Case Name: In the Matter of the Estate of Valentine, Deceased
Court: New York Surrogate's Court
Jurisdiction: New York
Decision Date: 1893-01
Citations: 1 Misc. 491
Docket Number: 
Parties: In the Matter of the Estate of Valentine, Deceased.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 1
Pages: 491–496

Head Matter:
In the Matter of the Estate of Valentine, Deceased.
(Surrogate’s Court—Westchester County,
January, 1893.)
On the accounting of an executor and trustee, who had power of sale under the will, the cestui que trust claimed that some of the sales made were fraudulent, and asked the court to hold the executor liable for the consequent damages. The answer was, that the court had no jurisdiction in the matter. Held, that the executor, being a testamentary trustee, whose duties, as such, were separable from his duties as executor, he was liable to account for the proceeds of sales, made by him, in the Surrogate’s Court, and thereupon the surrogate must decree payment, and distribute, but cannot inquire into the validity of any sales of real estate made by him, by reason of fraud and the like. The remedy of the cestui que trust is by action.
The deceased, by his will, among other things, after disposing of a portion of his estate, devised and bequeathed the one undivided one-half part of the rest and residue thereof, real and personal, to his son Nathaniel B. Valentine, and the use of the remaining one-half part to his daughter Harriet A. Burtis, for, and during her life, with remainder to her children, the executor being authorized to sell the real estate at any time after his decease, and being directed to invest her share of the proceeds on bond and mortgage, the interest on such investments to be paid to said daughter semi-annually, after the sale of his real estate, during her lifetime. The will bears date in 1880, and was admitted to probate in December of that year. The executor afterwards sold and conveyed some, or all of the real estate; and Mrs. Burtis, on whose application this proceeding is had, claims, among other things, that some of such sales were fraudulent, and asks this court to hold the executor liable for the consequent damage resulting to her. The executor objects that it has no jurisdiction in the matter. Other facts appear in the opinion.
Wm. George Oppenheim, for petitioner.
W. H. Pemberton, for executor.

Opinion:
Coffin, S.
In the briefs submitted by the respective counsel, there is no discussion of, nor are any authorities cited, on the jurisdictional question. All that appears on the subject is contained in that submitted by the executor's counsel, in which it is claimed that " the surrogate cannot pass upon his transactions as to sale of real estate." The result of researches made by me, touching the ower of the surrogate on the subject, are, briefly, as follows : By section 3 of chapter CCLII of the Laws of 1822, page 283, it is provided that where, by any last will, a sale of real estate is authorized to be made, either for the payment of debts or legacies, it shall be lawful for the surrogate to call the executors to account for the proceeds of such sales and the distribution thereof, etc. (subsequently repealed). By section 57 of title IV, chapter VI, of the second part of the Revised Statutes, pages 109, 110, we find the same provision, except that it applies only to the case where by any last will a sale of real estate shall be ordered to be made. Section 75, chapter 460, page 537 of the Laws of 1837 makes a similar provision in a case where the sale is made in pursuance of an authority given by any last will; and the proceeds of sale maybe brought into the surrogate's office for distribution, and shall be distributed in the same manner, and upon like notice, as if they were proceeds paid into his office in pursuance of an order of sale of real estate for the payment of debts. The above section 57 of the Revised Statutes was repealed by subdivision 3 of section 1 of chapter 245 of the Laws of 1880, and the above section 75 by subdivision 14 of the same section, thus, apparently, leaving no provision for either case. But in the same year, chapters 14 to 21, inclusive, of the Code of Civil Procedure were enacted, and it is presumed that subdivision 6 of section 2514 and sections 2802 to 2811, inclusive, were intended to supply the places of the above repealed sections. By a " supplement to Part III of the proposed Revised Statutes," appended to the first report of the above chapters to the legislature by the commissioners of the Code, will be found a section numbered 46, as follows : " Where real property is sold as prescribed in the last section " (in pursuance of an authority given by any last will and testament), " the proceeds thereof may be brought, for distribution, into the Surrogate's Court having jurisdiction. The surrogate must proceed to distribute the same upon notice, and he has power to compel them to be brought in for that purpose. The executor or administrator, selling the real property, is deemed a testamentary trustee, within the provisions of title sixth of chapter eighteenth of part third of these Revised Statutes." The commissioners' note to this section is this: "Proposed as a substitute for L. 1837, ch. 460, § 75 (4 Edm. 500), which confers upon the surrogate the power to distribute the proceeds. See Stagg v. Jackson, 1 N. Y. 206. We think that § 2319 " (2514 of the present Code), " subd. 6 of part three of this revision, in connection with § 2572— 2580" (now being 2802-2811 of the present Code), "sufficiently covers the subject; but we add the foregoing section for greater caution." The legislature did not enact this section, thus concurring in the view that the sections above referred to, " sufficiently covered the subject." The conclusion is, therefore, reached that the executor, being a testamentary trustee, whose duties, as such, were separable from his duties as executor, is liable to account for the proceeds of sales made by him, in this court. By section 2743, which is made applicable to the accounting of a testamentary trustee, by section 2811, the surrogate must decree payment and distribution. Thus, the powers of the court to decree payment and distribution, in a case like this, is the same as those conferred by the repealed section of the act of 1837. All the acts referred to, empower the surrogate simply to distribute the proceeds of sales received by the executor, and he has power to charge the trustee with any proceeds of sale which he has omitted to charge himself with. He cannot inquire into the validity of any sales of real estate made by him by reason of fraud, and the like.
The court is here asked, among other things, to pronounce a sale of a lot made by the executor to his son, and by his son to the executor's wife, void, for fraud. This, the court has no power to do. Section 58 of the Revised Statutes, immediately following section 57 above referred to, declares that any executor or administrator, or other person, appointed as therein directed, who shall fraudulently sell any real estate of his testator or intestate, contrary to the foregoing provisions, shall forfeit double the value of the land sold, to be recovered by the person entitled to an estate of inheritance therein. This section was not repealed by the repealing act of 1880, and is still in force. See Throopt's Rev. Stat. (1889) vol. 4, page 2568, § 58. It was proposed by the enactment of section 47 of the said supplement, to extend the provisions thereof to the case of an executor vested by the will with authority to sell, the forfeiture to be recovered by an action, etc.; but, for some reason, it appears not to have received legislative sanction. It will be discovered that in none of these enactments proposed, repealed, or in force, is any power conferred upon the surrogate to inquire into and determine any question as to an alleged fraudulent sale, and he cannot do it.now, unless he is clothed with it by some statute. That question belongs to a higher tribunal. Surrogate's Courts are creatures of the statute, and have a jurisdiction limited thereby. It cannot be discovered that it is clothed with authority by any express law, nor any power incidental thereto. All its powers on the accounting of a testamentary trustee, are defined by sections 2743 and 2812. By the latter section, where a controversy arises respecting the right of a party to share in the money or other personal property to be paid, distributed, or delivered over, it must be determined in the same manner as other issues are determined by him. See Matter of Rogers, 2 Connolly, 639. Here the jurisdiction of the surrogate, as to the questions he may try, ceases, and he cannot go beyond, and try and determine any others. In the case of Fulton v. Whitney, 66 N. Y. 548 (at page 557), the court says that all the surrogate could do, was to settle the accounts of the trusts created by the will. This was after the passage of chapter 115 of the Laws of 1866, which act is substantially the same as section 2802 of the present edition of the Code, and was the first which authorized a testamentary trustee to render and settle his accounts before the surrogate. All that may be sought by the petitioner in this proceeding, is the recovery of interest on her share of the proceeds of real estate sold, and she has an undoubted right, as already remarked, to show, if she can, that the testamentary trustee has not accounted for all of such proceeds, and her share of the interest thereon. There is no controversy as to her right to so share. All of the objections taken to the evidence tending to show fraud in the sale of lands, are sustained. The sole question that remains for determination, therefore, is the condition of the trustee's accounts.
The account of proceedings filed, is very unsatisfactory, loose in structure, confusing and embarrassing. There are only two schedules; designed, the one to show all receipts and the other all disbursements, embracing legacies paid, funeral expenses and other expenses of administration, etc. They are not added up and no summary is furnished. Some of the dates of receipts of proceeds of sale are omitted, as are also any statement showing how and when investments were made, rate of interest, etc. There is no statement of the items of interest paid, or when, to Mrs. Burtis, but the whole is given in a lump sum. Without enumerating other defects, these sufficiently show the , careless manner in which the account was prepared. The petitioner is chiefly interested in ascertaining the amount of the proceeds of sales on which she is entitled to one-half the interest. According to the account,.
The amount is.............................. $72,703 25
To which is to be added proceeds of sale to
Eraser, conceded to have been omitted....... 500 00
$73,203 25
To this is added one-half interest received.... 1,361 82
$74,565 07
From which the trustee claims should be deducted, including interest paid to Mrs. Burtis, and excluding charge for services of attorney herein................................... 19,000 02
Balance......................... $55,565 05
On which the petitioner, it is conceded, is entitled to one-half the interest, less expenses of this accounting and commissions.
As the proceeds of the sale of the Halfway House were intended to pay the legacy of $500 and interest to the wife of the trustee, and as she was not entitled to interest, which amounted to ninety dollars, and with the payment of which he credits himself, there can be no ground of complaint as he charges himself with $600, being ten dollars more than he credits himself with. The item of credit of seventy-five dollars for interest on legacy to George B. Valentine, must be disallowed as the testator made it payable without interest. The trustee credits himself with some items in contempt proceedings in the Supreme or County Court. These proceedings appear to have been against him for some neglect of duty. These items amounting, as nearly as can be ascertained, to $36.50, are disallowed. Adding these items to 'the above balance makes it $55,616.55.
It does not seem to be controverted that the petitioner has received $1,361.82 for interest moneys on her share. There is no evidence furnished or data given whereby the court can adjudge as to the correctness of that amount, but it is assumed to be all that her fund earned down to October 20,1891, with the possible exception of the interest on $111.50 the sum of the items above disallowed.
If the trustee has failed to produce proper vouchers for any of the credits claimed by him, he is still at liberty so to do. If he fail to do so or furnish the evidence of payment thereof' as provided by section 2134 of the Code, they will be disallowed and the fund in his hands increased accordingly.
On the settlement of the decree, counsel can be heard as to any matter which may have been overlooked and as to any other matter to which attention may be called.