137 Misc. 735 | N.Y. Sur. Ct. | 1930
In this accounting proceeding objections filed to the account raised several issues, the principal one of which was the liability of the executors for continuing testator’s business after his death. The referee appointed to hear and determine the issues has held that both executors are liable for the loss sustained by continuing the business. He has found that the testator was the owner of all of the stock of the corporation which conducted the business; that the corporation was solvent at the time of testator’s death, but subsequently became insolvent, a receiver in bankruptcy being appointed therefor. He has accordingly surcharged the executors with the book value of the business as of the date of testator’s death. The matter now comes before the surrogate on exceptions filed to the referee’s report.
The exceptions to the referee’s report are sustained to the extent of allowing the following deductions from the assets of the Sterling Wax Paper Manufacturing Company: From the merchandise inventory there should be deducted the difference between the sale price and the cost price of finished goods, or $3,166.17; and from the real estate there should be deducted depreciation from January 1, 1926, until September 29, 1926, or $403.13. The widow’s exemption of $150 is also allowed. (Surr. Ct. Act, § 200.) The remaining exceptions are overruled. As to the liability of testator’s widow, who qualified as executrix and actively managed the business, it clearly appears that in the absence of any authority in the will she must be held strictly accountable for the loss sustained in continuing the business. (Manhattan Oil Co. v. Gill, 118 App. Div. 17, 19; Matter of Glass, 134 Misc. 291, both citing Willis v. Sharp, 113 N. Y. 586.)
As to the coexecutor, Turkus, the contention that he "took no active part in the running of the business and, therefore, should not be held liable for the loss, cannot be sustained either by the testimony or as a matter of law. In his opinion the referee calls attention to the testimony of the executor that he received a financial statement which showed the net worth of the corporation to be
That the estate held only shares of stock in the business corporation does not affect the question of the executors’ liability. This question has been decided by the Court of Appeals in Matter of Auditore (249 N. Y. 335), the court saying: “ The surrogate is not dealing with the corporation but with the value of its stock at specified times.”
A further question presented on the argument before me was
The argument that the referee should not have included the proceeds of the sale of testator’s real property in the charges against the executors, is without merit. The real estate in question was devised by the residuary clause to the widow. That clause blended the real and personal estate. The devisee was also named as executrix and as such was charged with the payment of the general legacies. In paragraph 15 of the will she and her coexecutor were given the power to sell the real estate at such times and in such manner as they might deem for the best interests of the estate, I hold, therefore, that the general legacies were charged against the real estate (Carley v. Harper, 219 N. Y. 295, 301; Brown v. Knapp, 79 id. 136, 143), and the rents and expenses of the property were properly charged and credited in the account.
Pursuant to section 236 of the Tax Law (as amd. by Laws of 1924, chap. 357), and rule VIII of this court, a decree cannot be entered until the transfer tax is fixed and a proper final receipt therefor is filed. Submit such receipt and proposed decree on notice confirming the referee’s report, with the exceptions above stated, and settling the account accordingly.