§ 77 — Action to enforce trust

New York § 77

• Jurisdiction: New York
• Law LIE: Lien
• Art. 3-A: Definition and Enforcement of Trusts

Text

§ 77. Action to enforce trust. 1. A trust arising under this article\nmay be enforced by the holder of any trust claim, including any person\nsubrogated to the right of a beneficiary of the trust holding a trust\nclaim, in a representative action brought for the benefit of all\nbeneficiaries of the trust. An action to enforce the trust may also be\nmaintained by the trustee. In any such action, except as otherwise\nprovided in this article, the practice, pleadings, forms and procedure\nshall conform as nearly as may be to the practice, pleadings, forms and\nprocedure in a class action as provided in article nine of the civil\npractice law and rules; provided, however, that in determining whether\nthe prerequisites of a class action have been satisfied, the provisions\nof paragraph one of subdivision (a) of section nine hundred one of such\nlaw and rules may be waived at the discretion of the court.\n 2. Such action may be maintained at any time during the improvement of\nreal property, or home improvement, or public improvement and successive\nactions may be maintained from time to time during the improvement\nprovided no other such action is pending at the time of the commencement\nthereof. No such action shall be maintainable if commenced more than one\nyear after the completion of such improvement or, in the case of\nsubcontractors or materialmen, after the expiration of one year from the\ndate on which final payment under the claimant's contract became due,\nwhichever is later, except an action by the trustee for final settlement\nof his accounts and for his discharge.\n 3. (a) The relief granted in any such action may include any or all of\nthe following:\n (i) Relief to compel an interim or final accounting by the trustee; to\nidentify and recover trust assets in the hands of any person together\nwith interest accrued thereon from the time of the diversion. Interest\nshall be computed at the rate equal to the underpayment rate set by the\ncommissioner of taxation and finance pursuant to subsection (e) of\nsection one thousand ninety-six of the tax law, minus four percentage\npoints; to set aside as a diversion any unauthorized payment, assignment\nor other transfer, whether voluntary or involuntary; to enjoin a\ndiversion; to recover damages for breach of trust or participation\ntherein;\n (ii) Enforcement on behalf of the trust of any right of action\nconstituting a trust asset;\n (iii) Determination of the existence and amount of any trust asset or\nof any trust claim;\n (iv) An order terminating or limiting the authority of the trustee in\nthe application of trust assets or of any trust asset, or directing the\ntime and manner of application of a trust asset or part thereof;\n (v) An order requiring the trustee to give security to ensure the\nproper distribution of the trust assets, either during the pendency of\nthe action or thereafter, or to furnish assurance therefor in any other\nmanner, if it appears that there is danger that such assets or asset\nwill be dissipated before judgment or diverted from trust purposes;\n (vi) An order for distribution of any trust assets available for\ndistribution, either with respect to the entire trust or with respect to\nparticular assets of the trust, or for retention of particular assets\nfor future distribution. Where the holder of any trust assets is a\ntrustee or a transferee who received the assets with the knowledge that\nthey were trust funds, an order for distribution and retention for\nfuture distribution of any trust assets shall include the amount of\ndiverted funds plus interest from the time of the diversion to the date\nof such order;\n (vii) Settlement of the interim or final account of the trustee;\n (viii) Final discharge of the trustee at the termination of the trust,\nor discharge of the trustee with respect to the application of specific\ntrust assets;\n (ix) Such other and further relief as to the court may seem necessary\nand proper;\n (x) Any provisional or ancillary relief incident to any of such\nrelief.\n (b) Any relief pursuant to subparagraphs (i), (ii), (iii), (iv), (v),\n(ix), or (x) of paragraph (a) shall be deemed to be for the benefit of\nthe entire class of trust beneficiaries, including persons who may\nbecome trust beneficiaries at any time before the termination of the\ntrust. Except as provided in subdivision four of this section, relief\npursuant to subparagraph (vi) shall also be deemed to be for the benefit\nof such entire class, but unless the court shall otherwise direct, only\nthose persons shall be entitled to share in any distribution of the\ntrust assets who are trust beneficiaries at the time of entry of the\njudgment under which distribution is to be made and who have appeared in\nthe action or filed their claims in such manner and within such time as\nthe court shall direct, and whose claims are due and payable at the date\nfor distribution as set by the order of the court and either are\nundisputed by the trustee or have been determined in the action.\n 4. If an action to enforce a trust of which the owner is trustee is\ncommenced before the completion or abandonment of the improvement of\nreal property, or home improvement, or if an action to enforce a trust\nof which a contractor or subcontractor is trustee is commenced before\nthe completion or abandonment of the performance by the trustee under\nthe contract or subcontract, the judgment therein may provide for\ndistribution of the assets then available for distribution among trust\nbeneficiaries whose claims are then payable, and who have appeared in\nthe action or who file their claims within such time as the court shall\ndirect, and the judgment shall so provide unless the court shall\ndetermine that in the circumstances equity requires that distribution be\ndeferred to await maturity of other trust claims.\n 5. If the action to enforce a trust of which a contractor or\nsubcontractor is trustee is brought after the completion or abandonment\nof the performance of the contract or subcontract but before the\ncompletion of the improvement the court may direct that the action be\ncontinued to await events by reason of which additional trust assets may\nbecome available.\n 6. For the purposes of any distribution of trust assets, the court may\ndirect that trust claims shown upon a schedule or schedules filed by the\ntrustee shall be deemed to have been filed in the action.\n 7. An action brought under this article shall not be compromised or\ndiscontinued nor dismissed by consent, by default or for failure to\nprosecute, except with the approval of the court. On any application for\nsuch approval notice shall be given in such manner as the court shall\ndirect.\n 8. Subject to subdivisions three and four of this section, in any\ndistribution of trust assets pursuant to order or judgment in an action\nto enforce a trust, the following classes of trust claims shall have\npreference, in the order named: (a) trust claims for taxes and for\nunemployment insurance and other contributions, due by reason of\nemployments, and for amounts of taxes withheld or required to be\nwithheld; (b) trust claims of laborers for daily or weekly wages; (c)\ntrust claims for benefits and wage supplements; (d) claims for any\namounts of wages of laborers for daily or weekly wages (other than\nclaims for amounts of taxes deducted and withheld, constituting trust\nclaims for such amounts) actually deducted from payments thereof,\npursuant to law or agreement, for remittance to any person on behalf of\nthe laborer or in satisfaction of his obligation, to the extent that\nsuch person is entitled to assert, as a trust claim, the claim the\nlaborer would otherwise have for such amount.\n Except as provided in this subdivision, trust claims entitled to share\nin any distribution of trust assets pursuant to order of the court shall\nshare pro rata.\n