Case Name: Matter of the Estate of Henrietta E. Guldenkirch, Deceased
Court: New York Surrogate's Court
Jurisdiction: New York
Decision Date: 1901-05
Citations: 35 Misc. 123
Docket Number: 
Parties: Matter of the Estate of Henrietta E. Guldenkirch, Deceased.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 35
Pages: 123–124

Head Matter:
Matter of the Estate of Henrietta E. Guldenkirch, Deceased.
(Surrogate’s Court, New York County,
May, 1901.)
Executor—'When not chargeable with his attorney’s concealed debt to the testatrix.
An executor is not chargeable upon a judicial settlement of his accounts with the amount of his attorney’s note to the testatrix (lost to the estate) where the executor had no actual notice of the existence of the indebtedness, nor any constructive notice except upon the legal theory that the attorney’s knowledge was his, and particularly where the attorney was shown to have been guilty of numerous other improprieties in the case.
Proceedings upon the judicial settlement of the accounts of an executor. Objections to report of the referee.
Louis W. Stotesbury, for executor.
Elmer S. White, special guardian.
Ingle Carpenter, special guardian.

Opinion:
Thomas, S.
The executor was properly charged by the learned referee with all of. the amounts set forth in the report, except only as to the sum of $910.50, being the amount due on a prom issory note from the attorney for the executor to the testatrix. The liability of the executor for this sum could only rest upon the proposition of fact that he -was legally chargeable with notice of the existence of this indebtedness on the part of his attorney, at a time when the attorney was solvent, and that it was lost to the estate by neglect of the executor to take seasonable efforts for its enforcement. It is quité plain that culpable neglect to collect a claim, which forms an asset of the estate, can only exist when knowledge, or notice legally equivalent to knowledge, of its existence is also found. This principle is emphasized in all of the cases upon this subject. Harrington v. Keteltas, 92 N. Y. 40; Mills v. Hoffman, 26 Hun, 594; Moore's Estate, 1 Tuck. 41; Matter of Hosford, 27 App. Div. 427; O'Conner v. Gifford, 117 N. Y. 275; Matter of Hall, 16 Misc. Rep. 174. Ho actual notice to the executor of the fact that his attorney was a delinquent creditor of the testatrix was shown or claimed, and the charge against him seems to have been made on the theory that he was chargeable with notice of facts in the knowledge of an attorney who was largely trusted by him. The rule that makes' the knowledge of an agent the knowledge of his principal rests upon a presumption that the agent will act honestly and will communicate the facts truthfully. This presumption fails when it is shown that the attorney is violating his duty and is engaged in a scheme to defraud his principal, because he cannot in reason be presumed to have disclosed that which would expose and defeat his fraudulent purpose. Benedict v. Arnoux, 154 N. Y. 715, 729; Bienenstok v. Ammidown, 155 id. 47, 60; Henry v. Allen, 151 id. 1; Weisser v. Denison, 10 id. 68; Am. & Eng. Ency. of Law (2d ed.), 1145. In this case it is entirely improbable that the attorney who has been guilty of the numerous improprieties' shown in this case would have disclosed the fact of his own indebtedness, and thus have invited an action against himself for an obligation which his conduct shows he desired to evade and did not intend to pay. As to this one charge, the report of the referee is overruled. In other respects the -report is confirmed. The executor is allowed commissions and costs for the, preparation of the account, payable out of the estate. The disbursements of the contest are adjudged against him' personally. Costs to contestants payable out of the estate.
Decreed accordingly.