Opinion
2010-498/D
12-13-2016
In the Matter of the Accounting of Joseph J. Timpano as the Administrator of the v. ESTATE OF Robert D. Brough, Jr. Deceased.
Appearances: For the Petitioner: F. Paul Steates, Esq. For the Objectant: Elizabeth A. Kenny, Esq.
Appearances: For the Petitioner: F. Paul Steates, Esq. For the Objectant: Elizabeth A. Kenny, Esq. Louis P. Gigliotti, J.
BACKGROUND
Decedent Robert D. Brough, Jr. died on April 12, 2010 in a Florida hospital. Prior to his hospitalization, he resided in a mobile home situated on Lot No.80 in Enchanted Grove Mobile Home Park (herein "Enchanted Grove") in Lake Wales, Florida. His sister Georgianna Brough (herein "Georgianna") spent her winters in a mobile home located directly across the street from the one occupied by decedent.
Shortly before his death and while hospitalized, decedent executed a Will on March 30, 2010, which nominated Georgianna as executor. On July 19, 2010, represented by counsel, Georgianna petitioned this Court to admit the Will to probate. Decedent was survived by three children, Mark Brough (herein "Mark"), Kelly Brough (herein "Kelly") and Robert D. Brough, III (herein "Robert"), who were cited in the probate proceeding as distributees. On the return date of the citation, Mark and Kelly requested an examination of the attesting witnesses to the Will, pursuant to Surrogate's Court Procedure Act ("SCPA") § 1404. The testimony of one of the attesting witnesses to the Will, Ms. Trudy Stephenson, prompted counsel for Georgianna to withdraw her probate petition by letter dated May 13, 2011. Thereafter, competing petitions for Letters of Administration were filed by Mark and Robert. Subsequently, both sons withdrew their petitions and all three children consented to the appointment of the Oneida County Chief Fiscal Officer (herein "CFO") as administrator. The CFO's petition for appointment as administrator noted the existence of the Will and that its validity had not yet been determined by the Court. On March 26, 2012 the Court issued a Decision and Order declaring the Will invalid and, one day later, issued a decree appointing the CFO as administrator.
Testimony at the hearing (described herein) revealed that decedent was domiciled in the County of Oneida, State of New York on the date of his death, but resided in Florida during the winter months.
Before the Court now is the CFO's petition seeking judicial settlement of his final accounting, as amended on September 21, 2016. Kelly filed written objections in response, which are attached hereto for ease of reference. In essence, Kelly's objections challenge line items within the accounting to reimburse Georgianna for expenses she paid on decedent's behalf following his death, namely Enchanted Grove lot rent, electric service bills for the mobile home and storage costs for decedent's tangible personal property. Immediately prior to the commencement of the hearing on October 14, 2016, Kelly withdrew her objection to reimbursement for the storage charges and consented to reimbursement of all but $83.44 of the electric service bills.
The amended accounting has several documents attached to it, including a letter dated November 8, 2011 from Enchanted Grove indicating Georgianna paid rent for the months covering April 1, 2010 (the month of decedent's death) until January 1, 2011. Georgianna testified that she continued to pay rent after decedent's death because she believed the decedent owned the mobile home situated thereon. She further testified that the park manager for Enchanted Grove told her that if she did not pay the rent, the decedent's mobile home and contents would be confiscated. As nominated executor under the Will, she believed she was required to do whatever was necessary to protect the decedent's property while probate was pending. She understood her responsibilities to include payment for electrical service to run the air conditioning so as to avoid mold and mildew, thereby protecting both the home and decedent's personal property contained therein. According to Georgianna, at no time did any of decedent's children object to her covering these expenses.
Georgianna further testified that bad relations among her and decedent's children prompted Robert to search the title to the mobile home. In January 2011, he informed Georgianna that his name was on the title. Upon learning of same, Georgianna contacted her attorney, who advised her to remove decedent's remaining possessions from the mobile home, place them in storage and stop paying lot rent and electrical bills. A Certificate of Title, submitted into evidence, confirms that title to the mobile home was placed in Robert's name.
Kelly testified that Robert had previously removed items of personal property from the mobile home after the decedent's death. --------
Kelly testified in support of her objections. Significantly, she acknowledged she too was initially unaware that the mobile home was owned by Robert. She did not present any evidence suggesting she told Georgianna to stop paying these particular obligations prior to learning Robert owned the mobile home. Nor did she present evidence contradicting Georgianna's testimony about her motivation or intent in paying the lot rental and electric bills.
ANALYSIS
Under the law, a nominated executor has obligations to secure assets of an estate prior to formal appointment. (See Matter of Schultz, 104 AD3d 1146, 1148 [4th Dept 2013] ["[A]n executor's duties are derived from the will itself, not from the letters issued by the Surrogate."] [internal citation and quotation marks omitted]; Matter of Skelly, 284 AD2d 336, 336-37 [2d Dept 2001] [finding questions of fact as to whether the nominated executor fulfilled her duty to assess and preserve assets of the estate]). Georgianna's actions in the wake of the decedent's death evidence her understanding of this responsibility. She testified that she retained counsel shortly after burying the decedent in April 2010. She filed a probate petition approximately three months thereafter. She maintained electrical service to avoid damage to and paid lot rent to avoid confiscation of the mobile home and its contents until such time as she learned the mobile home was not the property of the decedent. She thereafter removed what remained of the decedent's personal belongings and placed them in storage. Even though the Will was subsequently deemed invalid in 2012, Georgianna would have had no basis to anticipate this outcome when she acted to preserve decedent's assets throughout 2010 and into early 2011.
An individual who expends personal funds in good faith and in furtherance of her fiduciary responsibilities is entitled to reimbursement. (See Corn Exch. Bank Trust Co. v. Bankers Trust Co., 268 NY 224, 227 [1935] ["Persons acting en autre droit, as executors, administrators, trustees, guardians, receivers, etc., are, upon a faithful execution of their trusts, to be indemnified out of the trust property, for all expenses necessarily incurred in the faithful performance of their duties."] [internal quotation marks and citation omitted]). Each case turns on its own facts, with the question of whether a fiduciary acted in good faith being a critical component. (See Matter of Van Volkenburgh, 139 Misc. 437, 439 [Sur Ct, NY County 1931] ["No general rule as to the right of reimbursement or payment out of the estate has been laid down by the authorities. Necessarily, the distinctive circumstances of each estate must govern. The good faith of the fiduciary appears to be an essential test."]; see also Matter of Boulware, 144 Misc. 235, 238-39 [Sur Ct, Westchester County 1932] [applying Van Volkenburgh in the context of an estate proceeding where the executors used estate monies to pay for legal expenses incurred individually as defendants in a custody proceeding involving decedent's children]).
The basis for Kelly's objections is that the estate did not own the mobile home and as such, could not have been responsible for lot rent and electric bills. While true in a technical sense, to rule in Kelly's favor would be to ignore the particular circumstances of this case. Both Georgianna and Kelly testified that they believed the estate did in fact own the home until they were informed to the contrary in January 2011. Neither Kelly nor her siblings demanded that Georgianna stop paying rent or utilities. Upon learning the true owner, Georgianna on her own initiative sought advice of counsel and immediately stopped covering the mobile home expenses. Furthermore, the Court infers from Kelly's withdrawal of her objection to reimbursement of storage fees that the property Georgianna removed from the mobile home did belong to decedent. Without any evidence contradicting Georgianna's testimony as to her motivation, the Court finds Georgianna acted in good faith and should be reimbursed by the estate the amount of $2,120.00 for lot rent paid to Enchanted Grove and the remaining $83.44 in electric bills that are the subject of this proceeding. Otherwise, to sustain the objections would be to instill a chilling effect on the work of nominated executors who are tasked with preserving an asset believed in good faith — not solely by a nominated executor but also by members of a decedent's family — to belong to the estate.
The Court's deliberation however, does not end here since it also seems fundamentally unfair to burden the estate with a debt that belongs to Robert as the actual owner of the mobile home. "An enforceable debt can be offset against a legacy in an accounting proceeding in the Surrogate's Court." (Matter of Flint, 118 Misc. 354, 355 [Sur Ct, Westchester County 1922]). This principle has been applied to debts owed to a decedent prior to his death, as well as debts incurred to an estate after the decedent's death. (See Matter of Grifenhagen, 174 Misc. 559, 561 [Sur Ct, NY County 1940]). Even if Robert himself were not to have realized he was the owner of the mobile home until January 2011, he personally benefitted from Georgianna protecting the mobile home against confiscation by Enchanted Grove for unpaid lot rental. Indeed, the title admitted into evidence at the hearing shows Robert sold the mobile home in March 2011 for $6,000.00.
Before assessing the full amount of rent against Robert's share however, the Court recognizes the estate did benefit to some degree by Georgianna's use of the mobile home as a storage facility for decedent's personal property. A legitimate need to maintain the air conditioning existed so that personal property was not damaged by mold and mildew. Moreover, had Georgianna recognized at the time of decedent's death that he did not own the mobile home, she would have incurred storage facility costs similar to what she incurred in January 2011. Robert should not have to bear solely the lot rental cost without an offset for the value realized by the estate in preserving decedent's personal belongings.
As such, it is hereby
ORDERED that Joseph J. Timpano shall submit, within 30 days of the date of this Decision & Order and on notice to counsel for Kelly Brough, revised schedules for his final accounting to reflect the following:
(1) Reimbursement to Georgianna Brough the amount of $2,120.00 for lot rent paid to Enchanted Grove Mobile Home Park;
(2) Reimbursement to Georgianna Brough the amount of $280.70 for electric bills paid to Progress Energy; and
(3) An offset to the distributive share to be paid to Robert D. Brough, III an amount
equaling two-thirds of the following sum: $2,120.00 less the amount that would have been paid to Country Storage had the decedent's personal belongings been stored there starting in May 2010. This offset is to be divided equally and added to the distributive shares of Mark Brough and Kelly Brough.
This constitutes the Decision and Order of the Court. Dated: December 13, 2016 ENTER: Utica, New York Hon. Louis P. Gigliotti, SURROGATE