Newman v. Dore

• Court: New York Court of Appeals
• Writing for the Court: LEHMAN
• Citation: 9 N.E.2d 966,275 N.Y. 371
• Decision Date: 13 July 1937
• Parties: NEWMAN v. DORE et al.

275 N.Y. 371
9 N.E.2d 966

NEWMAN
v.
DORE et al.

Court of Appeals of New York.

July 13, 1937.

Proceeding by Emma Straus Newman against Arthur G. Dore and another as trustees, etc., and Arthur G. Dore and another as executors, etc., of Ferdinand Straus. From a judgment (250 App.Div. 708, 294 N.Y.S. 499) affirming an adverse judgment of the Special Term, plaintiff appeals.

Affirmed.

[9 N.E.2d 966]

Appeal from Supreme Court, Appellate Division, First Department.
Edward G. Griffin, Carl Sherman, and Samuel N. Leiterman, all of New York City, for appellant.

Jacob H. Gilbert, Susan Brandeis, and Emanuel Feldberg, all of New York City, for respondent Clara Dorner Straus.

Brill, Bergenfeld & Brill, of New York City (Abraham Brill and Frank F. Bergenfeld, both of New York City, of counsel), for respondent Arthur G. Dore.

LEHMAN, Judge.

The Decedent Estate Law (Consol Laws, c. 13, arts. 2, 3) regulates the testamentary disposition and the descent and distribution of the real and personal property of decedents. It does not limit or affect disposition of property inter vivos. In terms and in intent it applies only to decedents' estates. Property which did not belong to a decedent at his death and which does not become part of his estate does not come within its scope.

The share in the real and personal property of a decedent, not devised or bequeathed, which a husband or wife takes, is now fixed by section 83 of the Decedent Estate Law. Prior to the revision of the Decedent Estate Law which took effect on September 1, 1930, a decedent could by testamentary disposition effectively exclude a wife or husband from the share of the estate which would pass to her or him in case of intestacy. That was changed by section 18 of the revised Decedent Estate Law. By that section (subdivision 1) ‘a personal right of election is given to the surviving spouse to take his or her share of the estate as in intestacy, subject to the limitations, conditions and exceptions contained in this section.’ These limitations and exceptions include a case where ‘the testator has devised or bequeathed in trust an amount equal to or greater than the intestate share, with income thereof payable to the surviving spouse for life.’ Subdivision 1(b). The Legislature has

[9 N.E.2d 967]

declared that its intention in enacting these sections of the revised Decedent Estate Law was ‘to increase the share of a surviving spouse in the estate of a deceased spouse, either in a case of intestacy or by an election against the terms of the will of the deceased spouse thus enlarging property rights of such surviving spouse.’ Laws 1929, c. 229, § 20.

Ferdinand Straus died on July 1, 1934, leaving a last will and testament dated May 5, 1934, which contained a provision for a trust for his wife for her life of one-third of the decedent's property both real and personal. In such case the statute did not give the wife a right of election to take her share of the estate as in intestacy. She receives the income for life from a trust fund of the amount of the intestate share, but does not take the share. That share is one-third of the decedent's estate. It includes no property which does not form part of the estate at the decedent's death. The testator on June 28, 1934, three days before his death, executed trust agreements by which, in form at least, he transferred to trustees all his real and personal property. If the agreements effectively divested the settlor of title to his property, then the decedent left no estate and the widow takes nothing. The widow has challenged the validity of the transfer to the trustees. The beneficiary named in the trust agreement has brought this action to compel the trustees to carry out its terms. The trial court has found that the ‘trust agreements were made, executed and delivered by said Ferdinand Straus for the purpose of evading and circumventing the laws of the State of New York, and particularly sections 18 and 83 of the Decedent Estate Law.’ Undoubtedly the settlor's purpose was to provide that at his death his property should pass to beneficiaries named in the trust agreement to the exclusion of his wife. Under the provisions of the Decedent Estate Law the decedent could not effect the desired purpose by testamentary disposition of his property. The problem in this case is whether he has accomplished that result by creating a trust during his lifetime.

The validity of the attempted transfer depends upon whether ‘the laws of the State of New York and particularly sections 18 and 83 of the Decedent Estate Law’ prohibit or permit such transfer. If the statute, in express language or by clear implication, prohibits the transfer, it is illegal; if the laws of the state do not prohibit it, the transfer is legal. In strict accuracy, it cannot be said that a ‘purpose of evading and circumventing’ the law can carry any legal consequences. ‘We do not speak of evasion, because, when the law draws a line, a case is on one side of it or the other, and if on the safe side is none the worse legally that a party has availed himself to the full of what the law permits. When an act is condemned as an evasion what is meant is that it is on the wrong side of the line indicated by the policy if not by the mere letter of the law.’ Bullen v. Wisconsin, 240 U.S. 625, 630, 36 S.Ct. 473, 474, 60 L.Ed. 830. In a subsquent case it was said of a defendant: ‘The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you intentionally may go as close to it as you can if you do not pass it.’ Superior Oil Co. v. State of Mississippi, 280 U.S. 390, 395, 50 S.Ct. 169, 170, 74 L.Ed. 504, both opinions by Mr. Justice Holmes. Under the laws of the State of New York, and particularly sections 18 and 83 of the Decedent Estate Law, neither spouse has any immediate interest in the property of the other. The ‘enlarged property right’ which the Legislature intended to confer is only an expectant interest...