Case ID: ny-st-rep_17/html/0951-01.html
Source: Caselaw Access Project
Author: {"author": "Martin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Minnie B. Brown, Resp’t, v. Nathan C. Phelps, as Executor, etc., of Milo Mitchell, Deceased, App’lt.
    
      (Supreme Court, General Term, Fourth Department,
    
    
      Filed April, 1888.)
    
    1. Executors—Accounting—How adjusted in court of equity and of law.
    At law an executor will be charged with all the assets that come to his hands to be administered, and he must discharge himself by showing a legal administration of all of them. A court of equity will, however, adjust the accounts of an executor upon equitable principles.
    3. Same—Petition in surrogate’s court to compel payment of legacy —When surrogate can pass upon Code Civ. Pro. § 2717.
    The petition of the plaintiff herein showed that the testator had given a legacy to her and had given the rest and remainder of his estate hath real and personal to his four children. That the executor, after paying the debts of the estate and deducting an amount largely in excess of that to which he was entitled had turned over to said children of the testator the residue of the estate, amounting to over §8,000, without providing for the payment of the legacy in queslion or giving them any notice of liis so doing, but taking from them a written release from any claim. Thereafter the petitioner obtained a judgment in the supreme court against the said executor for the amount of her legacy and then instituted these proceedings to compel the executor to account and pay her legacy. The executor set up in his answer that there was no money in his hands to pay the petitioner’s claim. Held, that there was no written verified answer which set forth facts that cast any doubt upon the petitioner’s claim, nor was there any denial of its validity or legality which had been conclusively proved by the judgment. That such an answer did not require the surrogate to dismiss the respondent’s petition under Code Civ. Pro., § 2717.
    •3. Same—Executor can not delegate to a legatee his power to PAY DEBTS.
    . .The executor claimed that inasmuch as he had transferred the entire estate to the residuary legatees, who had agreed to pay the debts of the testator and inasmuch as they had paid debts to an amount which, if added to the amount of those paid by him would exceed the value of the personal estate which came into his hands, he should not he required to pay the plaintiff's judgment against him. II. Id., that he could not take advantage of the debts paid by the residuary legatees, nor have them allowed in his account. That the executor could not delegate his powers as such to these legatees, nor did the payments by the legatees inure to his benefit as against this plaintiff.
    Appeal from, a decree made by the surrogate of Oneida county, upon the petition of Minnie B. Brown, the respondent, as legatee under the will of Milo Michell, deceased, compelling the executor to render an account and to pay her legacy.
    The wiU in question was “ I give and bequeath to my wife, Ann,- one-third of all my real estate, after paying all debts and claims which are now due or hereafter to become due on said real estate during her life.
    “Second. I give and devise to my daughter Catherine, the sum of $3,000, to be put in the hands of James Mitchell, my son, to pay the interest to said Catherine, on the first day of January in each and every year during her life. If the said Catherine have issue at the time of her death, then the said $3,000 is to be divided with said heir or heirs. If the said Catherine has no issue then the said $3,000 is to bo divided equally between my lawful heirs.”
    “Third. I give and devise all the rest and remainder of my real and personal estate of every name and nature equally between my said children, viz., Caroline, James, Sarah and Isabella, after deducting all moneys heretofore given to them or loaned to them by note or otherwise, to have and to hold the same, their heirs and assigns, forever. But there is no part of the above legacies to be paid until the said real estate is all clear from incumbrances. It is to be kept together, as it is now, until the rents pay for the same, under the control of ply executor.”
    “ Lastly. I do hereby nominate and appoint Nathan C. Phelps to be the executor of this, my last will and testament, etc.”
    The testator died in March, 1870. The executor qualified in 1870, and immediately took possession of all the real and personal estate of the testator, inventoried at $16,-657.47, besides four farms and a cheese factory. He managed and controlled the same for over two years, and until after the death of Catherine, in 1877, who died without issue. No part of the $3,000 legacy to Catherine was ever paid to her.
    At the time of Catherine’s death, Milo Mitchell’s only heirs were his four children, Sarah, James, Caroline and Isabella, and two grandchildren, James M. Brown and Min-1 nie B. Brown, the respondent, who were then both infants.
    One of the farms, known as the Hall farm, was encumbered by a mortgage of $500. Another, called the Camp farm, had been purchased by testator from James Stevens
    
      and others, and was entirely unpaid for. The.contract price was $14,000, of which $3,000 was payable in April, 1870, and the balance ($11,000) in April, 1875. These were the only incumbrances on the testator’s real estate, except a certain lease reserving rent on one of the farms.
    The executor paid debts of the testator amount-
    ing to...................................... $5,308 80
    The executor paid on Stevens’ contract from personal property......................----.... 2,000 00
    The executor paid expenses of administration,
    etc......................................... 410 00
    Commissions were............................ 217 00
    $7,937 28
    Leaving a balance unaccounted for after deducting this from the amount of inventory....... $8,720 19
    James Mitchell presented a claim against the testator’s estate for $13,000 which was never paid by the executor. The executor retained the possession and control of the testator’s entire estate real and personal until 1873, when with the exception of $1,200 retained by him for his services and expenses, he turned the whole estate over to James Mitchell, Isabella Wood and Sarah Witherell. (James Mitchell had acquired the interest of Caroline Depuy in addition to his own) and received from them the following agreement:
    “In consideration of $1.00 to each of us paid by Nathan C. Phelps, executor of the last will and testament of Milo Mitchell, late of the town of Remsen, N. Y., deceased, and the surrender to us of the goods, chattels and property of said deceased we, James Mitchell, Sarah Witherell and Isabell Wood, children and heirs-at-law of the said Milo Mitchell, and legatees under his last will and testament aforesaid, do hereby forever release and discharge the said Nathan 0. Phelps as such executor as aforesaid, of and from the payment of any and all of the legacies given to us, or either of us, and of and from the delivery of any property, rights or interest to us, or either of us, belonging under such will aforesaid, and the said Nathan C. Phelps is. hereby discharged from his duties as such executor aforesaid, as fully and completely as he could be by the courts, after a full and complete accounting.
    Witness our hands and seals, this 17th day of December, 1873.”
    [Signed,] J. MITCHELL, [l. s.]
    SARAH WITHERELL, [l. s.] ISABELL WOOD, [l. s.]
    
      These three took a conveyance of the Camp farm, subject to the mortgage debt of $11,000, and assumed and agreed to pay it. Of this surrender, transfer and agreement the petitioner and her brother, James M. Brown, who were then infants, had no notice. Bpt the father of said infants notified the executor at the time of this transfer and division of their claim or interest in the aforesaid $300 legacy. In the division of the property between themselves, after paying certain debts amounting to $5,932.33 and allowing James Mitchell upon his claim $4,200 over and above the claims of the estate against him, they took the remainder.
    James Brown assigned his interest in the $3,000 legacy to Minnie, and thereafter she brought suit and obtained a judgment in the supreme court against the executor for the amount of her interest in said legacy. After obtaining such judgment, she instituted these proceedings in the surrogate’s court, and the executor appeared and answered that he had in his hands “no assets, money or property of any name or nature in his hands belonging to the estate of said testator; that on or about December 17, 1873, this executor turned said estate over to James Mitchell, Isabella M. Wood and Sarah Witherell, as he claims, in pursuance of the provisions of the last will and testament of said Milo Mitchell, deceased; that the legacy and judgment mentioned in the complaint were not a lien or in any manner charged upon the real estate of said testator, and that therefore there was no fund from which the same could be paid.”
    He was ordered by the. surrogate to render an account, which he did. His account was contested and the surrogate finally held that he should be charged with the amount of the personal estate shown by the inventory to have been received by him and be credited only with his commissions and payments set forth in the foregoing statement, which left $8,720.19 to be accounted for by him, from which he should pay to the said Minpie Bell Brown the full amount of said claim and interest, amounting in the whole to the sum of $2,208.66, together with the sum of $320.73, the costs of said Minnie Bell Brown in these proceedings, making a total of $2,529.49.
    
      Walter Ballou, for app’lt; John S. Baker, for resp’t.
   Martin, J.

We do not think that the appellant’s claim that the surrogate’s court had no jurisdiction of the proceedings instituted to compel the payment of this claim, can be sustained. Section 2717 of the Code of Civil Procedure authorizes such a proceeding. There was no written, verified answer which set forth facts that cast any doubt upon the petitioner’s claim ; nor was there any denial of its validity or legality, either absolutely or upon information and belief. Moreover, the validity and legality of the respondent’s claim had been conclusively established, by a judgment between the parties, rendered in an action in the supreme court. The answer set up that there was no money in the appellant’s hands with which to pay the petitioner's claim. Such an answer did not require the surrogate to dismiss the respondent’s petition. It is only when it is not proved to the satisfaction of the surrogate that there is money or other personal property of the estate applicable to the payment or satisfaction of the petitioner’s claim, and which may be so applied without injuriously affecting the rights of others entitled to priority or equality of payment or satisfaction, that the surrogate must dismiss the petition. Code Civ. Pro., § 2718 ; Matter of Macaulay, 94 N. Y., 574. Obviously such was not the case here. The only question before the surrogate, on the merits, in this proceeding was, whether there was money or property belonging to this estate which was applicable to the payment of the respondent’s judgment, and which might be so applied without affecting the rights of others entitled to priority or equality of payment. To determine that question an accounting was ordered. On the accounting it was held, that there was money or property to the amount of $8,720.19 for which the appellant was liable to account, and which to the extent of the respondent’s judgment and costs should be applied in payment of her claim.

But the appellant claims that inasmuch as he had transferred the entire estate to the residuary legatees, who agreed to pay the debts of the the testator, and inasmuch as they had paid debts to an amount which, if added to the amount of those paid by him, would exceed the value of the personal estate which came into his hands, he should not be required to pay the respondent’s judgment against him. The surrogate has held otherwise. The appellant’s method of discharging the duties of executor and trustee is novel, but not to be commended. If that method of disposing of a trust estate were to be upheld, a most dangerous precedent would be established. These legatees may have paid themselves and other creditors the amount claimed but the executor has not. Nor has the executor passed upon the justice or validity of these claims, except that of James, which he had already rejected. It maybe that these claims were just and valid, and would have been allowed and paid by the executor if they had been properly presented to him, and he had remained at his post of duty. They were, however, neither allowed nor paid by him. They were voluntarily paid by these legatees. This executor could not delegate his powers, as such, to these legatees, nor do the payments by the legatees inure to his benefit as against this respondent. Matter of Keef, 43 Hun, 98 ; S. C., 6 N. Y. State Rep., 587. The debts against this estate are also evidently barred by the statute of limitations.

At law an executor will be charged with all the assets that come to his hands to be administered, and he must discharge himself by showing a legal administration of all of them. A court of equity will, however, adjust the accounts of the executor upon equitable principles. 1 Perry on Trusts, § 407. If the appellant had administered his testator’s estate as he was in duty bound to do, on a final settlement before the surrogate the rights of the respondent and her brother, as well as the rights of the other legatees under the wifi, could have been determined and adjusted, and the appellant would then have been properly discharged from his liability as such executor. Although the duty of this executor was plain, yet, instead of discharging his legal obligations to the creditors and legatees, he retains for his own services at least five times as much as the surrogate finds him entitled to, and with knowledge of the respondent’s claim, surrenders the whole estate to the other legatees, leaving these infant heirs of the testator wholly unprotected, and the payment of their legacies unprovided for. There may have been no collusion between the appellant and the residuary legatees, still, the facts are not such as to establish any very strong equities in favor of this executor. We think the surrogate was right in holding that the payments made by these legatees were not payments by the executor; that there was sufficient property in the hands of this executor to pay the respondent’s judgment and costs, and in making the decree appealed from.

It fofiows that the decree and order appealed from should be affirmed, with costs.

Hardin, P. J., and Follett, J., concur.