Case ID: ny-st-rep_27/html/0789-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Adlington, S.", "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 Estate of Sylvanus S. Millard, Deceased.
    
      (Surrogate’s Court, Monroe County,
    
    
      Filed November 8, 1889.)
    
    1. Executors and administrators—Liability for failure to collect assets.
    Among the assets of an estate was a note of testator’s son. • The executor visited the son in Maryland, but took no steps to collect the note. The son became embarrassed and his farm was sold, the executor buying it in individually, at which time he surrendered the note and took a new one, which proved worthless. Held, that the debt was lost through the negligence of the executor, and he should be charged with it.
    %. Same—Cannot pay principal to owner of life estate.
    The will gave the residue of the estate to testator’s wife to be used for her benefit during her life; gave the executor power to sell real estate, the use of the proceeds^ to be given to his wife for life, and on her death it gave legacies and directed the remainder to be distributed among his heirs. The entire personal estate was needed to pay debts, etc. Held, that the act of the executor in turning over the entire personal property and proceeds of. sale of real estate to the widow was unauthorized, and he must account therefor.
    Exceptions to report of referee on settlement of accounts of Executor.
    
      J. H. Chadsey, for executor; Horace McGuire, for contestant.
   Adlington, S.

The will of the above named decedent, after directing the payment of debts, bequeaths absolutely to the testator’s wife all of his household furniture. It then gives to his son, Henry, the executor, a bequest of $1,000, and proceeds as follows, viz.:

“ Fourth. I will and bequeath to my beloved wife, Margery Millard, all the residue and remainder of my real and personal estate, to be used for her own personal benefit during her natural life. I hereby authorize my executor, hereinafter named, with the advice and consent of my wife, Margery, to sell in part or all of my real and personal estate, and the use of the money arising therefrom shall be. as above stated, given to my wife Margery, for her benefit and support during her natural life, and, after her decease, I will my daughters, Barbery S. Rich, Jennett Ann Clark, Freelove A. Everett, and Alexander S. Millard, each one, five hundred dollars. The remainder of my estate to be equally divided among all of my heirs.”

The will is dated December 15, 1873, and the testator died June 27, 1876.

The account of the executor states that the testator’s estate consisted of a house and lot, worth $1,200; a small farm, worth $1,500, and a mortgage, and certain promissory notes, having an apparent value of about $2,700. Of these notes several were reported worthless, among the number being one made by Barzilla Millard, a son of the testator. There was realized from the personal assets somewhat more than $1,400, out of which were paid the debts of the testator, amounting to about $465, and the remainder was turned over to the widow by the executor. In 1881 the farm was sold for $1,500, of which the executor retained $700 to apply on his own legacy above mentioned, and paid over the remaining $800 to the widow. The latter died in August, 1885, leaving no property.

Objections were filed to thé account, the matter was referred, and the questions now to be considered come up on exceptions to the referee’s report.

The referee found, in effect, that the indebtedness of Barzilla Millard to the estate, heretofore mentioned, was not collectible, and that the account of the executor should not be surcharged with the amount thereof. This, I think, was error. It appeal's from the evidence that Barzilla had given to his father in 1875 his promissory note for $387.32, payable on demand, and that this note came into the executor’s hands in the fall of 1876 as a part of the testator’s assets.

Barzilla at that time owned a farm in Maryland worth from $3,000 to $4,000, which was incumbered to an amount not exceeding $1,200. The executor visited Barzilla in Maryland soon after he had received letters testamentary and had come into possession of the note aforesaid. A judgment on the note could then have been easily obtained, either by confession or action, and such judgment would have insured the ultimate collection of the debt by making it a lien on the farm. A mortgage would have made the claim equally secure, and could probably have been obtained.

The executor, however, did nothing. Barzilla contracted other ■debts. Judgments were -taken against him, and at last, in 1879, the farm was sold on execution, was bought in by the executor individually, and was afterwards mortgaged by him for $1,850, and a large part of the money so obtained was used in paying off claims against Barzilla.

On the same day that the executor became the purchaser of Barzilla’s farm, he surrendered the note of 1875 and took the one which he now holds for $519 in renewal of the former. The new note is signed by Barzilla alone, and is worthless. This debt seems to have been lost through the negligence of the executor, and he should be charged with the value thereof.

An executor is bound to try to collect a debt due from a solvent person in another state, * * * and when such debt is lost by his neglect, he is liable. Shultz v. Pulver, 3 Paige, 182; .aff’d 11 Wend., 361; see, also, Harrington v. Keteltas, 92 N. Y., 40; Hollister v. Burritt, 14 Hun, 291-293; Holcomb v. Executors of Holcomb, 11 N. J. Eq., 281-300; Powell v. Evans, 5 Vesey’s Ch., 839-844.

A second question arises in regard to the turning over to the widow, by the executor, of the entire personal estate after payment •of debts ; and also in regard to the payment to her of the sum realized from the sale of the farm, less the $700.00 applied on the •executor’s own legacy.

The decision of this point depends wholly on the construction ■of the fourth clause of the decedent’s will above quoted.

The executor maintains that, by virtue of that clause, the widow took an absolute title to the testator’s property, and had a right to its possession, and to use the whole for her benefit and support This is the view taken by the referee.

The contestant, on the contrary, insists that the widow was entitled only to the use, or income, of the residuary estate during life, and that it was the duty of the executor to preserve the principal for distribution to the legatees after the widow’s death.

I think that the latter is the correct construction of the instrument.

Tne testator, in the first clause of the will, had given his wife ull his household furniture absolutely. In the fourth clause he •evidently intended to make a different disposition of the residue, .and to give her the use only of that portion of his estate remaining after payment of debts and of the executor’s legacies.

That he aid not intend to give her power to exhaust the principal seems plain from the fact that nearly the whole of such principal would be required to satisfy the legacies directed to be paid therefrom after the widow’s death.

It is also to be observed that the power to sell either the personal or real property was lodged, not in the widow, but in the executor. Ho part of the personal property should have been turned over to the widow, except the household furniture.

By the third clause of the will an absolute legacy of $1,000 was given to the executor, Henry Millard. That legacy was payable-in one year after the issue of letters testamentary, out of the personal estate. The satisfaction of this legacy, the payment of testator’s debts, and of funeral expenses, and of the executor’s commissions and expenses, would have just about exhausted the collectible personal assets, and, if the executor had followed the plain rules of the law in the premises, no question could have arisen in regard to the ownership or disposition of such personal assets.

So long as the land remained unsold the only “ use ” the widow could make of it would be to occupy and work it, or to lease it; and it seems very clear that when a part was sold, she took under the will only the interest, or income, of the money realized therefrom. When, therefore, the executor turned over to her a part of the principal derived from such sale, and paid part to himself as legatee, he did that which he was not authorized by law to do,, and he must now account for the fund. Calkins v. Calkins, 1 Redf., 337; Tyson v. Blake, 22 N. Y., 558; Terry v. Wiggins, 47 id., 512, 515 ; Livingston v. Murray, 68 id., 485 ; Matter of Cager, 46 Hun, 657; 13 N. Y. State Rep., 45.

This case is clearly distinguishable from those in which the testator gives to a beneficiary, during life, the use of property for his support or benefit, and then directs that the “residue,” or “ the remainder,” or “what remains,” or “what is left,” shall be divided among certain specified persons. Examples of this kind are, Cohen v. Cohen, 4 Redf., 48; Spencer v. Strait, 38 Hun, 228; Thomas v. Walford, 16 N. Y. State Rep., 764; Leggett v. Firth, 53 Hun, 152; 25 N. Y. State Rep., 332.

In all these cases it was clearly the intention that the principal fund could, or would, be enroached on, or expended; and that it was only the unexpended remainder which was to be divided after the death of the first beneficiary, while in the present case the testator has given legacies, payable after the widow’s death, i which, as before said, would require for their payment nearly the whole residuary estate.

For these reasons the report of the referee must be set aside and the order of reference vacated.