Opinion
335946
Decided June 8, 2005.
In this miscellaneous proceeding, the co-executors, James B. Rice, Jr. and Thomas F. Rice, seek to evict their sister, Mary Catherine Rice, from the premises located at 184 Circle Drive, Plandome Manor, New York, which was owned by the decedent, in order that they may sell the premises. Petitioners also seek an order charging the respondent with use and occupancy, restraining respondent from removing from the premises any items of the decedent's personal property and/or papers, and charging costs and attorney's fees in connection with this proceeding against the respondent's one-sixth (1/6) share of the residuary estate.
This application was commenced by order to show cause signed March 7, 2005. A hearing was held on April 4, 2005. The respondent appeared pro se. It was agreed between the parties that the hearing would be limited to the issue of the eviction of the respondent from the premises. At the conclusion of the hearing, the parties were permitted to submit memoranda of law.
The decedent died on January 25, 2005 survived by six children, including petitioners and respondent. His Will dated August 15, 1997 was admitted to probate on April 22, 2005. Preliminary letters testamentary issued to the petitioners on January 26, 2005 and letters testamentary issued to them on April 28, 2005. The Will divides the residuary estate equally among the decedent's six children.
A deed was introduced into evidence at the hearing confirming that the decedent and his wife had taken title to the property as tenants by the entirety. The decedent's wife predeceased him, and after her death, the decedent held the property as the surviving tenant by the entirety. Petitioners maintain that a sale of the premises is necessary to pay estate taxes and administration expenses as the other assets in the estate are insufficient to satisfy those obligations in full.
Both James B. Rice, Jr. and Thomas F. Rice testified that respondent has not contributed to the payment of the real estate taxes or the costs of maintaining the property. Petitioner, James B. Rice, Jr., further testified that he had done a walk through of the premises with a realtor for the purpose of identifying those repairs which needed to be made in order to ready the property for sale. He stated that a substantial number of repairs needed to be made such as refinishing floors and repairing broken windows as well as painting some rooms of the house. According to petitioners, a full assessment of the house could not be made because of the boxes and general clutter in the house.
Petitioners also testified that the respondent's presence poses a serious threat to the safety of the property and exposes the estate to potential liability. According to petitioner, respondent has chemicals and solvents in the decedent's office, left a space heater unattended and caused a fire in the kitchen.
Respondent, who is suffering from terminal lymphoma and is undergoing chemotherapy, appeared at the hearing pro se and submitted a response to the order to show cause which the court has denominated as an "answer." Respondent maintains that she and her son had been living with the decedent for approximately nine years prior to his death. Her son Sean is presently in college, but maintains a room in the house. Annexed to respondent's answer which was admitted into evidence was a copy of a purported lease agreement signed by the decedent and respondent in May of 1996. Assuming, arguendo, that the lease was a valid agreement, it terminated upon the decedent's death as the terms of the lease provided that respondent would perform services such as grocery shopping and doing laundry for the decedent in lieu of rent. Respondent denies that she poses a threat to the safety of the premises, denies that a fire occurred, and maintains that she takes proper precautions with respect to the solvents and space heater. Respondent, herself, recognizes that she must vacate the premises and she has already begun packing in anticipation of the move.
Petitioner, James B. Rice, Jr., testified that the decedent executed a power of attorney on August 11, 2000 naming James B. Rice, Jr., Lillian R. Del Priore and Brigid M. Victorson as his attorneys-in-fact, to act severally. A copy of the power of attorney was admitted into evidence without objection. According to the attorney for the estate who testified at the hearing, the decedent's attorneys-in-fact caused a notice to vacate to be served upon the respondent on or about December 7, 2004 while the decedent was hospitalized. The notice was served because the attorneys-in-fact believed the decedent would be unable to return to the premises.
The court has jurisdiction over eviction proceedings involving a decedent's estate ( Matter of Taylor, NYLJ, Feb. 2, 2005 at 22; Matter of Santillo, NYLJ, Nov. 26, 2003 at 37, col 3). Upon the decedent's death, respondent became a tenant in common in the premises with her siblings, they being the residuary beneficiaries of the estate ( Matter of Wellings, NYLJ, April 26, 1989 at 26). At that point, the notice to vacate served while decedent was alive was of no effect since upon the decedent's death the respondent acquired an ownership interest in the premises. The authority of the attorneys-in-fact to act for their principal also expired at the moment of decedent's death ( Matter of Cooper, 283 NY 68; Matter of Timbers, 107 Misc2d 1012). An executor has the "right to possess and manage the decedent's realty so that he may sell the property in accordance with the statutory authority with which estate fiduciaries are imbued, as well as to collect the rentals thereof, and otherwise preserve the asset and make it productive to all those with a beneficial interest therein, [SCPA § 1902; EPTL § 11-1.1; Estate of Pastorelli, NYLJ, Nov. 21, 2002 at 25, col 5; Estate of Semenza, NYLJ, Sept. 15, 2000, at 28, col. 2]." ( Matter of Taylor, NYLJ, Feb. 2, 2005 at 22; see also Matter of Wellings, NYLJ, Apr. 26, 1989 at 26).
Although the court is sympathetic to respondent's plight given her medical condition, her removal from the premises is warranted. It is estimated that the value of the premises is approximately $1,700,000.00 and the other assets totaling approximately $300,000.00 are insufficient to cover the estate taxes which are attributable primarily to the premises. Thus, the premises must be sold to pay the estate taxes. In addition, it is well-settled that:
"all the residuary beneficiaries must elect to take the real property in kind in order to defeat the fiduciary's power to sell real property which is part of the residuary estate ( Trask v. Sturges, 170 NY 482; Matter of Southwick, 127 AD2d 662, 663; Matter of Fello, 88 AD2d 600, aff'd 58 NYS2d 999; Matter of Sherburne, 95 AD2d 859; Matter of Marino, 146 Misc2d 188, 189-190; Matter of Grad, NYLJ March 28, 2002, at 26, col 6). The reason the law requires all residuary beneficiaries to consent to take property in kind is that title vests in them immediately upon admission of the Will to probate as tenants in common subject only to the executrix's power of sale ( Trask v. Sturges, 170 NY 482, 497; Mellen v. Mellen, 139 NY 210)." ( Matter of Kaszuba [Estate of Seviroli], 4 Misc 3d 1014A [2004]).
Accordingly, the motion is granted to the extent of an award of possession together with a warrant of eviction. Respondent is granted a thirty (30) day stay of the execution of the warrant. In addition, respondent is prohibited from interfering in any manner with the possession, control or management of said premises by the executors of the estate for the purpose of selling the premises, which the executors are authorized and empowered to do pursuant to EPTL 11-1.1.
Petitioners' application to charge respondent with use and occupancy is denied. A co-tenancy allows a tenant in common to possession of the entire property, and she is not obligated to pay rent unless she wrongfully excludes the other co-tenants from use and possession ( Matter of Pastorelli, NYLJ, Nov. 21, 2002 at 25, col 5; Matter of Spiss, 50 Misc2d 595; Matter of Hazley, 166 Misc 745).
The testimony adduced at the hearing was that petitioners excluded respondent from the premises. Petitioners changed the locks on the premises and did not provide respondent with keys. It does not appear that respondent ever denied petitioners access to the premises. Both petitioners testified that they had entered and inspected the premises to determine what repairs needed to be made in order to ready the premises for sale. Petitioners also had access to take photographs of the various rooms in the house which were offered in evidence at the hearing. Moreover, petitioners have not offered any proof as to the appropriate charge for use and occupancy. In any event, such a remedy is not justified given that the only ouster from the premises that occurred was an ouster of respondent by the petitioners.
Petitioners also seek an order restraining respondent from removing any items of tangible personal property or papers belonging to the decedent from the premises. In particular, petitioners testified that respondent removed a set of golf clubs and a drafting table from the premises. According to respondent, the golf clubs have been returned, and the decedent authorized her to sell the drafting table prior to his death. Nevertheless, a fiduciary has a duty to safeguard and protect the assets of the estate ( Matter of Skelly, 284 AD2d 336; Matter of Yarm, 119 AD2d 754). The respondent is, therefore, prohibited from removing any of the decedent's tangible personal property or papers from the residence.
During the course of his testimony, petitioner, James B. Rice, Jr., stated that respondent is not indigent and has the necessary funds to pay her moving expenses and the costs of obtaining other living arrangements. According to Mr. Rice, respondent, in addition to her expectation of her one-sixth share of the residuary estate, received gifts made by the attorneys-in-fact. Specifically, Mr. Rice testified that he made gifts of $10,500.00 in December of 2004 and gifts of $11,000.00 in January of 2005 to each of the decedent's six children, five spouses of the children and all of the decedent's grandchildren. According to petitioners' memorandum of law, gifts in the aggregate amount of $483,500.00 were made. A review of the power of attorney shows that, pursuant to Section (M) of the powers provision, the decedent's agents were permitted to make gifts to the decedent's "spouse, children and more remote descendants, and parents, not to exceed in the aggregate $10,000 to each of such persons in any year."
A power of attorney "is clearly given with the intent that the attorney-in-fact will utilize that power for the benefit of the principal" ( Moglia v. Moglia, 144 AD2d 347, 348) ( see, also Mandala v. Mandala, NYLJ, July 30, 2004 at 21; Matter of Kislak, 2004 NY Slip Op 24562 [2004] ; Matter of McNamara, NYLJ, Oct. 6, 2003 at 33;). The attorney-in-fact is "under a duty to act with the utmost good faith toward the principal in accordance with the principles of morality, fidelity, loyalty and fair dealing . . ." ( Mantella v. Mantella, 268 AD2d 852, 853).
In Matter of Salvation Army v. Ferrara ( 3 Misc 3d 944), Surrogate Wiener discussed an agent's authority to make gifts under the New York statutory short form power of attorney (GOL § 5-1501). The power of attorney at issue in that case included the statutory short form gift-giving language and, in addition, authorized the agent to make gifts "without limitation" to the agent and the decedent's brother. Surrogate Wiener pointed out that prior to the amendment to General Obligations Law Sec § 5-1501(1), there was a presumption of impropriety when an agent made a gift to himself. This presumption could only be overcome by clear and convincing evidence that the principal intended the gift to be made ( see, Matter of Dean, NYLJ, Oct. 25, 1996, p. 30, col 6). Surrogate Wiener held that the presumption no longer applies in the case of a post-January 1, 1997 power of attorney which specifically authorizes the agent to make a gift to himself. The court noted, however, that pursuant to GOL § 5-1502M, the authority to make gifts to certain persons in a sum not to exceed $10,000.00 may only be made "for purposes which the agent reasonably believes to be in the best interest of the principal" (GOL § 5-1502M). The court noted that there is a dichotomy created because the legislature neglected to specifically include the best interest standard for gifts in excess of $10,000 (Matter of Salvation Army v. Ferrara 3 Misc 3d 944).
Unlike the power of attorney in Matter of Salvation Army v. Ferrara ( 3 Misc 3d 944), the power of attorney here did not expand the agents' gift-making authority but limited the agent to the statutory short form gift-giving authority. The power of attorney executed by the decedent did not permit the agents to make gifts in excess of $10,000.00 or to make gifts to the spouses of the decedent's children. The agents apparently have acted outside the scope of their authority as it is set forth in the executed power of attorney presented at the hearing. Moreover, pursuant to General Obligations Law § 5-1502M, since the power of attorney executed by the decedent included only the statutory language for gift-giving authority, his agents were required to act in his best interests. General Obligations Law § 5-1502M recognizes that minimization of estate taxes is, generally, in the best interests of the principal. Petitioners' memorandum of law notes that by making these gifts, the decedent's estate was reduced by $483,500.00 resulting in substantial estate tax savings. Nevertheless, petitioner James B. Rice, Jr. testified at the hearing that it was his father's intention that his estate be divided among his six children equally.
Petitioners reiterate this on page 10 of their memorandum of law wherein they state "[w]hat decedent did intend is evidenced by his Will, i.e., that his six children share equally in his estate." By making gifts to persons other than the decedent's six children, the decedent's agents may have acted contrary to the decedent's wish for his children to share his entire estate equally if in fact that was his wish. A decedent's testamentary plan may be probative of the decedent's donative intent concerning gifts ( see Matter of Coppola, 189 AD2d 933; Matter of Burns, 126 AD2d 809). Thus, the agents by making such gifts may have acted contrary to the decedent's wishes and thus may have breached their fiduciary duty to the decedent.
A court has broad authority to require on its own motion the judicial settlement of a fiduciary's account if it be in the estate's best interest (SCPA 2205, 2206; Matter of Stortecky v. Mazzone, 85 NY2d 518; Matter of Morrison, NYLJ, Oct. 22, 2002 at 23, col 3; Matter of Nathan, Nov. 29, 1979 at 11, col 6). It appears that James B. Rice, Jr., Lillian R. Del Priore and Brigid R. Victorson, as attorneys-in-fact, may have made gifts contrary to the decedent's testamentary plan and which exceeded their authority in terms of the recipients of the gifts and the amounts of the gifts made. Accordingly, the court finds that an account of the attorneys-in-fact is in the best interests of the estate and directs the attorneys-in-fact to file an account of their proceedings within sixty (60) days of the date of this decision.
Insofar as petitioners seek recovery of legal fees, costs and disbursements of this proceeding, that part of the application is denied.
This constitutes the decision and order of the court.