In re Beiny

129 A.D.2d 126, 517 N.Y.S.2d 474, 1987 N.Y. App. Div. LEXIS 43671
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 18, 1987
StatusPublished
Cited by58 cases

This text of 129 A.D.2d 126 (In re Beiny) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Beiny, 129 A.D.2d 126, 517 N.Y.S.2d 474, 1987 N.Y. App. Div. LEXIS 43671 (N.Y. Ct. App. 1987).

Opinions

OPINION OF THE COURT

Per Curiam.

The present motion for suppression of allegedly improperly obtained material and disqualification of counsel comes in the context of a trust accounting proceeding commenced by petitioner Martin Wynyard. Wynyard and his family are the beneficiaries of the trust in question which has as its corpus 45% of the voting shares of the Antique Company of New York (ACNY). The trustee of this trust and respondent to the Wynyard petition is Wynyard’s sister, Rotraut L.U. Beiny (hereinafter the Trustee). In addition to being Trustee of the Wynyard trust, Ms. Beiny is herself the beneficiary of trusts containing 55% of the voting and non voting shares in ACNY and is ACNY’s president and chief executive officer.

Wynyard alleges, inter alia, that valuable assets of ACNY, [128]*128including antique porcelains, Renaissance jewelry and other art objects have, since 1972, been diverted from ACNY without consideration and placed in two trusts situated in Leichtenstein created by the parties’ parents, Hans and Elisabeth Weinberg, but now controlled exclusively by the Trustee and her immediate family. Obviously, the ownership of the allegedly diverted assets in the Leichtenstein trusts is critical to the outcome of the accounting proceeding.

It is petitioner’s contention that ACNY’s ownership of the assets as to which the claim of wrongful diversion is made is traceable to the parties’ father, Hans Weinberg, who amassed a large collection of antique porcelains and other art objects in pre-Nazi Germany. In 1939, Weinberg emigrated to London where he established a business dealing in porcelains, and substantially increased his collection. Petitioner maintains that before leaving London in 1957 to take up residence and center his business in the United States, Weinberg transferred ownership of his entire personal holdings of porcelains to a Panamanian company known as Michelle, the stock of which was owned by his wife Elisabeth. Michelle was liquidated in the early 1960’s and its inventory transferred first to a revocable trust created by Elisabeth Weinberg for the benefit of the parties herein, and then to the newly established ACNY. In consideration for the Michelle inventory, ACNY stock was issued to four irrevocable trusts created by Elisabeth Weinberg: the Wynyards were the beneficiaries of two of these trusts which together contained 45% of the voting and non voting ACNY stock, while the Beinys were the beneficiaries of the remaining two trusts together containing 55% of the ACNY voting and nonvoting shares. It is as cotrustee of the Wynyard trust having as its corpus 45% of the ACNY voting shares that Beiny appears in the within accounting proceeding.

Beginning with the liquidation of Michelle in 1964 and in subsequent transactions pursuant to which the Michelle inventory came to be owned by ACNY, Hans Weinberg, his family, and his business were represented by the law firm of Greenbaum, Wolff & Ernst. The Greenbaum firm’s representation of the Weinberg interests continued until 1973. Hans Weinberg died in 1976.

In March 1985, after the commencement of the within proceeding, Garrard Beeney, of the firm of Sullivan & Cromwell, petitioner’s counsel, twice telephoned John Wiener, the liquidator of the by then defunct Greenbaum firm. Beeney [129]*129explains that he contacted Wiener "because counsel believed that the Greenbaum firm possessed factual information concerning ownership of the antiques presently held by Beiny in Europe.” Wiener refused to give out any information over the phone and indicated that he had no authorization from the executor of the Weinberg estate or anyone else to permit Beeney the access he requested to Greenbaum’s files. Thereafter, Beeney issued a combined notice of deposition and subpoena duces tecum commanding Wiener as Greenbaum’s liquidator to appear for deposition in two weeks and to bring with him all documents within his control "which reflect, refer or relate to Hans Weinberg, Martin Wynyard, Ruth Wynyard, Rotraut Weinberg Beiny, The Antique Company of New York, Inc., The Antique Porcelain Company, Michelle, Inc., and/or The Antique Porcelain Company, Ltd., London.” Accompanying the subpoena was a cover letter representing that the subpoena was served on behalf of Sullivan & Cromwell’s client, Martin Wynyard, who the letter states "is the executor and an heir to Mr. Weinberg’s will.”

Upon receiving the subpoena, which it is conceded was not served on notice to the Trustee, Wiener states that he contacted Beeney and inquired whether the Trustee’s authorization was not necessary for the release of the files. Weiner further states that he was assured that the files would be made available to the Trustee’s attorneys. According to Wiener, once he had received this assurance, he retrieved the extensive Weinberg files from the Greenbaum warehouse and delivered them to Sullivan & Cromwell. This was done about one week prior to the date of the planned deposition. Shortly after the materials had been turned over, Wiener received notification that his deposition had been canceled.

From April 1 through April 9, 1985, the Trustee was deposed by Sullivan & Cromwell in London. Documents obtained from the Greenbaum liquidator without the knowledge of the Trustee or her attorneys were used extensively to surprise her during her deposition testimony. In view of the Trustee’s claim that the documents as to which she was being deposed contained confidential attorney-client communications or evidence thereof, it was stipulated that the Trustee’s response to inquiries based on those documents would not constitute a waiver of her claim of privilege. When questioned by the Trustee’s counsel, Beeney refused to divulge where or how he had obtained the documents. Only upon returning to New York and conducting his own investigation did the Trustee’s [130]*130counsel learn that Wiener had turned over the Greenbaum firm’s Weinberg files pursuant to the covertly issued subpoena.

Following the Trustee’s substitution of counsel in June 1985, her new attorneys contacted Beeney and requested the production of the documents obtained from Wiener. Beeney refused to make the documents available, except in exchange for discovery concessions. The present motion for suppression of the subject documents and disqualification of Sullivan & Cromwell followed in August 1985. As of the time of the motion the Trustee still had not been permitted access to the documents obtained from Wiener, which it must be noted were the originals, and consequently had no way of knowing the extent of the disclosure made.

Upon initial consideration, the Surrogate, although noting that petitioner’s attorney "clearly obtained material in a. manner not in accord with proper practice in this state”, declined to disqualify petitioner’s counsel, opining that disqualification was too extreme a punishment. She also declined to grant the motion for suppression, pending examination of the documents obtained from Wiener to determine whether they were in fact shielded from disclosure by attorney-client privilege. The Surrogate ventured that petitioner would be unduly punished by suppression if the documents were otherwise obtainable.

Pursuant to the Surrogate’s decision disposing of the motion, the Trustee finally obtained copies of the subject documents and in November 1985, renewed her motion for suppression and disqualification.

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Cite This Page — Counsel Stack

Bluebook (online)
129 A.D.2d 126, 517 N.Y.S.2d 474, 1987 N.Y. App. Div. LEXIS 43671, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-beiny-nyappdiv-1987.