92 N.Y.S. 195 | N.Y. App. Div. | 1905
Lead Opinion
The facts are sufficiently stated in the-opinion of Mr. Justice Laughlin. The rule is- settled that where inferences are. equally •consistent with innocence or guilt; equally consistent with good faith or bad, or equally consistent with the view that one Upon whom a duty is placed has or has not performed it, we are required to draw those inferences which are consistent with innocence, with good faith, with diligence and performance of duty, rather than the ■opposing inferences. I think that, without doing violence to any of-the inferences that should fairly be drawn from the facts surrounding the obtaining and -paying of the judgment by the executors, an argument could be built up in support of the view, equally as cogent .and logical as that presented against it, that, so far as the ejxecutors
It must be conceded that there, was a question as to whether ’the widow had or had not -a valid claim against the estate. She had, asserted it and was engaged in pressing it and, in addition, she had! a right and had shown an inclination to contest the validity of the will itself. Tire executor. Watson, who' had been the private secretory and business manager of the testator, and who was entirely familiar with the merits of the claim, as well as with what were the chances of success had the widow, contested the will, is not to be charged with bad faith or want of diligence if, in his best judgment,, he. concluded that it would be better to avoid the contest of the will and pay the claim of the widow if -it could be.established. To that, end, the claim was. rejected by-the executors and afterwards referred and it is because the attorney for the executors did not object to the widow’s testifying to personal transactions between herself and her -deceased husband, which were, incompetent under section829 of the Code of Civil Procedure, that the charge of negligence is made.
The executor Watson was examined ag a witness on the reference to prove the widow’s claim, and his testimony tended- to establish its-validity. This testimony was competent when given, and was sufficient to sustain the validity of the widow’s claim. On this accounting, however, wherein the good faith .of the ¿xecutors in paying -the' claim or judgment is brought in question, Watson’s testimony was. excluded upon .the ground that .-it is incompetent under section S29 of the Code of .’Civil' Procedure, although concededly competent' when given on behalf of the widow on the reference to prove her claim. ' ,
' ^Tlie testimony, of the widow upon this accounting of- the executors was received, but, as appears- from tlie report. of -the referee,, the proceedings had upon the hearing and the discussion by him in his final opinion, no weight was attached to it, because, as suggested, the testimony which she had formerly given upon -the reference to-' establish , her own claim was then incompetent. In this, record,. therefoie., we have these anomalies : That the original claim-of the,
It would seem to be a harsh and unjust rule to apply or surcharge-the executors with this judgment. It is only, as said, by resolving-against the appellants’ inferences, equally as consistent with their good faith and honesty as with bad faith and fraud, that the conclusion can be reached that the claim of the widow, which was reduced to judgment and which was admittedly paid by the executors, is-not a proper credit to allow them. The principal argument in support of this finding is that their attorneys, upon the reference, were-not sufficiently astute and did not avail themselves of the advantage which, under section 829 of the Code of Civil, Procedure, they possessed of keeping ont certain testimony which was given in support of the widow’s claim. Taking the then situation from the executors’ standpoint, there was a fair question as to whether the widow’s-claim was honest and valid. They required her to establish it before-a referee, and the reason why a more stubborn contest was not made-is furnished by the testimony of the executor "Watson, who believed it to be a good claim. After it was proven, the executors, by paying-'it, avoided the contest of the will. Are they to be judged upon the-basis of the fuller knowledge of all the facts which they now pos- •
The decree should be reversed, and a - new hearing had before another referee, With costs to appellants to abide the event.
Van Brunt, P. J., and Hatch, J., concurred; Patterson and ,, .Laug-hlin, JJ., dissented. .
Dissenting Opinion
(dissenting)
The executors filed their accounts-and applied for judicial Settlement. Objections having been filed, a refereé was appointed to ■examine the accounts'and determine the questions arising and report. The decree, follows and confirms the report, and upon further evidence taken before the. surrogate ‘fixed the commissions of the ■executors.
The. principal item surcharged is a judgment for $10,423,55 recovered by the widow of the testator. It Was recovered on a reference by the surrogate' under section 2718 of the' Code of Civil' Procedure of a claim- filed by her against the estate which- the executors rejected and consented to refer. The claim,was for $3,000 .-alleged to have' .been advanced by her to her litisband in January, 1896,-and for $6,000, the alleged value and avails of a farm in Plain-: field, N.- J., alleged to have been intrusted' to him for disposal, making,$9,000^, which it is stated in her claim “ were so-intrusted to-the said Joseph Corbit fOr investment and to be dealt with by him for” her benefit, less $1,500, the valué of the equity in property which he transferred to her, leaving a balance of $7,500.
'' The testator was seventy-two years of age when lie' married, and was conducting a real estate and -brokerage business in the city Of New York, under the name of' j. Corbit & Co. He had for some years left the management of his business, including his pri-' •vote and business bank- account, almost' "exclusively to the appellant
The judgment was conclusive on the executors and against the •estate until annulled for fraud or collusion or vacated by the Supreme •Court; and with the consent of the surrogate execution could be issued thereon against the personal estate, or it would have to be allowed on distribution (Code Civ. Proc. §§ 1825, 2743), but on the accounting the executors could be charged with the amount of the judgment upon proof that the claim was in fact invalid and that they were guilty of negligence or collusion in defending the ■estate against it. (Matter of Saunders Estate, 4 Misc. Rep. 28.) 'The correctness of that part of the decree surcharging the executors with the judgment and interest thereon, therefore, depends upon whether it has been shown both that the claim was invalid and that ■the executors were guilty of negligence or collusion in allowing a recovery thereon ; and the burden of establishing these facts was on the contestants. ■ If the claim was valid and enforcible -they could ■not be surcharged therewith, even though they were guilty of negligence or collusion in allowing the recovery of the judgment-; but •if it was invalid they were properly surcharged with the judgment =and interest if they did not employ a competent attorney to defend the estate, or did not inform him of all the material facts within their knowledge or discoverable by reasonable diligence, and did not -exercise due care in having the same presented to the court. In the absence of fraud or collusion, if they employed a competent .attorney and in good faith took and acted upon his advice, they fshould not be held responsible for his failure to object to incompetent evidence or to present competent evidence which they ■fully brought to his attention. It appears that they were represented by an attorney on the hearing before the referee to whom "the claim was referred. The widow, however, was permitted to testify without objection in support of her claim to personal trans.-actions between herself and her husband. The executor Watson, a -competent witness, also gave material testimony tending to support her -claim ; but he was not fully interrogated concerning all the material ■facts within his knowledge and without the incompetent testimony -of the widow her claim, as to the $3,000 at least, was not established.
Upon the hearing before the referee on the accounting some of
I am of the opinion that the contestants fairly sustained the bur- . den of showing, both that the widow’s claims were not enforcible- and also either collusion or negligence on the part of the executors-in allowing the recovery of the judgment.
According to the claim filed by the widow neither the $3,000 nor-the proceeds of her New Jersey farm was loaned to her husband and yet the judgment she recovered went upon that theory for she» was allowed interest upon both. Her -formal claim was, as has been ■ seen, that she turned the money and property over to him “ for-investment, and to be dealt with by him for the benefit of this claimant.” .In the absence of negligence or mismanagement, therefore,, she would only be entitled to an accounting for the property into»
*559 “ Second. I give, ■ devise and bequeath unto my beloved wife Mary Elmer Corbit my farm at Rahway in the State of New Jersey,, together with all the buildings and improvements thereon, and all the stocks, crops, farming implements and household furniture thereat; also the real estate, consisting of an apartment house and lot of land situate on the south side of West 15th street between 6th and 7th avenues, in the Borough of Manhattan, in the City and County of New York, known as number 132 West 15th street in said city, to have and to hold the same unto her ■and her heirs forever absolutely. I also. give , and bequeath unto my said wife the sum of $3,000 in cash, and all of the furniture in the bedroom occupied by her and myself at Number 433 West 23d street in said city and borough, together with each and every article and thing she may have brought there or which belonged to her. I also give and devise unto my said wife a grave for the interment of her body in my plot in Greenwood Cemetery..
“ The above devises and legacies are given to my said wife and to be accepted by lier'in lieu and stead of all her dower and right of dower and rights and interests in and to my real and personal estate. ,■ “ I have heretofore given and caused to be conveyed unto my said wife the real estate, consisting of an apartment house and lot of land, known as number 172 East 90th street in said city and borough, it being my intention at the time to give said property unto her in the place and stead of her farm at Oak Tree, New Jersey, which was sold by her and the proceeds in part used in the purchase of said last-named real estate.”
■ The executors were aware of the husband’s claim as stated in his will concerning these matters, but they neither attempted to establish nor brought to the attention of the referee the principal facts tending to sustain it, although such facts were all known to the executor Watson. The executors, instead of presenting-the facts concerning the widow’s claim to an attorney and asking his advice thereon, reported to their attorneys and informed them “ that they had examined the claim and they knew that it was correct; that the money was owing to,Mrs. Corbit, but that they desired to have .her make formal proof so that they would, be held harmless in case'anybody would object to the payment on the accounting,” and they were advised to make formal objection to the claim and that
Heither the testimony of the claimant nor of Watson was techni-eally accurate, and their, testimony Was misleading in that they stated that the farm was sold and her husband received the proceeds, and they neither offered the records of the real estate transactions in evidence "nor testified, to the- facts which woúld .have shown an adjustment "between the parties-substantially as recited in the. will. Mbreover," it appears that the widow has accepted all the property •devised- and bequeathed to. her and effect should be given to the provisions of the will that it is in lieu not only of dower but of all -clainqs against .his personal” estate." Since the only other claim she ■could have against his personal estate would be as a creditor, this .-should be construed as an-intention on his part to be in payment of •any claim she might have against his estate. and she should be • estopped from asserting a claim inconsistent with-a provision made ■for her benefit in the will which she has elected to accept. • She was .allowed to recover ás for $9,0.00 'loaned, less-an, admitted credit of $1,500, the amount realized for her equity in the premises 172 East "¡Ninetieth street on a sale after her husband’s.death. It thus fairly . appears, I think, that her claim- was not enforcible and. that' they ■knew it. It was their duty not only to reject the claim but upon the trial to show the facts which were known, to themlconstituting a -defense thereto, (Schutz v. Morette, 146. N. Y.. 137; Butler v. Johnson, 111 id. 204, and cases cited.) This they failed to do and tinder all the circumstances they were properly chargeable with negligence. Whether the tender consideration shown the widow in the.
The account was surcharged $906.49 which the executors paid to ■certain devisees to whom specific parcels of land were devised to reimburse them for interest accrued on mortgages on the lands from the last precéding interest day until the death .of the testator on the theory that it was apportion able from day to day. As between the •devisees and the personal representatives of the testator these were not proper charges against the estate. (Real Prop. Law [Laws of 1896, chap. 547], § 215; House v. House, 10 Paige, 158; Taylor v. Wendel, 4 Bradf. 324.) The fact that on the appraisal for the purpose of levying the collateral inheritance tax these items of interest were reported as charges against the' estate "and that the ■surrogate confirmed the report cannot affect the question as now presented.
It was stipulated that no experts’should be called as to the value •of the services of the attorneys for the executors but that counsel might make suggestions concerning the same. The referee deducted from the charges for attorneys’ services contained in the account the sum of $600 and interest thereon, estimated to be the amount included for services in connection with the unfounded claim, and $250 charged for clerical services of their managing clerk in drafting the account and checking up the vouchers and interest thereon, upon the ground that such services are taxed as costs and included in the ten-dollar per diem allowance given by section 2562 of the •Code of Civil Procedure. We think these questions were properly decided. The testator was conducting business as a real estate agent and he bequeathed the business to a firm to be composed of' two .of bis executors and the son of the third, giving the executors ten-sixteenths of the profits. The firm was formed accordingly and took ■over the business. The executors employed the firm to collect rents
The executors were, only allowed one commission. They claim they should have been allowed three, upon the theory that the value bf the personal property amounted to' $100,000- or more over and above all debts. (Code Civ. Proc. § 2730.) If that which is real estate at the testator’s death may be considered at all for the purpose of applying this statute, il is evident. that, only his^ equities in real estate directed to be converted into personalty under a power' of sale may be-considered, and that all valid liens must be deducted. The commissions ■ are to be allowed at a time when the value is known and it is manifest that- it is the actual realized value and -not the inventoried value that is controlling. Applying these tests; the personal estate was less than $100,000, and, therefore, the surrogate was right in allowing only -one Commission. - • The decree should, therefore, be affirmed, with separate bills of. costs to the respondents appearing separately payable -by the appellants individually.
Decree- reversed and a new hearing had before another referee, with costs to appellants to abide event.