In re the Accounting by Fleet Bank

884 N.E.2d 1040, 10 N.Y.3d 163
CourtNew York Court of Appeals
DecidedMarch 13, 2008
StatusPublished
Cited by255 cases

This text of 884 N.E.2d 1040 (In re the Accounting by Fleet Bank) 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
In re the Accounting by Fleet Bank, 884 N.E.2d 1040, 10 N.Y.3d 163 (N.Y. 2008).

Opinion

OPINION OF THE COURT

Chief Judge Kaye.

In Matter of Best (66 NY2d 151 [1985]), this Court relied on strong policy considerations to conclude that a child adopted out of the family by strangers does not presumptively share in a class gift to the biological parent’s issue established in the biological grandmother’s 1973 testamentary trust. This appeal presents the same scenario, but with class gifts created by 1926 and 1963 irrevocable trusts. Despite the time difference, we conclude that the policy considerations that were determinative in Best equally determine the case before us, and that the adopted-out child does not share in the trust proceeds.

Background

Florence Woodward created two irrevocable trusts, one in 1926 and a second in 1963, for the lifetime benefit of her daughter, Barbara W Piel, and upon her death the trusts directed the trustee (successor-in-interest Fleet Bank) to distribute the principal to Barbara’s descendants. Specifically, the 1926 trust net income was to be paid “to her descendants, if any, in equal shares, per stirpes.” The 1963 trust principal was to be divided equally for “each then living child of hers.” Barbara Piel died in July 2003, and in October 2004 Fleet Bank instituted two proceedings for judicial settlement of the final account for each trust. This appeal concerns the distribution of approximately $9.7 million in trust principal.

Barbara Piel gave birth to three daughters. Her first daughter, intervenor-respondent Elizabeth McNabb, was born out of wedlock on August 15, 1955 in Portland, Oregon. Within days, Barbara signed a consent to adoption, relinquishing her parental rights and agreeing to Elizabeth’s adoption by strangers. An Oregon court finalized the adoption in November 1955 and Elizabeth lived her life in Oregon as a member of the Jones family. There is no indication that Florence Woodward knew of Elizabeth’s birth or adoption. Barbara’s other two daughters, [166]*166Stobie Piel, born in 1959, and Lila Piel-Ollman, born in 1961, are the children of her marriage to Michael Piel.

Fleet Bank cited Stobie and Lila in the October 2004 proceedings, but failed to include Elizabeth or her children as interested persons. In November 2004 Elizabeth moved for permission to intervene and file objections to the accounts, later joined by her two children. Elizabeth objected to each account because it failed to provide her with a one-third distribution of the principal and income of each trust. The parties cross-moved for summary judgment.

Surrogate’s Court denied Elizabeth’s motions for summary judgment and granted petitioner’s motions seeking dismissal of Elizabeth’s objections. The Surrogate relied on this Court’s holding in Matter of Best that class gifts to the issue of a beneficiary do not presumptively include adopted-out children. The Appellate Division reversed, finding inapplicable the reasoning and policy considerations in Best because the Woodward trusts were executed prior to 1963 and 1966 amendments in the Domestic Relations Law that had been effective in Best. We now reverse and reinstate the Surrogate’s decrees.

Analysis

We begin with the fundamental premise that a court must first look within the four corners of a trust instrument to determine the grantor’s intent (see generally Mercury Bay Boating Club v San Diego Yacht Club, 76 NY2d 256 [1990]; Matter of Cord, 58 NY2d 539 [1983]). Only if the terms are ambiguous may a court consider extrinsic evidence. Where, as here, there is no evidence of the grantor’s intent to include or exclude a person from the class gift, a court may craft general, yet rebuttable, rules of construction based on statutory interpretation and public policy.

We did just that in Best, concluding that a nonmarital child adopted at birth by strangers was not entitled to share in a class gift devised by his biological grandmother to her daughter’s issue. The testamentary trust in Best, executed in 1973, directed the trustee, upon the biological mother’s death, to distribute the trust principal equally among her issue. The mother had two sons—David, born out of wedlock in 1952 and immediately adopted by strangers, and Anthony, born in 1963. The question in Best, as here, was whether the adopted-out child was an intended beneficiary of the class gift.

There being no evidence of the grantor’s intent, the Court considered the effect of David’s status as his biological mother’s [167]*167nonmarital, adopted-out child. Although there was a rebuttable presumption that nonmarital children could share in class gifts to their parent’s issue, David’s status as a nonmarital child became irrelevant to the class disposition because of his status as an adopted-out child.

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Cite This Page — Counsel Stack

Bluebook (online)
884 N.E.2d 1040, 10 N.Y.3d 163, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-accounting-by-fleet-bank-ny-2008.