237 A.D. 497 | N.Y. App. Div. | 1933
In this discovery proceeding, brought under the provisions of sections 205 and 206 of the Surrogate’s Court Act, the administrators have been granted a decree to the effect that the administrators are entitled to a credit with the Marine Trust Company of Buffalo in the sum of $27,346.61, with interest from April 1, 1932; that the administrators recover such amount and have execution therefor.
The material facts are these: Conrad Hammer, Sr., a resident of the city of Buffalo, died on the 9th day of March, 1915. His will was admitted to probate in the Surrogate’s Court of Erie county two weeks later, and letters testamentary were thereupon issued to his widow, Anna M. Hammer, his sons, John and Conrad, Jr., and Robert F. Schelling. The last-named executor died December 17, 1916. In the will the testator appointed his executors already named trustees and gave all his property, real and personal, to his executors with direction to pay to his wife the whole net income and profit of his entire estate during her life, and upon her death to distribute his estate, including income which might have accumulated and not been paid over to his wife, among his children. Funds of the estate were deposited by the executors with the Buffalo Trust Company of Buffalo subject to withdrawal upon the check of John Hammer, executor, countersigned by Conrad Hammer, Jr., executor. Anna M. Hammer filed with the Buffalo Trust Company a consent in writing to this arrangement. By April, 1922, the estate’s funds in this account with the Buffalo Trust Company had grown to an amount of over $30,000. On the 10th day of April, 1922, Conrad Hammer, Jr., went to the banking office of the appellant, the Marine Trust Company, taking with him a check for the sum of $20,000, dated on that day, payable to the order of cash, signed John Hammer, executor, and countersigned Conrad Hammer, Jr., executor. He there talked with one of the vice-presidents of the Marine Trust Company and arranged to deposit $10,000 of the sum represented by the check with the Marine Trust Company, and to receive a $10,000 check to be issued by the Marine Trust Company to his order as executor which he was to deposit in another bank. The arrangement was carried out. Conrad Hammer, Jr., signed the usual signature card referable to the account which he
It is the contention of the administrators that the Marine Trust Company had no right to honor checks upon the deposits with the Marine Trust Company and in the Citizens Trust Company account (after the merger of the Citizens Trust Company with the Marine Trust Company), inasmuch as the deposits had been made to the knowledge of the Marine Trust Company for the benefit of the estate of Conrad Hammer, Sr., and inasmuch as Conrad Hammer, Jr., was only one of three hving executors and trustees of that estate. The existence of another executor, namely, John Hammer, had been brought to the attention of the Marine Trust Company by the form of the $20,000 check which John Hammer had signed as executor, and from the proceeds of which the accounts with the Marine Trust Company and the Citizens Trust Company had been opened. The administrators further argue that the Marine Trust Company was not justified in paying the five Heisz checks because, as they claim, the signature of Heisz was forged. In consequence of the illegality of these acts, it is the position of
The Marine Trust Company contends on the other hand that the Surrogate’s Court is without jurisdiction to grant relief in this case because, as it claims, the proceeding amounts to nothing but an attempt to collect a debt. Further, it is the position of the Marine Trust Company that it was justified in honoring checks signed by Conrad Hammer, Jr., alone, as executor, and lastly that it was fully justified in paying the Heisz checks bearing the indorsement of Conrad Hammer, Jr., following the name of Heisz.
The challenge to the jurisdiction of the court is upon the theory that the administrators in this proceeding are merely attempting to collect a debt which they claim to be due to the estate from the appellant, the Marine Trust Company, and that the jurisdiction of the Surrogate’s Court, even under the amended provisions of sections 205 and 206 of the Surrogate’s Court Act, has not been broadened to such an extent as to give the Surrogate’s Court in a discovery proceeding power to collect a debt, but that its jurisdiction in this respect is still confined to securing the delivery to the executor of specific personal property belonging to the estate, or securing the delivery or payment to the executor of the proceeds or value of such property, if it has been disposed of. Before the adoption of the amendments in 1924 (Laws of 1924, chap. 100) it was only possible in a proceeding under these sections to obtain possession of specific money or personal property which had belonged to the deceased in his lifetime. (Matter of Heinze, 224 N. Y. 1.) Consequently, if such property had been exchanged for other property or sold, the Surrogate’s Court had no power to direct the value of such property to be paid to the executor or the proceeds to be turned over to him. (Matter of Hyams, 237 N. Y. 211.) These Imitations were removed in 1924 by the amendments so that property coming into the possession of a person after the death of the deceased may be the subject of a discovery proceeding, and a person in possession of property belonging to an estate who disposes of it may be required to deliver to the executor or pay over to him, the proceeds or value of such property. (Matter of Wilson, 252 N. Y. 155.)
As we read the amended sections, however, the inquiry and the resulting decree must still refer to specific personal property or its proceeds or value. The property may be intangible, such as a right to a bank account. (Matter of Akin, 248 N. Y. 202.) But we find nothing to indicate that by means of such a proceeding
The check for $20,000 payable to cash was signed, as stated above, by Conrad Hammer, Jr., and his brother John as executors. This put the funds represented by the check in the hands of the bearer of the check, who was Conrad. Without question, the Buffalo Trust Company, on which the check was drawn, was required to pay this check as it did. (Whiting v. Hudson Trust Co., .234 N. Y. 394; Clarke v. Public Nat. Bank & Trust Co., 259 id. 285.) The administrators’ claim arises out of the transactions beginning with the deposit of the $10,000 in the Marine Trust Company in the name of the1 estate, with provision that Conrad Hammer, Jr., acting alone, might withdraw funds from the account, and with the issuance by the Marine Trust Company to Conrad Hammer, Jr., of the check for $10,000, payable to his order, which he deposited in the Citizens Trust Company. It is the contention in this respect that the Marine Trust Company and the Citizens Trust Company at the time that these transactions took place had notice that the funds were estate funds and that they were required, therefore, to make investigation as to the right of Conrad
The administrators urge, however, that this principle of the right of one executor to control funds of an estate is not applicable here because the executors were in fact also trustees and the rule is not effective as to trustees. In respect to deposits of the funds of an express trust, all the trustees must sign the withdrawal checks. (Sinclair v. Jackson, 8 Cow. 543; Brennan v. Willson, 71 N. Y. 502; Brown v. Doherty, 185 id. 383.) (See 7 C. J. 677.) These executors
The administrators further contend that even though Conrad Hammer, Jr., was, in general, authorized to draw upon the accounts, the Marine Trust Company paid the Heisz checks, aggregating $19,000, upon forged indorsements and consequently are not entitled to a credit for the amount of such checks. In the sense that Frank A. Heisz did not sign his name on the back of these checks, the indorsements were forged. As stated in Trust Company of America v. Hamilton Bank (127 App. Div. 515, 521), it is at least convenient to speak of these indorsements as forged. Nevertheless, in our opinion the banks were authorized to charge the estate accounts with the amount of these checks. Concededly, the maker of the checks, Conrad Hammer, Jr., did not intend that the payee of the check, Frank A. Heisz, should ever become possessed of the checks. There was no intention on the part of Conrad Hammer, Jr., to deliver the check to Heisz or for Heisz’ benefit, nor was Heisz entitled to any money from the estate. Conrad Hammer, Jr., certainly used the name of Heisz as the nominal payee in order to facilitate a plan to obtain possession of these funds without making the intention perfectly obvious. He could have drawn a check to cash or to bearer, or to himself by name, and have received the money from the Marine Trust Company thereon. Following the general practice of wrongdoers, he took
Other points argued in the appeal have been considered, but they are unimportant in view of our conclusion as to the questions discussed.
The decree should be reversed on the law, with costs payable out of the estate, and the petition dismissed, with costs payable out of the estate.
All concur.
Decree reversed on the law, with costs to the appellant payable out of the estate, end petition dismissed, with costs payable out of the estate.