39 N.Y.S. 954 | N.Y. App. Div. | 1896
The surrogate of Hew York county made a decree in this matter settling an account of James T. Horn, a substituted testamentary trustee. It declared that the account “is judicially settled and. allowed as filed and adjusted.” It directed that .one-fifth of the amount in the trustee’s hands for distribution be paid to J. Albert Horn as his distributive share, another fifth to Mary 0. James as her distributive share, one-tenth to the guardian of Viola Horn, an infant, and another tenth to the guardian of Beatrice Horn, an infant, as their respective shares. It was also stated in the decree, in substance, that one other fifth under the will of the testator, Benjamin T. Horn, belonged to James T. Horn and the remaining fifth to Isabella M. Dewey, but it was held that these shares should not be paid over. It appeared in the proceeding upon the accounting that James T. Horn and Isabella M. Dewey were sureties upon a bond which had been. given by one August Kohn, the immediate predecessor of J ames T. Horn as trustee. It further appeared that Kohn was appointed trustee on the 26th of May, 1887, and remained such until his death on April 3, 1895, and that at the time of his. death ho was indebted to the trust in the amount of $39,578, which, amount, it is claimed, is, prima facie, shown to have been misappropriated by Kohn. James T. Horn remained upon the bond of Kohnas his surety from May 26 to September 8, 1887, when he was released from liability on such bond for any future delinquency of the trustee, but Mrs. Dewey has continued to be a surety on Kohn’s bond to the present time. When James T. Horn was released as surety one Lewis Appell was substituted in his place. It is also shown in the proceeding that Kohn’s estate is insolvent, and that by reason of his misappropriation there is an apparent loss to the estate of about $10,000. Appell’s estate is also said to be insolvent. The amount ready for distribution on the present accounting, minus deductions allowed, is about $25,000. In the decree made by the surrogate in this proceeding is a provision as follows : “ And it appearing to this court that neither the said James T. Horn nor the said Isabella M. Dewey as such sureties, respectively, nor the estate of said Lewis Appel, the deceased surety, have made good the deficiency or loss of trust funds on the part of their principal, said August Kohn,
James T. Horn and Isabella M. Dewey (whose share was assigned’ to George H. Winters) and George H. Winters filed exceptions to .that part of the.decree of the surrogate from which the foregoing extract has been taken; and the question raised by their appeals, in the first place, is as to the right and authority of. the surrogate to impound the shares of James T. Horn and .Isabella M. Dewey so that those specific shares may be subjected, if it becomes necessary in the future, to any judgment Which may be recovered against the sureties' on Kohn-s bond.
So far as James T. Horn is concerned, we do not - see lioW,. in any aspect of the question, his share can be made liable. He was surety for Kohn only for a; period of about four months ; that is' to say, from the end of May to September, 1881. - The condition of the bond upon which he Was surety provided for the faithful discharge by August Kohn o.f the trust reposed in' him as a successor-trustee under the will of Benjamin T. Horn, and for his obedience to all lawful decrees and orders óf the surro
But, further than this, we are of the opinion that there was no power in the Surrogate’s Court to make that provision of the decree which puts a restraint upon the distribution of any of the shares until an action may be framed, tried and determined as to the liability of the sureties upon Kohn’s bond. The Surrogate’s Court has no jurisdiction to try claims, but it has a qualified power on the settlement of the accounts of a testamentary trustee to retain possession of distributive shares until the courts having jurisdiction may determine controversies respecting such shares. The provision of section 2743 of the Code with reference to the distribution of estates after the accounting of a trustee is a mandatory provision; it enacts that when the account is judicially settled and any part of the estate remains and is ready to be distributed the decree must direct the payment and distribution thereof to the persons so entitled according to their respective rights. That portion of the estate of the testator accounted for in this proceeding was ready for distribution and is partially distributed by the terms of the decree, but, as limiting the mandatory provision of section 2743, section 2812 of the
The decree of the surrogate should be reversed in so far as the provision we have considered is concerned, and the decree should be modified by directing that the amount found ready for distribution, minus charges and reserved fund as stated in the decree, be paid oyer in accordance with the interests of the parties as settled by the decree; that is to say, one-fifth to James T. Horn, one-fifth to J. Albert Horn, one-fifth to Mrs. Dewey or Winters, her assignee, one-fifth to Mary 0. James, one-tenth to the guardian of Yiola Horn, and one-tenth to the guardian of Beatrice Horn, or, if no such guardians are appointed, that such tenths be deposited with the chamberlain of the city of Hew York.' Costs of these appeals and costs in the Surrogate’s Court are-allowed to the appellants to be paid out of the fund.
Rumsey, Williams and Ingraham, JJ., concurred; Van Brunt, P. J., concurred in result.
Decree reversed in part, and modified as directed in opinion, with costs of appeal and costs in the Surrogate’s Court to the appellants to be paid out of the fund.