Case ID: ny-st-rep_4/html/0433-01.html
Source: Caselaw Access Project
Author: {"author": "Churchill, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William E. Thorne, App’lt and Resp’t, v. Harriet H. Garner and Francis M. Iselin, Impleaded, Etc., Resp’ts and App’lts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed December 30, 1886.)
    
    1. Will—Legacy—When payable-—When it draws interest from DEATH OP TESTATOR.
    Ordinarily a legacy is not payable until the time fixed by the will for its payment or if no time be fixed until the period fixed by the statute has expired, and until payable, it draws no interest. But in the case of a legacy left by a parent to a child for whose maintenance no other provision is made and who, unless interest be allowed is without income intermediate the death of the testator and the legacy bee oming due, the legacy draws interest from the death of the testator. This rule is recognized and made to include one not a child, but to whom the testator stood in loco parentis.
    
    
      2. Same—When interest not payable from death of testator—On WHAT IT DEPENDS.
    A legacy given to an infant child by a will which makes other provision for its support does not draw interest from the death of the testator. The presumption of the intention of the testator upon which the rule as to payment of interest rests depends upon the tact that the ch.ld is dependent and not otherwise provided for, and not upon the fact of infancy.
    3. Same—What fact sufficient to show intention that interest be PAID ON LEGACY FROM DEATH OF TESTATOR.
    Where it appeared that the legatee had been in feeble health wholly dependent upon his father for the means of support of himself, wife and chi d ; ■ that he had no other source of income, and that from the time he became of a<re until his father’s death, his father had regularly each year furnished him the money necessary for his support, which had been increased from year to year. Held, That the father must have understood the son’s dependance upon him, and that the legacy was a provision for the son’s maintainance, and as no other provision was made for his maintainance intermediate the testator’s death and the time at which the legacy was payable the testator would be presumed to intend that it draw interest from his death.
    4. Executors and administrators—Accounting—Decree—Not binding AS TO MATTERS NOT INCLUDED IN THE ACCOUNT
    Where at the time an executor rendered his account he did not include in said account certain moneys which should have been entered as assets in his hands and under his control. Held, that the decree is not conclusive against parties interest in said money.
    5. Same—When compound interest allowed against.
    Compound interest is allowed against an executor in cases of gross delinquency, or as a penalty for negligence, or wrong doing, or for some clear violation of trust. For mere neglect to invest, simple interest is generally imposed.
    Appeals by the plaintiff, and by the defendants above named, from parts of judgment entered on report of referee.
    ■ H. A. Nelson, for pl’ff, appl’t and resp’t; Joseph H. Choate, Duncan and J. Evarts Tracy, for def’ts, resp’ts and appl’ts.
   Churchill, J.

Thomas Garner, Sr., died October 16, 1867, leaving a large real and personal estate considerably exceeding $5,000,000 in value. He left two sons, Thomas Garner, Jr., and William T. Garner, and three daughters. He left a will dated April 12, 1866, by which he made provision for each of his children. That for his son Thomas Garner, Jr., was as follows:

“Sixth. I give and bequeath to my son Thomas the sum of $1,000,000, to be paid him within eighteen months after my decease.”

He made his son William T. Garner his residuary legatee, thereby giving him a share of the estate considerably exceeding that of any other child. He appointed his two sons, one of his sons-in-law and the plaintiff in this action, executors. William T. Garner alone qualified and acted as executor of his father’s will. The personal estate provecí sufficient to pay all the legacies of the will and debts of the testator and to leave a considerable sum for the residuary legatee.

Thomas Garner, Jr., came of age October 9, 1859; he was married June 6, 1860; his only child, Frances M. Iselin, one of the defendants, was born July 3, 1861, and he died March 23, 1869, leaving a widow, the defendant Harriet H. Garner, and their child above named. He left a will dated November 12, 1867, appointing as executors and trustees of his estate his brother, William T. Gamer, with the plaintiff, both of whom soon after Ms death qualified and entered upon their duties as such.

In the early part of 1871, William T. Gamer, with the plaintiff, applied to the surrogate of New York for a final settlement of their accounts as such executors, of which the defendants, Harriet H. Gamer and her daughter, then an infant, had notice. No appearance for the widow or her daughter appears to have been made, except that a special guardian was appointed for the infant. April 4, 1871, a decree was made by the surrogate, adjudging the balance in the hands of the executors to be $840,861.37» and directing them, after paying commissions and the expenses of the accounting, to hold and invest the same as directed by the will, which was done by them.

The account as presented and allowed, credited the legacy of $1,000,000 under the will of Thomas Gamer, Sr., as-having been paid April 15, 1869, or at the end of eighteen, months from the death of the testator; and included no interest upon the legacy for any part of that period. It included an item for $177,754.03, charged as cash paid by the executors to Gamer. & Co. for moneys advanced by Gamer & Co. to Thomas Garner, Jr., during Ms life and before the legacy of $1,000,000 was paid.

Gamer &'Co. was composed of William T. Gamer and a nominal partner, who received a salary for Ms services and had no interest in the property or profits of the firm, and the moneys advanced by Garner & Co. to Thomas Gamer, Jr., were in fact paid by WiMam T. Garner, who as executor of his father’s will at the time when such moneys were paid to Thomas Gamer, Jr., and also at the time when said legacy was credited as paid had in Ms hands ample funds from which to pay the interest upon said legacy, if Thomas Gamer, Jr., was entitled to interest thereon from his father’s death.

William T. Garner died July 20, 1876, and the plaintiff has ever smce been sole executor and trustee under the wiE of Thomas Gamer, Jr. This action is brought by the plaintiff to obtain permission to resign those positions and for the appointment of a new executor and trustee; for an accounting subsequent to that before the surrogate in 3 871, and. for his discharge from further responsibility or accountability for the estate of Thomas Garner, Jr.

A previous action by the defendants, Harriet H. Garner and her daughter, against the plaintiff, was brought soon after the death of William T. Garner, asking, with other relief, for the removal of the plaintiff as trustee and the appointment of a new trustee, for an accounting, and particularly that he be required to pay and make good the said sum of $177,754.03 as having been improperly allowed upon the accounting before the surrogate.

That action was discontinued upon a stipulation providing that a proceeding should be commenced by the plaintiff to obtain the results sought in this action, and that upon the accounting to be had in that proceeding the decree made by the surrogate, above referred to, should be final, conclusive and binding upon the parties, except as to certain items the adjustment of which was agreed upon in the stipulation, and also except as to “certain moneys amounting in the aggregate to $177,754.03, which were paid by Garner & Co. on drafts of Thomas Garner, Jr., deceased, and for his account between the death of Thomas Garner, Sr., and the death of Thomas Garner, Jr., the question being not as to the fact that the money was paid to and for the account of Thomas Garner, Jr., but as to whether such payments are properly chargeable against against the legacy left by the said Thomas Garner, Sr., to the said Thomas Garner, Jr.” This action is not the proceeding contemplated when the stipulation was made, but is in the same direction, and the stipulation is conceded on both sides to be binding upon the parties to it in the accounting had in this action.

This action was referred, and the referee by his report has found that Thomas Garner, Jr., was entitled to interest upon his legacy from his father’s death, and that the payments of cash in the item of $177,754.03 should be treated as made by William T. Garner on account of that interest to the extent of it, and the excess only treated as a payment on the principal of the legacy, and he has readjusted the account to conform to those findings. By such readjustment he finds the sum of $109,860.54 to have been on deposit with Garner & Co., in the hands or under the control of the executors of Thomas Garner, Jr., and uninvested on the 31st day of January, 1871, beyond the amount accounted for in the accounting before the surrogate, and he allows simple interest upon that amount from that date.

The plaintiff insists that interest was improperly allowed by the referee upon the legacy of $1,000,000 from the death of Thomas Garner, Sr., and also that certain sums paid to William K. Thorne, as attorney for the executors of Thomas Garner, Jr., were allowed only in part.

The defendants, Harriet H. Garner and Frances M. Iselin, insist that compound and not simple interest should have been allowed upon the sum of $109,860.54, above mentioned.

These are the principal questions raised by the appeals, and the only ones necessary to be considered.

Ordinarily a legacy is not payable until the time fixed by the will for its payment, or, if no time be fixed, until the period fixed by the statute has expired; and until payable it draws ho interest.

To this general rule there are several exceptions; the most important Of which is the case of a legacy left by a parent to a child for whose maintenance no other provision is made, and who, unless interest be allowed, is without income intermediate the death of the testator and the legacy becoming due.

In such case the legacy draws interest from the testator. Green v. Belchier, 1 Atk., 505; Heath v. Perry, 3 id., 101; Hearle v. Greenbank, 3 id., 695, 716; King v. Talbot, 40 N. Y., 76; Brown v. Knapp, 79 id., 136; Redfield’s Surrogate Courts, 601.

The rule is thus stated by Lord Hardwicke (1 Atk., 506, A. D. 1737): “It being a constant rule in equity that whenever a legacy is given by a father to a child as a provision for such child, though the legacy be payable at a future day, yet the child has an immediate right to the interest of the money.”

And again (3 Atk., 102): “How far a legatee who is not entitled to the payment of his money immediately shall have interest in the meantime depends upon particular circumstances-. But all these cases are subject to this exception if it is in the case of a child; for then, let a testator give it how he will, either at twenty-one or at marriage, or payable at twenty-one, or payable at marriage, and the child has no other provision, the court will give interest by way of maintenance, for they will not presume the father inofficious or so unnatural as to leave the child destitute.” And this was a rule coming down from a much earlier period. In re George, 22 (Moaks’) Eng. Rep., 507, 510.

This rule is recognized and made to include one not a child, but to whom the testator stood in loco parentis in Brown v. Knapp, supra, where it is said (p. 142)- “ This rule is based upon the presumption that the testator in such case must have intended that the legatee should in meantime be maintained at his expense, thus discharging his moral obligation or carrying out his benevolent design. It is not needed for the application of this rule that the testator must have been under a legal obligation, at the time of his death, to support the legatee. Such obligation of a testator to support his own child continues only during his life. The duty of a testator in this case to provide for and support his infant grandchild was almost, if not quite, as strong as that of supporting his own child, and it must be presumed that he meant to discharge that duty-. This legacy, therefore, carried interest from the death of the testator.”

It is said that the rule is limited to legacies to infants. Most of the cases in which the question has arisen have been those of legacies to infants, and the language used in stating the rule has frequently been limited accordingly. But the moral obligation of a parent to make provisions for the support of a dependent child includes adult as well as infant children, and is certainly as great in the case of such adult child .as in that of one not a child, but to whom the testator has assumed the place of a parent. This moral or natural obligation is frequently referred to as the foundation of this rule, and upon it rests the provision of the Revised Statutes which makes the parent hable for the support of an indigent child, whether adult or infant. In re Rouse's Estate, 9 Hare, 649, 653; Brinkerhoff v. Merselis, 24 N. J. (law), 680; 1 R. S., 614, § 1; 2 Kent’s Com., 190.

A legacy given to an infant child by a will which makes other provision for its support is held not to come within the rule, showing that the presumption of the intention of the testator upon which the rule rests, depends upon the fact that the child is dependent and not otherwise provided for, and not upon the fact of infancy. '

The case of Bradner v. Faulkner (12 N. Y., 472), is cited as settling this question favorably to the plaintiff. In that case, the testator gave to one of his two daughters (both adult and married) a farm valued at $15,060, and a legacy of $16,000; to the other a farm valued at $31,060. The will declared it to be the intent of the testator to .give his daughters equal advantages in the disposition of his property. .The surrogate allowed interest upon the legacy from the father’s death. This was affirmed at general term but reversed by the court of appeals. The latter court said that the predominant intention of the testator was to give equality of benefit to his daughters, and considering the various provisions of the will in the light of that intent held interest upon the legacy to have been improperly allowed. That the interest was necessary to the maintenance of the legatee was not claimed. Indeed the contrary appeared, since she had a husband, presumably able to maintain her; and also the will gave her a valuable farm to the possession of which she would be entitled immediately upon her father’s death. The question involved here is not hinted at in the opinion of the court.

In this case the evidence showed Thomas Garner, Jr., to have been in feeble health ; that he was wholly dependent upon his father for the means of support of himself, wife and child ; that he had no other source of income ; and that from the time he became of age until his father’s death, his father had regularly each year furnished him the money necessary for his support.

The amount so furnished in 1864 was $3,012.91; in 1865, $8,088.35; in 1866, $9,336.48, and in 1867 to October sixteen, the date of his father’s death, $10,526.48.

From the regular increases of these annual amounts the father must have understood at the time of making his will and at the time of his death that his son was dependent upon him, and that that dependence was not diminishing. The legacy was a provision for his son’s maintenance. Unless interest be allowed, the son was without income intermediate the death of the testator and the payment of the legacy. The case furnishes the strongest ground for presuming the testator to have intended that his son’s legacy should draw interest from his death and the judgment in that respect should be affirmed.

It is claimed for the plaintiff that the surrogate’s decree on the accounting of the executors of Thomas Garner, Jr., made April 4, 1871, prevent the recovery by the defendants of interest on the legacy from the death of the testator. The stipulation made by the plaintiff with the defendants in consideration of which they discontinued the action commenced by them in the superior court, furnishes an answer to this claim.

Had the question raised here been raised before the surrogate, and interest on the legacy of $1,000,000 been allowed by him from the death of the testator, the payments of cash included in the item of $177,754.03 would undoubtedly have been held first to apply in payment of that interest, and to that extent to have been extinguished, and the remainder only to apply in payment of the principal of the legacy* and the same result would have been arrived at as to the balance due at the time of that accounting, as has been arrived at by the referee in this action. But the stipulation was obviously intended and understood by the parties as giving to the defendants the right to raise every question as to the allowance of that item or any part of it (except the fact of payment), which might have been raised on the hearing before the surrogate, and it was so treated on the trial of this case.

Besides, the interest upon this legacy, if legally allowable, must, under the facts of this case, be regarded as assets in the hands or under the control of the executors of Thomas Garner, Jr., at the time of rendering their account in 1871, and not having been included in that account, the decree is not conclusive against the claim now made by the defendants. Brown v. Brown, 53 Barb., 217; President, etc., Bank of Poughkeepsie v. Hasbrouck, 6 N. Y., 216, 221; Wurts v. Jenkins, 11 Barb., 546.

The plaintiff complains that part of the sums paid William K. Thorne for legal services and charged to the estate of Thomas Garner, Jr., were disallowed by the referee. The charges were for services in keeping down taxation on the Garner estate. The whole amount of taxes on personal property paid for that estate, as well as these charges for legal services, were charged against the estate of Thomas Garner, Jr., and his sister Anna James Garner, who was also left a legacy of $1,000,000 by her father’s will.

Upon the trial of this action it was stipulated by the parties that but one-fourth of the faxes so paid should be allowed against the estate of Thomas Garner, Jr., and the referee has adopted the same rule as to the sums paid for the legal services of William K. Thorne. This upon the evidence is quite as favorable to the plaintiff as he had a right to expect.

As to the claim of the defendants Harriet H. Garner and Frances M. Iselin that the plaintiff should have been charged with compound interest upon the sum of $109,860.54 with which the executors of Thomas Garner, Jr., were held to be chargeable and which had remained uninvested from January, 1871, the referee was justified in rejecting it.

Compound interest is allowed in cases of gross delinquency, or as a penalty for negligence or wrong-doing, or for some clear violation of a trust. For mere neglect to invest simple, interest is generally imposed. Clarkson v. DePeyster, Hopk., 424, 427; Hannahs v. Hannahs, 68 N. Y., 610; Utica Ins. Co. v. Lynch, 11 Paige, 520; Barney v. Saunders, 16 How. [U. S.], 535, 542.

In this case there is no evidence to show that the executors of Thomas Garner, Jr., supposed themselves chargeable with interest on this legacy until the question was raised in this action, or that they did not believe in good faith that they had invested for the benefit of their cestuis que trust, as directed by the surrogate, the whole trust fund with the care of which they were charged. There is no uniform rule of redress in cases of this kind, but each calls for the exercise of the judicial discretion of the court, and in this case that judicial discretion was properly exercised.

The judgment should be in all respects affirmed, without costs or the appeal to either party Barrett and Daniels, JJ., concur.