Beneficiary designations appear most often in insurance contracts, retirement plans, and annuity contracts. These contracts are known as testamentary substitutes because they pass outside of the probate estate. The insured or annuitant is asked to designate both the primary beneficiary(ies) and the contingent beneficiaries. We will examine a case where an issue of construction with respect to the primary beneficiaries required Surrogate Court intervention.
On March 10, 1989, Archibald Foley executed a Will in which he divided the residuary estate as follows: "...shall be divided into six (6) equal shares․ one each of those shares to each of my brothers and/or sisters who shall survive me and one share to be divided equally between my niece, Carmel Foley, and my nephew, Lawrence Foley, or their survivor. If neither of them survive me or if any of my brothers and sisters shall fail to survive me, then I direct such share as would have gone to them to be divided equally amongst those brothers and sisters who do survive me."
On March 13, 1989, Dr. Foley changed the beneficiary designation on four 20-year guaranteed retirement annuities with a combined date-of-death value of $275,872.75 to read: “to be divided equally, share & share alike among my living brothers and sisters, and one share to be divided equally between my niece (Carmel Foley) & nephew Lawrence Foley.' Then on March 20, 1989, Foley designated the primary beneficiary under his defined contribution retirement plan with a date-of-death value of $709,380.04 to read: “to be divided in equal shares among my living brothers and sisters-and an equal share to be divided between my niece Carmel Foley and my nephew Lawrence Foley.” He did not designate contingent beneficiaries under either the retirement annuities or the defined contribution retirement plan. Foley's Will was admitted to probate on April 7, 1998 (In re Estate of Foley, 181 Misc. 2d 258, 693 N.Y.S.2d 843, 1999 N.Y. Misc. LEXIS 241 (N.Y. Sur. Ct. May 24, 1999)) [http://caselaw.findlaw.com/ny-surrogates-court/1444422.html]
By the time Archibald Foley died, all of the primary beneficiaries under the annuities and the retirement plan had died except for his sister Edna and his niece Carmel. The executor of Foley's Will sought a judicial ruling as to how to distribute the proceeds, particularly the 1/4 share to his predeceased nephew Lawrence.
As it turned out, this was an issue of first impression for the New York County Surrogate's Court. " No authority has been discovered which addresses whether a predeceased beneficiary's share under a retirement plan or annuity contracts passes to the estate of decedent or to the surviving beneficiaries." Basing its analysis on prior analogous cases (The New York City Fire Department Life insurance Fund and totten trust accounts), the court reasoned that where beneficiaries were designated as individuals (Carmel and Lawrence) and not as a class (my living brothers and sisters), then they took as tenants in common and not joint tenants with right of survivorship. "Here, Mr. Foley did not expressly declare a joint tenancy in the beneficiary designation of either the retirement plan or the annuities. Nor does the Court find the evidence that Mr. Foley intended for Lawrence Foley's proceeds to pass to the surviving beneficiary, Carmel Foley, to be sufficiently clear. Thus, the Court is required to hold that a tenancy in common has been created. [See EPTL 6-2.2(a) ]. Accordingly, Lawrence Foley's share of the proceeds from the retirement plan and the annuities are to be distributed to the estate of Mr. Foley." The Will then governed the distribution of Lawrence's share, being the only document with express instructions as to predeceased relatives. Thus a non-probate asset became a testamentary asset subject to probate.
The court was sensitive to the fact that this holding may have disrupted the intent of Mr. Foley's estate plan, but in the absence of express declarations and named contingent beneficiaries, and the ambiguity of the language used to create the primary beneficiary designations, this was the only possible result. Yet the court was aware that this was an anomalous result: "In the absence of legislation reversing the general common law presumption in the context of retirement plans, annuity contracts and other testamentary substitutes, modern thinking as to presumed intent cannot be extended to these assets. This anomaly merits consideration and therefore is referred to the EPTL-SCPA Advisory Committee for such action as it deems appropriate."
The lesson here is clear: the drafting of beneficiary designations on testamentary substitutes needs to be done with great care. Moreover, you should safeguard even your testamentary substitutes by having a Will with clear bequest, beneficiary, and residuary estate language.
If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published.
Thank you.
Thursday, December 21, 2017
Thursday, November 2, 2017
Alexander Hamilton, Trusts and Estates Attorney, Part 3
"What are the rights of the individuals
composing a society and living under the protection of the government
when a revolution occurs, a dismemberment takes place, and when new
governments are formed and new relations between the government and the
people are established?" This was the pressing question asked by the U.S. Supreme Court in 1830 as it considered a case arising from the Last Will and Testament of Robert Randall containing testamentary trust for the establishment of Sailor's Snug Harbor that Alexander Hamilton had drafted.
New York has always been known as the city of immigrants. It was so when Alexander Hamilton arrived in New York, then known as the Province of New York and a British proprietary colony. Alexander Hamilton's role in the Revolutionary War and in the founding of the United States is now well-known. Less well-known is the complex history of New York from the time of the Declaration of Independence until the British retaking of the city in September of 1776, and the occupation of New York by the British until the retaking of the city by George Washington's Continental Army on November 25, 1783. During those tumultuous times, loyalists and revolutionaries considered themselves citizens of New York. But who was a citizen and who was an alien? Who had the right to inherit property?
Revolution in New York had begun before the Declaration of Independence. On May 22, 1775, a group of local revolutionary representatives calling themselves the New York Provincial Congress had declared themselves the government of New York. But New York was also home to Loyalists, colonists born in New York who remained loyal to the British Crown. New York was the only colony not to vote for independence on July 4, 1776 and only endorsed the Declaration of Independence five days later. About a third of the population of New York considered themselves Loyalists. One of them was Bishop Charles Inglis. From 1773 until the British defeat in 1783, Charles Inglis had been the rector of Trinity Church. He resigned his post in 1783 and, like many Loyalists, emigrated to Nova Scotia where in 1788 he founded King's College in Windsor, Nova Scotia. Charles Inglis never returned to New York. He had a son, John Inglis, who was born in New York in 1776 but who emigrated to Nova Scotia with his father. John Inglis was ordained deacon by his father in 1801 and became Rector of St, Paul's in Halifax, Nova Scotia in 1816. In 1826, John Inglis became the third Bishop of Nova Scotia. Thereafter, he began a legal challenge to reclaim his rights to Robert Randall's estate.
In the record of the U.S. Supreme Court case of Inglis v. Trustees of Sailor's Snug Harbor (28 U.S. 99 (1830)), John Inglis stated an uncontroverted claim to be related to Robert Richard Randall through Margaret Inglis, his mother, who was a descendant of John Crooke, the common ancestor of Robert Richard Randall, Catherine Brewerton, and Paul R. Randall. But was kinship sufficient to claim an inheritance under Randall's Will? John Inglis had been born in New York before the Declaration of Independence, and he had lived in New York prior to the British re-occupation in September 1776. As a child, he had emigrated with his father to Nova Scotia, his mother having died while the family lived in New York. Did his birth on New York soil alone establish his right to inherit under Robert Randall's Will and nullify the Sailor's Snug Harbor Trust?
In his opinion, Justice William Johnson, who had been appointed to the Court by Thomas Jefferson, held that "(A) person born in New York before 4 July, 1776, and who remained an infant with his father in the City of New York during the period it was occupied by the British troops, his father being a loyalist and having adhered to the British government and left New York with the British troops, taking his son with him, who never returned to the United States, but afterwards became a bishop of the Episcopal Church in Nova Scotia; such a person was born a British subject, and continued an alien, and is disabled from taking land by inheritance in the State of New York." This property and inheritance holding would be used to control both immigration and property ownership throughout the 19th century in New York. Currently, New York's SCPA § 2218 provides a procedure for aliens to inherit money or property located in New York.
If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published.
Thank you.
New York has always been known as the city of immigrants. It was so when Alexander Hamilton arrived in New York, then known as the Province of New York and a British proprietary colony. Alexander Hamilton's role in the Revolutionary War and in the founding of the United States is now well-known. Less well-known is the complex history of New York from the time of the Declaration of Independence until the British retaking of the city in September of 1776, and the occupation of New York by the British until the retaking of the city by George Washington's Continental Army on November 25, 1783. During those tumultuous times, loyalists and revolutionaries considered themselves citizens of New York. But who was a citizen and who was an alien? Who had the right to inherit property?
Revolution in New York had begun before the Declaration of Independence. On May 22, 1775, a group of local revolutionary representatives calling themselves the New York Provincial Congress had declared themselves the government of New York. But New York was also home to Loyalists, colonists born in New York who remained loyal to the British Crown. New York was the only colony not to vote for independence on July 4, 1776 and only endorsed the Declaration of Independence five days later. About a third of the population of New York considered themselves Loyalists. One of them was Bishop Charles Inglis. From 1773 until the British defeat in 1783, Charles Inglis had been the rector of Trinity Church. He resigned his post in 1783 and, like many Loyalists, emigrated to Nova Scotia where in 1788 he founded King's College in Windsor, Nova Scotia. Charles Inglis never returned to New York. He had a son, John Inglis, who was born in New York in 1776 but who emigrated to Nova Scotia with his father. John Inglis was ordained deacon by his father in 1801 and became Rector of St, Paul's in Halifax, Nova Scotia in 1816. In 1826, John Inglis became the third Bishop of Nova Scotia. Thereafter, he began a legal challenge to reclaim his rights to Robert Randall's estate.
In the record of the U.S. Supreme Court case of Inglis v. Trustees of Sailor's Snug Harbor (28 U.S. 99 (1830)), John Inglis stated an uncontroverted claim to be related to Robert Richard Randall through Margaret Inglis, his mother, who was a descendant of John Crooke, the common ancestor of Robert Richard Randall, Catherine Brewerton, and Paul R. Randall. But was kinship sufficient to claim an inheritance under Randall's Will? John Inglis had been born in New York before the Declaration of Independence, and he had lived in New York prior to the British re-occupation in September 1776. As a child, he had emigrated with his father to Nova Scotia, his mother having died while the family lived in New York. Did his birth on New York soil alone establish his right to inherit under Robert Randall's Will and nullify the Sailor's Snug Harbor Trust?
In his opinion, Justice William Johnson, who had been appointed to the Court by Thomas Jefferson, held that "(A) person born in New York before 4 July, 1776, and who remained an infant with his father in the City of New York during the period it was occupied by the British troops, his father being a loyalist and having adhered to the British government and left New York with the British troops, taking his son with him, who never returned to the United States, but afterwards became a bishop of the Episcopal Church in Nova Scotia; such a person was born a British subject, and continued an alien, and is disabled from taking land by inheritance in the State of New York." This property and inheritance holding would be used to control both immigration and property ownership throughout the 19th century in New York. Currently, New York's SCPA § 2218 provides a procedure for aliens to inherit money or property located in New York.
If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published.
Thank you.
Tuesday, October 31, 2017
Probating a Lost Will or a Will as an Ancient Document
There are significant benefits to having an attorney prepare your Will. Some are more evident than others. In this post, we are going to discuss some less obvious but highly advantageous benefits for an attorney-drafted Last Will and Testament.
What happens if the attorney-draftsman who prepares your Will and supervises the execution ceremony dies before you do and the original Will, still in the custody of the attorney, is then lost? What happens if, before you die, one of the witnesses to the Will also passes away? There are a significant number of cases where a decedent signed a Will many years ago and where the original Will remained in the custody of the attorney-draftsman, leaving the decedent with only a conformed copy. A conformed copy will contain the names and addresses of all signatories, including the testator/testatrix, but it is not signed by either the testator/testatrix or any of the witnesses. The attorney's "back" will be affixed to the conformed copy and marked as a conformed copy.
In order to prevent the probate of fraudulent Wills, New York's SCPA § 1407 establishes what proof is necessary to admit to probate a lost or destroyed Will:
"A lost or destroyed will may be admitted to probate only if
If there is a conformed copy of the original Will found among the decedent's possessions, then that conformed copy will take the place of one of the credible witnesses. The remaining credible witness must be able then to testify as to the substance of the original Will in order for the Will to be admitted to probate. Recalling the substance of the Will meets the publication requirement. In re Estate of Kleefeld , 55 N.Y.2d 253, 433 N.E.2d 521, 1982 N.Y. LEXIS 3542, 448 N.Y.S.2d 456 (Feb. 25, 1982), the Court of Appeals reversed the Appellate Division's ruling to admit the conformed copy of a Will lost while in the possession of the attorney-draftsman to probate, holding that "each of the witnesses must testify to all the principal parts of the will" (Id., at 258). Since the remaining witness could not recall the substantive parts of the Will, probate was denied. The proponent of the Will could not meet its burden on the issue of due execution.
But what happens in the case where the attorney-draftsman has passed away as well as both attesting witnesses? One of the exceptions to the Federal Rules of Evidence against hearsay that applies even when the declarant is not available as a witness is called the "ancient document rule" (Rule 803(16)): "A statement in a document that is at least 20 years old and whose authenticity is established." New York State Surrogate's Courts have a long history of borrowing from the ancient document rule when it comes to probating a an old Will where the witnesses have predeceased the testator.
New York's SCPA § 1405 (4) states that "If all of the attesting
witnesses are dead or incompetent or unable to testify by reason of
physical or mental condition or are absent from the state and their
testimony has been dispensed with as provided in this section the will
may nevertheless be admitted to probate upon proof of the handwriting of
the testator and of at least one of the attesting witnesses and such
other facts as would be sufficient to prove the will."
The courts have added three elements necessary to have a Will admitted to probate as an ancient document. First, the Will must be more than twenty (20) years old. Second, the Will must have been taken from a natural place of custody (for example, the decedent's safe deposit box or filing cabinet). And third, the Will must be of an unsuspicious nature. Any alterations to the original Will must be fully explained. In In re Estate of Tier (3 Misc.3d 587,772 N.Y.S.2d 500, 2004 N.Y.Misc. Lexis 48 (Feb. 2, 2004), the Surrogate's Court of New York County admitted an ancient document to probate but without the alterations made to the Will. The proponent of the Will stood to benefit from the alterations and failed to produce evidence sufficient to show that the alterations preceded the Will execution. Once the proponent failed to produce the evidence, the burden shifted to the residuary beneficiaries, the ones who stood to lose from the alterations, to show that the alteration preceded the Will execution. Since the residuary beneficiaries failed to provide such evidence, the Will was admitted to probate in its original form and without the alterations.
However, in the case of a lost Will or a Will propounded as an ancient document, the court must still be satisfied under SCPA § 1408 of "the genuineness of the will and the validity of its execution," as well as the competence of the testator and the absence of fraud and undue influence. Thus, whether the Will offered for probate is a conformed copy or an ancient document, it is still open to be examined by any party to the probate proceeding under SCPA § 1404 either before or after the filing of objections.
If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published.
Thank you.
What happens if the attorney-draftsman who prepares your Will and supervises the execution ceremony dies before you do and the original Will, still in the custody of the attorney, is then lost? What happens if, before you die, one of the witnesses to the Will also passes away? There are a significant number of cases where a decedent signed a Will many years ago and where the original Will remained in the custody of the attorney-draftsman, leaving the decedent with only a conformed copy. A conformed copy will contain the names and addresses of all signatories, including the testator/testatrix, but it is not signed by either the testator/testatrix or any of the witnesses. The attorney's "back" will be affixed to the conformed copy and marked as a conformed copy.
In order to prevent the probate of fraudulent Wills, New York's SCPA § 1407 establishes what proof is necessary to admit to probate a lost or destroyed Will:
"A lost or destroyed will may be admitted to probate only if
1. It is established that the will has not been revoked, and
2. Execution of the will is proved in the manner required for the probate of an existing will, and
3. All
of the provisions of the will are clearly and distinctly proved by each
of at least two credible witnesses or by a copy or draft of the will
proved to be true and complete."
If there is a conformed copy of the original Will found among the decedent's possessions, then that conformed copy will take the place of one of the credible witnesses. The remaining credible witness must be able then to testify as to the substance of the original Will in order for the Will to be admitted to probate. Recalling the substance of the Will meets the publication requirement. In re Estate of Kleefeld , 55 N.Y.2d 253, 433 N.E.2d 521, 1982 N.Y. LEXIS 3542, 448 N.Y.S.2d 456 (Feb. 25, 1982), the Court of Appeals reversed the Appellate Division's ruling to admit the conformed copy of a Will lost while in the possession of the attorney-draftsman to probate, holding that "each of the witnesses must testify to all the principal parts of the will" (Id., at 258). Since the remaining witness could not recall the substantive parts of the Will, probate was denied. The proponent of the Will could not meet its burden on the issue of due execution.
But what happens in the case where the attorney-draftsman has passed away as well as both attesting witnesses? One of the exceptions to the Federal Rules of Evidence against hearsay that applies even when the declarant is not available as a witness is called the "ancient document rule" (Rule 803(16)): "A statement in a document that is at least 20 years old and whose authenticity is established." New York State Surrogate's Courts have a long history of borrowing from the ancient document rule when it comes to probating a an old Will where the witnesses have predeceased the testator.
The courts have added three elements necessary to have a Will admitted to probate as an ancient document. First, the Will must be more than twenty (20) years old. Second, the Will must have been taken from a natural place of custody (for example, the decedent's safe deposit box or filing cabinet). And third, the Will must be of an unsuspicious nature. Any alterations to the original Will must be fully explained. In In re Estate of Tier (3 Misc.3d 587,772 N.Y.S.2d 500, 2004 N.Y.Misc. Lexis 48 (Feb. 2, 2004), the Surrogate's Court of New York County admitted an ancient document to probate but without the alterations made to the Will. The proponent of the Will stood to benefit from the alterations and failed to produce evidence sufficient to show that the alterations preceded the Will execution. Once the proponent failed to produce the evidence, the burden shifted to the residuary beneficiaries, the ones who stood to lose from the alterations, to show that the alteration preceded the Will execution. Since the residuary beneficiaries failed to provide such evidence, the Will was admitted to probate in its original form and without the alterations.
However, in the case of a lost Will or a Will propounded as an ancient document, the court must still be satisfied under SCPA § 1408 of "the genuineness of the will and the validity of its execution," as well as the competence of the testator and the absence of fraud and undue influence. Thus, whether the Will offered for probate is a conformed copy or an ancient document, it is still open to be examined by any party to the probate proceeding under SCPA § 1404 either before or after the filing of objections.
If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published.
Thank you.
Thursday, April 20, 2017
Recovery of Lost or Stolen Art: The Case of the Missing Lipchitz
Jacques Lipchitz was a Lithuanian-born Cubist sculptor best known for abstract "transparent" sculptures. He moved to Paris in 1909 to study at the Ecole des Beaux-Arts and thereafter joined a group of artist that included Pablo Picasso and Amedeo Modigliani. He became a French citizen in 1924. When the Nazis began to occupy Paris during WWII, Lipchitz who was Jewish fled France to escape deportation to the death camps. He arrived in the US as an asylum seeker and eventually settled in 1949 in New York State in the town of Hastings-on-Hudson in Westchester County.
In 1928-29 while still in Paris, Lipchitz sculpted an erotic piece originally titled "The Couple." Considered shocking when it was first exhibited in Paris in 1929, Lipchitz change the title to the more ambiguous "The Cry" in order to later exhibit the sculpture in Amsterdam. The sculpture kept this title when Lipchitz imported it to the US in order to avoid confiscation as pornography by American customs authorities.
In 1948, Lipchitz married Yulla Halberstadt, also a sculptor, with whom he had his only child Lolya. After Lipchitz died in 1973, his wife Yulla took up with a self-styled psychic and music producer Biond Fury (who also once owned John Lennon's white suit that Lennon wore on the Abbey Road album cover) and lived with him for the last 17 years of her life until 2003.
In 1997 Yulla made an inter vivos gift to Fury of "The Cry" by inscribing the following handwritten message on the back of a photo of the sculpture: “I gave this sculpture, ‘The Cry’ to my good friend, Biond Fury in appreciation for all he did for me during my long illness. With love and warm wishes for a Happy Future, Yulla Lipchitz/Oct. 2, 1997, New York.” Fury subsequently sold his interest in "The Cry" in 2005 to Toronto art collector David Mirvish for $220,000. Mirvish then sought delivery of the sculpture to Toronto.
Unbeknownst to both Fury and Mirvish, Hanno Mott, Yulla's son by a first marriage and her executor, had loaned the sculpture to the Tuilleries Gardens in Paris in 1998, unaware of the gift. Neither Fury nor Mirvish had any idea that the sculpture was no longer in New York. Mott further claimed that he had sold the sculpture to the Marlborough International Fine Art Establishment, along with two other sculptures, for $1 million.
To determine the rightful ownership of "The Cry," Mott commenced an action in New York County Surrogate's Court against Mirvish. Mirvish filed a cross motion for summary judgment asking that the court find the decedent's inter vivos gift to be valid. Mirvish also sued Mott in Supreme Court for replevin and conversion to recover possession of the sculpture.
The Surrogate's Court ruled in favor of Mirvich, finding that the inter vivos gift to Fury had been completed, and that Fury thus has the right to sell his interest to Mirvish. Mott appealed the decision and the Appellate Division, First Department found in Mott's favor, finding that Mirvish's claims in replevin and conversion were time-barred by the three-year Statute of Limitations and that the accrual on the Statute of Limitations began on the date that the conversion tool place, that is, on the date when the sculpture left New York for the Tuilleries Gardens in 1998. In essence, the court found that Mirvish was too late in filing his claims. The fact that neither Fury nor Mirvish had any knowledge that "The Cry" had been transported to Paris was immaterial. Mirvish appealed.
The New York Court of Appeals disagreed with the First Department. The Court found that Fury's possession of the photo with the handwritten note by Yulla meant that Yulla's inter vivos gift to Fury had been "delivered." Thus all of the elements of an inter vivos gift had been satisfied: a present transfer; a delivery of the gift, and acceptance by Fury. Fury thus had every right to sell his interest to Mirvish who was indeed the rightful owner of the sculpture.
What lessons can we learn from this case? First, one's executor should be made aware of any inter vivos gifts, including artworks. Mott, who was an attorney, would not on behalf of the Lipchitz family have loaned the sculpture or sold it to Marlborough had he been made aware of the gift. Second, to avoid having a claim for lost or stolen art dismissed because of a statute of limitations, it is best to file a claim for replevin and conversion as soon as the artwork is found missing. And third, a buyer of artwork should examine the provenance of the artwork carefully, noticing any gaps or suspicious ownership claims.
If you would like to discuss your own personal situation with me, if lost or stolen artwork is part of an estate, or you would like to make an inter vivos gift tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
In 1928-29 while still in Paris, Lipchitz sculpted an erotic piece originally titled "The Couple." Considered shocking when it was first exhibited in Paris in 1929, Lipchitz change the title to the more ambiguous "The Cry" in order to later exhibit the sculpture in Amsterdam. The sculpture kept this title when Lipchitz imported it to the US in order to avoid confiscation as pornography by American customs authorities.
In 1948, Lipchitz married Yulla Halberstadt, also a sculptor, with whom he had his only child Lolya. After Lipchitz died in 1973, his wife Yulla took up with a self-styled psychic and music producer Biond Fury (who also once owned John Lennon's white suit that Lennon wore on the Abbey Road album cover) and lived with him for the last 17 years of her life until 2003.
In 1997 Yulla made an inter vivos gift to Fury of "The Cry" by inscribing the following handwritten message on the back of a photo of the sculpture: “I gave this sculpture, ‘The Cry’ to my good friend, Biond Fury in appreciation for all he did for me during my long illness. With love and warm wishes for a Happy Future, Yulla Lipchitz/Oct. 2, 1997, New York.” Fury subsequently sold his interest in "The Cry" in 2005 to Toronto art collector David Mirvish for $220,000. Mirvish then sought delivery of the sculpture to Toronto.
Unbeknownst to both Fury and Mirvish, Hanno Mott, Yulla's son by a first marriage and her executor, had loaned the sculpture to the Tuilleries Gardens in Paris in 1998, unaware of the gift. Neither Fury nor Mirvish had any idea that the sculpture was no longer in New York. Mott further claimed that he had sold the sculpture to the Marlborough International Fine Art Establishment, along with two other sculptures, for $1 million.
To determine the rightful ownership of "The Cry," Mott commenced an action in New York County Surrogate's Court against Mirvish. Mirvish filed a cross motion for summary judgment asking that the court find the decedent's inter vivos gift to be valid. Mirvish also sued Mott in Supreme Court for replevin and conversion to recover possession of the sculpture.
The Surrogate's Court ruled in favor of Mirvich, finding that the inter vivos gift to Fury had been completed, and that Fury thus has the right to sell his interest to Mirvish. Mott appealed the decision and the Appellate Division, First Department found in Mott's favor, finding that Mirvish's claims in replevin and conversion were time-barred by the three-year Statute of Limitations and that the accrual on the Statute of Limitations began on the date that the conversion tool place, that is, on the date when the sculpture left New York for the Tuilleries Gardens in 1998. In essence, the court found that Mirvish was too late in filing his claims. The fact that neither Fury nor Mirvish had any knowledge that "The Cry" had been transported to Paris was immaterial. Mirvish appealed.
The New York Court of Appeals disagreed with the First Department. The Court found that Fury's possession of the photo with the handwritten note by Yulla meant that Yulla's inter vivos gift to Fury had been "delivered." Thus all of the elements of an inter vivos gift had been satisfied: a present transfer; a delivery of the gift, and acceptance by Fury. Fury thus had every right to sell his interest to Mirvish who was indeed the rightful owner of the sculpture.
What lessons can we learn from this case? First, one's executor should be made aware of any inter vivos gifts, including artworks. Mott, who was an attorney, would not on behalf of the Lipchitz family have loaned the sculpture or sold it to Marlborough had he been made aware of the gift. Second, to avoid having a claim for lost or stolen art dismissed because of a statute of limitations, it is best to file a claim for replevin and conversion as soon as the artwork is found missing. And third, a buyer of artwork should examine the provenance of the artwork carefully, noticing any gaps or suspicious ownership claims.
If you would like to discuss your own personal situation with me, if lost or stolen artwork is part of an estate, or you would like to make an inter vivos gift tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
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