Kummer, Matter of

• Decision Date: 04 April 1983
• Citation: 93 A.D.2d 135,461 N.Y.S.2d 845
• Parties: , 2 Soc.Sec.Rep.Ser. 1328 In the Matter of Philip KUMMER, deceased. Margaret Kummer, as temporary administratrix, etc., Appellant-Respondent, Department of Social Services of the County of Westchester, Respondent-Appellant, Clifford J. Kummer et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 845

461 N.Y.S.2d 845

93 A.D.2d 135, 2 Soc.Sec.Rep.Ser. 1328

In the Matter of Philip KUMMER, deceased Margaret Kummer, as temporary administratrix, etc Appellant-Respondent Department of Social Services of the County of Westchester Respondent-Appellant, Clifford J. Kummer et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

April 4, 1983.

Frank & Fredericks, New York City (Frank O. Fredericks and David B. Julie, New York City, of counsel), for appellant-respondent.

Samuel S. Yasgur, County Atty., White Plains (Jonathan Lovett and Eric D. Koster, White Plains, of counsel), for respondent-appellant.

Samuel N. Barish, White Plains, guardian ad litem, for respondents Clifford and Jennifer Kummer.

Before DAMIANI, J.P., and LAZER, GULOTTA and BRACKEN, JJ.

DAMIANI, Justice Presiding.

These are cross appeals from stated portions of a decree of the Surrogate of Westchester County in a proceeding to settle the intermediate account of the administratrix of the decedent. At issue is whether certain moneys advanced by the Westchester County Department of Social Services for the medical and nonmedical care of the decedent's children before his death, may be recovered from decedent's estate and whether, and to what extent, any recovery should bear predecision interest. We must begin with a knowledge of the people whose actions gave rise to the present dispute and of the different roles they play.

DRAMATIS PERSONAE

Clifford and Jennifer Kummer--the children of Daisy and Philip Kummer. They were placed in the care of the Westchester County Department of Social Services as neglected children by order of the Family Court and were subsequently placed in a foster home.

Daisy Kummer--the mother of Clifford and Jennifer and first wife of Philip Kummer. She is now deceased.

Philip Kummer--the testator and the father of Clifford and Jennifer. After the death of Daisy, he married Margaret Kummer. He is now deceased.

Margaret Kummer--the second wife of Philip Kummer and administratrix of his estate. She is the petitioner in this proceeding to obtain a judicial settlement of an intermediate account of Philip Kummer's estate.

The Department of Social Services of the County of Westchester (hereinafter DSS)--this party plays several different roles in this case. First, the DSS was the custodian of the persons of the two children, Clifford and Jennifer, by reason of an order of placement of the Family Court giving the DSS custody due to the neglect of their parents. Second, the DSS is the "representative payee" of certain Social Security benefits due from the Federal Government to the children. Third, the DSS is a welfare agency, that is, it administers certain relief programs providing for monetary payments to the needy. Fourth, the DSS is the objectant in this proceeding, that is, it objects to the rejection by the administratrix of its claim for reimbursement of moneys expended for the care of the children.

THE FACTS

Daisy and Philip Kummer were married and had two children, Clifford and Jennifer. On July 24, 1972 the DSS instituted a neglect proceeding against the parents pursuant to article 10 of the Family Court Act and the children were removed from their parents' custody on that date. Four days later, on July 28, 1972 the mother, Daisy Kummer, died. She left an estate exceeding half a million dollars to her husband Philip Kummer.

On April 12, 1973 an order was entered in the pending Family Court neglect proceeding pursuant to a stipulation of the parties which, inter alia, (1) found neglect on the part of the father, Philip Kummer, (2) placed the children with the DSS, which In June, 1973 the DSS wrote to the father concerning an oral undertaking that he had apparently made "to pay for the full cost of care from the date of placement" of the children. Thereafter, letters were exchanged in August and November, 1973 concerning the father's support obligation. In the letter of August 14, 1973, the DSS queried the father concerning the deceased mother's Social Security status, stating:

would, in turn, place them in a foster home, with the provision that the father would not be advised of their residence, (3) provided that the father would have the right at any time to bring a petition to terminate the placement and (4) granted a permanent order of protection directing the father not to harass the children or attempt to contact them in any way except through the DSS.

"We also need to know Mrs. Kummer's Social Security number to determine if the children are eligible to receive any benefits based on Mrs. Kummer's account. If you are already in receipt of Social Security Benefits, then the County will effect a change of beneficiary and you would be responsible for the difference between Social Security and the full cost [of care]" (emphasis added).

In the letter dated November 26, 1973 the DSS again told the father that "[w]hen we become beneficiary of the social security benefits on the account of Mrs. Kummer * * * you will only be responsible for the difference between social security benefits and the full cost of care".

Philip Kummer paid $6,059.12 to the DSS toward the care and maintenance of the children from 1973 to 1974. On or about June 11, 1974 the DSS commenced a support proceeding against the father in the Family Court, Westchester County, alleging that since July 26, 1972 he had neglected to provide for the support of the children and that the DSS had authorized public assistance for the children in the sum of $610.40 per month plus medical expenses for their support. The petition was filed before the children had been awarded any Social Security benefits (to be discussed shortly, infra) and it thus appears that in the hiatus between the removal of the children from their parents and payment of Social Security benefits to which they were entitled, the DSS acted in its role as a welfare agency (see dramatis personae, supra) to provide relief for them on the ground that they were needy.

Daisy Kummer was a currently insured member of the Social Security System and when she died her children became entitled to benefits from the Federal Old Age and Survivors Disability Insurance Trust Fund (OASDI) as her dependents (see U.S.Code, tit. 42, § 402, subd. [d] ). The payments from the fund are not a form of public assistance administered by the DSS. Rather, they are akin to an annuity, purchased by Social Security contributions of the wage earner, which is payable to his or her dependent children until they reach age 18.

On August 3, 1974 the DSS applied, pursuant to subdivision (j) of section 405 of title 42 of the United States Code, for appointment by the Social Security Administration as "representative payee" to receive the OASDI benefits to which the children were entitled. ¹ On October 22, 1974 the DSS was appointed "representative payee". It is important to note here that the OASDI benefits were the property of the children and that the DSS applied for and received the designation of representative payee in its role as the custodian of the persons of the children (see dramatis personae, supra) and not in its role as a welfare agency. Thus, DSS was to receive and apply the OASDI funds for the use and benefit of the children (see 20 CFR former 404.1601).

The rules governing the expenditure and conservation of OASDI funds received by a "representative payee" were contained in two regulations promulgated by the Social "[Former] 404.1604 Use of benefits for current maintenance.

Security Administration, which stated in relevant part:

"Payments certified to a relative or other person on behalf of a beneficiary shall be considered as having been applied for the use and benefit of the beneficiary when they are used for the beneficiary's current maintenance--i.e., to replace current income lost because of the disability, retirement, or death of the insured individual."

"[Former] 404.1605 Conservation and investment of payments.

"Payments certified to a relative or other person on behalf of a beneficiary which are not needed for the current maintenance of the beneficiary * * * shall be conserved or invested on the beneficiary's behalf. Preferred investments are U.S. Savings Bonds, but such funds may also be invested in accordance with the rules applicable to investment of trust estates by trustees. For example, surplus funds may be deposited in an interest or dividend bearing account in a bank or trust company or in a savings and loan association if the account is either federally insured or is otherwise insured in accordance with State law requirements. Surplus funds deposited in an interest or dividend bearing account in a bank or trust company or in a savings and loan association must be in a form of account which clearly shows that the representative payee has only a fiduciary, and not a personal, interest in the funds " (emphasis added).

The DSS received a total of $17,527.20 in OASDI benefits for the period from May, 1973 through July, 1976 (Philip Kummer died on July 24, 1976), half of which sum was attributable to each child.

It was not until December 29, 1975 that the support proceeding, commenced in June, 1974, was heard in the Family Court, Westchester County. In the meantime the DSS had begun to receive the children's Social Security benefits. It agreed with the father to settle the support proceeding and a stipulation was entered into upon the following terms: (1) the father would turn over to the DSS two $10,000 Arizona Public Service Company bonds which were in his possession and which were registered in the name of Daisy Kummer as custodian for each of the two children under the New York Uniform Gift to Minors Act (EPTL 7-4.1 et seq.), (2) the DSS would cash the bonds and apply the principal and accrued interest thereon to the payment of the cost of past and future care for the children, including medical expenses until such time as the fund was depleted or the...