31 N.J. 215 | N.J. | 1959
The opinion of the court was delivered by
In 1954 Charles Halstead, a New Jersey attorney, absconded with $32,164.70 in assets of the estate of John Mild, and has never been found. The Bergen County Court surcharged Mrs. Catherine Dorn, substituted administratrix of the estate, for the sum taken by Halstead. On appeal this court reversed the judgment and remanded the case for determination of certain unresolved issues. 25 N. J. 467 (1957). The principal issue was whether prior co-administrators of the estate, who were not parties to the original proceedings, might have been solely or partially responsible for the loss to the estate. Mrs. Dorn and her surety were also given the opportunity to prove that certain of the assets held by Halstead before her appointment were uncollectible because of his insolvency. They did not avail themselves of this opportunity. After the new trial, the County Court found that the estate’s loss could not be charged against the original co-administrators, and again held Mrs. Dorn solely responsible. She and her surety appealed to the Appellate Division and the exceptants cross-appealed from the County Court’s denial of interest on the amount surcharged. We certified the case before consideration there.
On the first appeal we agreed with the County Court that Mrs. Dorn’s utter abandonment of her responsibility as administratrix to Halstead, her attorney, was culpably negligent. However, since the original co-administrators were not parties, and their role in the litigated circumstances was not part of the record, we felt that imposing liability on Mrs. Dorn without examining the conduct of her predecessors might work an injustice. We therefore exercised our in
The facts surrounding the $4,325 “receipt” delivered to the original co-administrators by Halstead, and the Varcadipane mortgage, are fully set out in our former opinion. Briefly, the co-administrators discovered soon after their appointment that Halstead, who had represented Mild during his life, may have been holding assets belonging to the estate. Upon their inquiry, Halstead freely admitted holding $4,325 in assets, which he refused to surrender on the ground he planned to remove the co-administrators and substitute Mrs. Dorn, Mild’s niece, as administratrix of the estate. The co-administrators were satisfied by his written “receipt” and his promise to deliver the assets if he decided not to move for their replacement. When Halstead did so move, the co-administrators filed a cross-motion that he turn over these assets. Given the complete lack of any reason to believe that Halstead’s motives were dishonest, the actions of the co-administrators were entirely reasonable on this score.
The co-administrators learned, after Halstead’s motion had been argued and they had been restrained by the County
The attorney who wrote the letter to Halstead also informed Mrs. Dorn, prior to the hearing, of the facts concerning the assets held by Halstead and those surrounding the mortgage, and Mrs. Dorn answered, “Mr. Halstead will take care of it.”
Under the circumstances of the restraint, the proceedings in the County Court, and the conversation with Mrs. Dorn, we fail to see what more the co-administrators could have done at that time. It must be remembered that they were dealing with an attorney whose honesty in his 16 years of practice was unquestioned. It should also be noted that the suggestion made by the first record in this case that the co-administrators, after becoming uneasy about Halstead’s activities, decided to effect a safe and painless withdrawal from further involvement with the estate is not borne out by the facts as they are now available to us. On the contrary, the co-administrators vigorously resisted Halstead’s motion to substitute Mrs. Dorn for them. Only after the County Court became satisfied that Mrs. Dorn was the proper person to administer the estate, and after all the facts known to the co-administrators were communicated to the court, did they end their efforts to retain the administration of the estate.
The sketchy accounting submitted by the co-administrators to Mrs. Dorn, their successor, is somewhat more
We are unable to see how the nature of the co-administrators’ accounting helped cause the loss to the estate. In the first place, a full account would have informed Mrs. Dorn of nothing she did not already know. She had been told of the assets held by Halstead and the circumstances surrounding the Varcadipane mortgage. She admitted that she had questioned Halstead about that mortgage and the other assets, and that he had answered, “It’s all turned in the bank, Mrs. Dorn.” Second, there is nothing in the record to indicate that the co-administrators suspected or should have suspected Halstead was a thief. Third, we are unable to believe that any further disclosure would have changed Mrs. Dorn’s utterly supine attitude and her complete trust in Halstead.
We are satisfied that the co-administrators should not be held liable for any part of Halstead’s defalcations on the basis of their conduct. They must be judged in the light of what they 'then knew, or had reason to know, and not in the light of what later events revealed. Their reliance on Halstead’s early and apparently frank acknowledgment that he held the $4,325 for the estate, and his voluntary statement in court that the Varcadipane mortgage had been
In view of this holding, we need not treat the effect of the statute of limitations and Mrs. Dorn’s release.
The original exceptants to Mrs. Dorn’s account seek in this later proceeding to have interest, from the date of her qualification as administratrix, imposed as part of the judgment against her. This is a matter that should have been raised at the first trial, and was not within the scope of our remand. In any event, in the peculiar circumstances of this case, we believe that the trial judge did not abuse his discretion by refusing to impose interest on the sum for which Mrs. Dorn was surcharged. Ditmars v. Camden Trust Co., 10 N. J. 471 at pages 491-492 (1952).
The judgment of the County Court is affirmed.
For affirmance—Chief Justice Weintbaub, and Justices Burling, Jacobs, Erancis, Proctor, Hall and Schet-TINO—7.
For reversal—Fone.