176 Misc. 799 | N.Y. Sur. Ct. | 1941
This is an intermediate application in the accounting proceeding in which a firm of attorneys and an individual attorney seek direction for the immediate payment to them of the balance of their fees, which was awarded pursuant to intermediate "determinations of the surrogate. The remaining sums due the firm of Duer, Strong & Whitehead, of which Mr. Selden Bacon was the active counsel for the executor, were fixed at $48,670.39. To Mr. Leonard B. Smith was awarded a balance of $2,797 for services rendered. (Matter of Sielcken, N. Y. L. J. March 15, 1940, p. 1196; Matter of Sielcken, Id. Nov. 2, 1940, p. 1387.) In these decisions and in the intermediate decrees made by the surrogate, payment of the amounts awarded was directed to be held in abeyance pending the final disposition of certain litigation arising out of violations of the Trading with the Enemy Act of 1917, brought by the United States government against the executor. That litigation involved an attempt to vacate a judgment rendered in the sum of approximately $716,000 in the United States District Court for the Southern
In the course of the administration of this estate, bitter and extensive litigation arose between the executor and the widow of the decedent as residuary legatee. One important phase of it involved an application to vacate certain decrees of this court settling the accounts. That litigation was disposed of adversely to the widow
The financial status of the estate has been further complicated by a claim asserted against the executor by one Terijon Weitling who seeks a right of recovery against the partnership of Crossman & Sielclcen of which the decedent was a member. That firm was liquidated by the executor as the legal representative of the partnership. The Weitling claim is based upon an alleged interest in certain of the moneys received from the United States government under the so-called Z. E. G. judgment which has been subject to the two different suits by the government. It is stated in the account that the claim of Weitling approximated $104,000 as of December 1, 1937 That litigation has been pending in the Supreme Court of New York county and judgments entered in the action have been reversed by the Appellate Division. Disposition of the action remains for another trial.
To summarize the present situation of the estate, there is in the collateral fund as assets for the payment of administration expenses and debts, a sum approximating $244,000. There is separately in the hands of the executor only the sum of about $11,000 which is subject to certain claims for services of attorneys other than the applicants here. Thus, there are total available assets of about $255,000. As against these assets there are the claims of the attorneys who are the applicants here, aggregating $51,000, a further claim for the commissions of the executor in the sum of $19,000 and the claim of the United States government for $727,000, of which about $313,000 was actually paid to the executor. Again, there is the claim of Weitling (which, in effect, is based upon earmarked
As I construe the complaint of the government in its action against the executor, a recovery of' specific moneys traced through the executor and over to the residuary legatee is sought. If successful the government will recover far more than the present available fund within the control of the executor either directly in its own hands or indirectly in the collateral fund. Under such circumstances it would be an abuse of power to direct the payment of the balance of the attorneys’ fees sought by the applicants here. Even if the government were unsuccessful and its suit decided favorable to the estate, there would still remain the final determination of the Weitling claim for identified moneys which came into the hands of the executor.
It is an elementary rule of the law of administration of estates that where moneys have been traced and identified as the funds of another person, they may not be subjected to the payment of funeral expenses, administration expenses, including commissions, or the debts of the decedent. Such funds and property do not constitute estate assets and their misapplication or diversion" to improper purposes constitutes a breach of trust. (Matter of Manning, 244 App. Div. 9; affd., sub nom. Matter of Dunbar & Sullivan Dredging Co. v. Fidelity & Deposit Co., 268 N. Y. 690; Matter of Hackfeld, 171 Misc. 727; affd., 259 App. Div. 707; leave to appeal to the Court of Appeals denied, 283 N. Y. 778; Matter of Kornder, 168 Misc. 553; Matter of Accles, 153 id. 421; affd., 245 App. Div. 743.)
In Matter of Hackfeld (supra) the government of the United States asserted a somewhat similar claim to that presented here upon the ground that large amounts of moneys had been paid by the Alien Property Custodian under a mistake of law as to the citizenship of the decedent and specifically that he was a German national and an alien enemy. An application was made by the attorney for the ancillary executor for the payment of his compensation. The application was denied by me under the principal authority of Matter of Manning (supra). My determination was sustained by the appellate courts. After the disposition of the appeals the government has thus far succeeded in its suit.
It would be obviously improper, under the circumstances in the present case, to authorize the diversion of funds which may ultimately be decided to be recoverable by the United States government because of violations of the Trading with the Enemy Act by persons directly or indirectly connected with German named concerns or operations in the World War of 1917-1918.
The directions contained in the intermediate decrees for the payment of fixed balances to the applicants here, necessarily entitled them to the payment of interest from the date of each decree.
The prior directions of the surrogate authorizing certain payments for administration expenses in no way affect the disposition of the present application. These distributions were made in the exercise of the discretion of the surrogate and with the express acquiescence of the representatives of the government. The vigorous opposition of the attorneys for the United States government to the present application and the dwindling assets are sufficient reasons for the stoppage of further payments. The question of payment is reserved for future determination when free funds of the estate, either directly in the possession of the executor or in the Chase National Bank as depository, become available for payment and exempted from other claims.
After the final disposition of the litigation pending in the Federal and State courts, the executor or its attorneys or any other party interested in the estate may apply upon written notice for a further hearing with a request for appropriate relief.
Submit order on notice accordingly.