IN RE: Michael V. BLUMENTHAL

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Supreme Court, Appellate Division, First Department, New York.

IN RE: Michael V. BLUMENTHAL, et al., Petitioners-Respondents, For a Decree, etc., Daniel Kingsford, Respondent-Appellant.

Decided: September 26, 2006

BUCKLEY, P.J., SAXE, WILLIAMS, SWEENY, MALONE, JJ. Kornstein Veisz Wexler & Pollard, LLP, New York (Daniel J. Kornstein of counsel), for appellant. Berger & Webb, LLP, New York (Steven A. Berger of counsel), for respondents.

Decree, Surrogate's Court, New York County (Eve Preminger, S.), entered on or about June 16, 2005, which awarded petitioners the principal sum of $1,904,604.37, unanimously affirmed, without costs.   Appeals from orders, same court and Surrogate, entered March 31 and June 6, 2005, which confirmed reports by the Judicial Hearing Officer, unanimously dismissed, without costs.

 Respondent Kingsford is a former executor who was also employed to handle the estate's real estate business pursuant to an employment agreement authorized by the decedent's will.   Shortly after the decedent's demise, this respondent made systematic, unauthorized transfers to himself, his wife and entities with which his wife was affiliated, claiming he was entitled to such monies as disposition incentive payments under the terms of the will or the employment agreement.   Several other payments to him were similarly unsubstantiated.   The Judicial Hearing Officer found that respondent, as a faithless servant, forfeited all salary and other compensation after his first faithless act (see Maritime Fish Prods. v. World-Wide Fish Prods., 100 A.D.2d 81, 474 N.Y.S.2d 281 [1984], appeal dismissed 63 N.Y.2d 675 [1984] ), including compensation received from Wise Acre, which functioned as an in-house real estate broker (see Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184 [2d Cir.2003] ).   In light of respondent's repeated disloyalty throughout his tenure, there is no merit to his assertion that there should have been an apportionment of his salary or of Wise Acre commissions as to which disloyalty was not found.   There is also no merit to his argument that disgorgement of compensation received by a faithless employee should be disallowed as tantamount to the imposition of punitive damages (see Soam Corp. v. Trane Co., 202 A.D.2d 162, 608 N.Y.S.2d 177 [1994], lv. denied 83 N.Y.2d 758, 615 N.Y.S.2d 875, 639 N.E.2d 416 [1994] ).   Finally, we decline the invitation to abolish the faithless servant doctrine, which has long been the law of this State.