145 N.Y. 98 | NY | 1895
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *100 The fundamental error in the decree of the surrogate, rendered on the accounting, is the assumption that the ice business carried on by Thomas J. Mullon and Jacob H. Mullon, from the death of their father, John Mullon, was carried on by them as administrators of his estate. Upon this assumption the surrogate reached the conclusion that the sale made by them to Sherman of the ice business and the property connected therewith was a sale of the business and property of the estate of John Mullon, and that the administrators are accountable as such for $20,250, the consideration of the sale.
The result reached subjects the administrators to a liability much beyond the value of the assets as inventoried which came to their hands on the death of their father, and involves the implication that for nearly five years subsequent to his death, the sons devoted their time and labor in carrying on the business for the benefit of the estate. The assumption made by the surrogate is unfounded in fact and in law. There can be no doubt upon the evidence that in form the sons carried on the business for themselves as co-partners from the death of the father. They took possession of and used in the business the horses, wagons and equipments which had been used by the testator. But they carried on the business in their *102 own names, and in the bill of sale to Sherman they described themselves as "trading and doing business as co-partners under the firm name and style of John Mullon's Sons." Moreover, they had no reason to suppose that in so doing they were in any way defeating or prejudicing the rights of the creditors of the testator. They were the residuary legatees under his will. The executors having renounced, they were appointed administrators with the will annexed. They procured an inventory of the estate to be made and filed October 20, 1886, in which the whole personal estate was appraised at $9,426.20, including therein the property and stock used by the testator in his ice business of the appraised value of $6,582. On the 30th of March, 1887, pursuant to the order of the surrogate, they caused notice for the presentation of claims to be duly published, and they paid in full all the claims presented. They paid the legacies and funeral expenses, and the payments on account of the estate exceeded the whole appraised value by more than $2,000. No claim was presented by the petitioner until about the commencement of the present proceedings for an accounting, in October, 1892. The claim then made was on account of a deficiency judgment obtained against the administrators of John Mullon for $3,811.70, October 5th, 1892, in an action for the foreclosure of a mortgage for $6,000, given by John Mullon in 1881, payable five years from date, to the estate which the contestant represents. Although the mortgage became due soon after the death of the mortgagor, no proceedings appear to have been taken to collect it until several years after his death, and so far as appears no claim was made or notice given to the administrators that such a debt was outstanding or that a deficiency would be likely to arise, prior to the sale to Sherman, February 28th, 1891.
But if in judgment of law the business conducted by the sons of John Mullon, after his death, was the business of the estate, and all the property used therein and sold to Sherman was the property of the estate, the understanding and intention of the persons in whose name it was carried on would be *103 immaterial, and the administrators would be bound to account for the consideration of the sale, however harshly such a conclusion might operate against them. They have charged themselves in the account with the appraised value of the ice plant, tools and machinery, as stated in the inventory. It was not shown that any personal property belonging to the testator was omitted therefrom. No direct evidence was given and no attempt was made to show that any article in the inventory was appraised at less than its full value. But it is insisted that as no accounting was had, and the administrators continued the ice business, and used therein the articles used by the testator, without any formal transfer of the title from themselves as administrators to themselves as individuals, the business, its profits, accretions and proceeds belonged to the estate. The petitioner, therefore, sought to surcharge the account rendered by the administrators with the difference between $6,582.00, the inventoried value of the ice fixtures and property, and the sum of $20,250.00, the consideration of the sale to Sherman. The decree proceeds substantially on this claim. The injustice of this result is very obvious. It appears from the bill of sale that it embraced the good will of the business of "John Mullon's Sons;" all the personal property connected therewith, including many things purchased after John Mullon's death; existing contracts for the sale of ice; about 9,000 tons of ice collected and stored by the firm in 1890 and 1891 on premises which the firm held under a lease, and in which the testator, John Mullon, never had any interest; and the bill of sale contained a covenant on the part of the vendors, jointly and severally, that they would not for ten years engage in the ice business in the counties of Albany and Rensselaer without the consent of Sherman.
We think the administrators were not in law bound to account for the proceeds of the sale to Sherman. It is not disputed that the sale included many articles which belonged to John Mullon at his death, and which are entered in the inventory. The administrators held the assets of the estate *104
as trustees for creditors and legatees, and this relation, at the time of the sale, had not been terminated by any decree or judicial proceeding. The administrators having regularly proceeded by notice to creditors, were justified in using the assets to pay claims presented, and other creditors who had neglected to present their claims had no cause to complain of such payments. (Erwin v. Loper,
We think the decree of the surrogate was properly reversed by the General Term, and judgment absolute is, therefore, directed in favor of the respondents on the stipulation.
All concur.
Judgment accordingly.