In re the Judicial Settlement of the Account of Proceedings of Anderson, 143 N.Y.S. 627

In re the Judicial Settlement of the Account of Proceedings of Anderson

143 N.Y.S. 627 | N.Y. App. Div. | 1913

Thomas, J.:

In 1884 Anderson leased 1180 Broadway for the term of twenty years upon an annual rental of $2,000 and certain taxes with an *937option to the lessee to renew for a similar term upon a rental of five per centum of the value of the lot, and all taxes and assessments, with stipulation that the lessor should pay the appraised value of any building on the property at the end of the renewed term. The trustee under Anderson’s will bought the lease in 1894 for $32,691.31, together with a mortgage thereon on which $20,000 was unpaid, and paid for it from certain income accumulated pursuant to testamentary directions. But when the lease expired, in July, 1904, James, then the trustee in place of his mother who died in 1896, did not renew it, and in this proceeding for an accounting by James as committee since 1896 of his incompetent brother Eugene who married but without issue died in 1912, and who owned one-third of the lease, the committee has been surcharged with one-third the cost of it and interest thereon from July 81, 1903, to which time the incompetent was credited with his share of the returns of the property. By the terms of the will Eugene had no interest in the accumulations, or in the corpus or practically in the income, and the purchase could not have been considered at the time as having been made for him or in his interest, but rather for the benefit of those who were entitled to the income of the properties and the remainders. But in 1903 the infant children of testator’s daughter Lizzie, Benedict by name, who had died in 1899, brought suit against the trustee and others, wherein it was decreed that the provision for the accumulations was void, and that the three children, James, Lizzie and Eugene, took them in equal shares by the intestacy of their father in respect thereto, and so, pursuant to the decree, the trustee James turned over the accumulations, including the lease, one-third to each child. That judgment and obedience to it forecloses all question as to the propriety of the purchase with the accumulations and as to the title to it vesting in the parties named. But why is the committee surcharged as stated ? Here it must be noticed that when the lease expired in 1904 one-third of the fee of 1180 Broadway vested in the Benedict children, one-third in James, while the other third was limited to Eugene’s heirs at law, presumably James and such children, subject to a use during Eugene’s life by him, the Benedict children and James. Had the lease been renewed, James would for the term have owned one-third of the income, less his proper contribution to the rent and taxes, and at the end of the term he would have been entitled to receive one-thud of the appraised value of any building on the lot. So that it is apparent that if there were no renewal, not only would James lose his principal, but would share less in the income. But the Benedict children and James were the better for the lapse of the lease, in that (1) it left the property free from the incumbrance of a long lease, and so more convenient for sale; (2) they received all the income less one-ninth; (3) they received all the purchase money on the sale; (4) they were not obliged to contribute to the payment of a building at the end of a new term. Indeed, it is conceded that it was a pecuniary advantage for them to be rid of the lease. But even so, can James be charged for it ? What default of duty as committee has he made ? It is urged that he should have deducted the cost of the lease to Eugene from the proceeds of sale of *938the property in 1905, when there was taken for the purchase price a mortgage on the property of $40,000 by the Benedict children for their one-third, and one of $80,000 by James individually for his one-third, and as trustee for the other third that would go to Eugene’s heirs. The respondent’s theory is that as the lease lapsed had enhanced the value of the property, Eugene should have made the owners pay for it when the property was sold. Assuming that the property rid of the lease was better sold, James could not legally compel the Benedict children to deduct something from money received by them, nor was James as trustee or as an individual owing himself as committee something merely for the enhanced value of the property. The lease was not in existence, and so no estate for years in which Eugene had a part was sold. But it is urged that the lease should have been in existence and was not by James’ failure to renew it. If so, there may be reason to make James respond, but not by compelling other interests to contribute. But the lease could not be renewed without the consent of the Benedict children and James individually and James as committee. It was against the interest of all owners of the fee to do it. James could not compel the Benedicts, infants, to do it. They could not by themselves make a lease that would survive their disaffirmance upon coming of age, and the court would not direct that their interest in the fee should be made subject to a term of years to their disadvantage. It was equally disadvantageous to James to renew the lease, and in my judgment he was not obliged to sacrifice his own pecuniary interests as a co-owner of the fee and of the lease to renew the same. Moreover, it is a serious question whether as committee he should have obligated Eugene and his estate to pay the new rental for a term of twenty years. But the court could have directed him as to that. What then should have been done ? The respondent should particularize: Should James have gone to the court and explained what I will assume was a conflict of interests, and asked that another committee be appointed ? That would have been a prudent disposition of the matter. But, although the court could have appointed another committee, nothing could come of it as the lease could not be renewed without the Benedict children and James joining in it as lessees, or consenting that it run only to Eugene as lessee — an impossible concession on their part, and one not demanded by law. What, then, has been the damage from James omitting to resign on application to the court, or sale of Eugene’s interest in the lease upon its expiration ? Who would buy ? But, passing all such considerations, how is the sum surcharged the legal damage ? I find no evidence that the cost of the lease to Eugene is the amount of his damage for failure to renew it on entirely different terms. The respondent’s counsel have corrected their impression that under the present lease the lessees were entitled to the appraised value of the building on the property at its expiration. But even that value was not shown. There was fault in this matter, and I consider that it was in adjudging that the lease was bought for Eugene, as that could not have been contemplated. I find no occasion to consider whether the matter has been adjudicated in previous accountings by the committee. But of what value is an accounting if it effectu*939ates nothing and sets nothing at rest ? The order, in so far as appealed from, should be reversed and the report of the referee confirmed, with ten dollars costs and disbursements. Jenks, P. J., Burr, Rich and Staple-ton, JJ., concurred. Order, in so far as appealed from, reversed, and report of referee confirmed, with ten dollars costs and disbursements.