Case Name: Matter of the Judicial Settlement of the Account of Nathan E. Davis, as Administrator, etc., of Stephen W. Davis, Deceased
Court: New York Surrogate's Court
Jurisdiction: New York
Decision Date: 1902-02
Citations: 2 Mills Surr. 505
Docket Number: 
Parties: Matter of the Judicial Settlement of the Account of Nathan E. Davis, as Administrator, etc., of Stephen W. Davis, Deceased.
Judges: 
Reporter: Mills' Surrogate's Reports
Volume: 2
Pages: 505–513

Head Matter:
Matter of the Judicial Settlement of the Account of Nathan E. Davis, as Administrator, etc., of Stephen W. Davis, Deceased.
(Surrogate’s Court, Chenango County,
February, 1902.)
Accounting — Interest on an Administrator’s Debt to His Intestate.
An administrator indebted to Ms intestate, Ms father, at the time of Ms death upon matured outstanding bonds secured by mortgages given to him by the admimstrator and bearing five per cent, interest, is chargeabl as against the next of kin with interest on the unpaid principal at the same rate up to the date of the decree made on his judicial settlement.
Where he has never paid anything on the debt since the death of the father he cannot stop interest, as of the time of his own appointment as administrator, by crediting the estate as of that date with the amount then due on the bonds and mortgages for principal and interest, as for so much money in Ms hands, and charging himself with the same amount as a payment on his own distributive share in the estate.
Such a method of computation is not authorized by Code C. P., § 2714, declaring that “ the naming of a person executor in a will does not operate as a discharge or bequest of any just claim which the testator had against him,” etc.
Proceedings on judicial settlement of the accounts of an administrator. Stephen W. Davis died intestate, March 23, 1901. His next of kin were William W. Davis and Nathan E. Davis, sons, and Sarah E. Hotchkiss, a daughter. The sons were appointed administrators April 12, 1901. Nathan E. Davis was indebted to the decedent on two bonds secured by mortgages, the principal of which aggregated $1,800, together with certain interest. Both bonds were past due. On his appointment as such administrator, he charged himself with the principal of said bonds and interest thereon to the time of his ■father’s death, as so much money in his hands. It is conceded by him that he should have charged himself with interest at the time of his appointment as administrator. November 25, 1901, be filed witb tbis court a petition and final account of bis proceedings as such administrator, upon wbicb a citation was issued land tbis proceeding was instituted. In such account tbe estate was credited witb tbe amount of tbe .principal of said bonds, together witb interest to tbe time of tbe death of Stephen W. Davis, as money in tbe bands of said administrator arising from demands due tbe estate. Tbe amount of said bonds, principal and interest, was charged against tbe distributive share of tbe said Nathan E. Davis as one of tbe next of kin of tbe deceased.
Sarah E. Hotchkiss filed objections to tbe said account and claims that said Nathan E. Davis should be charged witb interest on said bonds to tbe time of tbe actual distribution.
Eugene Clinton, for administrator.
Albert Hotchkiss, for contestant, Sarah E. Hotchkiss.

Opinion:
GladdiNG, S.
— Stephen W. Davis, tbe above-named intestate, died March 23, 1901. Letters of administration were issued to Nathan E. Davis and William W. Davis, April 12, 1901. Tbe deceased left him surviving said Nathan E. Davis, William W. Davis, and Sarah E, Hotchkiss, bis children and only heirs-at-law. He left no widow. Tbis accounting is made by tbe administrator, Nathan E. Davis, his co-administrator, William W. Davis, having, so far as appears, taken no part or action in tbe administration of tbe estate.
At tbe time of tbe decedent's death, tbe administrator, Nathan E. Davis, was indebted to him upon two bonds and mortgages given by tbe administrator to decedent, both of which mortgages were due, and tbe principal sum remaining unpaid was $1,800, and said principal was drawing interest &t the rate of five per cent.
The said Nathan E., Davis, administrator, filed bis petition and account, whereby be commenced tbis proceeding. November 25, 1901, and the citation issued thereon was returnable December 16, 1901. The citation wtas duly served upon all the persons interested, and the matter was thereupon by consent adjourned until January 20, 1902, at which time said Nathan E. Davis, administrator', filed a supplementary account herein. Whereupon the matter was again adjourned to January 27, 1902, at which time the said Sarah E. Hotchkiss by Albert Hotchkiss, her attorney, filed objections to the said accounts, alleging that the same were erroneous in that they failed to charge said ad-administrator with the proper sum received, or chargeable against him for interest.
It appears by the supplemental account that the total sum distributed to-the three children is $11,005.87, from which is to be deducted before distribution, the commissions of the administrators and expenses of this accounting. It also appears that there has already been distributed to the three children of the decedent the following sums:
To William W. Davis. $1,439 92
To Nathan E. Davis. 2,490 30
To Sarah E. Hotchkiss. 578 45
Total. $4,508 67
The said Nathan E. Davis in his account filed as aforesaid credits the estate with the amount of said two mortgages principal and interest thereon at five per cent, to March 23, 1901, the date of the death of his intestate, as so much money in his hands, and in his said final account the said Nathan E. Davis charged the same amount to himself as a part of his distributive share of said estate.
It does not appear that said Nathan E. Davis has ever paid said bonds and mortgages to the estate, or to his co-administrator, or that he has ever placed the amount of money represented by them in the funds of said estate except by crediting the estate with the amount and charging the same to himself as aforesaid.
The question raised bj the contestant's objections is whether said Nathan E. Davis should be charged, in addition, the amount of interest accruing upon said mortgages from' the death of said intestate to the time of this accounting, or, as claimed by the contestant in his brief, whether the administrators should be charged with, interest on the moneys distributed by them in excess of the amount that has been distributed to Sarah ,E. Hotchkiss as hereinbefore stated.
Counsel for the administrator claims, that by reason of section 2714 of the Code of Civil Procedure, said administrator, Nathan E. Davis, was authorized and justified in crediting the amount of the mortgages at the time letters were issued to him to the estate as so much money in his hands, and in the preparation of his account charging the same amount as having been distributed to himself, and that he is not liable for interest upon said $1,800 from, and after the time letters of administration were issued to him, nor for interest upon the amount distributed to himself in excess of that distributed to the others. That portion of section 2714, which he cites as a warrant for this treatment by the administrator of the amount due upon the mortgages as aforesaid reads as follows: " The naming of a person executor in a will does not operate as a discharge or bequest of any just claim which the testator had against him; but it must be included among the credits and effects of the deceased in the inventory, and the executor shall be liable for the same as for so much money in his hands at the time the- debt or demand becomes due, and he must apply and distribute the same in the payment of debts and legacies, and among the next of kin as part of the personal property of the deceased."
After having given eareful consideration to the questions involved, and due examination of the briefs of counsel for the respective parties, and the authorities cited by them, I hold .and decide:
First. The statute above quoted, and upon which the administrator's counsel relies to relieve him of this interest, is not applicable to administrators.
Second. Had the statute included administrators, as well as executors, it would not relieve him, and an executor would be chargeable with such interest under the same circumstances.
Third. It is not equitable, just and fair to the other next of kin to absolve him from accounting for such interest.
1. It will be observed that the language of the Code above quoted specifies executors, and does not refer to administrators. It is a re-enactment of a provision of the Revised Statutes which was originally enacted for the purpose of changing the common-law rule, which theretofore prevailed, to the effect that when a creditor named his debtor as executor of his will, upon the issuing of letters testamentary to him the debt became discharged. No such rule ever prevailed in respect to administrators, hence the statute was not made to apply to' administrators. There is no statute of like import in respect to administrators.
In Keegan v. Smith, 33 Misc. Rep. 76, it was said that, " The principle embodied in these provisions of the Code is equally applicable to administrators." This is true, but only to the extent of requiring them to account for their own indebtedness to the estate to the same extent, and with the same justice and value to the estate as though the debt or obligation had been that of sonrn person other than the administrator. If the case last referred to holds more than that it is erroneous, but I do not think it does, or that there is any case that goes farther than that.
In Soverhill v. Suydam, 59 N. Y. 142, it is said that when an executor has paid out the monys due from him to the estate in due course of administration, that then, and not till then is his indebtedness discharged. " But before this is done, it was not in our judgment the intention of the legislature, while preserving the debt, to discharge liens by which it might be secured. Subjecting the executor, as between hint and those interested in the estate, to liability for his debt as for so much money in his hands, does not necessarily discharge a lien on real estate'by which the debt may be secured. That provision merely superadds to his original obligation, a liability to account as executor for the amount of the debt, and was intended to facilitate the administration, and for the benefit of the estate, and not for that of the executor or of his individual creditors who may have subsequent Mens upon his property. It certainly would not be so treated in a proceeding of an equitable nature, lihe the present. That the debt and lien may under the very terms of the act, exist in their original form after the debtor has entered upon the duties of his office, is apparent."
In Baucus v. Barr, 45 Hun, 587, the court say: "We are of the opinion that the provision of the statute declaring that a debt due from an executor to the estate shall be treated, in the rendering of his account, as money in hand, must be construed with reference to the ordinary obligation, which imposed on him only diligent, faithful, honest action touching the administration of the estate committed to his charge."
In Baucus v. Stover, 89 N. Y. 5, the court say: " While the debt must be treated as money in his hands for the purpose, of administration it will not for purposes stand on the same footing as if he had actually received so much money."
It thus seems certain that it was never intended that the statute in its application to executors even, nor the principle of the statute in its application to administrators should be a: law or rule by which some advantage could accrue to a representative debtor which he would not have but for the statute, and by which there would inure to him inequitable benefits over other beneficiaries of the estate.
Clearly, such would be the result if the rule contended for by the administrator in this case should prevail.
Matter of Clark, 11 N. Y. Supp. 911; S. C., 34 N. Y. St. Repr. 523 (decided by tbe General Term of tbis Department, Judge Hardin writing tbe opinion), was a case of two executors, one of whom was indebted to tbe estate at tbe time of tbe testator's death, and tbe debtor executor did not pay tbe debt to Ms coexecutor, or put tbe money to pay tbe debt into tbe ftads of tbe estate, and it was beld that such executor was chargeable with interest on such indebtedness down to the time of the accounting, Tbe question of charging tbe executor with such interest was directly passed upon.
Under tbe authorities above cited it is clear that were tbis representative an executor, be could not acquire under tbe statute or otherwise, this ¡advantage over legatees, or other beneficiaries by reason of bis indebtedness to tbe estate; that is, the advantage of having Ms share of tbe estate paid at once upon bis appointment by'the canceling of Ms own interest-bearing debt; however, not being an executor, but being an administrator be cannot have whatever protection (if any) tbe statute affords to an executor, as tbe statute was intended to, and does apply solely to executors by its terms.
Tbe administi'ator has bad the benefit of tbe interest on these two mortgages. He has not paid them, and, therefore, has bad tbe use of tbe money due upon them, to tbe same extent, and same advantage to himself since tbe death of bis intestate as before; and to tbe same extent and advantage that would have pertained bad bis intestate lived until tbis time. If tbe money due upon these mortgages is regarded tbe same as though paid into tbe estate by him, then, in that case be has bad tbe use of tbe money and benefit of such money to tbe same advantage to himself as though be bad received it, and immediately loaned it out at five per cent., and received tbe interest thereon until this time.
A general and underlying principle, which it is always wise to adhere to, and safe to tie to under almost any circumstances, is that a trustee, executor, administrator, or guardian cannot so use tbe property of tbe estate be represents as to make any profit, or receive any advantage to bimself over others interested in tbe estate.
In this case this administrator in bis account, as made up by him, clearly received tbe advantage of tbe interest accruing upon these mortgages from tbe time of tbe intestate's death until distribution over that of bis sister, Mrs. Hotchkiss, who is equally entitled with him to share in tbe assets of tbe estate.
This $1,800 being well invested, and payment of which could be bad and declared at any time when tbe same should be needed for actual distribution by crediting tbe estate with tbe amount, and charging tbe same to Nathan E. Davis' distributive share, it was the duty of tbe administrator to leave it so invested until required in actual distribution. If, on tbe other band, it should be claimed that because these mortgages were due, that tbe debtor administrator bad tbe right to- pay them' at any time, then be could only properly discharge them-, and stop the running of interest upon them by actually paying tbe money into the estate, and thereby increasing tbe fund on hand for distribution, .and placing bimself in a position where a dis-tributee, equal with bimself, would have the right to demand a distributive share of this $1,800, and interest.
Under the rule above alluded to, that an administrator shall not so manage tbe estate as to- make any advantage to bim-self over other distributees equally entitled, it is at least doubtful whether be could rightfully distribute moneys to bimself in an amount in excess of that distributed to Mrs. Hotchkiss without being liable for tbe interest on such excess.
But, I think, it is clearer and better to hold that be should account for tbe interest upon the mortgages from the time of his intestate's death to tbe entry of tbe decree herein.
Much more might be said in support of this contention, but the foregoing is sufficient to show that it is equitable, and right to obarge this administrator with interest upon the mortgages, and. that the statute relied upon by him does not relieve him therefrom.
There should be added to Schedule A of the supplemental account the amount of the interest upon $1,800, at five per cent., from' March 23, 1901, to the time of the entry of the decree herein.
If the respective counsel fail to agree upon a decree, in accordance with this decision, the same will be settled by the surrogate upon five days' notice.
Decreed accordingly.