Court Opinion

ID: 5210200
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:10:56.242521+00
Date Added: 2024-06-11T08:27:21.493897
License: Public Domain

Ingraham, J. (dissenting):
This is a creditor’s action by the plaintiff as the receiver in bankruptcy of a creditor of one Patrick Barney, deceased.' Ho judg*813ment upon the claim was ever obtained against either Larney or the defendant as his personal representative. The complaint alleges that on the 25th of May, 1897, Patrick Larney died leaving a last will and testament by which he devised and bequeathed all his property, real and personal, to his wife during her life, and upon the decease of his wife to liis children equally, share and share alike, with a power of sale to his executors and appointing the defendant Mary A. Skelly executrix and his son John P.'Larney executor. At the time of his death it does not appear that the testator had any debts except the contingent liability upon the bond" to the trust company of whom the plaintiff is receiver. Upon the death of the testator this real property passed to his wife for life with a remainder over to the defendants in fee. Their title became absolute on the probate of the will subject only to a proceeding under title 5 of chapter 18 of the Code of Civil Procedure to dispose of such real property for the payment of his debts. This will was duly admitted to probate and letters testamentary were issued by the surrogate of the city and county of New York on June 29, 1897. By section 2749 of the Code of Civil Procedure it is provided that real property of which a decedent died seized may be disposed of for the payment of his debts and funeral expenses as prescribed in that title. Section 2750 provides that at any time within three years after letters y/ere first duly granted within this State upon the estate of the decedent, an executor or administrator or a person holding a judgment lien upon the decedent’s real estate at the time of his death or any other creditor of the decedent except the holder of a mortgage which is a lien upon the decedentis real property, itiay present to the Surrogate’s Court from which letters were issued a written petition duly verified praying for a decree directing the disposition of the decedent’s real property. Section 2751 extends the time to commence the proceeding during the time in which an action is pending in acourt of record between a creditor and the administrator or executor of the estate if the creditor has> before the expiration of the time so limited, filed in the clerk’s office of the county where the real property is situated a notice of the pendency of the action. After providing in other sections for the contents of the petition, the issuance of citation and the proof necessary for a decree, section 2757 provides that if it shall appear to the satisfaction of the surrogate that the personal *814estate of the decedent is insufficient for the payment of liis debts and funeral expenses, the surrogate shall make a decree empowering the executor or administrator to mortgage, lease or sell the whole or such part of the real estate or interest of the decedent in real property as the surrogate shall deem necessary for the payment thereof. The foregoing provisions are taken from the existing statute (as amd. by Laws of .1887, chap. 423 ; Laws of 1894, chap. 735, and Laws of 1904, chap. 750). Similar provisions existed during the statutory period in question. (See Code Civ. Proc. [Laws of 1880, chap. 178], §§-2749-2763, as amd. by Laws of 1885, chap. 213'; Laws of 1887, chap. 423, and Laws of 1894, chap. 735.)
By this title of the Code of Civil Procedure a proceeding is provided for the application of a decedent’s real property when necessary to pay his debts, and this is the only provision with which I am acquainted under which a court has power to compel the application of a deceased debtor’s real property to'the payment of his' debts. The will of the testator gave no power to his executors to sell his real property for the payment of his debts and contained no 'direction in relation to liis indebtedness. It disposed absolutely of .liis real property and upon his death the title to such real property vested absolutely in his devisees, subject only to the power of the Surrogate’s Court to decree a sale thereof upon a proper proceeding being commenced by the executors or a creditor under these provisions of the Code of Civil Procedure within a time there limited, namely, three years from the issuance of letters testamentary. The power of sale contained in the will was' evidently given for the purpose of distribution, but no trust was created; the executors had no title to the real property ; no power to sell it to pay the testator’s debts ; and the proceeds of the sale after the execution of the power-became in the hands of the executors a substitute for the real estate, and the devisees were actually entitled to such proceeds subject, of course, to the power of the executors or a creditor to have such proceeds applied to the payment of the testator’s debts under the provisions of the Code of Civil Procedure to which I have referred.
The complainant also alleges that on January 27, 1-897, the testator executed and delivered to the City Trust, Safe Deposit and Surety Company of Philadelphia a certain bond of indemnity whereby he agreed to save the trust company harmless from any *815loss or' damage it might suffer by reason of its having issued its bond on behalf ■ of Patrick Costello to discharge a lien filed by the Glen Cove Granite Company; that thereafter the Glen Cove Granite Company brought an action against Costello and the trust company to foreclose the lien covered by the aforesaid bond, and on May 9, 1900 — nearly three years after the death of the testator — judgment was entered in favor of the Glen Cove Granite Company against Costello; that on February 21, 1901, the Glen Cove Granite Company brought an action against the trust company ; that on March 27, 1901, the trust company served notice on the defendant Skelly as executrix of Patrick Larney, deceased, and called upon the estate of Patrick Larney to furnish any defense it might have to resist the pending suit; that on May 15, 1901, judgment was recovered in favor of the Glen Cove Granite Company against the trust company, of which the executrix of Patrick Larney, deceased, received notice oil May 18, 1901; that subsequently and on January 8, 1903, final judgment was entered against the trust company, which amount was paid by the trust company to the Glen Cove Granite Company on June 16, 1903 ; that on June 6, 1901, Skelly, as surviving executrix of the estate of Patrick Larney, transferred the real estate of which the testator died seized to one Catherine Devlin, but that such sale was not an actual sale but was a conveyance for a, nominal consideration ; that subsequently Catherine Devlin sold the property to one Anderson for $17,500 and turned over the proceeds of the sale to the defendant Skelly ; that subsequently the proceeds of the sale were used by the said defendant Skelly in purchasing premises in the city of New York known as 216 East Forty-ninth Street, but the said Skelly, with intent to cheat and defraud the existing and subsequent creditors of the testator, took the record title in the name of the defendant Finnegan. And the judgment demanded is that the conveyance of the. premises be declared, held and adjudged to be taken for the benefit ■ and use of the defendant Skelly as surviving executrix of the estate of Patrick Larney, deceased; that the same were taken and held by the defendant Finnegan in fraud of the right of the plaintiff as a creditor, and that the said premises be sold and the plaintiff be paid the amount of his judgment thereon, with costs.
The plaintiff or his predecessor, the trust company, could during *816the three, years succeeding the issuance of letters testamentary to the executrix have commenced an action against the estate to recover the amount of this indebtedness, and could have-filed a lis pendens affecting this property which would have extended the time within which the creditor could have taken proceedings to have the real estate of the testator applied to the payment of his debts. It omitted, however, to take such .a proceeding, and omitted to apply within three years for the sale- of the. property. In Russell v. Russell (36 N. Y. 581), the testator left certain real property, giving all his estate to Ins wife during her life, with remainder to liis children, and appointed executors, giving a power to sell the real and personal property-. This will was admitted to probate,, and subsequently the executors executed the power of sale for a consideration named in the deed of $3,000. The life tenant died in April, 1855, and in April, 1857, an action was commenced by the plaintiff, one of the heirs and devisees of the testator, to set aside this deed and the subsequent conveyances. The complaint, was dismissed at Special Term. The Supreme Court at General Term affirmed the judgment and the plaintiff appealed to the Court of Appeals. That court held that the execution ¡of this power of sale was for the interest of the residuary legatees; that the real estate was not liable for the debts of the testator except upon the presentation of a petition to the surrogate alleging the insufficiency of the personal estate, and asking the application of the real estate to that purpose; that the duty of the payment of debts belonged to the executor, and the real estate could not be applied to that purpose except upon certain proceedings being taken which were not taken in that case. In Slocum v. English (62 N. Y. 494) it was held that a proceeding for the sale of a testator’s real property commenced more than three years after the granting of letters was absolutely void, and that the statute commenced to run from the date of the original granting of letters of administration. In Stilwell v. Swarthout (81 N. Y. 109) it was held that an action could not be maintained to reach a fund in the hands óf an administrator which has resulted from a sale • of the decedent’s real property. - In that case certain mortgages upon the property were foreclosed, the property was sold, and the fund remaining after the payment of mortgages was paid over to *817representatives named, and constitutes the subject of controversy in the action. It was held that in view of a failure to comply with the statute in relation to the sale of the decedent’s real property, to reach such proceeds proceedings must be commenced before the surrogate, and that such funds, not being proper funds for distribution by the surrogate, could not be reached by an action in equity. The court there said: “ The plaintiffs’ counsel insists that it (tlie fund), must be' treated as surplus moneys- arising upon a foreclosure sale, and regarded as equitable assets in the hands of the administratrix and administrator, and thus became a trust fund for the benefit of Swarthout’s creditors. There are difficulties in enforcing this rule in the casé at bar. The money represented real estate, and belonged to the heirs at law, subject to the widow’s right of dower. The fund, was not held by the administratrix and administrator in that capacity, but as trustees for the owners. It belonged to the latter, and the owners alone are answerable for its proper disposition and appropriation. Although the administrators are parties, the action is really against the heirs, to compel them to pay the plaintiffs’ debt from the surplus realized upon the foreclosure sale of the real estate. They can only be made liable in the manner prescribed by the statute, and unless it be made to appear that the deceased left no personal assets within this State to be administered upon, out of. which the debt can be collected, or that the personal assets have been disposed of and appropriated toward the payment of the demand. * * * The failure thus to seek redress according to the statute precludes the plaintiffs from enforcing their claim against the heirs at law in this action; and, as we have seen, the administratrix and administrator as. such, cannot be held liable, as the fund is not under, their control as representatives of the estate.” In Selover v. Coe (63 N. Y. 438) it was held that heirs at law or next of kin of a deceased person could only be made liable -upon his contracts or for his debts in the cases and in the manner prescribed by statute. That was an action brought against the defendant as one of the heirs at law and next of kin of a deceased debtor to recover the shares of real and personal estate received by him to be applied upon an alleged claim of the plaintiff against the estate. It was held that the action could *818only be maintained in accordance with the statutory regulations which established a legal liability under the circumstances presented and that there was no rule .of common law which furnished a precedent for such a case. In Mcttter of Gantert (136 N. Y. 106) the testator, owing unsecured debts to the amount of $30,000,. with per-; sonal 'property of $1,000, and real estate valued at upwards of $73,000, died leaving a will giving all his property, real and personal, to his executors upon certain specified trusts for the benefit of his wife and minor children, and giving his executors a power of sale. The petitioner, a general creditor, brought this proceeding for the sale of the testator’s real estate. It was held that the proceeding could be maintained as the power of sale for payment of debts could not be implied and a general power of sale was not sufficient to compel a sale for the purpose of paying debts ;' that to justify such a proceeding the 'debts must be made a charge upon the real estate. (See, also, Clift v. Moses, 116 N. Y. 144.)
I think, therefore, that upon the death of the testator this land descended absolutely to his widow and children; that the power of. sale was for the purpose of the division of his real estate:; that the real estate left by the testator could only be made applicable to the payment of his debts by a proceeding under the provisions of the Code, of Civil Procedure before cited and that no such proceeding having been commenced within three years from the issuance of letters the plaintiff lost his right to have the testator’s real estate applied to the payment of his debts; that the exercise of the power of sale by the executrix vested in her. the consideration that she received therefor as the property of the remaindermen: and that amount in her hands as such was not applicable to the payment of the testator’s debts; that the only remedy that'the .plaintiff has is an: action at law against the devisees to recover the property of the tes-' tator which they had received, and that, therefore, this action cannot be maintained. There are other questions- in this case which would, I think, require an affirmance of the judgment, but as I think the action cannot be maintained it is not necessary to dismiss them.
. For this reason I think the judgment should be affi rmed, with costs.
Judgment reversed, new trial ordered, costs to appellant, to abide, event.