Matter of Balsome
Annotate this CaseDecided on March 22, 2005
Surrogate's Court, Nassau County
In the Matter of the Estate of Joseph R. Balsome, Deceased.
330362
John B. Riordan, J.
This is a compulsory accounting proceeding by an alleged creditor which the court has converted into a proceeding for the determination of the creditor's claim upon the consent of all the parties (SCPA 1808 [5]; Matter of Sevigny, NYLJ, July 10, 1997, at 29).
The decedent Joseph R. Balsome died a resident of Nassau County on October 27, 2003. His Will was admitted to probate and letters testamentary issued to the nominated executors. On January 8, 2002, Mr. Balsome and the claimant Catherine Taylor together purchased a cooperative apartment. A proprietary lease was executed and they received shares in the cooperative corporation issued to "Joseph Balsome and Catherine Taylor as joint tenants with right of survivorship."
In order to finance their purchase of the cooperative apartment, Mr. Balsome and Ms. Taylor entered into a loan agreement with Norwest Mortgage of New York, Inc. They executed a joint promissory note in the amount of $118,650.00 in exchange for the money to purchase the cooperative apartment. To secure the promissory note, Mr. Balsome and Ms. Taylor executed a loan security agreement that pledged their shares of stock in the cooperative corporation and they assigned their proprietary lease to Norwest. At some later date, but before Mr. Balsome's death, the promissory note was assigned to Wells Fargo Home Mortgage. After Mr. Balsome's death, Ms. Taylor, as surviving joint tenant, refinanced the loan and paid off the entire outstanding balance of $108,615.99. Ms. Taylor has been making the payments on the new loan and there is no indication that the loan is delinquent. Ms. Taylor now asserts that the estate of Joseph Balsome owes her 50% of the remaining principal balance on the original loan at the time of refinancing ($54,308), on the theory that both parties were jointly and severally liable and that the liability survived death.
Ms. Taylor also relies on General Obligations Law §15-106, which provides that "[o]n the death of a joint obligor on a contract, his estate shall be bound as such jointly and severally with the surviving obligor or obligors." However, the original note signed by Ms. Taylor and the decedent was paid in full when she refinanced that loan. Neither Ms. Taylor nor the decedent's estate has any further liability on the original indebtedness, as payment in full satisfaction of the indebtedness by any of several co-obligors necessarily discharges them all (American Guild of Richmond v Damon, 186 NY 360, 366 [1906]; 12 Williston on Contracts, §36:12). Clearly, there is no liability on the part of the decedent or his estate to the note holder [*2]of the original loan as it has been satisfied; nor is there any liability on the part of the decedent or his estate on the new obligation, as that was undertaken solely by Ms. Taylor.
What Ms. Taylor seeks, then, is contribution from the decedent's estate for half the amount of the outstanding indebtedness on the original loan obligation as of the date it was satisfied. "The doctrine of contribution rests on principles of equity and natural justice and not on contract" (Williston on Contracts, §36:14; accord, Hard v Mingle, 206 NY 179 [1912]; Rindge v Baker, 57 NY 209 [1874]). Ms. Taylor would have the court conclude that equity requires that although the decedent's interest in the subject property terminated by operation of law at the moment of his death, his estate should nevertheless pay half of the then-outstanding indebtedness on the purchase money loan. However, as surviving joint tenant, Ms. Taylor succeeds to the decedent's interest subject to the indebtedness. In a similar case wherein the surviving spouse of a decedent sought to require his estate to pay half the remaining balance on a purchase money loan which they used to finance the purchase of a home they owned as tenants by the entirety, the Supreme Court of Florida held, "[i]t is in our opinion unconscionable and inequitable to allow the law to take from one his interest in [property], yet hold him responsible for a part of the purchase price thereof which remains unpaid" (Lopez v Lopez, 90 So. 2d 456, 458 [1956]). The courts in New York are in accord with that conclusion ( Geldart v Bank of New York and Trust Company, 209 App Div 581 [2d Dept. 1924]; Robinson v Bogert, 187 Misc 735 [1946]; Matter of Dell, 154 Misc 216 [1935]).
Even if the original loan had not been paid off, the court would reach a similar result for the reasons set forth in Matter of Griffith (183 Misc 2d 210 [2000]). Accordingly, the court determines that Ms. Taylor's claim against the estate is invalid and should be disallowed.
This is the decision and order of the court.
Dated: March 22 , 2005
John B. Riordan
Judge of the
Surrogate's Court
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