Matter of Obregon

696 N.E.2d 984, 91 N.Y.2d 591, 673 N.Y.S.2d 972, 1998 N.Y. LEXIS 1072
CourtNew York Court of Appeals
DecidedMay 14, 1998
StatusPublished
Cited by16 cases

This text of 696 N.E.2d 984 (Matter of Obregon) 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
Matter of Obregon, 696 N.E.2d 984, 91 N.Y.2d 591, 673 N.Y.S.2d 972, 1998 N.Y. LEXIS 1072 (N.Y. 1998).

Opinions

OPINION OF THE COURT

Bellacosa, J.

This is a discovery, turn-over proceeding brought by an ancillary administrator (Stern) in New York County concerning property in the Cayman Islands, all with respect to an estate being administered primarily in Mexico. This Court must determine whether the subject matter jurisdiction of the New York Surrogate’s Court extends to the Cayman Islands assets of decedent, a Texas resident and Mexican domiciliary, when the issuance of ancillary letters of administration in New York is predicated solely on a small bank account in this State.

This proceeding was commenced as part of the ancillary administration. It seeks discovery for the location and turnover of approximately $1,300,000 allegedly transferred after decedent’s suicide on April 20, 1990. These assets moved from his investment account with Morgan Stanley Asset Management, Ltd. in London (Morgan Stanley-London) to a trust allegedly created before his death through Barclays Private Bank and Trust Limited (Barclays) in the Cayman Islands.

The petition was amended to pursue particularly the discovery and turnover of the trust assets now in the Cayman Islands. Surrogate’s Court denied motions by respondents, Bar-clays and Morgan Stanley, to dismiss the ancillary administrator’s amended petition. The Appellate Division reversed and Stern appeals pursuant to leave granted by this Court.

We now affirm. The Island of Manhattan can no more declare itself the command center over Mexico and the Cayman Islands with respect to the subject assets in the circumstances of this case today, than the Island of Tobago could pretend to rule the world in 1808 (see, Buchanan v Rucker, 9 East 192, 194, 103 Eng Rep 546, 547 [KB 1808] [“Can the island of Tobago pass a law to bind the rights of the whole world? Would the world submit to such an assumed jurisdiction?” Held, No.]).

I.

While a resident of New York in 1988, Oscar Obregon opened an investment account with Morgan Stanley-London. The initial arrangements were handled by Eugene R. Gonzalez, an [594]*594officer in the New York office of Morgan Stanley International Inc., and Michael Cowan, an investment manager at Morgan Stanley-London. Obregon deposited over $1,300,000 into the London account through Mellon Bank in New York. Decedent’s marital son, Oscar, was named as beneficiary of the London account.

In early 1989, while still residing in New York City, Obregon sought estate planning guidance from Gonzalez, who was then employed at Barclays. In March of 1990, Obregon contacted Nelson Ramirez, a trust officer at Barclays’ Miami office, to establish a discretionary, inter vivos off-shore trust in the Cayman Islands with Barclays Private Bank using the London funds. Obregon executed a “letter of instructions and WISHES TO ESTABLISH A TRUST AND COMPANY” dated April 16, 1990. It allowed Barclays Private Bank “considerable discretion with respect to the distributions and administration * * * of the income and capital” of the “Faygate Trust.” The Letter of Instructions and Wishes provided that, in the event of Obregon’s incapacity, “the Trustees may act in their absolute discretion should the need arise.” Obregon also faxed an “asset transfer instruction letter” dated April 19, 1990 to Cowan at Morgan Stanley-London authorizing him “to transfer the balance of my Investment Management Account [approximately $1,200,000] to my trust at [Barclays Private Bank]” in the Cayman Islands. Thereafter, Obregon allegedly indicated that he wanted to designate his nonmarital infant son, Christian, who was living in Canada, as beneficiary of the trust funded by the London account.

On April 20, 1990, the decedent committed suicide at his residence in Houston, Texas. Manuel Reyero Conejo (Reyero) is the husband of Obregon’s ex-wife. The latter was sole distributee under Mexican law. Reyero was designated administrator of Obregon’s estate in Mexico. The Mexican Probate Court later declared decedent’s marital son as “the sole and universal heir of this succession” to his father’s estate.

On June 14, 1990, Barclays Private Bank and Morgan Stanley-London agreed that Morgan Stanley-London should manage the assets of the Faygate Trust on behalf of the trustee, Barclays. Thereafter, at the direction of Barclays, Morgan Stanley-London liquidated the trust assets in London and transferred the proceeds to Barclays Private Bank. This was accomplished by a cashier’s check drawn on Citibank, N.A. in New York, purchased by Morgan Stanley-London, payable and transmitted to Barclays Private Bank in the Cayman Islands.

[595]*595One year after Obregon’s death, Reyero petitioned the Surrogate’s Court in New York for ancillary letters of administration. He alleged that although the only New York estate asset was a bank account with a balance of $1,405, “[t]he real purpose of having ancillary letters * * * is to enable us to conduct discovery proceedings in order to trace in excess of $1,200,000 that has been purportedly transferred to a trust in the Cayman Islands.” Reyero later requested that his attorney in New York, Joel S. Stern, be designated ancillary administrator. On May 16, 1991, ancillary letters of administration were issued to appellant Stern. The order stated that “none of the property be removed from this state without first giving the State Tax Commission sufficient evidence to enable it to ascertain the tax due thereon.”

Stern then sought discovery and turnover of the funds used to establish the Faygate Trust. He alleges that respondents, Barclays Bank PLC and Morgan Stanley Group Inc., participated in the unauthorized transfer of approximately $1,400,000 of decedent’s funds to the Trust from Obregon’s London account after his death. Pegging New York’s conceded power over the unadministered New York bank account to these events and assets, Stern makes claim to the funds in the Faygate Trust on the ground that the trust and transfer were not validly executed as of the time of Obregon’s death.

Surrogate’s Court concluded that it possessed and acquired subject matter jurisdiction over the Cayman Islands trust. The Surrogate asserted in this key respect that an ancillary administrator’s authority “extends to the reach of process of the state’s courts * * * and that an ancillary administrator is not limited to the collection of the asset that furnished the basis for his appointment” (citations omitted).

The Appellate Division unanimously reversed (230 AD2d 47). It held that, other than the de minimis sum in the New York bank account that served as the basis for Stern’s ancillary appointment, the Surrogate’s Court lacked more extensive subject matter jurisdiction in these circumstances and the ancillary administrator enjoyed no supervening authority over Obregon’s extraterritorial assets by way of the ancillary New York proceeding (id., at 51-54, citing Lockwood v United States Steel Corp., 153 App Div 655, 659-660, revd on other grounds 209 NY 375; Matter of Piccione, 57 NY2d 278, 287-291; Matter of Re v Truck-A-Tune, Inc., 191 AD2d 327). Because Stern’s appointment was purely and narrowly ancillary to the Mexican proceeding, the Appellate Division cogently concluded that his [596]*596authority was limited to property situated within the New York ancillary jurisdiction (id., at 52, citing Lockwood v United States Steel Corp., supra, 153 App Div, at 659-660; McMaster v Gould, 240 NY 379, 388; Dimmerling v Andrews, 236 NY 43; Matter of Rogers,

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Matter of Obregon
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Cite This Page — Counsel Stack

Bluebook (online)
696 N.E.2d 984, 91 N.Y.2d 591, 673 N.Y.S.2d 972, 1998 N.Y. LEXIS 1072, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-obregon-ny-1998.