Volckening's Estate, In re

• Decision Date: 08 August 1973
• Citation: 75 Misc.2d 221,347 N.Y.S.2d 521
• Parties: In re ESTATE of Lucille V. VOLCKENING. In re Accounting of William J. KRAMER et al., as Executors, Estate of Lucille V. Volckening, Deceased. Surrogate's Court, Kings County
• Court: New York Surrogate Court

Page 521

347 N.Y.S.2d 521

75 Misc.2d 221

In re ESTATE of Lucille V. VOLCKENING In re Accounting of William J. KRAMER et al., as Executors Estate of Lucille V. Volckening, Deceased.

Surrogate's Court, Kings County.

Aug. 8, 1973.

Mumma, Crane & Costabell, New York City, for executors.

Carter, Ledyard & Milburn, New York City, for respondent Dolores K. Wolfer.

George Dines, New York City, guardian ad litem for 10 infant legatees.

Abraham Males, New York City, guardian ad litem for 3 infant legatees.

Louis J. Lefkowitz, Atty. Gen., New York City, for ultimate charitable beneficiaries.

NATHAN R. SOBEL, Surrogate.

The three executors are in disagreement in computing their commissions in this account. They request a determination by the Court whether certain dispositions are specific or general.

The disagreement no doubt results from an earlier decision by this Court in this same estate (Matter of Volckening, 70 Misc.2d 129, 332 N.Y.S.2d 538). There, however, the issue was 'abatement' not 'commissions'. This Court decided that abatement was not necessary; that the 'abatement' statute, EPTL 13--1.3, did not apply when estate assets were insufficient to pay estate taxes. As a result of that decision, the statute was amended to clarify its provisions with respect to such estate taxes (L.1973, c. 663). This Court however added in dicta (p. 132, 332 N.Y.S.2d p. 543) that even if abatement was required--'All dispositions in Mrs. Volckening's will are general. There are no Specific dispositions as all parties assume.'

Although rarely articulated in the decisions, a disposition can be 'general' for one purpose, yet 'specific' for another. (See e.g. Matter of Fitch, 281 App.Div. 65, 67, 118 N.Y.S.2d 234, 236; Matter of Smallman, 138 Misc. 889, 247 N.Y.S. 593; Matter of Kuker, 22 Misc.2d 63, 192 N.Y.S.2d 1014). That this principle is not understood is not surprising: the decisions are often confusing.

As defined, a 'specific disposition is a disposition of a specified or identified item of testator's property' (EPTL 1--2.16). Whether a disposition is specific or general may require determination in many contexts. The areas most frequently encountered are:

(1) The order of 'abatement' of dispositions.

(2) The treatment of 'stock splits' occurring between execution of the will and death of testator.

(3) 'Ademption' of dispositions.

(4) 'Commissions':--by statute (SCPA 2307, subd. (2)) specific dispositions are not commissionable.

In each of these contexts, the decisions discuss the traditional indicia of specific dispositions (e.g. 'my' or 'all' stock or other property; the 'remainder of' described property; inclusion of the disposition in the same dispositive paragraph with other specific dispositions; direction that the disposition be free of taxes; disposition of stock in family corporation as distinguished from public corporations, etc.). The decisions focus on the presence or absence of these traditional indicia as if these were solely determinative of the issue before the Court. As will be discussed these are helpful in some areas but not at all relevant in others.

I

An 'abatement' of dispositions becomes necessary when the residuary estate is insufficient to pay debts, funeral and administration expenses and in consequence insufficient to pay pre-residuary dispositions in full. In such circumstances, a statute (EPTL 13--1.3) requires that 'general' dispositions abate before 'specific' dispositions. The same statute (subd. (d)) provides that the statutory order of abatement shall apply only in the absence of an 'express or implied intention' to prefer proportionate abatement. Since equality in abatement is generally preferred by most testators and inequality is the exception (Matter of Neil, 238 N.Y. 138, 144 N.E. 481; Matter of Cameron, 278 N.Y. 352, 358, 16 N.E.2d 362, 364; 2 Davids, New York Law of Wills, § 1073) it is often unnecessary to resort to the traditional indicia at all. Yet the courts struggle with the traditional indicia in order to avoid plainly unintended inequity to preferred objects of testator's bounty. (Davis v. Crandall, 101 N.Y. 311, 4 N.E. 721; Matter of Smallman, 138 Misc. 889, 247 N.Y.S. 593, Supra; Matter of Brewster, 144 Misc. 888, 260 N.Y.S. 588; Matter of Haslett, 190 Misc. 496, 74 N.Y.S.2d 294; Matter of Paterski, 50 Misc.2d 24, 269 N.Y.S.2d 494; Matter of Cannavo, 59 Misc.2d 889, 300 N.Y.S.2d 731; Matter of St. George, 61 Misc.2d 749, 306 N.Y.S.2d 571). Since 'intention' is often made manifest by the dispositions in the will, the presence or absence of the traditional indicia will have little to do with the decision.

The prior decision in this case is illustrative. Mrs. Volckening created three trusts, one for each of her daughters. The first was funded with general assets, the other two by stock of a family corporation. During her lifetime when the stock of the family corporation increased in value, she added $100,000 to the corpus of the first trust. Even without this manifestation of her intention, it was evident from the contents of her will, that Mrs. Volckening desired equality in each trust and therefore equality in and not disproportionate abatement. Although all the traditional indicia of 'specific' dispositions were present in the dispositions creating the two trusts funded by shares of the family corporation, this Court held that for the purpose of abatement the dispositions were to be treated as 'general'.

Since the order of abatement turns primarily on testator's intention, resort to the traditional indicia to determine whether a disposition is general or specific is most often unnecessary.

II

Testamentary intention also determines whether a disposition of shares of stock entitles the legatee to stock splits occurring between the date of execution of the will and date of death. (Matter of Security Trust Co. of Rochester, 221 N.Y. 213, 116 N.E. 1006; Matter of Martin, 252 N.Y. 582, 170 N.E. 151; Matter of Rollins, 271 App.Div. 982; Matter of Hicks, 272 App.Div. 594, 74 N.Y.S.2d 246, affd. 297 N.Y. 924, 79 N.E.2d 747; Matter of Griffing, 11 A.D.2d 709, affd. 9 N.Y.2d 919, 217 N.Y.S.2d 90, 176 N.E.2d 99; Matter of Howe, 15 A.D.2d 396, 224 N.Y.S.2d 992, affd. 12 N.Y.2d 870, 237 N.Y.S.2d 343, 187 N.E.2d 794; Matter of Mitchell, 114 Misc. 370, 186 N.Y.S. 666; Matter of Lamborn, 171 Misc. 734, 13 N.Y.S.2d 732; Matter of Davis, 184 Misc. 952, 57 N.Y.S.2d 356; Matter of Jaynes, 3 Misc.2d 118, 154 N.Y.S.2d 89; Matter of Brown, 26 Misc.2d 1011, 209 N.Y.S.2d 465; Matter of Roob, 59 Misc.2d 619, 300 N.Y.S.2d 9.)

The cited decisions hold that if the disposition is 'specific' the legatee is entitled to the additional shares resulting from the stock split; if the disposition is 'general' he is not. The older cases articulate the reason for that rule. The theory is that if the disposition is 'general', testator is expressing his intention as of the date of death; the disposition therefore carries with it only the number of shares specified in the will. On the other hand, if the disposition is specific, testator is expressing his intention as of the date of execution of the will; it therefore carries with it all stock splits occurring thereafter. (Note, Right to Stock Accretions Which Occur Prior to Testator's Death, 36 Albany L.Rev. 182 (1971)). Here again the courts struggle with the traditional indicia to determine whether testator intended a specific or general disposition.

It is reasonable to assume that when a testator gives 100 shares of AT&T instead of a pecuniary disposition, he expects that the disposition will have increased in value at the time of his death. If the disposition increases in value beyond his expectation or the value becomes disproportionate to dispositions to other objects of his bounty, he will alter the disposition by a new will or codicil. His concern is only with total value, not with the number of times his original disposition has been 'sliced' by stock splits. In the absence of any action by the testator to reduce the disposition, it may be presumed that he intended that additional shares resulting from a stock split should go to the legatee.

Since testator's intention that the legatee take the additional shares may be manifested by his failure to take such action, a finding that the disposition is 'general' because of the absence of the traditional indicia of a specific disposition, may frustrate rather than carry out testator's intention.

Perhaps this is the reason no appellate court in this state has ever denied the benefit of a stock split to the legatee of a 'general' disposition. In Matter of Fitch, 281 App.Div. 65, 67, 118 N.Y.S.2d 234, Supra, the Surrogate had held that the dispositions in issue were 'general' for the purpose of avoiding their loss by 'ademption'. He also held that the same dispositions found 'general' were entitled to the benefit of stock splits. Nothing that there seems to be no authoritative case to the contrary, the First Department held that since the Surrogate's determination was based on his evaluation of the testator's intent, the dispositions found by him to be 'general' nevertheless carried with it the additional shares resulting from a stock split. Surrogate Bennett has flatly decided that a legatee of a 'general' disposition is entitled to the benefit of a stock split. (Matter of Roob, 59 Misc.2d 619, 300 N.Y.S.2d 9, Supra.) If this is present law, then of course the traditional indicia may be totally disregarded.

However, at least one appellate decision since Fitch, continued to pay lip service to the traditional indicia as evidence of intention. (Matter of Howe, 15 A.D.2d 396, 224 N.Y.S.2d 992, affd. 12 N.Y.2d 870, 237 N.Y.S.2d 343, 187 N.E.2d 794, Supra.)

In either case, since the legatee's right to stock splits turns on testator's intention, resort to the traditional indicia is often unnecessary.

A report of the Bennett Commission on Estates, (Fifth Report (1966: No. 5.19.1B) pp....