| Island Fed. Credit Union v Smith |
| 2009 NY Slip Op 01776 [60 AD3d 730] |
| March 10, 2009 |
| Appellate Division, Second Department |
| Island Federal Credit Union, Appellant, v Gerald J. Smithet al., Respondents. |
—[*1] Wolinsky, Parnell & Montgomery, LLP, Lake Ronkonkoma, N.Y. (Bruce F. Parnell ofcounsel), for respondents.
In an action to recover the proceeds of a bank account, the plaintiff appeals from an order ofthe Supreme Court, Suffolk County (R. Doyle, J.), entered November 19, 2007, which grantedthat branch of the defendants' motion which was for summary judgment dismissing thecomplaint and denied its cross motion for summary judgment dismissing the defendants'counterclaims.
Ordered that the order is reversed, on the law, with costs, that branch of the defendants'motion which was for summary judgment dismissing the complaint is denied, and the plaintiff'scross motion for summary judgment dismissing the defendants' counterclaims is granted.
In 1996, Bernard J. Mallon died and his will named Gerald K. Smith (hereinafter the ElderSmith) executor of his estate. On August 20, 1997, the Elder Smith opened a bank account(hereinafter the subject account) in the name of the Estate of Bernard J. Mallon at Island FederalCredit Union (hereinafter the plaintiff). The signature card for the subject account designated theEstate of Bernard J. Mallon as the "Primary Member" and the Elder Smith as "Joint Member #1"with rights of survivorship. After the Surrogate's Court issued final permanent letterstestamentary in June 1999, the Elder Smith closed individual accounts held in Mallon's name andtransferred the proceeds into the subject account. Subsequently, the Elder Smith died on October31, 1999, and no successor executor was appointed for the Estate of Bernard J. Mallon. TheElder Smith's son, the defendant Gerald J. Smith (hereinafter the Younger Smith) was appointedexecutor of his estate. Based upon its belief that the subject account was a joint account withrights of survivorship and that the Younger Smith, as the Elder Smith's son and the executor ofthe Elder Smith's estate, was entitled to the funds in the subject account, the plaintiff located theYounger Smith in [*2]2002 and paid the funds from the subjectaccount to him. After an inquiry concerning the subject account by the residuary beneficiary ofthe Mallon estate, the plaintiff reviewed the subject account and concluded that it paid theproceeds of the subject account to the Younger Smith in error.
In May 2006, the plaintiff commenced this action against the Younger Smith, individuallyand as executor of the Elder Smith's estate, alleging, inter alia, that the proceeds of the subjectaccount were distributed to him by mistake. In answering the complaint, the defendants assertedcounterclaims alleging abuse of process and intentional infliction of emotional distress.Thereafter, the defendants moved, among other things, for summary judgment dismissing thecomplaint and the plaintiff cross-moved for summary judgment dismissing the counterclaims.The Supreme Court granted that branch of the defendants' motion which was for summaryjudgment dismissing the complaint and denied the plaintiff's cross motion. We reverse.
The defendants failed to establish their prima facie entitlement to judgment as a matter oflaw dismissing the complaint, which sought to recover the proceeds of the subject account underthe theory that the money was paid by mistake, because they did not establish that the subjectaccount was a joint account with rights of survivorship. A joint tenancy is defined as "an estateheld by two or more persons jointly, with equal rights to share in its enjoyment during their lives,and creating in each joint tenant a right of survivorship" (24 NY Jur 2d, Cotenancy and Partition§ 16; see Matter of Kleinberg v Heller, 38 NY2d 836, 841 [1976, Fuchsberg, J.,concurring]; Matter of Bricker v Krimer, 13 NY2d 22, 27 [1963]; Gotte v Long Is.Trust Co., 133 AD2d 212, 215 [1987]). As a general principle "[j]oint tenancies are typicallyconfined to natural persons" (24 NY Jur 2d, Cotenancy and Partition § 18). Moreover, acorporation cannot hold property as a joint tenant with a natural person (see Moore Lbr. Co.,Inc. v Behrman, 144 Misc 291, 292 [1932]). Furthermore, Banking Law § 675operates under the assumption that joint tenants are natural persons who have a lifetime and aspecific date of death. Here, although the Elder Smith is listed as a joint member, the accountapplication states that the name of the subject account as well as its primary member is the"Estate of Bernard J. Mallon." Based upon the above, the estate, which is not a natural person,could not have created a joint tenancy with a natural person, the Elder Smith. Therefore, as amatter of law, the subject account is not a joint account.
"The principle that a party who pays money, under a mistake of fact, to one who is notentitled to it should, in equity and good conscience, be permitted to recover it back is longstanding and well recognized" (Manufacturers Hanover Trust Co. v Chemical Bank, 160AD2d 113, 117 [1990], citing Ball v Shepard, 202 NY 247, 253 [1911]). This ruleapplies even though the mistake is the result of the payor's negligence (see Banque Worms vBankAmerica Intl., 77 NY2d 362, 366-367 [1991]; Collins v HSBC Bank USA, 305AD2d 361, 362 [2003]). However, where the payee has "changed its position to its detriment inreliance upon the mistake so that requiring that it refund the money paid would be 'unfair,'recovery has been denied" (Banque Worms v BankAmerica Intl., 77 NY2d at 366,quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 422 [1972],cert denied 414 US 829 [1973]; see Bank of New York v Spiro, 267 AD2d 339,340 [1999]).
Here, the plaintiff distributed the subject account to the Younger Smith under the mistakenbelief that it was a joint account that passed by operation of law to the surviving tenant, the ElderSmith and that, upon the Elder Smith's death, the Younger Smith, as the executor of the ElderSmith's estate and a distributee of the Elder Smith's estate was entitled to these funds. If thesubject account was merely an estate account and the Elder Smith was only acting as therepresentative for the Mallon Estate, the Younger Smith, as executor of the Elder Smith's estate,would not have been entitled to the proceeds of the subject account. An executor may notadminister and distribute the assets of an estate of which his testator was administrator (seeMatter of Collyer, 124 App Div 16, [*3]18 [1908]).Additionally, the Younger Smith was never appointed to be the successor administrator of thesubject account (see SCPA 706 [2]).
Although there is evidence that the Younger Smith spent all the proceeds of the subjectaccount, the issue of his detrimental reliance and to what extent it would be unjust to require himto reimburse the plaintiff presents questions of fact which should not be resolved on summaryjudgment (see Collins v HSBC Bank USA, 305 AD2d at 362). Therefore, the SupremeCourt improperly granted that branch of the defendants' motion which was for summaryjudgment dismissing the complaint.
With respect to the cross motion, the plaintiff established its prima facie entitlement tojudgment dismissing the defendants' counterclaims to recover damages for abuse of process andintentional infliction of emotional distress. A claim to recover damages for abuse of processcannot be based on the mere commencement of an action by summons and complaint, withoutunlawful interference with person or property (see Curiano v Suozzi, 63 NY2d 113,116-117 [1984]; Sipsas v Vaz, 50AD3d 878, 879 [2008]; Mago, LLCv Singh, 47 AD3d 772, 773 [2008]). Moreover, the plaintiff established that its actionsfell short of the requisite "extreme and outrageous conduct" necessary to sustain thecounterclaim to recover damages for intentional infliction of emotional distress (Mago, LLCv Singh, 47 AD3d at 773; see Ralinv City of New York, 44 AD3d 838, 839 [2007]; Wyllie v District Attorney of County of Kings, 2 AD3d 714, 720[2003]). In opposition, the defendants failed to raise a triable issue of fact. Florio, J.P., Covello,Balkin and Leventhal, JJ., concur. [See 2007 NY Slip Op 33716(U).]