139 N.Y.S. 459 | N.Y. Sur. Ct. | 1912
The contestants claim that the accountant should “ return ” to the estate the salary which he has received from a corporation in which he held office and in which the estate held stock. This argument rests primarily upon the assumption, which the contestants plainly state, that the corporation involved was the estate and was treated as such. But the corporation was a separate entity. The executors did not own it, nor as such executors did they or either of them conduct it. Their only relation to such coroporation was that of stockholder.
Two cases are cited to support the demand that the accountant return the salaries.
In Matter of Froelich, 122 App. Div. 440, the business which the executor continued belonged to the decedent personally and itself was a part of the estate. There was no intervention of a corporation in which the estate held stock. The will created a trust to take charge of the decedent’s business and to continue the same, and expressly provided for the
The case is ample authority for a, recompense to the executor for a service even though it were rendered to the estate if it were performed outside the duties imposed upon him in his capacity as executor or trustee. It surely cannot be cited to support inquiry on an accounting in this court with respect to a payment to an executor for his services, when they were rendered outside of his executorial capacity; they were not rendered to the estate and the payment was not made by the estate.
In Matter of Popp, 123 App. Div. 2, the business of the testator was continued under a direction in the will, but without any provision for extra compensation. It was there said: “ If he (the executor) be allowed compensation out of the- estate of the deceased other than that fixed by statute, it cannot be for services in his office, but only for something he has done apart from and entirely outside of his office, i. e., as an individual and not as an executor or administrator.”
The expression quoted had nothing to do with any compensation unless it is payable out of the estate. The case has only to do with services to the estate. The court concedes the propriety, in a proper case, of compensation to the executor “ for something he has done apart from and entirely outside of his office,” but it takes no thought of a service done for an individual, whether natural or corporate, when such individual is separable from the estate itself.
The objection is overruled, upon the sole ground that the services in question were not performed within the accountant’s function either as executor or as trustee, and that the salaries
It is not forgotten that the law, though obliged to recognize corporations as individual entities may, upon just occasion, look through the corporate personality if it be found to be a mere mask and may work equity without regard to the forms in which the parties appear; but the mere statement of this resource of the law intimates that it cannot be availed of in this proceeding. Where the relief prayed for would necessarily dispose of an interest or controversy in which a corporation would be even formally concerned, it could only be awarded in a court having equitable jurisdiction adequate to the case and not then unless in a proceeding in which the corporation was impleaded.
It is no answer that this court may have recently been endowed with equitable faculties to “ affect the accounting party with a constructive trust” (Code Civ. Pro., § 2472a), for, if such faculties were available, the conceivable trust would legally concern the corporation from \ which the salaries were received, and the surrogate, however his powers may have been broadened by the section cited, cannot affect the accountant with a duty which was presumptively owing to a person not a party before him.
In Matter of Schaefer, 65 App. Div. 378, the executors had received certain money from the corporation in which their estate was a stockholder. The only question there considered was whether this money belonged to the estate of the decedent; and the opinion declared that this question depended upon whether the money “ was as a fact received by the appellants as a portion of the estate or as the income or profits of the interest of the estate in the stock of the brewing company.”
In that case the court recognized the possibility that the conduct of the accountants might create a grievance in behalf of the corporation from which the money was received, and in
While the case last cited arose before the enactment of section 2472a of the Code of Civil Procedure in 1910, all that is said therein is applicable to the present discussion, for it still remains that the surrogate can only determine “ the question as to what assets have come into the hands of the executors [whether legally or in the course of a constructive trust] for which upon the accounting they are properly chargeable,” and it must be true, without the need of authority, that the only
The accounting executor personally owned 503 shares of the stock of the Federal Brewing Company at a time when the Long Island Brewery, a corporation, held 2,035 shares of the Federal Brewing Company’s stock. It is charged that in the sale of his own stock and in the sale of the stock owned by the Long Island Brewery the accountant subordinated the interests of the estate to his own and therein dealt unfairly and selfishly with the subject of his trust. The only relation which the estate held to these transactions in the stock of the Federal Brewing Company was that it was a stockholder in the Long Island Brewery. If any injury was sustained by anybody at the hands of the accountant by reason of his conduct touching these sales of the stock of the Federal Brewing Company it was the Long Island Brewery. To say that the Long Island Brewery was the only person concerned if the accountant failed in duty in these transactions is no mere nicety. It is a reality, the sober recognition 'of which is imperative if we are not to lapse into legal delirium. The only cause of action or grievance, legal or equitable, which could arise if it were found that the accountant had abused his relations of trust to secure a personal advantage in the transactions above described would be a cause of action or grievance of the Long Island Brewery, whose own property had been sacrificed to the accountant’s gain.
The court must still be mindful, as it was with respect to the payment to the accountant of salary as an officer of the corporation, that in an appropriate proceeding in a proper forum
The same considerations dispose of the objection that the acountant retained a certain dividend upon his personal stock while assenting to the repayment of the dividend in which the estate was interested. In this respect, whatever the accountant did with his own dividends produced a result which legally concerned only the corporation upon whose stock the dividend was paid and the other company which held as its own part of the dividend-paying stock. The only relation of the estate to the dividend transaction was that of stockholder.
A careful review of the brief for the contestant shows that all the items of objection come within the foregoing discussion, and should be overruled.
The account will be settled accordingly.
Decreed accordingly.