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In re Will of Bissell

Supreme Court of New York, Appellate Division

April 20, 1954

In the Matter of the Accounting of JANET B. DIMOND, as Executrix of EMILY W. BISSELL, Deceased, Respondent. MUTUAL BENEFIT LIFE INSURANCE COMPANY, Appellant; THOMAS J. MCNAMEE, as Special Guardian, et al., Respondents.

Page 625

APPEAL from a decree of the New York County Surrogate's Court (COLLINS, S.), entered September 16, 1953, settling the intermediate account of respondent executrix under the will of Emily W. Bissell, deceased. The appeal is from such portion of the decree as directed appellant insurance company to pay to said executrix $1,525.15 as the proportionate amount of Federal and New York estate taxes paid by the executrix and allocated to the value of an annuity contract. The decree further provided that such payment was to be made upon respondent's surrender of the annuity contract for 'the issuance of an amended contract in lieu thereof whereby the monthly payments payable thereunder shall be reduced to $65.63'. Appellant withdrew, by an order of the Appellate Division entered November 5, 1953, so much of its appeal as was taken from another part of the decree, which directed appellant to pay $16,711.39 as the proportionate amount of Federal and New York estate taxes allocated to a life insurance policy.

COUNSEL

A. Amasa Miller of counsel (Littlefield, Miller & Cleaves, attorneys), for appellant.

Henry N. Ess, III, of counsel (Langdon M. Day with him on the brief; Sullivan & Cromwell, attorneys), for executrix, respondent.

Page 626

Thomas J. McNamee, as special guardian, respondent in person.

John V. Bloys (Henry R. Glenn with him on the brief), for Life Insurance Association of America, amicus curiae.

BASTOW, J.

Presented upon this appeal is the issue as to the liability of a life insurance company for the amount of estate tax apportioned under section 124 of the Decedent Estate Law to the value of an annuity contract issued by the company.

On March 5, 1937, the decedent purchased from the appellant, the Mutual Benefit Life Insurance Company, a single premium annuity contract. The company received $20,000 from the decedent and issued a contract by the terms of which it agreed to pay a monthly annuity of $103.60 to the decedent during the joint lives of the decedent and her daughter, Janet B. Dimond. The company further agreed that after decedent's death the monthly payments were to be made to the daughter until the maturity of the contract on March 5, 1957, or the prior death of the daughter. The contract does not provide for the payment of any minimum total amount, or of any minimum number of monthly payments, nor does it provide for any surrender or terminal value. In other words, upon the death of the decedent the sole obligation of the company was to make each monthly payment as it fell due, provided the annuitant was alive on such due date, until March 5, 1957.

The decedent died in November, 1945, leaving, among other heirs, her daughter, who is the annuitant and the executrix of the decedent's will. On September 14, 1953, a decree was made settling the intermediate account of the executrix. The decree, among other things, directed the appellant to pay the executrix the sum of $1,525.15 as the proportionate amount of Federal and New York estate taxes previously paid by the executrix and allocated to the value of the annuity contract. During the years from the death of decedent in 1945 until the making of the decree in 1953, the appellant had paid the annuitant in monthly installments pursuant to the provisions of the contract, a total of $9,738.40.

Section 124 of the Decedent Estate Law provided in part that 'Whenever it appears upon any accounting * * * that an executor * * * has paid a death tax * * * upon or with respect to any property required to be included in the gross estate of a decedent * * * the amount of the tax so paid * * * shall be equitably prorated among the persons

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interested in the estate to whom such property is or may be transferred or to whom any benefit accrues. * * * In all cases in which any property required to be included in the gross estate does not come into the possession of the executor as such, he shall be entitled, and it shall be his duty, to recover from whomever is in possession, or from the ...


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