Court Opinion

ID: 5474977
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:48:20.977794+00
Date Added: 2024-06-11T08:33:27.601977
License: Public Domain

By the Court
Ingraham, P. J.
On the accounting before the snrrog’ate, various objections were taken by different parties to the report of the auditor, and from the decisions of the surrogate thereon, appeals are taken.
*4I propose, in the examination of the case, to notice the various objections taken and made the subject of appeal, without separating them into different appeals.
1st. The principal ground of appeal in which two or more of the appellants agree, is to the refusal to charge the executors with interest on the moneys received by them, and kept on deposit in banks.
These moneys were received from the beginning of 1861, and large balances remained in their hands from that date, down to the time of the accounting. The report of the auditor was made in January, 1867.
The auditor reports the whole amount received by the executors up to 1st May, 1866, to have been the sum of §296,304, and the amount paid out for debts and expenses, §26,741 rVo, and for legacies, &c., §18,500. This would leave a surplus received by them of §251,062TW. Of this, they have had on hand, uninvested, large sums, varying from §28,000 in 1861, to $119,000 subsequently.
By the will, the executors were directed “to invest ir stocks of the United States or of a State, or of a city, or in town securities, or bond and mortgage, whatever funds may, from time to time, be lying in their hands, awaiting the periods at which, according to the provisions of the will, such funds were to be disbursed to the children or grandchildren of the testator.”
This provision of the will was utterly disregarded by the executors. Small sums only were so invested, while these large balances were retained in bank. Two bank accounts were kept, and moneys were transferred from one bank to the other, and sometimes transferred back again.
The excuse for not investing, given by the executors, is: 1. That some of the parties interested objected to investments in United States bonds in 1861; 2. The difficulty of investing in bond and mortgage, and 3. That they kept the moneys in such a condition that the same could, at any time, be paid over to the persons entitled thereto.
*5None of the reasons justify the executors in disobeying the directions of the testator. If the United States securities were considered objectionable, and if it was difficult to loan on bond and mortgage, there were other securities of States or cities, which were not subject to the same objection, and it was their duty to invest these moneys until they were wanted for payment of the legatees. Ho authority was given to retain such moneys uninvested for the purpose of distribution, and the only discretion vested in them was as to the security in which the investment was to be made. Instead of following these directions they appear to have used the funds, from time to time, or part of them for the accommodation of one or more of their own number, either by buying the notes or discounting the notes of one of the executors, or paying cash for goods purchased by him in his business, to be repaid by him at the expiration of the ordinary credit, and in one instance loaning to said executor money on bond and mortgage. Ho such transactions are within the power, nor are they consistent with the duty of an executor, and if any loss had occurred therefrom, such loss would have been chargeable personally on the executors consenting to such use of the funds of the estate. Where the will directs the specific securities in which the moneys are to be invested, the rule which requires adult legatees to bring to the knowledge of the executors the securities in which they desire such investments to be made is inapplicable. Whatever doubt may have existed as to United States securities in 1861, was long ago removed, and furnished no reason for the neglect to invest in such securities after 1863. Instead of this, the funds were kept in different ways; some in the iron chest for months; some deposited to the credit of the executors, as such, and some deposited to their credit as private persons. There can be no doubt that, for such disobedience of the plain directions of the will, and for such appropriation of the moneys of the estate to private purposes, of one or more of the executors, they have made themselves liable to be charged interest on the moneys so retained by them uninvested, after *6the allowance of a reasonable time for the purpose of making such investment.
Where the investment is to he made in public securities which can at all times he obtained in the market, thirty days is a reasonable time to require such investment to be made.
In taking account of such interest, a reasonable number of rests only should bo made in the accounts, not holding the executors to invest every sum as soon as received by them. Such reasonable time would be not longer than six months, and that time would give the executors everything they could reasonably ask for in making the investments. Upon this branch of the case the executors must be charged with interest on the sums held by them at the end of every six months from 1st May, 1861, not invested, after allowing thirty days for making such investment. (Scheiffin v. Stewart, 1 John. Ch. 620; Garrett v. Carr, 3 Leigh, 407; Lansing v. Lansing, 45 Barb., 190; King v. Talbott, 50 Barb., 453.)
The excuse for not investing, viz.: That some cf the legatees objected to investing in the securities of the United States, has' no force. The testator had a right to' direct as to the investment of these funds, and having done so in his will, the executors were bound to follow his directions. If they had done so, they would have been protected even if a loss had occurred, or they could have invested in other securities, to which there was no objection.
Under any view of this question, it seems clear that tíre executors have been guilty of neglect and disobedience of the provisions of the will, and that they are chargeable with interest as before stated.
It is urged that the executors are chargeable with compound interest.
If it appeared that they had neglected to give credit fertile interest on the moneys used by them, or either of them, there would be no doubt of the rule, and its application to the present ease. Here they appear to have credited the estate with interest on all moneys so used, leaving the *7liability to be only for moneys left uninvested in the bank, and, so fir as the evidence goes, not showing any benefit derived therefrom by the executors,, unless it ivas from a credit which such deposits might incidentally give them in their individual business.
2d. The next ground of appeal is, that Edward McClellan should be charged with certain notes collected by him.
I do not think the evidence warrants any interference with the findings in this respect. The question was a matter of fact solely, depending, in some measure, on contradictory testimony, and the evidence sustains the decision.
3d. The objection to the allowance to Edward McClellan, for services rendered the testator, is also not well taken. There is evidence that the testator had agreed to support McClellan and his family, if he would attend to his business; and, that the testator said he had promised to pay McClellan enough to pay his expenses and those of his family ; and, a short time before his death, that he expressed himself satisfied with McClellan’s attention to his business. There is no reason for an interference with this allowance.
4th. An objection is made to the allowance to the counsel for executors of their charges for services. So far as they had been paid, they were properly before the surrogate on the accounting. By his decree he has disallowed so much of them as relates to the proceedings in Maine.
The only item which is objectionable, is that allowing the executors to charge the estate, with the expenses of their opposition to an order for accounting, and with the defense of the executors after they were in contempt for not obeying the order of the surrogate to account. This charge is made at $150, and should be disallowed, and the executors charged with that amount.
oth. The item of $950 received by the executors is stated in the inventory, and remains charged against them as part cf the estate, and they are there charged with it. It would be unnecessary to repeat it until the final accounting takes place.
*86th. The remaining objection is to the charge against George F. Gilman, of his note for $12,626.54, held by the testator at the time of his death.
It is objected by Charles B. Gilman that this note should not be charged against the executor here, because the note has been transferred in Maine to the widow, after having been sued to judgment in Maine, where the widow is now prosecuting it to collection.
The mere recovery of the judgment in Maine is no ground for omitting to charge the executor with the amount of his indebtedness. There is no sufficient proof of the transfer of the note or judgment to the widow, or any other person, to prevent such charge here. There may be a conflict between the courts here and in Maine. That must be disposed of in the decision of the actions pending between the parties. As the bulk of the estate and the place of administration is here, it is proper that the accounting should be here. Had the executor paid the money in Maine, it might have constituted a good objection to the charge here; but, as no such proof is given, I do not see any ground for reversing the decision on this point.
The decree of the surrogate must be modified in the mode before stated, and the case referred back to the surrogate, with instructions to charge interest on the balances kept by them without investment, making rests every six months, and allowing thereafter thirty days for such investment, at the rate of six per cent, also to disallow the charge for opposing the accounting, and charging the executors with the amount allowed therefor, $150.
Ordered accordingly.