Court Opinion

ID: 5278505
Source: CourtListenerOpinion
Date Created: 2022-01-06 21:48:13.587251+00
Date Added: 2024-06-11T08:28:20.932272
License: Public Domain

Van Kirk, J.:
The Fort Covington Banking Company was a partnership. The deceased was a partner. Mr. Scripter is his executor. The banking firm was prosperous; the estate is of considerable size. The widow, now Mrs. Brushey, is the residuary and principal legatee. In administering the affairs of the estate ready funds were not always on hand. Naturally, if funds were needed for the estate, application was made to the firm of which the deceased had been a member; moneys were so loaned upon notes signed by Mr. Scripter as executor, with full knowledge and consent of the widow. With one of these notes a $1,000 bond belonging to the estate was pledged as collateral. The proceeds of these notes were used, under the terms of the will, for a monument and for advancements to the widow. In his account the executor asked, and by the decree has been allowed, credit to himself for these moneys so borrowed and used, The banking firm asks that it be subrogated to the rights of the executor as to this sum or credit.
The banking firm cannot enforce its claim against the estate directly, but it invokes relief in equity under the principles stated in 24 Corpus Juris, 71: “ Subrogation of Contracting Party. While a person who lends or advances money to an executor or administrator upon a promise by note or other contract acquires no right at law or in equity against the estate, unless the money has in fact been applied to pay debts or otherwise to benefit the estate, he will in such case be permitted to take the representative’s place and be subrogated to his right to reimbursement from the estate.” We think it should have this relief. (Hamlin v. Smith, 72 App. Div. 601.) It is plain that the bank, the executor and the residuary legatee, who alone under the will have an interest in this question, understood these moneys were borrowed solely for proper purposes in the administration of the estate. The surrogate has held they were used in the proper administration of, and for the benefit of, the estate, else he could not have allowed ■ the executor credit therefor to be paid by the estate. The part of the decree making this allowance is not appealed from and is final. (Ball v. Miller, 17 How. Pr. 300.) There is no dispute as to this allowance between the bank and the estate; the estate must pay it. What are the merits between the bank and the executor? The moneys borrowed on these notes were not used by- or for the executor personally. He was the conduit simply from the bank to the estate. He had *340not one dollar less after he had disbursed this money than he had the moment before; he was not in the least “ out of pocket.” But he now has a credit, is unjustly enriched, in his account for that which never was in fact his and which never cost him one penny; the bank alone is the loser. A sense of justice revolts against this condition. If this money had been used to pay valid debts of the estate, Hamlin v. Smith (supra) would be án exact authority. There can be no real distinction here in principle from that holding. It is said that in this case the money was used not to pay debts of the deceased, but the answer is it was used, in pursuance of the provisions of the will, for the benefit of the estate as much as is the payment of a debt; the moneys were needed in its proper administration. The dispute in this respect is solely between the executor and the bank. The credit is not in fact a reimbursement to him; it is rather an unjustified present. Why make him this present; why be liberal to him with another’s money?
The notes have been long due; they have not been paid; the executor says he owes them; since the decree was made he has had the funds with which to pay; evidently for some reason he does not intend to pay them. There is no explanation why he has not paid them or why payment has not been forced from him; the one conclusion is that collection from him.cannot be forced; that he is insolvent. In First National Bank of Freehold v. Thompson (61 N. J. Eq. 188) it was held that a person who had loaned money to an administrator to pay debts of the estate was entitled upon the insolvency of the administrator to be subrogated to his claim against the estate for reimbursement.
In the management of this estate Mr. Scripter acted not only as executor but as its attorney and has been allowed compensation for. his services as such. Every indebtedness and obligation of the estate could have been readily provided for from the liquid assets of the estate. No explanation is made why moneys were borrowed from the bank, except that in his discretion the executor concluded so to do. And the fact stands that, if he had paid the notes from the amount for which he is allowed credit, the cost 'of this contest to the estate would have been avoided. The court should not protect one of its officers in such an unjust gain as is here disclosed. The allowance to Mr. Scripter for services should be reduced to $$00.
We have not considered the position of the insurance company which is obligated on the executor’s bond. It can be heard in case an action is later brought against it.
For the above reasons the bank should be subrogated to the executor’s right to reimbursement from the estate as to the afore*341said items of credit allowed in his account; and the allowance for services reduced as above stated.-
All concur, except Hinman, J., dissenting in part, with an opinion, in which Cochrane, P. J., concurs.