Case ID: ny-2d_83/html/0148-01.html
Source: Caselaw Access Project
Author: {"author": "Levine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[629 NE2d 1356, 608 NYS2d 398]
    In the Matter of the Estate of Harry A. Cohen, Deceased. Joel Goldberg, Appellant-Respondent; Rae Cohen, Respondent-Appellant.
    Argued January 11, 1994;
    decided February 17, 1994
    
      POINTS OF COUNSEL
    
      Hatter, Donovan & McFaul, Mineóla (John M. McFaul and Robert E. Trop of counsel), for appellant-respondent.
    I. When a contract is used to enforce a joint or mutual will which provides that the collective property of both parties pass to ultimate beneficiaries, the survivor to the agreement receives a life estate in the assets and is deemed a trustee of the assets for the ultimate beneficiaries, who have a remainderman interest. (Schwartz v Horn, 31 NY2d 275; Rich v Mottek, 11 NY2d 90; Tutunjian v Vetzigian, 299 NY 315; Rastetter v Hoenninger, 214 NY 66; Di Lorenzo v Ciancio, 49 AD2d 756.) II. Since the decedent’s wife did not receive an outright bequest of the decedent’s residuary estate, the acting Surrogate properly imposed a constructive trust upon the decedent’s entire estate to insure that upon the death of the wife the residuary estate passes to the relatives of the husband and wife in accordance with their reciprocal wills. (Tutunjian v Vetzigian, 299 NY 315; Di Lorenzo v Ciando, 49 AD2d 756.)
    
      Farrell, Fritz, Caemmerer, Cleary, Barnosky & Armentano, P. C, Uniondale (John R. Morken, John J. Barnosky and Elizabeth W. Cohen of counsel), and Friedman & Friedman, Brooklyn (Louis L. Friedman of counsel), for respondent-appellant.
    I. The majority of the Court below erred in imposing a constructive trust on any portion of the decedent’s estate because the contract was not enforceable in the absence of a valid and binding will. (Collyer v Collyer, 110 NY 481; Matter of Fox, 9 NY2d 400; Matter of Staiger, 243 NY 468; Matter of McDonald, 40 NY2d 995; Matter of Kennedy, 167 NY 163; Matter of Passuello, 169 AD2d 1007; Rastetter v Hoenninger, 214 NY 66; Glass v Battista, 43 NY2d 620; Schwartz v Horn, 31 NY2d 275; Rubenstein v Mueller, 19 NY2d 228.) II. The contract is unenforceable as a matter of law because the decedent’s own revocation of his will constituted either a breach of the contract, a waiver of his rights under the contract, or a failure of consideration. (Hermann v Ludwig, 186 App Div 287; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229; Croker v New York Trust Co., 245 NY 17; Rosenblatt v Birnbaum, 20 AD2d 556, 16 NY2d 212; 3301-3303 Hempstead Turnpike Beauty Salon v Oresti Salons, 60 NY2d 843; Levy v Lacey, 22 NY2d 271; Collins Tuttle & Co. v Ausnit, 95 AD2d 668; Greenspan v Amsterdam, 145 AD2d 535; Royce v Rymkevitch, 29 AD2d 1029; Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175.) III. A finding that the contract was not canceled is legally inconsistent with a finding that the decedent’s will, to which the contract was affixed, was revoked. (Matter of Schwartz, 94 Misc 2d 1024; Matter of Griffiths, 38 Misc 2d 87; Matter of Kennedy, 167 NY 163; Collyer v Collyer, 110 NY 481; Matter of Passuello, 169 AD2d 1007; Whalen v Stuart, 194 NY 495, 195 NY 524; Perry v Inter-County Sav. Bank, 97 AD2d 655, appeal dismissed, mot granted sub nom. Perry v Costa, 61 NY2d 756, affd sub nom. Perry v Inter-County Sav. Bank, 62 NY2d 630; Lippes v Atlantic Bank, 69 AD2d 127; Toner v Constable, 61 Misc 2d 586, 591; Pangburn v Buick Motor Co., 211 NY 228.) IV. Even were the contract enforceable, the imposition of a constructive trust on any portion of the decedent’s estate was error absent a showing that decedent’s widow has acted in such a way as to defeat the contract. (Blackman v Estate of Battcock, 78 NY2d 735, 79 NY2d 915; Margulis v Teichman, 125 Misc 2d 729; Schwartz v Horn, 31 NY2d 275; Tutunjian v Vetzigian, 299 NY 315; Wagner v Wagner, 58 AD2d 7.) V. Even were the contract enforceable, under no circumstances should a constructive trust apply to that portion of decedent’s estate which passes outright to his widow. (Blackman v Estate of Battcock, 78 NY2d 735; Schwartz v Horn, 31 NY2d 275.) VI. The Court below erred by failing to rule on the acting Surrogate’s denial of the widow’s constitutional right to a trial by jury on the issue of whether the contract was canceled. (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400; Cooper v Morin, 49 NY2d 69, 801, 446 US 984; Matter of Luria, 63 Misc 2d 675; Strychalski v Mekus, 54 AD2d 1068; Custen v Robison, 180 App Div 384; Parsons v First Trust & Deposit Co., 243 App Div 681, 269 NY 630; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Lord Constr. Co. v Edison Portland Cement Co., 234 NY 411; RWP Group v Resnick, 166 AD2d 514; Gallagher’s Stud v Fishman, 156 AD2d 50.)
   OPINION OF THE COURT

Levine, J.

The decedent, Harry Alexander Cohen, and respondent Rae Cohen, an elderly, childless married couple, executed mutual wills on April 15, 1982. Each will established a trust for the life of the surviving spouse consisting of that portion of the testator’s estate "equal to the largest amount that can pass free of Federal estate tax by reason of the unified credit and the State death tax credit”, with the corpus to be distributed upon the surviving spouse’s death among named relatives of the decedent and Mrs. Cohen in specified percentages, resulting in an equal division of the trust property between the decedent’s family and Mrs. Cohen’s family. Each will devised the residue of the testator’s estate to the surviving spouse, absolutely.

At the time they executed their wills, the decedent and Mrs. Cohen also entered into a written agreement making each of their wills irrevocable except upon the consent of the other spouse. The agreement recited that the parties had simultaneously executed wills effectively bequeathing their respective estates one half to the decedent’s relatives and one half to Mrs. Cohen’s relatives, and that they intended the wills to be permanently reciprocal so that the will of the survivor could not be changed after the first of them died. The agreement specifically provided that neither party could revoke or alter that party’s will without the written assent of the other and that any such unassented to (by both parties) revocation or alteration would not be effective as against the legatees named in that will. In another provision, the Cohens agreed that any inter vivas gift to a legatee by the surviving spouse was to be deemed an advancement on the legacy of that donee under the survivor’s will and that "every legatee [named in their wills] is hereby made a third party beneficiary of this Agreement”.

Decedent died in December 1986, survived by Mrs. Cohen. She applied for and was issued letters of administration, based upon her sworn statement that she was unable to find a will of decedent despite diligent search and inquiry. Petitioner, a nephew of decedent and a legatee, coexecutor and cotrustee under the decedent’s April 1982 will, then brought a proceeding to revoke the letters of administration and to probate a conformed copy of the decedent’s April 1982 will as a lost will or, in the alternative, to enforce specific performance of the Cohens’ agreement executed with that will.

After trial of the outstanding factual issues, Surrogate’s Court found that petitioner’s evidence was insufficient to overcome the presumption of revocation by the testator that attaches to a lost will (see, SCPA 1407; Matter of Fox, 9 NY2d 400, 407-408). Accordingly, the court refused to admit to probate the conformed copy of decedent’s April 1982 will. The Surrogate, however, rejected on credibility grounds Mrs. Cohen’s proof that the agreement executed by her and the decedent with that will had also been revoked. The court, therefore, held that the agreement was binding on the decedent’s estate, and imposed a constructive trust on the entire estate, which had been received by Mrs. Cohen in intestacy, for the benefit of the legatees named in the decedent’s 1982 will.

On Mrs. Cohen’s appeal to the Appellate Division, the entire Court agreed with Surrogate’s Court’s denial of probate to the copy of the decedent’s April 1982 will because of petitioner’s failure to overcome the presumption of revocation (187 AD2d 584). A three-Justice majority upheld Surrogate’s Court’s determination that the contemporaneous agreement between the decedent and Mrs. Cohen had not been revoked, and was enforceable in equity through the imposition of a constructive trust. The Appellate Division’s majority ruled, however, that the constructive trust could only be imposed on that portion of the decedent’s estate that would not have passed outright to Mrs. Cohen under his April 1982 will, and modified the decree accordingly. The two dissenters, while agreeing with the majority that the presumption of revocation of the decedent’s lost April 1982 will had not been overcome, would have dismissed the petition and denied imposing a constructive trust on any portion of the decedent’s estate. The dissenters reasoned that enforcement of the Cohens’ agreement was dependent on the valid existence of the decedent’s April 1982 will; to rule otherwise "allows the proponent of the [lost] will to do indirectly what cannot be done directly” (id., at 587). The Appellate Division granted leave to appeal to Mrs. Cohen and to petitioner on the certified question of whether its order of modification was correctly made. We reverse and answer the certified question in the negative.

Surrogate’s Court found, and the Appellate Division affirmed unanimously, that petitioner’s proof did not overcome the presumption that the decedent had duly revoked the April 1982 will. That finding is not contested and is, therefore, conclusive on these cross appeals. In our view, that finding, in effect, that decedent had revoked his April 1982 will, precludes enforcement of the Cohens’ contemporaneous agreement through the imposition of a constructive trust on all or any portion of the decedent’s estate — which Mrs. Cohen took, not through the decedent’s will, but as his sole heir in intestacy.

In each of our cases relied upon by Surrogate’s Court and the majority at the Appellate Division, in which the court’s equity power was invoked to enforce an express or implied agreement to make mutual or joint wills irrevocable (see, Glass v Battista, 43 NY2d 620; Schwartz v Horn, 31 NY2d 275; Rich v Mottek, 11 NY2d 90; Tutunjian v Vetzigian, 299 NY 315; Rastetter v Hoenninger, 214 NY 66), the first party to die had performed the agreement by not revoking the joint or mutual will before death. The surviving party to the agreement, however, reneged by later executing a new will or making an inter vivas gift effectively nullifying a specific bequest of the will the parties made irrevocable.

The basis in each of our cases for enforcing the agreement against the surviving party or the survivor’s estate by the imposition of a constructive trust is clearly that equity will not permit the surviving party to accept the benefits of the performance of the agreement by the first decedent and then to breach the agreement by disposing of the parties’ estates in a manner inconsistent with their agreement. Thus, in Tutunjian v Vetzigian (supra) we expressed the underlying rationale as follows: "[T]o permit the one who survives to gain the benefits of the joint will and then to flout its provisions in violation of the promise made to the other 'would be a mockery of justice’. (Mutual Life Ins. Co. v. Holloday, 13 Abb. N. C. 16, 24.)” (299 NY, at 319 [emphasis supplied].) And we have invoked that principle from Tutunjian in our subsequent decisions on the subject (see, Schwartz v Horn, 31 NY2d, at 280, supra; Rich v Mottek, 11 NY2d, at 94, supra). Imposing a constructive trust to prevent the surviving party from gaining the benefits of the agreement with the first decedent and then breaching that agreement is essentially a particularized application of the more general rule which recognizes unjust enrichment as a necessary element of any cause of action for a constructive trust (see, Simonds v Simonds, 45 NY2d 233, 242; Sharp v Kosmalski, 40 NY2d 119, 123).

In the instant case, the findings of the courts below that decedent’s will had been revoked establish that Mrs. Cohen did not reap the benefits of the decedent’s performance of their agreement to make their mutual wills irrevocable. Indeed, Mrs. Cohen’s taking of the decedent’s entire estate was as a result of the revocation of a will that had been covered by their agreement. Consequently, the affirmed findings in this case cannot support the conclusion that Mrs. Cohen would be unjustly enriched by having unrestricted discretion to dispose of her and her husband’s estate. Hence, there is no basis here for invoking a court’s equity power to control such discretion.

Our conclusion that a constructive trust may not be imposed upon the estate Mrs. Cohen took by intestacy is unaffected by the designation in the Cohens’ agreement of petitioner and the other legatees named in their wills as third-party beneficiaries of that agreement. In their agreement, the Cohens each reserved the right to revoke his or her will with the assent of the other spouse. There is no claim here of any detrimental reliance upon the agreement by any legatee. At the latest, Mrs. Cohen effectively manifested her assent to the revocation of the decedent’s April 1982 will when she applied for letters of administration of his estate, and thereby precluded the third-party beneficiaries from asserting any vested rights under the Cohens’ agreement (see, Salesky v Hat Corp., 20 AD2d 114, 116-117; see also, Robson v Robson, 514 F Supp 99, 103-104, affd without opn 681 F2d 820; Restatement [Second] of Contracts § 311 [2]). We are not called upon to decide here what remedies either Mrs. Cohen or the legatees named in the decedent’s April 1982 will might have had in the event that Mrs. Cohen had not acceded to the revocation of her husband’s will.

Accordingly, the order of the Appellate Division should be reversed, the petition dismissed, and the certified question answered in the negative, with costs to all parties appearing separately and filing separate briefs payable out of the estate.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith and Ciparick concur; Judge Titone taking no part.

Order reversed, etc.