SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
195
CA 14-01025
PRESENT: PERADOTTO, J.P., CARNI, SCONIERS, AND WHALEN, JJ.
IN THE MATTER OF THE ACCOUNTING BY
CHRISTOPHER J. SMOLKA, AS THE TRUSTEE OF
THE MELVIN D. MERGENHAGEN AND GERALDINE
R. MERGENHAGEN IRREVOCABLE TRUST DATED MEMORANDUM AND ORDER
OCTOBER 10, 1994.
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CHRISTOPHER J. SMOLKA, PETITIONER;
DAVID MERGENHAGEN AND JAMES MERGENHAGEN,
OBJECTANTS-RESPONDENTS;
CAROL A. SKRETNY, RESPONDENT-APPELLANT.
GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C., BUFFALO (ROBERT J. FELDMAN
OF COUNSEL), AND DUKE, HOLZMAN, PHOTIADIS & GRESENS, LLP, FOR
RESPONDENT-APPELLANT.
HARRIS BEACH PLLC, BUFFALO (RICHARD T. SULLIVAN OF COUNSEL), FOR
OBJECTANTS-RESPONDENTS.
Appeal from an order of the Surrogate’s Court, Erie County
(Barbara Howe, S.), entered April 8, 2014. The order, inter alia,
denied the motion of respondent Carol A. Skretny seeking summary
judgment granting and approving the petition of petitioner Christopher
J. Smolka, Esq. for a judicial settlement of the account of the Melvin
D. Mergenhagen and Geraldine R. Mergenhagen Irrevocable Trust dated
October 10, 1994.
It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.
Memorandum: Respondent Carol A. Skretny (respondent) appeals
from an order that, inter alia, denied her motion seeking summary
judgment granting and approving the petition of petitioner Christopher
J. Smolka, Esq. (Trustee), for a judicial settlement of the Trustee’s
account of the Melvin D. Mergenhagen and Geraldine R. Mergenhagen
Irrevocable Trust dated October 10, 1994 (1994 Trust), and determined
that the proceeds of the 1994 Trust should be paid in equal a shares
to respondent and objectants.
The sole asset of the 1994 Trust was a “second to die” life
insurance policy issued by Hartford Life Insurance Company insuring
the lives of the 1994 Trust’s grantors. Respondent and objectants are
the grantors’ children and primary beneficiaries, in equal shares, of
-2- 195
CA 14-01025
the 1994 Trust. Pursuant to the “Settlement Agreement” (Agreement)
between respondent and objectants, objectants were responsible for
paying the policy premiums for a specified period. During that
specified period, objectant David Mergenhagen submitted checks to the
Trustee on objectants’ behalf in the amount of the premiums then due.
Several of the checks contained handwritten notations in the memo line
or elsewhere on the face of the checks referring to future premium
dates. The Trustee returned to objectants the checks dated in
November 2012, which contained the notation “September 2013 Premium
Hartford,” and December 2012, which contained the notation, “Premium
Hartford L.I. Premium 9/13.”
Following the death of the second grantor in February 2013, the
proceeds of the life insurance policy were paid into the 1994 Trust.
The Trustee thereafter filed his petition for judicial settlement of
his account as Trustee of the 1994 Trust, and stated in the petition
that respondent was entitled to the entire balance of the Trust, less
administrative expenses, and that the interests of objectants had been
forfeited. Respondent submitted an affidavit in support of the
petition and thereafter moved for summary judgment granting and
approving the petition. Objectants filed objections to the petition
and opposed respondent’s motion.
We agree with Surrogate’s Court that the Trustee improperly
rejected the proffered premium checks and determined that objectants
had forfeited their interests in the 1994 Trust. As the Surrogate
concluded, the handwritten notations on the November and December 2012
checks did not constitute special or restrictive endorsements (see
generally Spielman v Manufacturers Hanover Trust Co., 60 NY2d 221,
226-227). Rather, the notations appear on a portion of the checks
that “is usually devoted to the bookkeeping records of the payor”
(Pincus-Litman Co. v Canon U.S.A., 98 AD2d 681, 681; see C. I. T.
Corp. v M & T Trust Co., 241 App Div 595, 596), and the checks at
issue were timely submitted by objectants to the Trustee in the amount
of the premium then due. Inasmuch as the Trustee had no legal basis
for rejecting the checks, objectants were never in default of their
obligations under the Agreement (see Furgang v Epstein, 106 AD2d 609,
609-610). In addition, it is well established that “the law abhors a
forfeiture” (Boyarsky v Froccaro, 131 AD2d 710, 713). We therefore
conclude that the Surrogate properly rejected the position of
respondent and the Trustee that the handwritten notations on the
November and December 2012 checks effected a forfeiture of objectants’
interests in the 1994 Trust (see generally Jacob & Youngs, Inc. v
Kent, 230 NY 239, 243-244, rearg denied 230 NY 656).
Entered: February 13, 2015 Frances E. Cafarell
Clerk of the Court