Case ID: ad_53/html/0193-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Judicial Settlement of the Account of Henry McAleenan, as Executor, etc., of Margaret Lavery, Deceased. Mary Lavery and Others, Infants, by Augustine R. McMahon, their Special Guardian, and the said Special Guardian as such, Appellants; Henry McAleenan, as Executor, etc., of Margaret Lavery, Deceased, and Others, Respondents.
    
      Appeal from a surrogate’s deci-ee— no exception isnecessary inhere, on the facts found by a referee, the surrogate sustains an exception to his conclusion of law — an assignment of a fund in trust to one who is also the assignor’s executor does not charge him as executor with the fund.
    
    Where a surrogate, without disturbing the findings of fact of a referee appointed to hear objections to an executor’s accounts or making any additional findings of fact, sustains an exception to his conclusion of law, no exception to the surrogate’s decision is necessary to enable the Appellate Division to review its correctness on an appeal from the decree entered thereon.
    Where the beneficiary of certain life insurance policies assigns the same before her death in trust for the benefit of her children, the fact that the trustee is the person named as executor in her will does not render him chargeable as executor with the proceeds of the policies received by him after the death of the beneficiary.
    Appeal by Mary Lavery and others, infants, by Augustine R. McMahon, their special guardian, and the said special guardian as such, from the following, portions of a decree of the Surrogate’s Court of the county of Hew York, entered in said Surrogate’s Court on the 12th day of March, 1900, settling the accounts of Henry McAleenan, as executor, etc., of Margaret Lavery, deceased.
    “I. Wherein the said surrogate modifies the referee’s report herein by *subcharging the account of the accountant with the benefit fund in the Catholic Benevolent Legion, amounting to $3,000, and the benefit fund in the United States Council of Royal Arcanum, amounting to $2,998, and such trust company interest as he has received thereon.
    “II. From, that portion of the decree wherein it is ordered, adjudged and decreed that the said amount be finally and judicially settled and allowed as filed, adjusted and therein stated by said surrogate.
    “ III. Also from that portion of the decree wherein it is found that the benefit fund, by virtue of the certificate bearing No. 18,753, issued to John La very, in the Catholic Benevolent Legion, a duly authorized fraternal organization under the laws of the State of New York, amounting to $3,000, and paid to Henry McAleenau, is not exempt by law from creditors of the estate of the above-named decedent, and said sum should be surchai’ged to the account of the accountant, with such trust company interest as he has received thereon.
    “ IY. Also from that portion of the decree wherein it is found that the benefit fund, by virtue of the certificate issued to John Lavery, in the United States Council of Royal Arcanum, a duly authorized fraternal organization under the laws of the State of New York, amounting to $2,998, and paid to Henry McAleenan, is not exempt by law from creditors of the estate of the above-named decedent, and said sum should be surcharged to the account of the accountant, with such trust company interest as he has received thereon.
    “Y. Also from that portion of the decree which awards costs to the creditors, Edward T. Cody, Lawrence H. Quinn and James Hagerty & Company, to be paid out of the funds of the estate, in so far as it directs such payment out of the benefit or insurance moneys above set forth.
    “ YI. Also from that portion of the decree wherein it is ordered, adjudged and decreed that the accountant pay the following creditoi’s: Bernheimer & Schmid, $3,322.11; James Hagerty & Company, $643.93; Lawrence H. Quinn, $331.10; Edward T. Cody,
    
      $208.84; and John McMahon, $47.50, in so far as it directs such payment out of the benefit or insurance moneys above set forth.
    
      “ VII. Also from so much of the decree as adjudges and decrees that, after making the payments therein directed, there remains in the hands of the accountant herein the sum of $2,423.99.”
    
      Augustine R. McMahon, special guardian, appellant in person.
    
      W. Arrowsmith, for the executor and testamentary guardian.
    
      M. Edward Kelley, for James Hagerty & Co., creditor, respondent.
    
      James F. Fogeriy, for Edward T. Cody, creditor, respondent.
    
      A. C. Weil, for L. H. Quinn, creditor, respondent.
   Ingraham, J.:

The executor to whom letters testamentary of the estate of Margaret Lavery had been issued presented his accounts to the sur-, rogate for settlement, and creditors of the estate filed objections to the accounts, based upon the failure of the executor to charge himself with various sums of money received from benevolent associations which became payable to the testatrix as widow of John Lavery, deceased. The questions presented on the accounting were referred to a referee. It appeared from the testimony before the referee that the executor received from two benevolent associations the sum of about $5,998 ;. that John Lavery died on the 10th of December, 1897, and Margaret Lavery, his wife, the testatrix, on the 22d of December, 1897 ; that they left four infant children, who are the appellants in this proceeding and who were parties to the accounting. The executor qualified on the 29th day of January, 1898, and he also qualified as testamentary guardian of these four infant appellants on the same day, and subsequently received the amounts payable by the benevolent associations which he held as guardian for the infant appellants. There were two benevolent associations; one, known as the Catholic Benevolent Legion and the other the Royal Arcanum, of both of which John Lavery was a member. After the death of John Lavery proof of loss was furnished to these associations. It further appeared that a certificate of membership of the Catholic Benevolent Legion had been issued to John Lavery, and that Margaret Lavery, his wife, was named as beneficiary in said certificate. The benefit payable on the death of John Lavery was $3,000. This amount was paid by check dated March 19, 1898, payable to the order of Margaret Lavery, wife and beneficiary of John Lavery, deceased; was indorsed by Margaret Lavery, wife and beneficiary of John Lavery, by Henry McAleenan, executor, and was duly paid. In regard to the Royal Arcanum, it appeared that John Lavery was a member of the corporation, an organization incorporated under the laws of the State of Massachusetts for the purpose of helping widows and orphans and members; and that association paid $2,998 by a check to McAleenan, as guardian for the children of John Lavery.

There were introduced in evidence two instruments executed on December 17, 1897, by Margaret Lavery, and duly acknowledged, by one of which she sold, assigned and transferred unto Henry McAleenan, as “ trustee for my children, Mary, Catharine, Daniel and Margaret Lavery, all my right, title and interest to the benefit certificate Number 18,753 of the Catholic Benevolent Legion, and hereby authorize him to collect the insurance money due me thereunder from the Supreme Council of the Catholic Benevolent Legion, or from whatever source the same is payable to me.” The other instrument was in substantially the same form, and sold, assigned and transferred her right, title and interest in and to the benefit certificate issued by the society known as the Royal Arcanum of the city, of New York. It appeared that when these instruments were executed by the testatrix she stated to her attorney who drew them that she wanted this money to go to her children ; that after she executed them she- handed them back to her attorney, who said, “ Mrs. Lavery, I will hand these to Mr. McAleenan ? ” and she said “ Yes.” The constitution of the Royal Arcanum provides that “in case of the death of the person or persons named in the order before delivery is made, the order shall be returned to the Supreme Secretary with a statement of the facts signed by the Regent, Treasurer and Secretary, under seal, and a new order shall be drawn, payable to the person or persons entitled to the benefit.”

Upon this evidence the referee found that prior to the decease of Margaret Lavery, subsequent to the death of John Lavery, and before the collection by Margaret of the benefits which she was then entitled to receive from the Catholic Benevolent Legion and the Royal Arcanum respectively, she made and executed two instrumonts of assignment, under seal, both dated December 17, 1897, one of which specified that she sold, assigned and transferred, to i 1 enry McAleenan, trustee for her children, Mary, Catharine, Daniel and Margaret Lavery, all her right, title, etc., to the benefit certificate No. 18,753 of the Catholic Benevolent Legion, and authorized him to collect the insurance money due her thereunder from the Supreme Council of the Catholic Benevolent Legion, or from whatever source the same was payable, etc.; and the other of which specified that she sold, assigned and transferred unto Henry McAleenan, as trustee for her children, Mary, Catharine, Daniel and Margaret Lavery, all her right, title and interest in and to the benefit certificate issued by the society known as the Royal Arcanum of the city of New York, all her interest in and to the insurance due to her, and authorized him to collect any insurance money due thereunder or in consequence of her husband, John Lavery, being a member of said order; that at the time of the execution of the said instruments of assignment the said Margaret Lavery was ill and confined to her bed; that W. Arrowsmith, Esq., was her legal adviser and attorney, and that she directed him to deliver said instruments to Henry McAleenan; that he delivered said instruments of assignment to said Henry McAleenan; that said Margaret Lavery, at the time of her death, was indebted to certain persons specified in the report of the referee for goods sold and delivered to her; and, as a conclusion of law, that Henry McAleenan, the executor of Margaret Lavery, deceased, was bound to account for several sums of money collected by him as such executor, but that so much of such moneys as he collected and received from these two benevolent associations, aggregating $5,998, is exempt from the claims of the creditors of Margaret Lavery, deceased, and that none of the creditors are entitled to receive any part thereof; that Henry McAleenan is chargeable with and bound to account to the infant children of Margaret Lavery, deceased, for the amount collected from such benevolent associations.

To this report the creditors filed exceptions which, coming on before the surrogate, were sustained, the surrogate holding that the moneys paid by these associations were exempt from the claims of the creditors of John Lavery, and were also exempt from the claims of the creditors of Margaret Lavery until they were actually paid, but that by their payment to her or to her executor, they lost their special exempt character and became, like other assets of her estate, subject to the payment of her debts; and a decree was entered sustaining such exceptions and surcharging the executor with the total amount of the money received by him, including the amounts paid to him from these benevolent associations. From that decree the special guardian for the infants and the executor appeal.

There were no findings by the surrogate, and it is claimed by the respondent that in the absence of exceptions filed by the appellants, no question is presented to the appellate court for review. We think, however, that this claim cannot be sustained. The facts were found by the referee and they stand in place of a finding of fact by the surrogate. The surrogate did not disturb these findings of fact, but upon the facts found by the referee sustained the exceptions to his conclusion of law that the executor was not chargeable with these sums received from these benevolent associations. Flo exception to that conclusion of law was possible, as no separate findings were made by the surrogate. Upon the appeal from the decree the question is presented as to whether the surrogate correctly determined the question of law.

The cases relied on by the respondents do not apply. In Matter of Bradway (74 Hun, 630) the appeal was from the decree which sustained an exception to a finding of fact by the referee, and it was held that under those circumstances a mere appeal from a decree brings up no question for review. That decision was based upon Matter of Sprague (125 N. Y. 732) where the court said that the record did not contain any exceptions to the findings or to the decision of the surrogate. But that case was tried by the surrogate, who made no findings, and, consequently, neither the General Term nor the Court of Appeals could review the decision of the surrogate upon the facts. In Matter of Yetter (44 App. Div. 408) we held that when a referee is ordered to hear and determine there is no trial before the surrogate within section 2545 of the Code. Here the facts were found by the referee and adopted by the surrogate •as the basis of his decree, the question being one of law, as upon the facts found by the referee the surrogate by his decree charged the executor with the amount of these benefits paid by the benevolent associations.

The question is, therefore, presented as to whether the executor of the estate is chargeable with moneys which had been assigned and transferred by the testatrix before her death to a trustee for the benefit of her children. If that assignment operated as a valid transfer of her interest in the moneys which she was entitled to receive from these benevolent associations, the fact that the trustee to whom those assignments had been made and delivered was the same person named as the executor in her will, would not justify the surrogate in charging the executor with the amounts that the trustee liad received under the assignment. If these transfers are without consideration, they may be attacked in a court of equity, as made with intent to hinder, delay and defraud creditors, but the surrogate has no jurisdiction to pass upon that question or to adjudge them void. (Matter of Randall, 152 N. Y. 513.) If the creditors are to reach this fund in the hands of the trustee they must proceed in a court of competent jurisdiction, in a proper action brought for that purpose. Upon this accounting the question is as to the property of the estate of the deceased, and the executor cannot be charged with any money or property except that which was the property of the testatrix at the time of her death. As to one of these associations, the Royal Arcanum, the referee found that the demand was transferred by the testatrix before her death and the money was paid, not to the executor as such, but to the trustee for the children of the deceased, and was received by him in that capacity, and is held by him as such trustee. As to the Catholic Benevolent Legion, the referee found as a fact that the testatrix transferred all her right, title, etc., to the certificate to Henry McAleenan as trustee for her children ; that he was authorized to collect the insurance money due thereon from whatever source the same was payable, and that that instrument was executed and delivered by the testatrix to Mr. Arrowsmith as her attorney, with a direction to deliver the same to Henry McAleenan, and that he delivered such instrument to the said Henry McAleenan. This report was confirmed, except so far as the conclusion of law is modified surcharging the executor with the amount paid by these benevolent associations. The finding of fact standing unreversed, it would follow that the deceased parted with her interest in these,moneys by the assignments and transfers, and that at the time of her death the legal title thereto had vested absolately in the trustee for the benefit of the children, and that the claims against the institutions were no part of her estate.

It follows that the decree of the surrogate surcharging the executor with moneys which formed no part of the estate of the testatrix at the time of her death, and sustaining the exceptions to the referee’s report must be reversed, with costs to the executor and the guardian ad litem to be paid out of the estate, and the case remitted to the surrogate to settle the accounts of the executor in conformity with the views before expressed.'

Van Brunt, P. J., O’Brien, McLaughlin and Hatch, JJ., concurred.

Decree reversed, with costs to the executor and guardian ad litem, and to be paid out of the estate and case remitted to the surrogate as directed in opinion.