Court Opinion

ID: 4085064
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:58:00.775735+00
Date Added: 2024-06-11T13:07:24.529446
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

51
CA 12-01283
PRESENT: SCUDDER, P.J., PERADOTTO, CARNI, WHALEN, AND MARTOCHE, JJ.

IN THE MATTER OF THE ESTATE OF SHIRLEY G.
SCHULTZ, DECEASED.
-----------------------------------------
REBECCA J. EVERETT, CO-EXECUTOR OF THE
ESTATE OF SHIRLEY G. SCHULTZ, DECEASED,           MEMORANDUM AND ORDER
PETITIONER-RESPONDENT;

PAUL F. SCHULTZ, II, CO-EXECUTOR OF THE
ESTATE OF SHIRLEY G. SCHULTZ, DECEASED,
OBJECTANT-APPELLANT.

FLAHERTY & SHEA, BUFFALO (MICHAEL J. FLAHERTY OF COUNSEL), FOR
OBJECTANT-APPELLANT.

GEORGE W. NARBY, BUFFALO, FOR PETITIONER-RESPONDENT.

     Appeal from an amended order of the Surrogate’s Court, Erie
County (Barbara Howe, S.), entered October 13, 2011. The amended
order, insofar as appealed from, granted the motion of petitioner for
summary judgment, dismissed the objections of objectant and settled
the final account of petitioner.

     It is hereby ORDERED that the amended order insofar as appealed
from is unanimously reversed on the law without costs, the motion is
denied, the objections to the account filed by objectant are
reinstated, ordering paragraphs three through seven are vacated and
the matter is remitted to Surrogate’s Court, Erie County, for a
hearing on the objections.

     Memorandum: Objectant is both a beneficiary and a co-executor of
the last will and testament (Will) of his mother (decedent), who was
survived by six adult children. Letters testamentary were issued to
objectant and petitioner, his sister, who is also both a beneficiary
and a co-executor of the Will. The Will specified that, due to the
fact that decedent had previously deeded real property to objectant
and a third sibling, she bequeathed to them only tangible personal
property, with certain exceptions. Petitioner and the three remaining
siblings were the beneficiaries of decedent’s residuary estate.

     When informal attempts to settle the estate failed, petitioner
filed a petition for judicial settlement, to which was attached her
final account. Objectant filed two objections to the final account,
contending first that it did not contain a statement of the tangible
personal property bequeathed to him and the third sibling, and second
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                                                         CA 12-01283

that it did not contain a statement of all uncollected debts due to
decedent. Specifically, objectant alleged that decedent had loaned
the sum of $65,000 to one of the beneficiaries and that there remained
a balance on that loan of approximately $50,000.

     The day before the scheduled hearing on the petition, Surrogate’s
Court, sua sponte, canceled the hearing on the ground that objectant
lacked standing to file the objections. Petitioner thereafter moved
for summary judgment dismissing the objections and for judicial
settlement of her final account. Objectant opposed the motion, and
two of the other residuary beneficiaries cross-moved to revoke their
previously executed releases and to join in the objections. In a
memorandum and order, the Surrogate granted the motion and denied the
cross motion. The Surrogate thereafter issued an order and an amended
order that, inter alia, settled the final account but did not
specifically address the cross motion. Inasmuch as a decision
controls an order in the case of a discrepancy (see Utica Mut. Ins.
Co. v McAteer & FitzGerald, Inc., 78 AD3d 1612, 1612-1613), we
conclude that the cross motion was denied. In any event, because only
objectant has filed a notice of appeal, any issue with respect to the
propriety of the denial of the cross motion is not before this Court.
We conclude that the Surrogate erred in granting the motion.

     “Although, generally, all persons required to be served with
process in an accounting proceeding may file objections, this is not
always so since the court will not permit objections to be filed where
the objecting party will not be benefitted by them, even if sustained”
(Matter of Woods, 36 AD2d 880, 880; see Matter of Freeman, 198 AD2d
897, 898, lv denied 83 NY2d 751, cert denied 513 US 838). Were
objectant not a co-executor of the Will, we would agree with the
Surrogate that he lacks standing to file any objection related to
petitioner’s failure to include the alleged debt in the accounting;
the inclusion of the debt in the estate would affect only the
residuary beneficiaries and not objectant (see Freeman, 198 AD2d at
898; Woods, 36 AD2d at 880). With respect to the tangible personal
property, however, resolution of that objection could inure to
objectant’s benefit, and objectant therefore has standing, as a
beneficiary of the Will, to assert that objection (cf. Freeman, 198
AD2d at 898; Woods, 36 AD2d at 880).

     Regardless of his standing as a beneficiary, we conclude that
objectant has standing, as a co-executor of the Will, to file both
objections. An executor is a fiduciary who owes “a duty of undivided
loyalty to the decedent and ha[s] a duty to preserve the assets that
[decedent] entrusted to them” (Matter of Donner, 82 NY2d 574, 584; see
Matter of Carbone, 101 AD3d 866, 868), and “an executor’s duties are
derived from the will itself, not from the letters issued by the
Surrogate” (Matter of Skelly, 284 AD2d 336, 336). “Suffice it to say,
an executor who knows that his co[-]executor is committing breaches of
trust and not only fails to exert efforts directed towards prevention
but accedes to them is legally accountable” (Matter of Rothko, 43 NY2d
305, 320).

     Relying on Matter of Miller (NYLJ, Mar. 19, 2003, at 23, col 4),
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                                                         CA 12-01283

the Surrogate concluded that, because there were no remaining
creditors of the estate and all of the other beneficiaries had
executed releases absolving objectant of liability, objectant no
longer had standing as a co-executor to file any objections to
petitioner’s final accounting. We conclude that the Surrogate’s
reliance on Miller was misplaced. The issue in Miller was the
management of assets that had already been identified and placed in a
trust, whereas here the issue is an executor’s duty to identify assets
that should be included in an estate. In any event, inasmuch as
Miller is a trial level decision that fails to address an executor’s
duty to a decedent, it does not control the outcome of this appeal.

     Contrary to the Surrogate’s conclusion, the mere fact that the
estate has no creditors and objectant can no longer be sued
successfully by any of the beneficiaries does not establish that he
has fulfilled his fiduciary duty to the decedent and the estate so as
to vitiate his standing to raise objections to the accounting filed by
the co-executor. An executor’s duty is not fulfilled merely because
he or she has obtained releases from liability. The standard of care
for a fiduciary cannot be set so low; rather, a fiduciary has a “duty
of active vigilance in the collection of assets belonging to the
estate” (Matter of Belcher, 129 Misc 218, 220 [Sur Ct, NY County
1927]; see generally King v Talbot, 40 NY 76, 85-86).

     With respect to the remaining issues of estoppel, waiver and
laches, even assuming, arguendo, that petitioner met her initial
burden on those legal theories, we conclude that objectant raised
triable issues of fact sufficient to defeat the motion (see generally
Zuckerman v City of New York, 49 NY2d 557, 562). We note in any event
that, regardless whether the objections were properly filed or are
barred by estoppel, waiver or laches, a Surrogate has an independent,
statutory duty to “settle the account as justice requires . . . ,
[and] to require the Surrogate to ‘rubber stamp’ the account because
the parties do not object to it would vitiate [that] statutory
directive . . . Indeed, it would seem self-evident that if a [court]
may not be compelled to enter a decree, then the court must have the
correlative power to deny a decree or, when inquiry is warranted, to
satisfy itself on questions arising during the proceedings” (Matter of
Stortecky v Mazzone, 85 NY2d 518, 524; see SCPA 2211 [1]). Here, it
appears that valid questions have arisen and that an inquiry into the
accounting is therefore required. We therefore conclude that the
Surrogate erred in granting the motion and dismissing the objections,
and we reinstate the objections and remit the matter to Surrogate’s
Court for a hearing on the objections.

Entered:   March 15, 2013                       Frances E. Cafarell
                                                Clerk of the Court