Rosner v. Caplow

• Decision Date: 23 November 1982
• Citation: 456 N.Y.S.2d 50,90 A.D.2d 44
• Parties: June ROSNER, Petitioner-Appellant, v. Mildred CAPLOW and Anna Rosner, Respondents-Respondents, and Jeffrey Wachtel, Wendy Wachtel and March Wachtel, Additional Respondents-Appellants, and Stacy Caplow and Amy Caplow, Additional Respondents.
• Court: New York Supreme Court — Appellate Division

Page 50

456 N.Y.S.2d 50

90 A.D.2d 44

June ROSNER, Petitioner-Appellant, v. Mildred CAPLOW and Anna Rosner, Respondents-Respondents and Jeffrey Wachtel, Wendy Wachtel and March Wachtel, Additional Respondents-Appellants and Stacy Caplow and Amy Caplow, Additional Respondents.

Supreme Court, Appellate Division,

First Department.

Nov. 23, 1982.

Philip R. Forlenza, New York City, of counsel (Katharine A. Rundle, New York City, with him on the brief, Hawkins, Delafield & Wood, New York City, attorneys) for petitioner-appellant.

Ralph K. Wood, New York City, of counsel (Louis Haimoff and Harry T. Nusbaum, New York City, with him on the brief; Blum, Haimoff, Green, Lipson, Garley & Niedergang, New York City, attorneys) for respondents-respondents.

Before KUPFERMAN, J.P., and SANDLER, SULLIVAN, ROSS and LYNCH, JJ.

SANDLER, Justice.

In this special proceeding in the nature of an action for a judgment declaring the parties' rights under three inter vivos trusts created on July 1, 1947 by Anna and Leo Rosner, petitioner June Rosner and additional respondents Jeffrey, Wendy and Marcy Wachtel appeal from an order and judgment (one paper) of the Supreme Court, New York County entered October 20, 1981, determining, inter alia, that an infant's later ratification of a purported 1951 modification of the trust may relate back to defeat certain intervening rights of nonconsenting remaindermen born in the interim, and therefore that respondents-respondents Anna Rosner and Mildred Caplow were validly appointed trustees pursuant to a power created in one of the settlors, Leo Rosner, by the 1951 modification.

This appeal presents an issue of first impression: whether a contingent remainderman and an income beneficiary who were infants at the time of a purported modification of an irrevocable inter vivos trust may at a later date expressly or impliedly ratify that modification after reaching majority, nunc pro tunc, when at the time of such later ratification there are additional contingent remaindermen who cannot consent to any modification because of their infancy.

Central to a resolution of this issue are the provisions of EPTL § 7-1.9 ¹ which provide in effect that the creator of an irrevocable trust may revoke or amend it only upon the written consent of all persons beneficially interested.

By agreement dated July 1, 1947, Anna and Leo Rosner created three inter vivos trusts, one for the benefit of Anna Rosner, and one each for settlors' two daughters, respondent Mildred Caplow (nee Rosner) and petitioner June Rosner. The duration of the trusts was for the lives of Mildred and June. Leo was designated sole trustee; substitute trustees were Jacob Fisher and Samuel Ecker with Frances Ecker as alternative for Samuel, with no provision for the further designation of trustees; by its terms the trusts were designated irrevocable.

The trust agreement provided that if Anna died before Mildred and June the assets of her trust would be divided equally between her daughters' trusts. Likewise, if Mildred or June died before the others and had no issue surviving, her trust would be divided equally between the surviving trusts. If at the time of death they had surviving issue, their issue would take all rights and benefits of the trusts per stirpes. Thus, any child of Mildred or June would upon birth become a contingent remainderman and thus beneficially interested in his or her mother's trust. Schoellkopf v. Marine Trust Co., 267 N.Y. 358, 362, 196 N.E. 288.

On May 29, 1951, Leo, Anna, Mildred and June executed a document, purportedly modifying the trust agreement of July 1, 1947 (hereafter "the Trust"), in which they consented to the renunciations of their appointments by the substitute trustees, and conferred on Leo the right to appoint substitute trustees during his lifetime without requiring the further consent of any of the income beneficiaries.

It is undisputed that on the date of the execution of the modification agreement June was under the age of 21, and Mildred had a two-year-old daughter, respondent Stacy Caplow, the then sole contingent remainderman. Thereafter the class of contingent remaindermen (hereinafter "remaindermen") was increased by the births of four members: On March 12, 1953 June's son Jeffrey Wachtel was born, and on February 12, 1956 and October 9, 1957 Wendy and Marcy Wachtel were born. Mildred gave birth to a second daughter, Amy Caplow, in or about 1958.

On November 12, 1963, by written instrument, and pursuant to the power granted him in the 1951 modification, Leo resigned as trustee, removed all substitute trustees, and appointed Anna and Mildred as co-trustees in his place.

On December 16, 1963, Leo and June entered into a letter agreement wherein June renounced any interest in the trusts in return for the shares and proprietary lease of June's residence, a cooperative apartment owned by Leo. A separate formal agreement of that date, signed by Leo, Anna, Mildred and June, revoked June's trust and recognized Anna and Mildred as successor trustees.

On February 10, 1966, Leo, Anna, Mildred and June entered into an agreement in which the December 16, 1963 agreement was rescinded, June renounced her rights to the income from the trusts, effective December 16, 1963, and June's trust was divided into equal parts for the benefit of her three infant children.

On March 27, 1973, Leo, Anna, Mildred and June entered into a further agreement which confirmed the prior rescission of the December 16, 1963 agreement, rescinded the February 10, 1966 agreement in which June had renounced her rights, and reinstated the 1947 Trust as originally written, except for substitutions of trustees. Each of the aforesaid agreements except the 1963 letter agreement referenced the 1951 modification in a "whereas" clause.

On August 20, 1977, Leo died.

On November 1, 1978, after June had challenged the administration of the Trust and was permitted an examination of the Trust records, she waived her right to an accounting in exchange for her designation, by Anna and Mildred, as a third co-trustee, an agreement by Anna to keep in force a will leaving June one-half the residue of Leo's estate, and a "no-show" consultant position for June at $18,000 or more annual salary with the Century-Paramount Hotel, the Trust's main asset.

Thereafter, June brought this proceeding for a declaration concerning her status with respect to the Trust, for an accounting, and for removal of Anna and Mildred as trustees. Special Term ultimately determined that June's appointment in 1978 as a trustee was void because the 1947 Trust reserved no power of amendment, and under the 1951 modification agreement only Leo could appoint new trustees, which power died with Leo in 1977. The court also held that June had waived her right to an accounting in the 1978 settlement agreement (105 Misc.2d 592, 601, 432 N.Y.S.2d 577). No appeal has been taken from these determinations.

In March 1980, answering the supplemental petition naming Mildred's and June's children as respondents, Stacy for the first time stated that she approved and ratified the 1951 modification. Both Stacy and Amy ratified "any modifications to date." The Wachtel remaindermen answered that they do not consent to the 1951 modification, and cross-petitioned for an accounting and a...