Perkins v Small
Attorneys and Parties
Brief Summary
This is a family business and estate dispute over whether shares of a closely held real estate corporation remained in a deceased father's residuary estate or had been transferred during his lifetime to one child.
The Supreme Court, Queens County, granted the plaintiff summary judgment declaring that she owned a 25% interest in Dayton Small Realty Co., Inc., denied the defendants' summary judgment motion, and declared that the corporation's shares should be distributed under the trust agreement.
The Appellate Division reversed the grant of summary judgment to the plaintiff and vacated the declaration that she had a 25% ownership interest and that the shares must be distributed under the trust, but otherwise affirmed the denial of the defendants' motion.
The plaintiff did not eliminate triable issues of fact as to whether the corporation was still part of the father's residuary estate when he died. At the same time, the defendants failed to prove as a matter of law that the father had validly transferred the corporation to Dayton before death, especially because their evidence of donative intent and delivery was insufficient without the written record required by the corporation's stock certificate.
Background
Dayton V. Small owned Queens real property and in 1993 formed Dayton Small Realty Co., Inc. In 1995, he prepared a deed conveying the property to the corporation. Dayton Robert Small, his son, later took over operations of the corporation and management of the property. In May 2000, the father executed a living trust naming himself and Dayton as co-trustees. The trust directed that, after the father's death, the residuary estate be distributed equally among the plaintiff Karin Perkins, Dayton, and two other siblings. The trust did not expressly direct distribution of the property or the corporation. The father also executed a will pouring his residuary estate into the trust and died days later. In 2019, the plaintiff sued for, among other relief, a declaration that she was entitled to an interest in the property through the trust. The defendants counterclaimed, asserting that the father had made an inter vivos gift of all corporate shares to Dayton, making him sole owner.
Lower Court Decision
The Supreme Court held that the plaintiff was entitled to summary judgment declaring that she had a 25% ownership interest in Dayton Small Realty Co., Inc. The court denied the defendants' motion for summary judgment dismissing the complaint and on their counterclaims, and declared that the corporation's shares should be distributed according to the trust agreement.
Appellate Division Reversal
The Appellate Division modified the order and judgment by deleting the grant of summary judgment to the plaintiff and deleting the declaration that she owned a 25% interest and that the shares should be distributed under the trust. The court held that factual issues remained as to whether the corporation was part of the father's residuary estate at death. However, it affirmed denial of the defendants' motion because they did not establish as a matter of law that the father had transferred ownership of the corporation to Dayton before death, nor did they establish laches or statute of limitations defenses. The court also granted in part the defendants' motion to strike portions of the respondent's appellate brief that raised new issues on appeal.
Legal Significance
The decision underscores that in ownership disputes involving closely held corporations and estates, neither side obtains summary judgment where the record leaves unresolved whether stock remained in the decedent's estate or was transferred during life. It also reinforces that a claimed inter vivos transfer of stock requires proof sufficient to satisfy the corporation's own documentary requirements, and that merely pointing to weaknesses in the opposing party's case is not enough to win summary judgment.
A beneficiary cannot obtain a declaration of ownership in estate-related corporate shares on summary judgment without conclusively proving that the shares were still estate assets at death, and a party claiming a lifetime gift of those shares must affirmatively prove a valid transfer with the required written evidence.