Tucker's Estate, In re

• Citation: 75 Misc.2d 318,347 N.Y.S.2d 845
• Parties: In re ESTATE of Spurgeon TUCKER. Surrogate's Court, New York County
• Decision Date: 06 September 1973
• Court: New York Surrogate Court

Page 845

347 N.Y.S.2d 845

75 Misc.2d 318

In re ESTATE of Spurgeon TUCKER.

Surrogate's Court, New York County.

Sept. 6, 1973.

Hughes, Hubbard & Reed, New York City, for executors-petitioners.

Max Lerner, New York City, guardian ad litem for Caroline Ewert and Alexandra Ewert.

S. SAMUEL DiFALCO, Surrogate.

An objection to the executors' account by the guardian ad litem of infant contingent remaindermen poses the question of the executors' right to commissions on unsold realty which they conveyed in unequal shares to themselves as trustees of two residuary trusts. The realty passed under the residuary clause of the will which directed a division in two equal parts, one of which was set up in a marital deduction trust and the other in trust for the benefit of the widow, with a limited power to appoint to issue, or failing appointment, then in further trust for the two daughters or their issue. The will directed that all estate taxes be paid out of the second part of the residuary estate. It is this allocation which resulted in trusts of unequal size.

The gross estate was valued at slightly over $1,171,000 of which $950,000 represented the value of the parcel of realty. The debts and administration expenses, including taxes, were just under $250,000. Thus it is patent that the executors would either have to sell the realty or arrange to divide it between two trusts of unequal size. The will gave the executors broad power to sell the realty and it authorized them 'to make distributions (including distributions to themselves as trustees) in kind or in money, or partly in each, in shares which may be composed differently', except, of course, that the marital deduction trust could not include any asset which would imperil the marital deduction. The executors accordingly distributed 64.55% Of the realty to the marital trust and 35.45% To the second trust. Each trust principal is proportionately indebted to income for funds borrowed to meet principal obligations for debts and expenses.

The executors contend that inasmuch as executorial judgment and action were required respecting the realty, it must be deemed to have been received and paid out within the meaning of SCPA § 2307. The guardian ad litem relies upon the well established rule that when real property vests pursuant to the terms of the will and the executorial power of sale expires, the executors are not entitled to commissions on such real property even where the executors confirm the legatees' title by a fiduciary's deed. (Matter of Saphir, 73 Misc.2d 907, 909--911, 343 N.Y.S.2d 20, 24--26.) No one disputes the general rule. What the executors say is that there are exceptions to that rule and that this case comes within the exceptions.

In Matter of Roth (53 Misc.2d 1066, 1068--1070, 281 N.Y.S.2d 225, 228--230, mod. 29 A.D.2d 941, 289 N.Y.S.2d 575) this court adverted to some of the fundamental principles governing fiduciary compensation in the State of New York. The rules enacted by the Legislature represent an effort to furnish a standard which fairly measures the value of fiduciary services and at the same time minimizes the need for and the expense of litigation over such fees. For an executor, the test is the value of the property which he is 'receiving and paying out.' (SCPA § 2307.) The courts have given to the words just quoted a reasonable meaning in line with the general purpose of the statute, rather than a strict literal interpretation. (Matter of Schinasi, 277 N.Y. 252, 259--260, 14 N.E.2d 58, 60--61.) Real property usually passes directly to a devisee by virtue of the terms of the will, and hence it does not ordinarily form part of the body of property which is administered by the executor. Unless the realty is devised to him, the executor does not take title to realty, although he may have power to sell it. That title passes directly from the testator to the devisee without any act on the part of the executor is sometimes cited in support of the finding that the executor did not receive the realty within the meaning of the commission statute, but the real basis of the decisions is that the executor performed no act in relation to the realty under authority given to him by the will or under general rules of law. (See Matter of Salomon, 252 N.Y. 381, 384, 169 N.E. 616, 618.)

The policy guiding the interpretation of the statute is perhaps nowhere more clearly revealed than in the cases relating to specific legacies. An executor does take a qualified title to property which is specifically bequeathed (Blood v. kane, 130 N.Y. 514, 517, 29 N.E. 994, 995), but he has no real responsibility in respect of it and no duty to collect and administer it (Matter of Columbia Trust Co., 186 App.Div. 377, 381, 174 N.Y.S. 576, 578; see also Matter of Roth, 53 Misc.2d 1066 at p. 1070, 281 N.Y.S.2d at p. 230). Hence the courts from the beginning excluded such property from the commission base, and the Legislature confirmed that policy in the statute which plainly says that the authority to consider other property as money (i.e. the commission base) 'shall not apply in case of a specific legacy or devise.' (SCPA § 2307, subd. 2.) In spite of that explicit exclusion of specific legacies from the commission base, the courts have nonetheless consistently allowed commissions based upon the subject matter of specific legacies whenever the will required executorial action with respect to that specific property. (Matter of Roth, 29 A.D.2d 941, 289 N.Y.S.2d 575; Matter of Lane, 55 Misc.2d 88; Matter of Kuker, 22 Misc.2d 63, 192 N.Y.S.2d 1014; Matter of Mattes, 12 Misc.2d 502, 172 N.Y.S.2d 303; Matter of Marshall, 199 Misc. 431, 100 N.Y.S.2d 996; Matter of Berwind, 181 Misc. 559, 42 N.Y.S.2d 58; Matter of Brooks, 119 Misc. 738, 197 N.Y.S. 637, affd. 212 App.Div. 868, 208 N.Y.S. 837; Matter of Grosvenor, 105 Misc. 344, 173 N.Y.S. 203; Matter of Fisher, 93 App.Div. 186, 87 N.Y.S. 567.) As we said in Matter of Kuker (supra, p. 65 of 22 Misc.2d, p. 1017 of 192 N.Y.S.2d), the statute must be read with an eye to its purpose of fixing the dollar value of services necessarily rendered by the executor, and the test is whether the will requires performance of regular executorial duties with respect to the property specifically bequeathed.

There is no explicit provision in the statute excluding realty from the commission base except where it is specifically devised. On the contrary, the statute originally said that the value 'of any real or personal property' was to be considered as money in the computation of commissions (Surrogate's Ct.Act § 285, subd. 2), and the use of the word 'property' in the present statute is meant to include realty as well as...