Greene v. Greene

436 N.E.2d 496, 56 N.Y.2d 86, 451 N.Y.S.2d 46, 1982 N.Y. LEXIS 3318
CourtNew York Court of Appeals
DecidedMay 18, 1982
StatusPublished
Cited by146 cases

This text of 436 N.E.2d 496 (Greene v. Greene) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greene v. Greene, 436 N.E.2d 496, 56 N.Y.2d 86, 451 N.Y.S.2d 46, 1982 N.Y. LEXIS 3318 (N.Y. 1982).

Opinions

OPINION OF THE COURT

Wachtler, J.

The plaintiff commenced this action against her former attorneys seeking (1) rescission of a trust agreement and (2) an accounting for mismanagement of the fund. On the defendants’ motion the trial court dismissed the rescission cause of action but the Appellate Division reversed. The defendants appeal by leave of the Appellate Division on a certified question concerning the correctness of its order.

Two primary issues are raised on the appeal: (1) whether the plaintiff has stated a cause of action for rescission and (2) whether the cause of action is barred by the Statute of Limitations. The latter issue also presents a question concerning the applicability of the “continuous treatment” doctrine to an attorney who drafts an agreement and then acts as trustee and attorney under the agreement.

In 1964, when she was a college sophomore, plaintiff received treatment for a mental illness at a New York City hospital. She remained a patient at that facility and a related one until 1967. While in those institutions plaintiff [90]*90was approached by a family lawyer (not associated with the defendants) and at his urging signed a trust agreement, dated February 5, 1965, in which she virtually surrendered to him all management and control over her inheritance for her lifetime.

Upon her release from the hospital in 1967 the plaintiff retained the defendants to have the 1965 trust agreement set aside. The defendants commenced an action on her behalf in the Supreme Court and, in 1969, succeeded in having the 1965 trust agreement rescinded. In that action the court concluded that the attorney who drafted the agreement and later became the trustee, was chargeable with overreaching. The court noted in particular the plaintiff’s mental condition at the time the 1965 trust agreement was executed as well as her lack of experience in business and legal matters and ignorance of the content and effect of this agreement.

A few months after that decision the defendants drafted a new trust agreement for the plaintiff. This 1969 agreement designates the plaintiff as a cotrustee of the fund. The other trustee is the defendant Theodore Greene, who is a member of the defendant firm but, incidentally, is not related to the plaintiff. As a trustee under the agreement the defendant Greene is empowered to invest up to $100,000 of plaintiff’s funds without her approval; beyond that amount her consent is necessary. He is to receive a fee for his services as trustee, as well as various other payments including 10% of the profits from the sale of trust assets. The agreement also provides that he is authorized to make investments which “are not of the type customarily made by [tjrustees” and his liability for his handling of the fund is “limited solely to * * * willful misconduct, or gross neglect”.

The initial term of the trust agreement was for two years, to be automatically renewed at that point, and at two-year intervals unless the plaintiff gives notice of termination. In 1977 the plaintiff served the notice of termination and commenced this action.

In the first cause of action, seeking rescission of the 1969 trust agreement, the plaintiff claims that the defendants “induced” her to enter the agreement knowing that she [91]*91was 25 years old, had no business experience or independent advice and relied entirely on the defendants. In the second cause of action, for an accounting, plaintiff claims that the trust assets were mismanaged in various ways, including “self-dealing” by the defendants. It is alleged, for instance, that the defendant firm induced the defendant Greene to invest trust funds in companies which were clients of the defendant firm or in which partners of the law firm had an interest as investors, officers or directors, “without full and adequate disclosure to the plaintiff”.

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Cite This Page — Counsel Stack

Bluebook (online)
436 N.E.2d 496, 56 N.Y.2d 86, 451 N.Y.S.2d 46, 1982 N.Y. LEXIS 3318, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greene-v-greene-ny-1982.