181 A.D. 446 | N.Y. App. Div. | 1918
Lead Opinion
This appeal is taken by certain legatees named in the will of Louisa Varet, deceased, from a decree judicially settling the accounts of the executor named in said will, the particular objection made to the decree being that the surrogate refused to surcharge the accounts of said executor with the difference between the inventoried value of certain securities included in the estate, and the prices at which these securities were sold by the executor.
Louisa Varet died on August 5, 1913, leaving a last will and testament which was admitted to probate on September 18, 1913, and letters testamentary issued to the executor named therein and who is respondent here. The estate was a considerable one and consisted in part of the securities as to which the loss referred to was suffered. These securities came into the executor’s hands on September 30, 1913, and on October 22, 1913, an inventory of the estate was filed in the surrogate’s office, and on the same day affidavits and schedules were filed with the tax appraiser. Prior to January 1, 1914, securities similar to those in question were dealt in upon the New York Stock Exchange and in the open market at prices approximating those at which the securities of the estate were inventoried, sometimes a little higher and more often a little lower. After January 1, 1914, prices steadily declined. The executor, who was a lawyer, and not engaged in any business having to do with dealings in such securities, consulted from time to time, as occasion offered, with gentlemen conversant with such matters and whose opinions as to the future course of prices were worthy of consideration, and as a result of such consultation he formed the opinion that better prices could probably be obtained in the autumn of 1914 than in the spring of that year. He did, however,
There is no claim that the executor acted in bad faith, or that he reaped or could reap any personal advantage from his delay in disposing of the securities. It is specifically found: “ That the executor exercised good faith in the administration of this estate,” and this finding is not challenged by the appellants. Nor is there any basis that we can find for a claim that he neglected the duty with which he was charged. So far as appears he kept constantly in mind the fact that it was a part of his duty to form a judgment as to the proper time to dispose of the securities, and, if he delayed too long, it was due to an honest error of judgment, and to circumstances which no man could have foreseen. The general rule in cases of administrators is that an executor or administrator is entitled to take a reasonable time within which to convert the assets of an estate into cash, and what is a reasonable time depends in each case upon the circumstances surrounding the particular case, and if such an executor or administrator acts in good faith and exercises his best judgment he will not ordinarily be held personally responsible if it appears, in the light of after events, that he would have displayed better judgment, or have produced a .more favorable result, if he had sold earlier. It was said in Matter of Weston (91 N. Y. 502) that “ Where no modifying facts are shown to shorten or lengthen the reasonable time, the period of eighteen months may serve as a just standard,” although it was also held that “ While such period furnishes a convenient guide where no special circumstances exist, it must, after all, not be taken as a fixed or arbitrary standard. The . test must remain, the diligence and prudence of prudent and intelligent men in the management of their own affairs. ” There
The claim of the appellants is, however, and upon this their appeal mainly rests, that the language of the will was such as to impose an obligation upon the executor to make an immediate sale of the securities, irrespective of the condition of the market, and without exercising any judgment or discretion as to whether or not it would be advantageous to the estate so to do. The following is the language thus relied upon: “ It is my will and I do order and direct my executor hereinafter named, as soon as may be after my decease to sell,' either at public or private sale and convert into money all the real and personal property and estate of which I shall die seized and possessed.” Insistence is laid upon the words “ as soon as may be after my decease,” which are deemed by the appellants to be equivalent to a direction to make a sale as soon as it can be made, that is, as soon as the securities come into the hands of the executor and he is in a position to give title to a purchaser, or within a very brief time thereafter. Such a construction of the language used is not in accordance with the authorities. The words “ as soon as may be,” or words of similar import, have frequently been judicially construed, and have been held to mean “ as soon as reasonably may be.” The direction to sell and convert into cash is undoubtedly peremptory, but the time of sale is still left to the reasonable discretion of the executor. As was said in the case from which we have already quoted: “ Even where there is a direction to sell, reasonable time must be given, and what that is must be determined in each case by its own surroundings.” (Matter of Weston, supra). In Adams v. Foster (59 Mass. 156) it was said, respecting a contract for the sale of a vessel: “ The words of the covenant ' forthwith, as soon as may be ' for the largest sum that we can reasonably obtain’ allowed a reasonable latitude, as to the time and manner of making the sale,” and to the same
Following this unbroken line of authorities we are constrained to hold that the words relied upon by the appellants are not susceptible of the peremptory construction sought to be applied to them, and that notwithstanding the use of these words in the will the discretion of the executor as to the time for selling the securities remained unfettered, provided as was the case here that he acted in good faith, without neglect and in the honest exercise of his best judgment.
For these reasons we think that the surrogate rightly refused to surcharge the accounts of the executor and that the decree should be affirmed, with costs to the executor to be paid by the appellants personally.
Clarke, P. J., and Laughlin, J., concurred; Page and Shearn, JJ., dissented.
Dissenting Opinion
I cannot accept the opinion of the majority, that as a matter of law, where a. will gives an executor power to .sell,
Two of the above cases cited are also cited in the majority opinion in the instant case. Robert v. Corning (supra) was an action to construe a will, which directed the executors to sell certain real estate “ at public sale in the city of New York, notice thereof having first been given of the time and place of sale for three successive weeks in four of the daily newspapers of the said city.” The court said (p. 235): “ Where the trustee is empowered to sell the land, without restriction as to time, the power of alienation is not suspended, although the -alienation in fact may be postponed by the non-action of the trustee, or in. consequence of a discretion reposed in him by the creator of the trust. The- statute of perpetuities is pointed only to the suspension of the power of alienation, and not at all to the time of its actual exercise, and when a trust for sale and distribution is made, without restriction as to time, and the trustees are empowered to
The opinion, in so far as quoted above, was an authority upon the proposition of law that was before the court in Chanler v. N. Y. El. R. R. Co. (supra), which is in no manner involved in the instant case. The court further considered the requirement that the sale should be public and on specified notice. The right of the testator to make such requirements does not seem to have been questioned, those facts being presented as an additional suspension of the power of alienation, which the court held was untenable. The court did say, however (p. 238): “ The direction that the real estate in this State should be sold at public sale on three weeks’ notice, was a prudential arrangement to insure a fair sale and prevent a sacrifice of the property, and in no proper sense suspended the power of alienation. * * * The act of 1837 (Chap. 460, § 43) provides that sales of real estate made by executors in pursuance of an authority given by any last will, unless otherwise directed therein, may be public or private. A public sale implies prior notice. The direction that the sale should be public was clearly valid, and it can make no difference upon the point now in question, whether the length of the notice (if reasonable) is prescribed by the testator or is left to the judgment of the executors.”
In Deegan v. Wade (supra) the contention was that the provision of the will directing the executor to sell certain real estate “ at some convenient day and place during the spring months of 1891 ” was void as suspending the power of alienation for a period not measured by lives. The court said (p. 576): “ It is obvious that the direction as to the time to sell was advisory and * * * was intended to facilitate the sale and not to limit or restrain the power of absolute disposition. The executor had the right to the ordinary period of administration, and this direction amounted to nothing more than a request that the sale be made at an earlier day.” It appears clearly, in my opinion, that these cases are authorities for
The language used by the testatrix in the instant case is not a mere request or an expression of a desire. It is a mandatory requirement. It is as follows: “ It is my will and I do order and direct my executor hereinafter named, as soon as may be after my decease to sell, either at public or private sale and convert into money all the real and personal property and estate of which I shall die seized and possessed.” In my opinion this clause is mandatory, not only that the executor shall sell, but as to time of sale, which is to be “ as soon as may be ” after the decease of the testatrix. There are no words in the clause that imply discretion as to time of sale, such as “as soon as convenient,” or when “ he shall deem it advantageous ” or “ for the best interest of the estate.” The majority of the court hold that these words add nothing, and apply the rule that would be applicable if these words were entirely eliminated. In construing a will, effect must be given to every word used by the testator. It is not to be presumed that words were idly used, and if in the ordinary use of language they have a well-defined meaning the presumption is that the testator intended that to be done which the language used fairly imports.
The effect of the words “ as soon as may be,” must be ascertained. The word “may ” means “to have power; have ability; be able;” have opportunity. (Century Dictionary.) Therefore, used in their ordinary sense, the words “ sell as soon as may be after my decease ” mean as soon after my decease as the executor has the power, ability and opportunity to sell, he shall sell. While I do not find that this exact phrase has been judicially construed in this State, the words “ may be ” as used in the Constitution have been given the meaning above stated. The Legislature is required, after a State census, to so alter the Senate districts “ that each
In Nunez v. Dautel (19 Wall. 560), an agreement to pay a sum of money “ as soon as the crop can be sold or the money raised from any other source,” the court said: “ The stipulations secured to the defendants a reasonable amount of time within which to procure in one mode or the other the means necessary to meet the liability. Upon the occurrence of either of the events named, or the lapse of such time, the debt became due.”
In Simon v. Etgen (152 App. Div. 399) the agreement was, on the receipt of a general release, to pay whatever sum might be realized on a sale of certain property over and above a certain amount, but only to the extent of a specified sum, which was held to create an obligation to sell the property within a reasonable time after receiving the release.
The case of Waddell v. Reddick (24 N. C. [2 Ire. L.] 424)
In Arthur v. Wright (57 Hun, 22; affd., 132 N. Y. 547) the contract, dated May twenty-fifth, was for the sale of wheat in Duluth to be delivered in Buffalo as soon as possible. The court said: “ It was the duty of the plaintiffs, under this contract to obtain the wheat and ship the same from Duluth with all reasonable dispatch, and to deliver the same in Buffalo in the usual course of lake navigation. * * * The known difficulty of procuring transportation could furnish no excuse for delay. The defendants were entitled to an exact performance by the plaintiffs of their contract to ship promptly and to deliver within a reasonable time. Failing in this, they have no ground of complaint against the defendants for refusal to accept the wheat on the eighteenth day of June.”
In Tobias v. Lissberger (105 N. Y. 404) old iron was sold “ for prompt shipment by sail from Europe, and for delivery on dock at the port of New York.” On the next day after the making of the contract, iron answering the description was shipped on board a vessel lying in a port upon a river in Germany which was then unnavigable by reason of being frozen over. On the first day possible the ship sailed, and after a voyage of ordinary length arrived at the port of New York. Held, not a compliance with the contract; the iron could have been shipped from any port in Europe and the defendants were entitled to such timely delivery as would follow an effective shipment.
In McNally v. Phoenix Ins. Co. (137 N. Y. 389) the policy provided that a sworn statement of proofs of loss should be furnished as soon as possible after the fire. Held, “ The plaintiffs were doubtless bound to furnish them within a
Philadelphia, Wilmington & Baltimore Railroad Co. v. Williams (54 Penn. St. 103) was an action by Williams for trespass alleging that the company by the construction of a turnout from their main track to an engine house obstructed his right of way in an alley and a watercourse, claiming that the company had no right to build the turnout as the charter authorized it “ as soon as they conveniently can, to locate and construct a railroad of one or more tracks ” and “ to make, construct and erect * * * all the works and appendages necessary for the convenience of the said company for the use of said railroad.” The court held: “ The expression ' as soon as they can conveniently locate and construct ’ is not a limitation upon the power to compel the company to exercise its whole authority in the very beginning, when the demands of business are few. It would be an unreasonable construction of its charter to require provision to be made for all the unknown wants of the future. The increase in trade and business, and the changes taking place, often require new and increased facilities.”
In Van Rensselaer v. Van Rensselaer (113 N. Y. 207) the will provided: “I hereby give and bequeath to my sister Elizabeth the sum of ten thousand dollars, to be paid by my executors when it shall be convenient for them, without regard to the time fixed by law, out of the moneys derived from the sale of the Van Schaick farm, * * . * or otherwise if it shall seem best to them.” The court said: “ He [the testator] knew that the amount and time of the sales would be uncertain, and, lest for that reason the general estate might be drawn upon to pay Elizabeth, he made her legacy payable at the convenience of the executor. But that convenience respected the situation of the estate, and not the choice or arbitrary will of the executor; and when money enough was realized from the sales to pay Elizabeth from that designated source, there was no excuse for further delay, the legacy became due and payable, and the executor who misappropriated the money, and the legatee who wrongfully accepted and retained it, became alike liable for its payment.”
The case of Adams v. Foster (59 Mass. 156) is very illuminating. The action was brought to recover on an agreement that the defendants would “ forthwith as soon as may be ” sell a schooner “ for the largest sum that they could reasonably obtain for her ” and pay the proceeds to the plaintiff. At the time of the making of the agreement the schooner was at sea. She arrived two days later and two days thereafter sailed for Yarmouth for the purpose of obtaining a new register, the old one' having been lost. Within eight or nine days thereafter she was wrecked. The Supreme Court approved of the charge of the trial judge “ That the defendants were to have the time necessary to sell the vessel; that they were not to sell her for a nominal but for a reasonable sum; that they were to take measures, immediately to effect a sale and were to sell her within such time as a man diligent in business could have sold her in the manner and for the object specified in the contract; that if her registry was lost, and a new registry would be necessary, before the vessel could be sold, they were to attend to that, and were to have the time requisite to perform all the acts necessary to complete the sale and vest the title; and that if the jury were satisfied that the defendants, acting as men diligent in business, could not have effected the sale before she was lost, they would not be liable.” (Italics are mine.) In my opinion the underlying principles in these cases give the rules that should be applied in the instant case. The executor was required to immediately do the things necessary to enable him to complete the sale and vest the title in the purchaser, and when he had the ability to do this to offer the stocks for sale. There was a ready market for . them as the larger proportion of the securities were daily dealt in upon the Stock Exchange, and the remainder had a ready market
The residuary legatees filed objections to the account, and this appeal is concerned with the claim that is made by the residuary legatees that the loss to the estate occasioned by the delay in the sale of the securities should be charged against the executor and that the executor’s account should be surcharged in the sum of $8,100.90. The sales of the securities were made within eighteen months of the death of the testatrix. The residuary legatees claim, however, that as the will required that the executor should sell “ as soon as may be after my decease,” the executor’s time was limited thereby in which to sell and that he should have sold within sixty days. There is, and there can be, no definite period of time within which an executor, who is directed to convert an estate into money, must sell the assets. Each case must be determined on its own facts, and the test to be applied in the absence of a mandatory direction to sell is, given the facts and conditions of the case, did the executor act with the diligence and prudence of prudent and intelligent men in the management of their own affairs? If he did, and loss ensues, he cannot be held liable. If he did not, then he must make good to the estate a resulting loss. There has been a disposition of the courts to recognize, in the period allowed for administration of the estate before an executor can be compelled to account, as fixing a reasonable period for the exercise of the power of sale. But “ In this State, at all events, there is no arbitrary standard. The executor, here, cannot be compelled to account until after eighteen months; and yet it may be his duty to sell even earlier than that, or to wait even longer, according to the circumstances of particular cases, and the exigencies which exist. Where no modifying facts are shown to shorten or lengthen the reason
In the case at bar there was a very potent modifying fact to shorten the time, in the will of the testatrix in the execution of which her intention has controlling effect. The direction was for the executor to sell “ as soon as may be after my decease.” This phrase recognizes that some delay will be necessary to enable the executor to give title, and incident upon transfer tax and other proceedings, but the requirement is mandatory that when the executor is in position to do so he must sell in the absence of extraordinary conditions. It may be that a prudent business man dealing with his own securities in his possession and being under no obligation to sell, would have been justified by such considerations as here appear in holding the securities until the fall. But the executor was not in that position. The obligation on him was to sell as soon as he was able. The test is, did he discharge that obligation with the diligence that a prudent business man would had he been intrusted with the securities of another under similar instructions. In my opinion he did not, and, therefore, is liable to the estate for the loss that resulted, determined by the amount that the executor could have realized if he had sold promptly, which may be taken at the inventory value, less the amount actually realized, which was proved to be $8,100.90, with which amount his account should be surcharged.
Shearn, J., concurred.
Decree affirmed, with costs to executor to be paid by appellants personally.
