Opinion
340361.
Decided March 31, 2009.
Andrew M. Cuomo, Attorney General of the State of New York, Charities Bureau, New York, NY, (for Ultimate Charitable Beneficiaries).
Farrell Fritz, P.C., Uniondale, NY, (for Petitioners, Edward Kalikow and Laurie K. Platt).
Holland Knight LLP, New York, NY, (for Respondent Eugene Shalik).
Morris, Downing and Sherred, LLP, Newton, NJ, (for Respondent James DeVita).
In this proceeding to determine a question of forfeiture, petitioners move for an order granting summary judgment and respondents cross-move for summary judgment (CPLR 3212).
Decedent Pearl Kalikow died on January 4, 2006. Her last will and testament (July 16, 2003) and codicils (September 29, 2004 and April 5, 2005) were admitted to probate by a decree of this court dated April 28, 2008. Preliminary letters testamentary issued to the nominated executors Eugene Shalik and James DeVita. A proceeding to disqualify the nominated executors (SCPA 709) is pending.
In response to a demand by decedent's children Edward Kalikow and Laurie Platt (petitioners) for the delivery of the personal effects of the testatrix bequeathed to them under Article "THIRD" of the will, the preliminary executors (respondents) invoked the in terrorem provision in the will declaring that petitioners had forfeited their bequests under Article THIRD" and Article "NINTH." In response, petitioners commenced this proceeding for construction of the will pursuant to SCPA 1420. Both respondents and petitioners move for an order granting summary judgment. The Attorney General of the State of New York, on behalf of the ultimate charitable beneficiaries, supports the cross-motion of the executors for a determination that petitioners forfeited bequests under the will.
The construction of a will is a matter of law ( Matter of Scott, 8 NY2d 419) and a motion for summary judgment is therefore superfluous. However, this proceeding requires more than a construction of a will. A determination as to whether the in terrorem clause has been triggered involves a construction of the will and an evaluation of the conduct of the petitioners ( Matter of Ellis, 252 AD2d 118 [2d Dept 1998]). The question as to whether the conduct induced a forfeiture can be determined on a motion for summary judgment if there are sufficient facts, not in dispute, to establish forfeiture as a matter of law ( Matter of Cagney, 186 Misc 2d 760 [Sur Ct, Dutchess County 2001], affd 293 AD2d 675 [2d Dept 2002]; Matter of Ellis, 252 AD2d 118 [2d Dept 1998]).
This proceeding requires an analysis of the following provisions of the will.
Article "NINTH" of the will provides:
"If at the time of my death I own either a general partnership interest in Hewlett Associates or stock of Kalikow Management Inc., I give said interest and/or stock to THE SUNSHINE FOUNDATION."
Article "TENTH" of the will provides in part:
"If at the time of my death I own a limited partnership interest in Hewlett Associates, I direct that as soon after my death as may be practicable, my Executors (subject to the terms and conditions of the Partnership Agreement of Hewlett Associates) shall offer in writing (the "Offer") to each of my children, EDWARD KALIKOW and LAURIE KALIKOW, the option to purchase for cash up to one-half (½) of said limited partnership interest that I may own at my death, at its value as finally fixed and determined for federal estate tax purposes after independent appraisal."
Article "EIGHTEENTH" of the will provides:
"In the event that any of my descendants shall, directly or indirectly, under any pretense or for any cause or reason whatever, in any jurisdiction, oppose the probate of my Will, or institute, abet, take, or share, directly or indirectly, in any action or proceeding against my estate to impeach, impair, set aside or invalidate any of the provisions of my Will, or make any agreement, direct or indirect, in connection with any of the foregoing, with any person instituting, abetting, taking or sharing in such action or proceeding, directly or indirectly, I do hereby revoke any and all dispositions, devises, bequests, trusts or other provisions, including the option provided in Article TENTH hereof, to or for the benefit of any such descendant, and I direct that any such dispositions, devises, bequests, trust or other provisions, to or for the benefit of any such descendant, shall become part of my residuary estate."
The Sunshine Foundation is the beneficiary of the residuary estate.
At the time of her death, decedent owned a 1% general partnership and a 50% limited partnership interest in Hewlett Associates. The partnership agreement for Hewlett Associates provides that the partnership does not terminate upon the death of a partner. A deceased partner's interest vests in the partner's executors.
In 2006 Edward Kalikow and Laurie Platt served the preliminary executors with a demand for arbitration. The controversy submitted to the arbitrator concerned construction of the partnership agreement to determine whether the testatrix was precluded from transferring an interest in the partnership through a testamentary instrument, without petitioners' consent. An answer in the affirmative would give the partners the right to prevent the executors from effectuating Article "NINTH" of the will.
Extensive litigation followed, including proceedings in this court to disqualify the arbitrator ( Matter of Kalikow, 15 Misc 3d 1106 [A] [Sur Ct, Nassau County], affd 58 AD3d 849 [2d Dept 2009]) and to vacate the arbitration award (Decision dated September 26, 2008). The arbitrator determined that the partnership agreement precluded an "assignment" of an interest in the partnership by a testamentary instrument (Decision dated April 29, 2009).
The executors seek summary judgment under the theory of forfeiture which would divest petitioners of any benefits under the will.
A forfeiture clause is essentially a condition attached to a legacy. There are statutory limitations imposed upon conditions (EPTL 3-3.5) which are inapplicable to the case. A simple no-contest clause triggers a forfeiture where the beneficiary files objections to probate of the will and is unsuccessful in defeating probate. The no-contest clause can be expanded to direct a forfeiture where a beneficiary attempts to defeat any provision in the will (5 Page, Law of Wills § 44.29 [Revised Treatise 2005]). An in terrorem clause may require that a beneficiary accept the validity of the will and acquiesce in all of its provisions.
In connection with a broad in terrorem clause, one category of cases pertains to a claim against an estate based upon rights which arise independent of the will ( see Anti-Contest Clauses: When You Care Enough to Send the Final Threat, 26 Ariz. St. L.J. 129 [1994]). Specifically, a claimant may allege rights which arise pursuant to a contract with the testatrix (Annot, 60 ALR3d 1147).
Cases, such as the one at bar, involving a claim of ownership or a right in specific property, should be distinguished from the cases involving a claim for money pursuant to a contract ( see e.g. Matter of Offerman, NYLJ, Mar. 21, 1995, at 26, col 4 [Sur Ct, New York County]; Matter of Small, NYLJ, May 3, 1991, at 28, col 1 [Sur Ct, New York County]).
Here, petitioners' claim the right, under a partnership agreement, to challenge a bequest of a partnership interest. Petitioners allege a direct interest in the property which is the subject of the bequest. Under these circumstances, the assertion of a right independent of the will can trigger a forfeiture under a broad forfeiture clause ( Koeppel v Koeppel, 268 AD2d 282 [1st Dept 2000]).
The language of this will indicates that the testatrix intended that petitioners receive the benefits under Article "THIRD" and Article "TENTH" on condition that they not challenge the bequest under Article "NINTH." This conclusion is supported by the fact that Article "NINTH" and Article "TENTH" concern the disposition of decedent's interests in the partnership and the in terrorem clause specifically refers to forfeiture of the rights bequeathed under Article "TENTH." It is fair to conclude that the testatrix anticipated and sought to prevent a challenge to the disposition under Article "NINTH" ( Smithsonian Institution v Meech, 169 US 398).
The remaining question is whether petitioners' participation in the arbitration proceeding and their opposition to the motion to vacate the award was conduct prohibited by the forfeiture clause.
Historically, in the absence of a forfeiture clause, the doctrine of election has been applied to adjust the rights of the parties where property is given on condition that the beneficiary release ownership or rights in other property bequeathed to him ( Beetson v Stoops, 91 App Div 185 [1st Dept 1904]; Shanley v Shanley, 22 App Div 375 [2d Dept 1897]). The beneficiary must elect as between the right of ownership and the bequest (II Alexander, Commentaries on Wills, § 813 [1918]; Williams, Treatise on the Law of Executors and Administrators, § 1034 [1841]).
Under the doctrine of election, a claimant is not required to make an election until all circumstances are known to him so that he can make a deliberate choice (II Story on Equity § 1098). Likewise, a forfeiture under a will occurs only when a beneficiary has acted with knowledge of his rights to the property ( Matter of Smyth, 271 NY 623; see also II Davids, New York Law of Wills § 884 [1924]).
A forfeiture could not occur prior to a determination of petitioners' rights under the partnership agreement. In 2006, petitioner served a demand to arbitrate. By decision dated October 13, 2006, the court determined that the dispute was subject to arbitration. An arbitration hearing was conducted on April 9, 2008 followed by an award which concluded that the agreement prohibited a bequest by a partner without the consent of the other partners. At that point, petitioners were apprised of their standing to contest the bequest under Article "NINTH."
Thereafter, petitioners made a motion to confirm the award. They opposed a motion to vacate the award. These actions demonstrated petitioners' intention to enforce their rights under the partnership agreement which precluded a partner from conveying or transferring his or her partnership interest without the consent of the other partners. Their decision to enforce their rights under the partnership agreement did "impeach, impair, set aside or invalidate [one of the] provisions of [decedent's] will" in contravention of the terms of Article "EIGHTEENTH" of the will, thereby triggering the in terrorem clause. In particular, petitioners' participation in litigation for the purpose of advancing their rights triggered a forfeiture ( see Smithsonian Institution v Meech, 169 US 398).
There is no validity to petitioners' argument that the forfeiture clause is unenforceable as against public policy, on the grounds that it interferes with the right to contract. A testator has the right to annex to the disposition of her own property a condition of forfeiture (II Alexander Commentaries on Wills § 1053; see Selvin, Terror in Probate, 16 Stan. L.Rev. 1355) [specifically with respect to forfeiture clauses and the enforcement of contract rights]).
The court finds that the conduct of petitioners in pursuing litigation to enforce their rights under the partnership agreement triggered the forfeiture clause under the will and deprived them of any benefits under Article "THIRD" and Article "TENTH" of the will.
Accordingly, the cross-motion of the preliminary executors for summary judgment is granted and petitioners' motion for summary judgment is denied.
Settle order.