Opinion
File No. 2020-3580/C
08-25-2021
In the MATTER OF the ESTATE OF Francis J. MCGUIRE, Deceased.
BOUVIER LAW LLP, Attorneys for Co-Executors, Thomas C. D'Agostino, Esq., and Michael J. McGuire, Peter J. Martin, Esq. of Counsel
BOUVIER LAW LLP, Attorneys for Co-Executors, Thomas C. D'Agostino, Esq., and Michael J. McGuire, Peter J. Martin, Esq. of Counsel
Decedent died at age 92 on July 7, 2020, survived by his wife, Donna, and seven children. Preliminary letters were issued on November 30, 2020 to Thomas C. D'Agostino, Esq. and Michael J. McGuire, the nominated co-executors under decedent's June 12, 2017 Will (with November 28, 2018 Codicil). Decedent's Will (with Codicil) was admitted to probate without objection on March 24, 2021, and full letters were issued to the executors.
By petition efiled August 12, 2021, the executors seek advice and direction from this Court pursuant to SCPA 2107 with respect to the sale of various estate assets:
(1) 2733 Wehrle Drive , Lancaster, New York [vacant land];
(2) Niagara Delaware, Inc. [decedent's 50% ownership interest thereof];
(3) 4585 Group, Inc. [decedent's 50% interest thereof];
(4) Mohawk Group LLP and Mohawk Group, Inc. [decedent's 12.37% interest in each entity].
The executors state that they have received offers to purchase each of the within estate assets and that they wish to accept such offers. The executors indicate that, based upon potential estate tax liabilities and other concerns, the sale of the assets listed in their petition for the prices proposed may leave an "insufficient" amount in the estate to satisfy fully all the bequests in decedent's Will. They ask that this Court now approve all such sales.
For the reasons which briefly follow, I decline to entertain the executors’ SCPA 2107 petition.
As our Court of Appeals said long ago in Matter of Leopold , 259 N.Y. 274, 277, 181 N.E. 570 [1932] :
"The administration of a decedent's estate requires the exercise of judgment and discretion. The Surrogate has power to review that discretion, but not to substitute [her] own discretion for the discretion of those upon whom the duty has been cast of settling the affairs of the estate."
And, as our Appellate Division pointed out in Matter of Grawe , 32 A.D.3d 1309, 1309-1310, 822 N.Y.S.2d 683 [2006] :
"[T]he exercise of discretion by the executor is limited by his absolute duty of impartiality to the beneficiaries of the estate (see Matter of Muller , 24 N.Y.2d 336, 341, 300 N.Y.S.2d 341, 248 N.E.2d 164 amended on other grounds 24 N.Y.2d 1029, 302 N.Y.S.2d 851, 250 N.E.2d 252 [1969]" (see also Matter of Menitskiy , 2009 N.Y. Misc. LEXIS 6500, 2009 N.Y. Slip Op. 33102[U], 2009 WL 5243705 [dec. Dec. 24, 2009] ["The executor must act in the best interests of the estate as a whole"]).
Nassau County Surrogate Judge Bennett, in Matter of Osterndorf , 75 Misc 2d 730, 730, 349 N.Y.S.2d 275 [1973], dealing with the potential sale of estate real property, noted that " EPTL 11-1.1 gives administrators broad powers and accordingly proceedings under SCPA 2107 for advice and direction should be exercised only in extraordinary situations ( Matter of Tannenbaum , 20 A.D.2d 808, 248 N.Y.S.2d 749, aff'd 15 N.Y.2d 829, 257 N.Y.S.2d 943, 205 N.E.2d 866 ; Matter of Ebbets , 130 Misc 250)" (emphasis added). Judge Bennett, further noting that the issue then before him was "one of business judgment and not law" (id. , emphasis added), and, while indicating that the Court could "appreciate the administrator being cautious" (id. ), then held as follows:
"However, since the statute provides the administrator with the authority to sell the real property, he should make the business judgment and utilize the powers afforded to him. In cases such as these, petitioning for said relief and being denied same on the grounds set forth herein may be enough of a protection of a fiduciary. If courts encourage the use of proceedings under SCPA articles 19 and 21 concerning the sale of real property and said sections were used other than in extraordinary situations, this may have a tendency to unduly create in the minds of some a limitation of the powers afforded to fiduciaries under EPTL 11-1.1 and place unnecessary clouds on title " ( id. , at 730-731, 349 N.Y.S.2d 275, emphasis added).
Provided estate fiduciaries exercise "good business judgment", their decisions are effectively immune to subsequent challenge. Only if the fiduciaries can be shown to have "acted negligently, and with an absence of diligence and prudence which an ordinary [person] would exercise in [his or her] own affairs" ( Matter of Lovell , 23 A.D.3d 386, 387, 808 N.Y.S.2d 227 [2005] [internal citations and quotation marks omitted]) is a surcharge possible.
In Lovell , the Appellate Division, Second Department, had before it an appeal where the Dutchess County Surrogate Court had entertained an SCPA 2107 application and had cancelled a real estate sales contract entered into by the estate executor. In finding that the Surrogate Judge had "erred in effectively cancelling the contract in the absence of any evidence, inter alia , of fraud, duress, overreaching or unconscionability (see Jablonski v. Jablonski , 275 A.D.2d 692, 713 N.Y.S.2d 184 [2000] )" ( id. , at 387, 808 N.Y.S.2d 227 ), the Appellate Division also pointed out that the SCPA 2107 petition should not even have been entertained:
" SCPA 2107 does not empower the Surrogate's Court to substitute its judgment for that of the executor , especially when the executor is exercising a specifically-granted power, and to cancel a contract it deems inadvisable (see Matter of William M. Kline Trust , 196 Misc 2d 66, 76, 763 N.Y.S.2d 721 [2003] ). Indeed, SCPA 2107 was not even properly invoked, as the record does not demonstrate the required "extraordinary circumstances" needed to warrant relief under that section (see Matter of Tannenbaum, supra; Matter of Romano, supra; Matter of William M. Kline Revocable Trust, supra ; Matter of Osterndorf, 72 Misc 2d 730; Matter of McCormack , 4 Misc 2d 646, 147 N.Y.S.2d 728 )" ( id. , at 387-388, 808 N.Y.S.2d 227, emphasis added).
And, in Matter of Tannenbaum , 20 A.D.2d 808, 248 N.Y.S.2d 749 [1964], aff'd 15 N.Y.2d 829, 257 N.Y.S.2d 943, 205 N.E.2d 866 [1965], the Appellate Division, Second Department, said the following with respect to the estate executors’ sale of decedent's stock in a corporation:
"Since the decedent did not own all, or substantially all of the shares of stock in the corporation, and since his will did not specifically empower the executors to continue the corporation's business (cf. Matter of Stulman , 146 Misc. 861, 263 N.Y.S. 197 ), the disposition of his interest in the corporation was wholly a matter of business judgment on the part of the executors, and the advisability of any such disposition was not a question properly determinable by the Surrogate's Court (Matter of Ebbets , 139 Misc. 250, 248 N.Y.S. 179 ; Matter of Pulitzer , 139 Misc. 575, 249 N.Y.S. 87, affd. 237 App. Div. 808, 260 N.Y.S. 975 ). Hence, the executors’ failure to make application for the court's direction as to the disposition of the decedent's 38 shares of stock, under section 215 of the Surrogate's Court Act; and the executor's judgment to embark on their own plan of liquidation, under which such shares were deemed to be without good-will value, constituted no unauthorized assumption of authority on their part (Matter of Pulitzer, supra ). Moreover, resort to said section 215, under settled case law, was available only in extraordinary circumstances, not here shown (Matter of Bernstein , 13 A.D.2d 743, 215 N.Y.S.2d 138 ; Matter of Bourne , 11 A.D.2d 128, 202 N.Y.S.2d 452 ; Matter of Wolfensohn , 138 NYS 2d 718 ; 3 Warren’ Heaton, Surrogates’ Courts [6th ed], § 251 par. 4, subd. [b], p. 290)" (at 810, emphasis added).
§ 215 of the then-Surrogate's Court Act is the antecedent of SCPA 2107.
Because my review of the executors’ petition now before me discloses no "extraordinary circumstances" which would warrant the invocation of SCPA 2107 and this Court's review of potential estate asset sales, I conclude that it would not be proper to entertain the petition on the merits, and I, therefore, decline to do so.
This decision shall constitute the Order of this Court and no other or further order shall be required.