Knowlton's Will, In re

• Decision Date: 21 July 1955
• Citation: 143 N.Y.S.2d 111,208 Misc. 454
• Parties: In re KNOWLTON'S WILL. Matter of the Petition of BROOKLYN TRUST COMPANY to render and settle a final account of its acts and proceedings as Trustee of a trust created for the benefit of Hans Clemens Count von Franckensierstorpff, also known as John C. Sierstorpff, in and by the Will of Edwin F. Knowlton, Deceased. Matter of the Petition of CITY BANK FARMERS TRUST COMPANY to render and settle its final account as Trustee under the Will of Edwin F. Knowlton, Deceased. Surrogate's Court, Kings County
• Court: New York Surrogate Court

Page 111

143 N.Y.S.2d 111

208 Misc. 454

In re KNOWLTON'S WILL Matter of the Petition of BROOKLYN TRUST COMPANY to render and settle a final account of its acts and proceedings as Trustee of a trust created for the benefit of Hans Clemens Count von Franckensierstorpff, also known as John C Sierstorpff, in and by the Will of Edwin F. Knowlton, Deceased Matter of the Petition of CITY BANK FARMERS TRUST COMPANY to render and settle its final account as Trustee under the Will of Edwin F. Knowlton, Deceased.

Surrogate's Court, Kings County.

July 21, 1955.

Cullen & Dykman, Brooklyn (William K. Allison and Harold A. Meriam, Jr., Brooklyn, of counsel), for petitioner Brooklyn Trust Co., as trustee and as guardian of Michael Sierstorpff.

Richmond L. Brown, New York City, for petitioner-trustee City Bank Farmers Trust Co.

Dallas S. Townsend, Asst. Atty. Gen., Leonard P. Moore, U. S. Atty., for Eastern District of New York, Brooklyn, John W. Wydler, Garden City, James D. Hill and Irving Jaffe, Asst. U. S. Attys., Washington, D.C., for Herbert Brownell, Jr., Atty. Gen. of United States of America.

Samuel Goldstein, Brooklyn, special guardian for respondent infant, Michael Sierstorpff.

J. Preston Mottur, Brooklyn, for respondent Constance and Edwin Sierstorpff.

Halpin, Keogh & St. John, New York City, for respondent John Baer.

Herman P. Rosenblatt, New York City, for respondents Jacob L. Feiner and Barry Feiner.

Katz & Sommerich, New York City (Otto C. Sommerich and Benjamin Busch, New York City, of counsel), for respondents Dr. Paul Hollos and Industrial Participations & Trading Co., Ltd., Inpatra.

Bokat & Bokat, New York City (Edmund W. Bokat and Janet Perlman, New York City, of counsel), for respondent Edward P. Levy.

Harry Krauss, New York City, for respondent Joseph L. Rosenberg.

Hodges, Reavis, McGrath, Pantaleoni & Downey, New York City, for respondent Securities Administration & Trading Co.

OLLIFFE, Acting Surrogate.

A second compromise agreement has been submitted for approval in these accounting proceedings, the first having been rejected by the Court by decision dated December 26, 1950, 200 Misc. 252, 102 N.Y.S.2d 184. No order has been entered on such decision. It was therein held that Edwin and Constance, surviving children of the first marriage of the deceased secondary life income beneficiary, were necessary parties to such an agreement, notwithstanding the fact that their shares of the trust remainder herein had been vested by the Alien Property Custodian. The percentage of their shares in this estate became fixed by a decision of this Court dated August 10, 1948, 192 Misc. 1032, 81 N.Y.S.2d 752, holding that Michael, a child of the deceased income beneficiary's second marriage, was lawful issue and, therefore, entitled to one-third of the remainder herein. No decree was entered thereon.

Edwin and Constance were accorded the right to open their default, plead and object to the account, 200 Misc. 252, 266, 102 N.Y.S.2d 184, 196, and the trial of the issues respecting the status of Michael was authorized to be re-opened to permit them to introduce new and additional facts which were not before the Court when the issues were tried, 276 App.Div. 864, 93 N.Y.S.2d 203; 200 Misc. 252, 267, 102 N.Y.S.2d 184, 197. Those rights have not been exercised by Edwin and Constance. Instead they have joined in the present agreement, under the terms of which they are each to receive from the share of their infant half-brother, Michael, the sum of $125,000, in exchange for which, among other things, they assign to Michael's guardian all of their interest asserted by them to any of the trust fund to be paid to Michael's guardian.

Constance had, however, executed two instruments, in assignment form on March 16, 1948, before a U.S. Consul at Geneva, Switzerland, authorizing the trustees to pay out of her share in this estate the total sum of $205,000 to a Swiss corporation; Edward executed a similar instrument on December 13, 1948, before a U. S. Consul at Zurich, Switzerland, whereunder he empowered one of the trustees to pay from his share to a Liechtenstein corporation the sum of $200,000. The existence of those assignments apparently was not called to the Court's attention in the prior proceeding, as the decision therein did not discuss the necessity of the assignees thereunder being necessary parties to a compromise agreement. The said assignees have, in turn, assigned sub-shares of their assignments to others, some of whom have still further assigned such sub-shares. Those assignees, and sub-assignees contend they are necessary parties to the compromise agreement, while all of the other parties contend to the contrary.

In addition to the said assignments, Constance also entered into an agreement on March 16, 1948, at Geneva, Switzerland, whereunder she agreed to pay an attorney a specified sum of money for legal services rendered and to be performed by him, and the said fee was to 'become due and payable to you if and when the Alien Property Custodian divests my share of the funds that I inherited from the estate of Edwin F. Knowlton * * *.' That agreement was assigned by the attorney on July 18, 1950, as collateral security for a loan to a corporation. That attorney-assignor executed a waiver and consent to the entry of an order approving the two compromise agreements herein. His assignee did not, however, execute a similar waiver and consent but neither did he interpose any objections. In any event, however, the said agreement merely created a debtor-creditor relationship, the provisions thereof not spelling out either a legal or equitable assignment, Hinkle Iron Co. v. Kohn, 229 N.Y. 179, 128 N.E. 113; Donovan v. Middlebrook, 95 App.Div. 365, 88 N.Y.S. 607, nor did it create an equitable lien, and hence neither the attorney-assignor nor his assignee is a necessary party to the agreements herein.

Constance's assignment to Industrial Participations and Trading Company, Ltd., Inpatra, is of 'all (emphasis supplied) my right title and interest, * * * in and to the remainder interest or any other interest in the whole or any part of the estate of Edwin F. Knowlton, * * *' but authorizes the City Bank Farmers Trust Company, as trustee, to pay to said assignee the sum of only $55,000. The said instrument further provides, 'It is understood that this assignment shall have no force or effect until my share of the funds of the estate and/or trusts created by the last will and testament of the said Edwin F. Knowlton are released and divested by the Alien Property Custodian of the United States of America.' Constance's other assignment likewise runs to the same corporation and is also of 'all (emphasis supplied) my right title and interest * * *' but limits the Brooklyn Trust Company, as trustee, to payment to said assignee of the sum of $150,000; and further provides, 'It is understood that this assignment shall have no force or effect until the share of my brother, Edwin * * * of the funds of the estate and/or trusts created by the last will and testament of the said Edwin F. Knowlton, deceased, are released and divested by the Alien Property Custodian of the United States of America.'

Edwin's assignment was to the Securities Administration and Trading Company (Establishment), and was also of 'all (emphasis supplied) my right title and interest * * * in and to the remainder interest or any other interest in the whole or any part of the estate of Edwin F. Knowlton * * *,' but that, too, limited payment to the sum of $200,000, which the trustee, City Bank Farmers Trust Company, was authorized to pay. It also contained the identical provision relating to divestment by the Alien Property Custodian as is present in the assignment executed by Constance to the same trustee.

Those provisions relating to release and divestment are characterized on the one hand as being conditions precedent to the right of the assignees recovering anything under their assignment. On the other hand, however, it is urged that the language so employed is not a condition precedent to payment of the assignments from any source but is descriptive language of the conditions to which the interests assigned were subject. Those contentions have their root in some measure in the form in which the compromise agreement was prepared. It consists of two instruments in each of the two trusts accounted for herein; one of which is designated compromise agreement No. 2-A. Thereunder the trustees, Edwin, Constance, the Attorney-General of the United States, as the Successor in office of the Alien Property Custodian, and the general and special guardians of Michael agree that Michael is entitled to a one-third share of each trust; the sources of payment of compensation to the trustees, etc., are designated from either the trust or Michael's share in the estate; the remaining net balance of two-thirds of the trust held for distribution to Edwin and Constance is to be paid to the Attorney General; the Attorney General is also to be paid $75,000 out of Michael's share in each trust, which sums are to be added to Edwin's and Constance's shares and to be reserved by him and retained under conditions not relevant to the issues herein. It is further provided therein by paragraph 12 and agreed to by all the parties thereto, except the Attorney General, that the said agreement shall be ineffective unless a further agreement by executed by the parties, other than the Attorney General, which 'provides for the payment to Edwin and Constance of certain sums.'

Pursuant to that provision all of the parties, except the Attorney General, entered into compromise agreement No. 2-B. Thereunder Edwin and Constance are to be paid the sums of $125,000 each from Michael's share, the payments to be made to their attorney, and if that manner be not feasible, then in such manner as the Court shall direct by decree, subject to their attorney's lien, which Edwin and...