Opinion ID: 1966617
Heading Depth: 1
Heading Rank: 4

Heading: The payment to Abraham I. Barash.

Text: An incident of the executors' neglect of duty was their approval of a gift of $25,000 to Abraham I. Barash, son-in-law of the testator and officer and director of the Bright Star Battery Company. The will of Israel Koretzky, deceased, provides for payment of debts and collection of accounts receivable. It nowhere indicates any intention to give testator's son-in-law Barash $25,000 either from his personal estate or through either the Battery Company or the Warehouse Company. Isaac Gross indicated on the stand that the payment was salve to Barash; Kislak testified he didn't think it was necessary to investigate the payment, nor the charge of improper entries in connection therewith on the books of the Battery Company because it made very little difference to the estate; that he didn't know whether it affected the beneficiaries, didn't ask the estate's attorney for a legal opinion, didn't discuss with his co-executors whether there was an obligation to pay the sum, but thought it was a proper payment to Barash, and yet he testified that the executors were all in agreement that the estate should reimburse the Battery Company for the payment although this actually made the payment a charge against the beneficiaries under the testator's will. Kadison testified he relied on testator's alleged statement to him (Kadison) that testator wanted to make a gift to Barash for past services to testator personally and to the company. He further testified that he and his co-executors knew the book entries were not made in November, 1945, (as shown on the books) but in January, 1946, after testator's death and dated back to reflect Mr. Koretzky's instructions during his life-time, although there was no writing to support it. The false entries were made upon Kadison's orders; he testified that he discussed this with Gross although not with Kislak. The payment to Barash was authorized although Barash owed the Battery Company $11,000 and although Barash in that year (1946) drew a $25,000 salary and an $8,000 bonus. Isaac Gross testified that he gave no consideration to the question whether the $25,000 proposed gift to Barash was a binding obligation on the estate or the company, nor whether the gift was revoked by testator's death. He knew payment was to be made when an insurance check (for fire losses) came in and that Barash did not have the money and the gift was not completed before testator's death. Benjamin Gross (Isaac's brother), attorney for the estate, testified that he was told by Kadison that the entries were made after testator's death and the executors knew it; that Kadison told him they were made sometime subsequent to the date they bore. The least condemnation of the conduct of the three executors under the above recited facts is that they did not exercise that degree of care, prudence, circumspection and foresight that an ordinary prudent person would employ in like matters of his own. Milberg v. Seaboard Trust Co., 7 N.J. 236, 244 (1951); Blauvelt v. Citizens Trust Co., 3 N.J. 545, 554 (1950). The three executors all had the duty to participate in the administration of the estate and each had the duty to use reasonable care to prevent the others from committing a breach of trust. 2 Scott on Trust, sec. 184, p. 972; Coxe v. Kriebel, 323 Pa. 157, 185 A. 770, ( Pa. Sup. Ct. 1936), also refer to Annotations found in 106 A.L.R., at p. 111; Restatement, Trusts, sec. 184. Compare Duncan v. Davidson, 40 N.J. Eq. 535 ( Prerog. 1884). Kislak not only was indifferent to the legality of the payment to Barash and its effect on the estate but expressed his willingness as executor to reimburse the corporation from the estate  even after he was put on notice of the falsification of the entries on the corporation books; Kadison participated by ordering the falsification, and Gross participated by abetting it; thus none of the three performed their duty of considering it together as executors nor used reasonable care to prevent commission of a breach of trust. It has been stated that    a trustee cannot make a gift of property in his care unless the gift is authorized by the instrument appointing him   . 6 N.J. Practice ( Clapp, Wills and Administration ), sec. 499, p. 440; In re Ebert, 136 N.J. Eq. 123, 127 ( Prerog. 1945). Compare Prudden v. Lindsley, 29 N.J. Eq. 615, 616 ( E. & A. 1878) and Paret v. Bayonne, 40 N.J.L. 333, 336 ( E. & A. 1878). It is no more proper to make the gift by the subterfuge of creating a debt of the testator (after his death) in a corporation in which the estate holds the controlling stock interest and then paying that debt from the funds of the estate, than it is to make the gift directly from the assets of the estate.