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In re Guardianship of Kent

Other Lower Courts

June 29, 2001

In the Matter of the Guardianship of Alice M. Kent.


Sall, Caltagirone & Coleman, Poughkeepsie (Christopher S. Coleman of counsel), for respondent.

Ian G. MacDonald, County Attorney of Dutchess County, Poughkeepsie (Janet V. Tullo of counsel), for petitioner.

Page 510


James D. Pagones, J.

Petitioner Robert B. Allers, guardian of Alice Kent, requests an accounting of the respondent Jane Smith, former attorney-in-fact of Alice Kent, pursuant to Mental Hygiene Law § 81.44. Respondent moves for dismissal of the underlying petition on the ground that the Court lacks jurisdiction to award an accounting, and further requests financial sanctions including attorney fees pursuant to 22 NYCRR 130-1.1.

The relevant facts are as follows. In June 1998, a psychiatric evaluation found Alice Kent incapable of making financial decisions. Upon this determination, Jane Smith, the niece of Kent's deceased husband, became representative payee of Kent's Social Security checks. Two months later Kent mortgaged her home for the sum of $20,000. Allegedly, approximately $3,000 of this mortgage was retained by Smith personally. The use or whereabouts of the remainder of the mortgage are not indicated in the petition or respondent's answer. In November 1998, Smith obtained power of attorney, living will and health care proxy over Kent. Robert B. Allers, Dutchess County Commissioner of Social Services, petitioned the Court on December 15, 2000 to appoint a guardian for Kent pursuant to Mental Hygiene Law article 81. On February 1, 2001, Kent was determined to be incapacitated pursuant to Mental Hygiene Law§ 81.02, and Allers was appointed guardian for personal needs and property management of Kent. Simultaneously, the power of attorney in favor of Smith was rescinded.

Respondent urges the Court lacks jurisdiction to order an accounting. She cites no authority other than counsel's interpretation of Mental Hygiene Law§ 81.44. A lengthy precedent proves otherwise. It is well established that Supreme Court possesses the jurisdiction to order an accounting when four factors exist. They are (1) a fiduciary relationship, (2) entrustment of money or property, (3) no other remedy, and (4) a demand and refusal of an accounting. (300 Broadway Realty Corp. v Kommit, 37 Misc.2d 325 [Sup Ct, Albany County 1962]; 1 N.Y. Jur 2d, Accounts and Accounting, § 34.) This case falls within this demesne. Both parties acknowledge that Kent executed a power of attorney to Smith in November 1998. [*] Granting a power of attorney creates a fiduciary relationship between the principal, Kent, and the agent, Smith.

Page 511

The parties also agree that Kent entrusted Smith with money and property after the June 1998 psychiatric determination. A power of attorney entails the handling of property, which may include power to mortgage, sell or otherwise dispose of any real or personal property without advance notice or approval. (General Obligations Law § 5-1501.) This unilateral authority, combined with the fiduciary relationship, requires the agent to reveal all of her dealings pertaining to Alice Kent's money. (American Inst. for Mental Studies v Brinn, 1985 U.S. Dist LEXIS 19520, 1985 WL 1424 [SD NY, May 24, 1985, Haight, J.].) Where disclosure does not occur as here, a principal may seek a court-ordered accounting to find the whereabouts of the entrusted money. (Id.)

The third criterion requires that no other adequate form of remedy exists. Based on the facts presented, an accounting constitutes the only form of remedy available for Kent.

Lastly, precedent requires a demand for an accounting and a refusal of said demand in certain cases. A demand for an accounting becomes necessary when a principal authorizes an agent to collect money belonging to the principal and hold it for her/him. The power of attorney authorizes Smith to collect and hold onto property/money of Kent; therefore, a demand would usually be necessary for the award of an accounting. Although Kent made no formal demand for an accounting, a request was made upon the filing of the original guardianship petition. The application now under consideration continues that demand. It is reasonable to conclude that Smith received constructive notice that an accounting would be demanded at the time the Department of Social Services was engaged and facts pertaining to Kent's finances were disclosed. To date, Smith has refused to account for the money she allegedly retained for her personal use.

This case adds a unique twist to the customary accounting cases. Ordinarily, the principal in the fiduciary relationship brings the petition for an accounting herself. However, on February 1, 2001, this Court declared the principal incapacitated, requiring the protection of the Court, and assigned Allers as guardian. The law compels the guardian to " preserve, protect, andaccount for [the ward's] property and financial resources faithfully" (Mental Hygiene Law § 81.20 [a] [6] [ii] [emphasis added]). The guardian also must " exercise care to avoid intentional or unintentional ...

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