| Matter of Harmon |
| 2010 NY Slip Op 04390 [73 AD3d 1059] |
| May 18, 2010 |
| Appellate Division, Second Department |
In the Matter of Ruth Harmon,Respondent; Robert Harmon et al., Appellants. (Proceeding No. 1.) In the Matter of RuthHarmon, Respondent; Robert Harmon et al., Appellants. (Proceeding No. 2.)—[*1] Arnold L. Kert, PLLC, Garden City, N.Y., for respondent.
In two related proceedings, inter alia, for a decree directing Robert Harmon and TheresaMuriel Stephens to distribute to the petitioner the corpus of a certain trust, Robert Harmon andTheresa Muriel Stephens appeal (1) from a decision of the Surrogate's Court, Suffolk County(Czygier, Jr., S.), dated May 29, 2009, made after a hearing, and (2), as limited by their brief,from so much of a decree of the same court dated June 18, 2009, as, upon an order of the samecourt dated September 23, 2008, and upon the decision, (a) directed that the sum of "$607,814.81made upon William Harmon's death to The Ruth Harmon Irrevocable Trust should be deemedtransferred to the William Francis Harmon Irrevocable Trust, and from it subtracted the sum of$157,137.15, and the sum of $450,677.66 be turned over to the petitioner forthwith," and (b)failed to award prejudgment interest on the sum of $157,137.15, which was directed to betransferred to The Ruth Harmon Irrevocable Trust.
Ordered that the appeal from the decision is dismissed, as no appeal lies from a decision(see Schicchi v J.A. Green Constr. Corp., 100 AD2d 509 [1984]); and it is further,
Ordered that the decree is modified, on the facts and in the exercise of discretion, by deletingfrom the last decretal paragraph thereof the words "$607,814.81 made upon William Harmon'sdeath to The Ruth Harmon Irrevocable Trust should be deemed transferred to the WilliamFrancis Harmon Irrevocable Trust, and from it subtracted the sum of $157,137.15," andsubstituting therefor the words "$450,677.66 made upon William Harmon's death to The RuthHarmon Irrevocable Trust should be deemed transferred to the William Francis HarmonIrrevocable Trust"; as so modified, the decree is affirmed insofar as appealed from; and it isfurther,
Ordered that one bill of costs is awarded to the petitioner, payable by the appellants.
The petitioner and her late husband, William Francis Harmon (hereinafter William),executed irrevocable trusts dated August 27, 2002. The appellants, Robert Harmon and TheresaMuriel [*2]Stephens, two of William's siblings, are cotrusteesand residual beneficiaries of both trusts. William died on October 30, 2005. Pursuant to articleIII of the William Francis Harmon Irrevocable Trust (hereinafter the William Trust), the corpusof the William Trust was to be distributed to the petitioner upon William's death, unless thecotrustees determined that, by reason of illness or mental or physical disability, the petitionerwas unable to properly handle her own affairs. Following William's death, the cotrusteesdetermined that the petitioner was unable to properly handle her own affairs and refused todistribute the corpus of the William Trust to her. The cotrustees closed the William Trust and, onDecember 31, 2005, transferred the sum of $607,814.81 from the William Trust into The RuthHarmon Irrevocable Trust (hereinafter the Ruth Trust). The petitioner then commenced theseproceedings, inter alia, seeking distribution of the corpus from the former William Trust to her.
By motion dated June 5, 2008, the cotrustees moved for summary judgment, inter alia, ontheir offset claim seeking the transfer of the sum of $157,137.15 to the Ruth Trust. In support oftheir motion, the cotrustees argued that, at the time the Ruth Trust was created, William and thepetitioner had irrevocably transferred the sum of $157,137.15 to the Ruth Trust, but thepetitioner had prevented those sums from being delivered to the Ruth Trust. By order datedSeptember 23, 2008, the Surrogate's Court granted that branch of the cotrustees' motion whichwas for summary judgment on their offset claim, finding that the sum of $157,137.15, held bythe petitioner, was part of the Ruth Trust, and otherwise denied the remaining branches of theirmotion.
After a hearing, in a written decision dated May 29, 2009, the Surrogate's Court found, interalia, that the cotrustees' determination that the petitioner was unable to properly handle her ownaffairs was not an abuse of the cotrustees' discretion, undertaken in bad faith, or completelyarbitrary. Notwithstanding this finding, however, the decree appealed from directed "that thetransfer of $607,814.81 made upon [William's] death to the [Ruth Trust] should be deemedtransferred to [the William Trust], and from it subtracted the sum of $157,137.15, and the sum of$450,677.66 be turned over to the petitioner forthwith." On appeal, the cotrustees challenge thedistribution of the sum of $450,677.66 to the petitioner and the failure to award prejudgmentinterest on the $157,137.15 offset claim, and contend that the offset claim was improperlysubtracted after the deemed transfer. The cotrustees concede that they should not have closed theWilliam Trust and then transferred the trust corpus into the Ruth Trust. We modify.
A written order or judgment must conform strictly to the court's decision on which it isbased, and where there is a conflict between the two, the decision controls (see Matter of Jimmy D., 63 AD3d737 [2009]; Scheuering vScheuering, 27 AD3d 446, 447 [2006]; Spier v Horowitz, 16 AD3d 400, 401 [2005]). However, thisCourt's authority is as broad as that of the hearing court and it may render the determination itfinds warranted by the facts, taking into account that, in a close case, the hearing court had theadvantage of seeing and hearing the witnesses (see Northern Westchester Professional ParkAssoc. v Town of Bedford, 60 NY2d 492, 499 [1983]; Kaygreen Realty Co. v IG Second Generation Partners, L.P., 68 AD3d933, 934 [2009]).
In determining payments to beneficiaries, a trustee must exercise his or her discretion inaccordance with the standard which the trust imposes. In addition, "the trustee must reach ajudgment soundly formed and in good faith upon the basis of the circumstances presented tohim" (Matter of Eckert, 23 AD2d 32, 35 [1965]). "Once the test of discretion imposed bythe settlor has been met, and the trustee has acted reasonably and in good faith, the court will notinterfere with the exercise of his judgment" (id. at 35; see Community Serv. Socy. ofN.Y. v New York Community Trust, 275 AD2d 171, 181 [2000]; Matter ofMcManus, 62 AD2d 758, 764 [1978], affd 47 NY2d 717 [1979]).
Here, article III of the William Trust vests the discretion to determine the petitioner'scapability to properly handle her own affairs in the cotrustees. However, given the cotrustees'lack of contact with the petitioner, failure to investigate her capabilities, failure to raise concernsrelated to her management of finances, and failure to revisit the issue in subsequent years, wefind that the cotrustees' determination that the petitioner was unable to handle her own affairswas not "a judgment soundly formed and in good faith upon the basis of the circumstancespresented to [them]" (Matter of Eckert, 23 AD2d at 35). As a consequence, theSurrogate's Court properly directed that the corpus from the William Trust be deemed transferredto that trust and then disbursed to the petitioner. Moreover, the Surrogate's Court properlysubtracted the sum of $157,137.15 from the disbursement to the petitioner, as that sum shouldhave been transferred to the Ruth Trust. However, we modify the decree to the extent indicatedto correct [*3]a defect in the deemed transfer of funds, whichwould result in the erroneous transfer of the sum of $157,137.15, funds adjudicated by theSurrogate's Court to be part of the Ruth Trust, from the Ruth Trust into the William Trust(see CPLR 5019 [a]).
Contrary to the cotrustee's contention, the Surrogate's Court did not improvidently exerciseits discretion in declining to award prejudgment interest on the sum of $157,137.15, which wasdirected to be transferred to the Ruth Trust (see CPLR 5001 [a]).
Since the petitioner did not cross-appeal, we do not reach her contention that the Surrogate'sCourt should have awarded prejudgment interest on the distribution to her (see CPLR5515; Hecht v City of New York, 60 NY2d 57, 60-61 [1983]; Adelman vAttonito, 304 AD2d 507, 508 [2003]). Skelos, J.P., Santucci, Leventhal and Hall, JJ.,concur.