In Re Kuser
An appeal is prosecuted by John L. Kuser, Jr., and Walter G. Kuser, executors of the estate of John L. Kuser, deceased, from an order of the Burlington County Orphans Court opening a decree of insolvency and permitting creditors to file exceptions to the report and account of the executors. Respondents are creditors of the estate.
In April, 1938, pursuant to
October 18th, 1940, more than two years and three months after the entry of the decree of insolvency, the respondent Scott Scammell gave notice of an application to open the decree of insolvency and for leave to file exceptions to the report and account of the executors. His petition was supported only by a general verification. While not required to answer a petition not properly verified by affidavits of witnesses and not presenting legal evidence by statement of fact and circumstance (Servis v. Cooper (Supreme Court), 33 N.J. Law 68; Sparks v. Fortescue (Court of Errors and Appeals), 75 N.J. Eq. 586; 73 Atl. Rep. 595; 19 Am. Jur. 303 ¶ 440), the executors did so and at length; their answer was supported by detailed affidavits of the executors and of third persons having knowledge of the facts.
The application to open the decree was based solely on the ground of newly discovered evidence. The petition disclosed
The fact that there was a John L. and Mary Dunn Kuser trust fund in existence had been disclosed by the report of the executors filed in the Orphans Court. The executors were also the trustees. The petitioner, although given notice of the application to have the estate declared insolvent, filed no exception to any of the claims listed in the statement filed by the executors and made no objection to the account of assets; he made no application for discovery nor did he ask that he be permitted to examine the executors on oath as to assets of the estate or claims filed. In August, 1940, petitioner had instituted a suit in the Court of Chancery under
In the petition the report of claims and the account of assets were questioned. For convenience, petitioner‘s questions may be grouped and considered: with respect to: 1, the claim of John L. Kuser, Jr., and Walter G. Kuser, as trustees of the trust fund, in the amount of $449,372.25; 2, the claims of John L. Kuser, Jr., and Walter G. Kuser, individually, for securities loaned by them to decedent and pledged by him on personal loans at banking institutions; 3, claims stated as those on which decedent was secondarily liable; 4, failure to include assets of the trust as assets of the estate; 5, the statement that decedent owned a one-third undivided interest in the real estate listed when, it is claimed, complete ownership was in decedent.
The order of the Orphans Court opening the decree of insolvency was made September 10th, 1941. It provided that the decree entered July 14th, 1928, “be opened to the extent of permitting petitioner and said creditors to file exceptions to said report and account,” and that, nothing contained in the order “shall be deemed to effect in any way any title to property acquired on sales by the said executors, subsequent and pursuant to the said decree.” In the opinion of the Orphans Court it is stated that petitioner rested his application to open the decree of insolvency on the claim of “newly discovered evidence as set forth in the petition,” and that, “after” obtaining the information set forth in his petition petitioner acted with diligence; that the claims made “could not have been discovered by the petitioner, prior to the making of the decree and are such that might change the status of the estate, if it can be shown that the trust fund really belonged to John L. Kuser, individually.”
“Our probate practice is essentially equitable in character, and under that practice, interlocutory orders are appealable.” In re Kellner (Court Errors and Appeals), 121 N.J. Eq. 243; 189 Atl. Rep. 91.
The right of creditors to file exceptions to the account of an executor in a proceeding to have an estate declared insolvent
Counsel have not, nor have I found any reported decision in this state defining the power of the Orphans Court to open a decree of estate insolvency, on the ground of newly discovered evidence, after the time limited for an appeal has expired. The Orphans Court partakes of the powers of a chancery and prerogative jurisdiction. Pyatt v. Pyatt (Court of Errors and Appeals), 46 N.J. Eq. 285; 18 Atl. Rep. 1048. Resort may be had, therefore, to equitable principles and precedents.
The fundamental law on the subject of opening decrees formally enrolled is Lord Bacon‘s First Ordinance: “No decree shall be reversed, altered or explained, being once under the great seal, but upon a bill of review; and no bill of review shall be admitted except it contain either error in law appearing in the body of the decree, without further examination of matters in fact, or some new matter which hath risen in time after the decree, and not any new proof which might have been used when the decree was made; nevertheless, upon new matter that is come to light after decree made, and could not possibly have been used at the time when the decree passed, a bill of review may be grounded, by the special license of the court, and not otherwise.” Beames Ord. 1. Chief Baron Gilbert, in his Forum Romanum, compares a bill of review to an appeal from a prince who has pronounced a definite sentence of the civil or canon law, uninformed, to the prince, better informed. For. Rom. 183. The modern and approved practice in New
In our simplification of the procedure necessary to obtain review of a decree we have not lost sight of the sound reasoning which prompted the formulation and adoption of Lord Bacon‘s rule, nor have we relaxed the strict requirements of that rule, prerequisite to entertainment of an application based upon alleged newly-discovered evidence. In Miller v. McCutcheon, 117 N.J. Eq. 123 (at p. 130); 175 Atl. Rep. 155, Chief-Justice Brogan, for our Court of Errors and Appeals, declared: “It is sound jurisprudence and public policy as well that there should be finality to judgments of courts of competent jurisdiction which parties let go unchallenged, by failing to exercise their right of appeal.” And: “It should also be observed that the final judgments of our courts would be seriously jeopardized and property rights stand on very insecure foundations if rehearings and bills of review were entertained to vacate final decrees, when the time to appeal has passed, and others have acquired vested rights, save in the well recognized instances herein mentioned.” Citing Watkinson v. Watkinson, supra, the Chief-Justice pointed out that a bill or petition of review will not lie after the time for appeal has expired unless it can be brought “strictly” within the exception of newly discovered evidence or some special equity that would give the court the discretionary power to make the order.
Vice-Chancellor Van Fleet, in Dringer v. Receiver of Erie Railway, 42 N.J. Eq. 573; 8 Atl. Rep. 811, commenting upon the importance of permanence in judgments of courts, declared that even if a judgment rests on perjured testimony or on a forged instrument, yet if the defendant has had an opportunity given to him by the law to show that the testimony was false or the instrument was forged, he stands irretrievably concluded by the judgment, unless he can procure
Lord Eldon, in Young v. Keighly, 16 Ves. 348; 33 English Reprint 1015, reluctantly dismissed a petition for leave to file a bill of review, saying: “This is an extremely important question. The evidence, the discovery of which is supposed to form a ground for this application, is very material; and I am persuaded, that by refusing the application I decide against the plaintiff in a case, in which he might, perhaps with confidence, have contended, that upon the evidence he was entitled to the whole money. On the other hand, it is most incumbent on the court to take care that the same subject shall not be put in a course of repeated litigation; and that, with a view to the termination of suit, the necessity of using reasonably active diligence in the first instance should be imposed upon parties. The court must not therefore be induced by any persuasion as to the fact, that the plaintiff had originally a demand, which he could clearly have sustained, to break down rules, established to prevent general mischief at the expense even of particular injury.” In the present case appellants suggest that the opinion of the Orphans Court indicates its action was taken on a misconceived impression that some particular injury might otherwise result. This is indicated, they say, in the statement of the court: “if it were not for the debts owing to the family, this estate might be solvent.”
Vice-Chancellor Van Fleet, in Traphagen v. Voorhees, 45 N.J. Eq. 41; 16 Atl. Rep. 198, declared that he who would open a decree must carry the burden of demonstrating to the court, clearly and plainly, that evidence has been newly discovered, that such evidence is competent, is of a highly weighty character and, because of the nature, situation or condition of that evidence, it was not possible for the applicant,
“The petition (to reopen a decree) must state the facts clearly and distinctly and be supported by the affidavits of witnesses so as to enable the court to determine whether the
With respect to claims 2, 3, 4 and 5, claims of John L. Kuser, Jr., and Walter G. Kuser, individually, for securities deposited with various banks as security for loans made to decedent, no allegations were made in the petition of newly discovered evidence. Also, with reference to these claims, the petition speaks in the alternative. Proof of grounds in the alternative is generally held to be insufficient. 1 Am. Jur. 952 ¶ 25.
The petitioner did not “establish” before the Orphans Court “by a statement of facts and circumstances” that he could not have discovered the new matter by the use of reasonable diligence in time to make use of it on the final hearing. It is true that he states such to be the fact, but his statement in that regard is merely a conclusion, and a conclusion is not evidence. Traphagen v. Voorhees, supra. “While petitioner claims the facts alleged were only `recently’ learned, it is not shown or even claimed that they could not have been `known’ by the exercise of reasonable diligence.” Cameron v. Penn Mutual Life Insurance Co., 116 N.J. Eq. 311; 173 Atl. Rep. 344.
Not only did the petitioner fail to prove that he could not have discovered the “new evidence” “by the exercise of reasonable diligence” (and the burden of proof is on him — Traphagen v. Voorhees), but the facts disclosed indicate the contrary. The petition states that in August, 1940, petitioner learned three things as a result of the Chancery suit: Details of the declaration of trust from the copy furnished him; that decedent paid certain premiums on policies belonging to the trust and that other premiums were paid from the trust fund; that individual debts were paid by John L. Kuser, Jr., and Walter G. Kuser out of the proceeds of insurance policies, which, it is alleged, were trust funds. Were these facts which could not have been discovered by the creditor before the decree was made by the use of reasonable diligence? The fact that there was a John L. and Mary Dunn Kuser trust fund in existence was disclosed by the report of the executors filed in the Orphans Court; the answer in the Chancery suit informed petitioner that certain policies became part of the assets of the trust fund; the terms of the trust he learned by asking for and receiving a copy of the trust declaration. He could have followed the same course in the Orphans Court and obtained the same information; it is vested with the power to compel discovery as fully as is equity. Clayton v. Asbury Park and Ocean Grove Bank, 115 N.J. Eq. 480; 171 Atl. Rep. 502; Hill v. Hill (Prerogative Court), 79 N.J. Eq. 521; 82 Atl. Rep. 338.
The executors filing the report and account were also the trustees. It did not appear by the petition that the creditor had even inquired of them as to the terms of the trust. The report had disclosed that the claim arising out of the trust matter was for $449,372.25. By filing an exception, the creditor could have examined the executors-trustees, and could have learned every detail as to the claim, the nature of the trust and what had happened to trust assets. Whether in the course of that investigation he would have found out about the premiums paid is beside the point. The policies were payable to specific beneficiaries. The affidavit of Walter G. Kuser filed in answer to the petition discloses that the
The Court of Chancery has no power, nor has the Orphans Court, whether by bill or petition of review, to open an order or decree after the time for appeal has expired, except for error of law on the face of the order or decree, fraud, or new or newly discovered evidence. Nash v. Leiderman, 103 N.J. Eq. 287; 143 Atl. Rep. 349; McKenzie v. Standard Bleachery Co., 109 N.J. Eq. 429; 157 Atl. Rep. 845; In re Realty Title Insurance Co., 126 N.J. Eq. 523; 10 Atl. Rep. 2d 264; Fidelity Union Trust Co. v. North Jersey Poultry Co. (Court of Errors and Appeals), 123 N.J. Eq. 259; 197 Atl. Rep. 65. It has been said (and sometimes without explanation) that the Court of Chancery has discretion to open its orders or decrees. The court may exercise its “sound discretion,” in the case of newly discovered evidence, only after facts and circumstances have been proven from which the court may find that the requirements of Lord Bacon‘s rule, as presently enforced, have been “strictly” met.
In Miller v. McCutcheon (Court of Errors and Appeals), 117 N.J. Eq. 123; 175 Atl. Rep. 155, Chief-Justice Brogan, speaking for the court, said:
“A bill of review (and, as has been said, that is what this proceeding essentially was) will not lie after the time for appeal has expired unless it can be brought strictly within the exception of newly discovered evidence or some special equity that would give the court the discretionary power to make the order. Watkinson v. Watkinson, supra. Neither of these elements exists in this case.
“As to time limitations in this class of cases, while there is no express statutory limitation as to the filing of bills of review, the limitation of right of appeal governs except in cases of new or newly discovered matter.”
The ruling of the Court of Errors and Appeals, in Miller v. McCutcheon, was that an interlocutory order made by a
In Nash v. Leiderman, 103 N.J. Eq. 287; 143 Atl. Rep. 349, an order had been made in the Court of Chancery authorizing the transfer of a lien on a certain property to the proceeds, and fixing the order of priority therein. Two years later an application was made by a receiver for an order modifying that order. The application was granted and the order modified; an appeal was taken. The Court of Errors and Appeals said: “If this be within the province of the Court of Chancery then there is no finality to any order which the court can make, for if an order can be made modifying an order made two years and three months prior thereto an order of modification could as well be made ten or twenty years subsequent to the making of the original order. If this be the law the right accorded a party by a former order would never be secure. * * * We do not think the power exercised by the Court of Chancery in modifying the order of November 4th, 1925, is vested in said court.”
The creditor who applied to open the decree of insolvency, had notice of the application to declare the estate insolvent and that a report and account would be presented by the executors. He chose not to question the proceedings, or the account when filed. He permitted his time for appeal from the order of insolvency to expire without action taken. His laches and negligence in this respect should have been a bar to any opening of the decree.
Another insufficiency in the petition is obvious. The evidence claimed to be newly discovered was not shown to be of such a weighty character as should persuade a court that a different decree ought to be entered, or to establish that the result attained by the decree was wrong. General statements were made in the petition suggesting doubt as to the accuracy of claims filed, but no relevant facts were proven. I am permitted, on this appeal, “to consider as well questions of fact
Petitioner‘s suggestions that the trust was destroyed because decedent used $449,000 worth of the trust assets for his own benefit, that of $78,000 worth of premiums paid on life insurance policies owned by the trust, decedent paid $2,400 worth from his own funds, and that decedent had certain dividends on such insurance policies made payable to himself while other dividends were made payable to the trust, if in the form of evidence, would not prove the point attempted to be made. Decedent could not legally disregard the terms of the trust to the prejudice of the beneficiaries. However, looking at the acts themselves, they would not have the effect suggested. If they did, every time a trustee mingled trust funds with his own, the trust would be extinguished. That could not be. Nor, could the trust have been dissolved by agreement of decedent and of his two sons, the primary beneficiaries. The trust provides for payment of income to the sons during their joint lives and, upon the death of one, that one-half of the principal and of accrued interest is to go to such persons as may be named in the will of the one dying, or, if there is no will, to the next of kin under the intestacy laws in force at the death; the remaining one-half to go to the survivor, absolutely. The ultimate beneficiaries of the trust could not be known until the death of one of the sons. So long as it remains uncertain who are the parties in interest, the trust can not be terminated. Martling v. Martling (Court of Errors and Appeals), 55 N.J. Eq. 771; 39 Atl. Rep. 203; Godfrey v. Roberts (Court of Chancery), 65 N.J. Eq. 323; 55 Atl. Rep. 353; Martin v. Martin (Court of Chancery), 106 N.J. Eq. 258; 150 Atl. Rep. 338; 65 C.J. 356. Assets substituted for trust assets belong to the trust. Janes v. Falk (Court of Errors and Appeals), 50 N.J. Eq. 468; 26 Atl. Rep. 138; Jeffray v. Towar (Court of Chancery), 63 N.J. Eq. 530; 53 Atl. Rep. 182; China Fire Insurance Co. v. David, 50 Fed. Rep. 2d 389; certiorari denied, 284 U.S. 658.
Under no possible view could the proceeds of the life insurance policies be said to belong to the estate of decedent. Specific benficiaries were named and the rights of those
Another assertion of the petition, not substantiated, relates to claims of the First Mechanics National Bank. Two notes were involved, one made by each son of decedent; decedent was endorser on both. At the time the report was filed by the executors these claims had not been paid and were valid claims against the estate of the endorser. The report made it clear that the claims represented only contingent liabilities. These are the claims unquestionably referred to by the Orphans Court as “debts owing to the family,” but for which “this estate might be solvent.”
The Orphans Court by its order permitted the decree to be opened to the extent of permitting exceptions to be filed generally to the report and account. Petitioner questioned only eight out of twenty-five claims. Nothing was said in the opinion of the court below justifying the opening of the decree as to the other claims or as to the account of assets. Under the statute dealing with the opening of accounts, upon proof of fraud or mistake, after they have been settled, the account is opened only in respect to particular items connected with the fraud or mistake. In re Schlemm‘s Estate (Prerogative Court), 130 N.J. Eq. 295; 22 Atl. Rep. 2d 364; Trimmer‘s Executor v. Adams (Prerogative Court), 18 N.J. Eq. 505.
In the petition, in addition to the suggestions made and doubts raised as to eight claims, it was asserted that the
Respondents argue that the statute,
Counsel for respondents have argued that by allowing exceptions to be filed the Orphans Court did not open the decree of insolvency (notwithstanding that the order was so worded) and that there is nothing which constitutes an order of the court and an adjudication that the account of assets be allowed as true and the claims as justly due. These contentions are contrary to the authorities. Smith v. Crater (Court of Errors and Appeals), 43 N.J. Eq. 636; 12 Atl. Rep. 530; Feick v. Hill Bread Co. (Court of Errors and Appeals), 89 N.J. Eq. 189; 140 Atl. Rep. 96; In re Schlemm‘s Estate, supra. The decisions dealing directly with the question treat a default decree no more leniently than a contested decree — perhaps with less indulgence. Cameron v. Penn Mutual Life Insurance Co., 116 N.J. Eq. 311; 173 Atl. Rep. 344; Better Plan Building and Loan Association v. Forman, supra. The Court of Errors and Appeals, in In re Hazeltine‘s Estate, 121 N.J. Eq. 49; 187 Atl. Rep. 177, declared that an order opening an account, without legal proof, will be set aside.
Another point should be discussed. In the opinion in Watkinson v. Watkinson, supra, appears the following: “There is, however, another consideration why the laches of
The petition to open the decree was not properly verified and such facts and circumstances as were therein set forth should not have been given weight as evidence; petitioner neglected to seek the information he characterizes as newly discovered evidence in the Orphans Court, failed to file any exceptions to the report or account and permitted his time to appeal from the decree to expire; petitioner failed to prove that he could not have discovered the evidence he offered as newly discovered, in time to have made use of it before the decree of insolvency was entered and he did not present