Court Opinion

ID: 5505012
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:08:43.758943+00
Date Added: 2024-06-11T08:34:01.584555
License: Public Domain

INGRAHAM, J.,
(concurring.) I do not think that the judgment against the executor of Beebe is conclusive upon these defendants, who were sureties upon Beebe’s bond, but who were not parties to the action in which such judgment was rendered, and had no notice of its pendency. It seems to me that this question was presented in the case of Thomson v. McGregor, 81 N. Y. 596, and that the decision therein is controlling. In that case one Biker was appointed receiver of copartnership property, and he gave a bond, the condition of which was, “if the said Charles B. Biker shall henceforth faithfully discharge the duties of his trust.” Biker was removed as receiver, and, by an order upon an accounting, was directed to pay to his successor a sum of money as the balance in his hands. It was held in the court below, in that case, that that order was conclusive upon his sureties, and in reversing the judgment against the sureties the court say:
“If the order was wrong, if the receiver owed no balance, if he was required to pay what was not due, then he had faithfully performed his duty as receiver, although not obeying the mandate of the court. It is said ‘the surety has contracted that the receiver will pay.’ Undoubtedly, hut pay what? Not any sum which the court may order, unless, indeed, the surety has bound himself by that rigorous contract, but such sum as the receiver justly owes, and as an honest and faithful officer ought to pay; and upon that question the surety has a right to be heard. We do not see that it avails anything to try to distinguish between an order which is binding as an adjudication against *443liis principal and an order which is conclusive evidence as a fact. The sub.stantial thing remains, though the phrases are changed. The doctrine, pushed to its logical results, might make every surety for the performance of duty bound by the adjudication against his principal, or so nearly so as practically to abrogate the rule which holds him only when he has explicitly contracted to submit himself to the judgment of the court. We think the vice ■of the reasoning lies hid in the failure to sufficiently distinguish the relative positions of the principal and surety. As between the principal and the creditors of the fund, it is the receiver’s duty to pay according to the order, for he has been heard, and is bound by the adjudication. But, as between the surety and such creditors, it is not the receiver’s duty to pay according to an order made without the surety’s knowledge, as to which he has not been heard, and which is not, against him, a binding adjudication.”
And in commenting upon the cases where it is held that the sureties on an administrator’s bond are bound by an adjudication .as to the amount due by the administrator, such as Scofield v. Churchill, 72 N. Y. 563, and Casoni v. Jerome, 58 N. Y. 320, the court •say:
“In these cases, besides the general covenant to faithfully execute the trust reposed, there is also the special agreement to obey all orders of the surrogate. That the rule, in these cases, which makes the adjudication against the principal conclusive on the surety, is always based upon the special covenant, which, in terms, submits the latter to the judgment or order of the court, indicates very plainly that the general words were not deemed sufficient, in and of themselves, to effect that result. * * * In every decision which has made the adjudication against the principal conclusive upon the surety, it has been founded on apt words or phrases, other than the general promise to perform duty, and which indicate an understood purpose to contract beyond the ordinary liability.”
The condition of the obligation sued on in this case is as follows:
“Now, the condition of this obligation is such that if the above-bounden Welcome R. Beebe shall and will well and faithfully perform and discharge his duties as such trustee, as named in said order, then this obligation shall be void, else to be and remain in full force and virtue.”
And as was said in Thomson v. McGregor, supra, if the trustee accounts for the trust fund which has come into his hands, he has well and faithfully performed and discharged the duties as such trustee, and the plaintiff, to recover upon the bond, must. prove, by evidence admissible against the sureties, that the principal had failed to account for the trust estate in his hands.
The court below found that Beebe was appointed trustee by an •order of the supreme court dated September 11, 1865. That fact was proved by the order of the court making the appointment, and that order is also recited in the bond signed by these defendants. The court also found the making and execution of the bond sued on, which bond was also introduced in evidence. The court also found that on the 25th of October, 1865, the sum of 14,297.29 was paid to Beebe as trustee, and that fact was proved by the evidence of John Collins, who swore that he was present when the money was paid to Beebe. The court then found that Beebe continued to be trustee of the fund to the date of his death, which occurred on the 22d of May, 1884; that he left a last will and testament, which was .admitted to probate, and letters testamentary issued to his executors therein named. And there was evidence to sustain these findings. The court then found that by an order dated 24th of *444June, 1884, Marla Louisa Collins, the relator plaintiff in the action, was appointed by the court to receive and hold the said fund of $4,297.29 in place of said Beebe, and that fact was proved by the order making such appointment, and that the trustee therein named duly filed her bond and qualified. The court also found that on the 24th day of January, 1885, a certified copy of such order was served upon Beebe’s executors, and a demand was made for the payment to the substituted trustee of the fund of $4,297.29, which demand was refused, and no payment was made, and that fact was proved by the person making the demand. It was also found, and such finding was sustained by evidence, that the substituted trustee commenced an action aginst Beebe’s executors to recover that fund, and the accrued interest thereon; that judgment was subsequently entered against said executors for the amount of said fund and accrued interest, and, execution having been issued upon such judgment, it was returned unsatisfied, and no part thereof has been paid. It was thus clearly proven, by competent evidence, that the trustee had failed to perform and discharge his duty as trustee, as to the principal of said trust fund, and plaintiff was therefore entitled to judgment against the sureties for the principal of such fund, and interest from the date of the judgment against the trustee. There was, however, no evidence in the case that the trustee had received, or had failed to pay to the beneficiary named, the income upon the trust fund prior to his death. There is also another objection to the recovery of any interest by this plaintiff, which is fatal to such a recovery. The order appointing the plaintiff trustee is not printed in the case, but the court found that by such order “the relator plaintiff herein was appointed, upon her application to this court, trustee ro receive and hold the said fund of $4,297.29, and to apply and use the interest and income thereof to her own use, as in and by the said last will of said Ann Bloodgood, her mother, directed, and to account for and pay over the principal unto the person or persons to whom the same shall be determined to belong.” By this order the said substituted trustee was not appointed trustee of, nor authorized to receive, the income that had accrued prior to the death of Beebe. Indeed, such income was not part of the trust estate, but belonged to the person named as beneficiary individually; and it would appear that all the substituted trustee was entitled to recover from the estate of the deceased trustee was the trust fund, leaving the beneficiary to proceed against the trustee for the amount due her individually for income of such trust property. The defendant, however, objects to judgment being entered, on the ground that the appointment of the substituted trustee in place of said Beebe was absolutely void, on the ground that the court had no power to appoint a beneficiary in such a trust as trustee. I do not think, however, such order was void. It appeared by the will of Ann Bloodgood that Maria Louisa Collins, the person appointed such substituted trustee, was given and bequeathed the use, interest, and income of the sum of $4,500 for and during her natural life, *445to be paid to her half-yearly, on her separate receipt.. As no trustee was appointed'by such will, this court, by an order entered on the 11th of September, 1865, appointed Welcome R Beebe trustee to receive that sum, and apply the use, interest, and income of said fund in the manner and to the person in the said will of said Ann Bloodgood mentioned. This trustee was appointed by virtue of the jurisdiction vested in a court of equity to prevent the failure of the trust bv reason of the failure to appoint a trustee, and the court thus took upon itself the execution of the trust. Upon the death of Beebe the trust vested in the supreme court, and it became the duty of the court to appoint a person to execute the trust. I think the court had power to appoint the beneficiary for that purpose, and it was that power that the court exercised when it appointed the relator plaintiff as such trustee. The decisions that hold that a valid trust is not created where the person creating the trust attempts to vest in the beneficiary the trust property, as trustee, do not apply, for here a valid trust was created, and there is no restriction in the power of the court as to the selection of its agent to carry out the trust. It is not necessary that we should approve of the action of the court in appointing the beneficiary as the person to execute the trust, but I do not think that the action of the court in appointing such person was void, so that such action can be attacked collaterally. It appears, therefore, that under the order appointing plaintiff as such trustee no recovery can be had in this action for interest upon the trust fund prior to the death of Beebe.
The court also found that defendant Donohue, between January 1, 1887, and January 1, 1890, lent and advanced to plaintiff divers sums of money, amounting to the sum of $900, and a conclusion of law that defendant was entitled to deduct that sum from the amount due on the bond. The plaintiff, in his brief submitted on the argument of this appeal, objected to the allowance of this sum; but he did not except to the finding of the court, nor to the conclusion of law, and did not appeal from the judgment. The plaintiff cannot object on this appeal to the allowance of this $900, and it should be deducted from the amount due to plaintiff. The judgment should be modified by reducing the recovery to the sum of $4,297.29, less $900, making $3,397.29, and interest thereon from the 22d day of May, 1884, and as so modified affirmed, without costs to either party upon this appeal.