Murphy v. Murphy

• Decision Date: 06 June 1968
• Citation: 56 Misc.2d 946,290 N.Y.S.2d 816
• Parties: Mary S. MURPHY, Plaintiff, v. Oliver A. MURPHY, Defendant.
• Court: New York Supreme Court

Page 816

290 N.Y.S.2d 816

56 Misc.2d 946

Mary S. MURPHY, Plaintiff, v.Oliver A. MURPHY, Defendant.

Supreme Court, Onondaga County.

June 6, 1968.

[56 Misc.2d 947] Costello, Cooney & Fearon, Syracuse, for plaintiff.

Hancock, Ryan, Shove & Hust, Syracuse, for executors of estate of Thomas W. Murphy, Decd.

DECISION

JAMES H. O'CONNOR, Justice.

A motion has been made by the Executors of the Will of Thomas W. Murphy, deceased, brought on by order to show cause seeking the vacation of certain provisions of a sequestration order of this Court which was granted March 15, 1968.They seek to vacate only that much of the sequestration order which concerns them as executors of the estate as aforesaid, or any property subject to their control as such executors.

The sequestration order herein sought to be vacated was granted ex parte by this Court and directed the appointment of a Receiver empowering him to take into his possession the personal property of the defendant, Oliver A. Murphy, herein in conjunction with a certain matrimonial action which was commenced subsequent to the granting of said order.The order further directed the Executors mentioned above to deliver and turn over to the Receiver all monies, stocks and bonds and other property in their possession or under their control, due or to become due to the defendant in the above action.In effect it directed the Executors to turn over to the Receiver approximately $873,000.00 being the share of the Thomas W. Murphy Estate distributable to the defendant herein.

The Executors move to vacate the order of sequestration on the ground that there existed a valid assignment dated May 11, 1967 assigning the defendant's interest in his deceased father's estate to a Cleveland, Ohio bank as Trustee of an inter vivos trust.The Trust Agreement provided for the payment of income therefrom to the defendant for life with a remainder interest passing to his daughter, Catherine.The Trust Agreement provided that the Trustee could invade the principal of the trust when necessary to maintain the defendant's standard of living; that the defendant could amend or modify the trust and could even revoke the trust in all or in part.The assignment was executed, filed and recorded in accordance with Section 13--2.2 of the Estates, Powers and Trusts Law of the State of New York and actual notice of the assignment was given to the Executors.While this is the basic argument of the executors to vacate the sequestration order, they also argue that they were not a party to the action and were not given notice or any opportunity to be heard in respect to the sequestration order involved herein.Therefore they argue that the order cannot be constitutionally applied to them since it would be in violation of the due process requirements of the Federal and New York State Constitutions.

Since it is the decision of this Court that the sequestration order should be vacated as to the Executors of the Estate of Thomas W. Murphy, it is unnecessary for this Court to reach the constitutional issue.The essential argument to be decided herein is whether or not the defendant, Oliver A. Murphy, had property within the State of New York which is subject to an order of sequestration.Section 233 of the Domestic Relations Law does not define what is meant by 'his property', so it is incumbent upon this Court to decide whether the assignment of the defendant's interest to an out of state trustee some ten months prior to the issuance of the sequestration order, exempts property flowing thereunder from sequestration.

The plaintiff claims that the defendant retained a property interest in the estate in spite of the execution of the assignment on the ground that the transfer in trust was illusory; that the order is void as to the plaintiff pursuant to Estates, Powers and Trusts Law, Section 7--3.1 in that the plaintiff is alleged to be a creditor of the defendant; that the trust is fraudulent as to the plaintiff and simply that the defendant retains a property interest in the estate of his deceased father notwithstanding any assignment.

Even under the law of the State of New York it is questionable whether the transfer in trust under the assignment in the instant case, is illusory under the doctrine expostulated in the case of Newman v. Dore, 275 N.Y. 371, 9 N.E.2d 966, 112 A.L.R. 643 upon which the plaintiff relies.In that case the testator created an inter vivos trust where he reserved not only the income for life together with the power to revoke the trust but also made the trust subject to his control during his lifetime.In addition the Court was considering the wife's right of election to take against the will of a testator who attempted to disinherit her by executing inter vivos trusts with terms as indicated above.The Court said at page 380, 9 N.E.2d at page 969:

'We assume, without deciding, that except for the...