Wise's Will, In re

• Decision Date: 12 December 1963
• Citation: 244 N.Y.S.2d 960,20 A.D.2d 55
• Parties: In re WISE'S WILL. Application of Bennett A. CERF and Lyman Stansky as Executors of the Estate of Herbert A. Wise, Deceased, for a construction of the Last Will and Testament of the said Herbert A. Wise, Deceased. Bennett A. Cerf, as Trustee under the Will of Herbert A. Wise, Deceased, Christopher Cerf, Glen Boles, and Ludwig Teller, as Special Guardian for Jonathan Cerf, Infant, Respondents-Appellants, Sue Bayer, Fred Wise and Walter Wise, Respondents-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 960

244 N.Y.S.2d 960

20 A.D.2d 55

In re WISE'S WILL Application of Bennett A. CERF and Lyman Stansky as Executors of the Estate of Herbert A. Wise, Deceased, for a construction of the Last Will and Testament of the said Herbert A. Wise, Deceased. Bennett A. Cerf, as Trustee under the Will of Herbert A. Wise, Deceased, Christopher Cerf, Glen Boles, and Ludwig Teller, as Special Guardian for Jonathan Cerf, Infant, Respondents-Appellants, Sue Bayer Fred Wise and Walter Wise, Respondents-Respondents.

Supreme Court, Appellate Division, First Department.

Dec. 12, 1963.

Whitman Knapp, New York City, of counsel (Henry Gale, Carl F. Rogge, Jr., New York City, and Stephen Friedman, White Plains, on the brief; Root, Barrett, Cohen, Knapp & Smith, New York City, attorneys) for appellant Glen Boles.

Horace S. Manges, New York City, of counsel (John M. Lewis and Philip T. Temple, New York City, on the brief; Weil, Gotshal & Manges, New York City, attorneys) for appellants Bennett A. Cerf, as Trustee and Christopher Cerf.

Ludwig Teller, New York City, Special Guardian for Jonathan Cerf, infant, appellant.

Sheldon Oliensis, New York City, of counsel (Lawrence Newman, New York City, on the brief; Kaye, Scholer, Fierman, Hays & Handler, New York City, attorneys) for respondents Sue Bayer, Fred Wise and Walter Wise.

David I. Silverman, New York City, of counsel (Jaffa & Silverman, New York City, attorneys) for respondent, Petitioner-Executor, Lyman Stansky.

Before RABIN J. P., and VALENTE, McNALLY, STEVENS and WITMER, JJ.

WITMER, Justice.

Certain beneficiaries under the will of Herbert A. Wise, deceased, appeal from the construction of said will made by the Surrogate. The issue is between two opposing groups of legatees with respect to the manner in which estate taxes are to be charged, i. e., whether they shall be paid from the entire estate before division thereof for distribution to beneficiaries, or be paid from the assets to be placed in Part B established by the executors under paragraph 3 of the will. The Surrogate held that the estate taxes are payable from Part B. We disagree.

The will was executed on May 3, 1957. Paragraphs 2, 3, and 13 thereof provide as follows:

'2. I direct that all estate taxes on my adjusted gross estate, whether based upon property that passes by this, my Last Will and Testament, or based upon property of any other kind, shall be paid, or an amount which my Executors, in their discretion, shall deem sufficient to pay the same, shall be set aside for the payment of said taxes before the execution by them of the remaining provisions of my Will.

'3. I direct that my Executors hereinafter named divide all the rest, residue and remainder of my property, real, personal and mixed, of whatsoever kind and nature, and wheresoever situated, of which I may die seized or possessed, or in which I may have any interest, or over which I may have any power of appointment, into two (2) equal parts, to be known respectively as Part A and Part B. I direct my Executors to divide Part A into fifty (50) equal parts which I hereby give, devise and bequeath as hereinafter set forth.

* * *

* * *

'13. I direct that all inheritance taxes payable by each of the legatees heretofore named shall be paid out of Part B, and I hereby direct my Executors to divide the remainder of Part B into three (3) equal parts.'

In paragraphs 4 through 12 of his will the testator bequeathed to designated persons the fifty parts of Part A to be established by his executors under paragraph 3. In paragraphs 14 and 16 thereof the testator bequeathed in three parts Part B to be established by his executors under paragraph 3.

The Surrogate held, 37 Misc.2d 403, 404, 235 N.Y.S.2d 633, 634, that paragraph 2 was 'no more than * * * the stereotyped testamentary direction to executors for the payment of taxes, debts and the expenses of administration', and constituted no direction against apportionment of taxes nor a direction as to the source of payment thereof. He further held that the testator used the term 'inheritance taxes' in paragraph 13 to designate 'estate taxes', and that accordingly all estate taxes are payable from Part B, in reduction of the shares to the three beneficiaries of Part B.

The argument that paragraph 2 refers to time of payment of estate taxes instead of the source of payment thereof, which is provided for in paragraph 13, is specious and misleading. It assumes the point at issue. Under paragraph 2 the entire estate is made the source of payment of the taxes before division of the estate for purposes of distribution. This is a perfectly feasible plan (cf. Matter of Cromwell's Estate, 199 Misc. 143, 102 N.Y.S.2d 85, affd. 278 App.Div. 649, 103 N.Y.S.2d 124, affd. 303 N.Y. 681, 102 N.E.2d 837).

With respect to the holding that paragraph 2 was inserted in the will in lieu of the age-old standard clause providing for the payment of a testator's debts and funeral expenses, it may be helpful to recall the derivation of such clause. It is an outgrowth of English history and ancient property rights. Prior to the year 1540 in England real property could not be devised by will, but descended by the law of primogeniture; and it was not subject to the payment of debts or funeral expenses. Also, for centuries prior thereto the personal property of a person dying intestate passed to the church, for disposition for the family and for charitable and religious purposes, and not until the year 1285 could such property be reached by his creditors or the undertaker for the payment of his debts or funeral expenses. Hence, it became the practice for every honorable man to make a will and provide for the payment of his debts and funeral expenses, lest it be said of him, as it was of one that 'he died stinking and inestate.' Historically, it was the practice to have such clause precede all dispositive provisions. In former days there was no inheritance or estate tax and so no reference to such taxes was made in that clause. Of course, such a clause is no longer necessary because the law has long required the payment of debts and funeral expenses from the estate of the deceased regardless of testamentary provision therefor; but more often than not, the clause is still found in present day wills.

As the Surrogate stated, such clause is a 'stereotyped testamentary direction', but this will contains no such clause. By the first paragraph the testator gave all furnishings, books, automobiles and other personal effects to a friend, to whom in paragraph 14 he gave two-thirds of Part B. Then in paragraph 2 he directed payment by his executors of all estate taxes 'upon property that passes by this * * *' (will) 'or * * * upon property of any other kind', before the execution by them of the remaining provisions of his will. No mention is made of debts or funeral expenses in this paragraph.

The inclusion in this paragraph of property dehors the will is a feature distinguishing this case from Matter of Mills' Estate, 189 Misc. 136, 64 N.Y.S.2d 105, affd. 272 App.Div. 229, 70 N.Y.S.2d 746, affd. 297 N.Y. 1012, 80 N.E.2d 535, so that paragraph 2 constitutes a clear provision against apportionment of estate taxes under section 124 of the Decedent Estate Law. (See Matter of Cromwell's Estate, supra, and cf. Matter of Shubert's Will, 10 N.Y.2d 461, 475, 225 N.Y.S.2d 13, 22, 180 N.E.2d 410, 417.) Thus, in the absence of paragraph 13 of the will the estate taxes would be...