185 Misc. 791 | N.Y. Sur. Ct. | 1945
The court is now asked to determine whether testatrix intended by the use of the word “ children ” to include children’s children; and also whether or not she meant a barred debt of a legatee to her should be deducted from her legacy to him.
1. The will was drawn and witnessed by a lawyer whose practice was largely in probate law. Seven years before her death on April 20, 1943, testatrix, who was then beyond middle age, chose as the objects of her bounty eight persons of middle age, of whom only two were among the group of her nearest blood relatives. Those relatives in all numbered nine persons, comprising a nephew, three nieces, a grandnephew and four grandnieces. Her will first gave six sevenths of her estate to six persons who were not of her kin, and whose relationship is not described in the will. They are the heirs of her deceased husband, from whose family she had received the bulk of her estate. The remaining one seventh she bequeathed to two of her nearest blood relatives, without describing in the will their relationship to her. With the apparent object of forestalling intestacy and of ’ preserving equality among the family group who were to receive six sevenths of her estate, testatrix provided that those of the group of six who outlived her should take equally; but if any of this group died in her lifetime, leaving “ children surviving them ”, then the share intended for “ such deceased person ” should “go to their children ”. ■ This is expressed in the will as follows: “ six sevenths of all the rest, residue and remainder to * * * [six named persons, including Alice M. Allen], or to so many of them as may be living at the time of my death, share and share alike; and should any of them predecease me and leave children them surviving, it is my will and I direct that the distributive share or shares going to said deceased person or persons shall go to their children.” One of those six legatees, Alice M. Allen, died on May 11, 1941, in the lifetime of testatrix, leaving a daughter, and the child of another daughter who had died seven years before the date of the will. The- first question is whether this grandchild of the legatee takes half the seventh, or whether his aunt takes the whole
2. One of the residuary legatees of testatrix, named Frank K. Price, was the maker of a note to her order for $377, payable on November 18, 1930, one year after its date, with interest. This note was found in her possession at the timé of her death, without any indorsements of payments thereon, for none were ever made. The second question is whether the executor can withhold from the legacy the amount of this note. For present purposes it is assumed that the payee’s right of action at law could have been barred, at the option of the maker, after November 18,1936. Meantime and on November 6,1936, testatrix made
This statement in the opinion was made the sole basis of a decision in Matter of Mary V. Farrell (121 Misc. 536, 538) where the Surrogate added that “ The courts of other States have long followed the same rule.” Since then some of the text writers have suggested there are differences between our procedure and that of the five other States mentioned in the foregoing decisions; and the editors of the annotated cases state that the majority of the rulings at large sustain the right to retain a barred or discharged debt in the liquidation of estates in surrogate or equity practice (see Note, 1 A. L. R. 991; Note, 30 A. L. R. 775; Note, 1918C L. R. A. 619). The facts in the Farrell case (supra) were that testatrix held a note for $25,000, made in 1902, by a person who was appointed as one of the named executors of her will. This maker never paid anything but the interest for the first six months, when it was due; but nothing more during the ensuing twenty years of the payee’s life; nor did he make any new promise. At common law, and up until 1830 only, such a legacy would have been
The doubt that the statement quoted from the opinion in the Kimball case (supra) is binding in surrogate practice has been increased by two later decisions which can be justified on principles similar to those that have ever sustained the right of retainer. One is Matter of Sawin (173 Misc. 428, 432). And the other is Matter of Cramer (166 Misc. 713). In the Sawin case (supra) the debt that Surrogate Millard properly allowed to be retained was one that had been discharged in bankruptcy. Those principles are that in actions at law for debt, the Statute of Limitations is designed merely to shut the doors of the court in the face of stale demands, and thus bar the remedy, without, however, destroying the obligation; and that the remedy by action may be lost by delay, with the practical by-product in some cases that the party in possession thereby equivalently attains status as if he were a true owner; yet under both statutes, that of limitations and that of bankruptcy, the creditor’s right to be paid remains unimpaired to the extent that he still can obtain payment as best he legally may, otherwise than by an action at law, or a special proceeding, as, e.g. where he has a lien (Hulbert et al. v. Clark et al., 128 N. Y. 295), such as a vendor’s lien, which is purely equitable (17 R. C. L., Limitation of Actions, § 313, n. 18); or where he has a pledge (House v. Carr, 185 N. Y. 453, 457; Clay v. Freeman, 118 U. S. 97); or where he has received from the debtor a written. acknowledgment of the debt and a promise to pay it;,for the courts have recognized the so-called moral obligation that is still outstanding after action on the debt has been barred or discharged, as still being a “ consideration ” sufficient to support the new promise, notwithstanding the case is not strictly one of an adequate quid pro quo.
On this basis the ancient equitable rule of offset in the distribution of decedents’ estates was justified by emphasizing the equity of making one who was to be the recipient of a mere gratuity of gift, first discharge his moral obligation to pay the debt he owed to his testator or ancestor, for otherwise he would be giving himself a preference by withholding an asset. In such case the decedent’s representative withholds from the money the debtor never earned, enough to satisfy the latter’s moral obligation, as testator is presumed to have thought, in giving the legacy, that the debtor would do. Quite different is the case where the decedent’s representative by an execu
As to whether our general Statute of Limitations must now be read as overriding all equitable liens in surrogate and equity practice, our highest court has not yet spoken. In Matter of Chamberlin (289 N. Y. 456) the legatee’s notes to testatrix were ‘made after she had made her last will; and her declarations to third persons were held ineffectual that she did not want the notes paid, and had directed they be destroyed before her estate was settled.
The other decision above mentioned as raising doubt as to the effect in surrogate practice of. the statement made in the Kimball v. Scribner case (174 App. Div. 845, supra) is Matter of Cramer (166 Misc. 713), in which Surrogate Foley reaffirms the traditional rule in Surrogates’ Courts that even the otherwise unleviable income of an express testamentary trust is available for application to the beneficiary’s debt to the testator, unless the will expressly declares the income is not to be liable for the debts of the income beneficiary. In many cases in this line, and in the Sawin case (173 Misc. 428, supra), the dates were such as to render inapplicable the Statute of Limitations.
As to the second group of cases, therefore, it is clear that the decision itself in Kimball v. Scribner (supra) was correct,
As to the third group of cases, those where there is no evidence of intention to deduct or not, either in the will alone, or when considered in its factual setting, apparently the basis for decision is to be found more in legal presumptions and principles of law. This may account for the apparent attitude of some that any question of retainer may be decided as a matter of law. The general rule is that there must be affirmative evidence, that testator intended to forgive the debt when he signed his last will. The legacy to the debtor, in and of itself, does not extinguish the debt. The presumption is that the testator meant both the legacy and the debt be paid. Up until 1916, when the opinion in the case of Kimball v. Scribner (supra) was published, the fact that the debt could be barred at the date of the will was not deemed either in surrogate practice, or in an action in equity for an accounting, to.extinguish the right of retainer, except possibly where there was laches, or the number of the years was so great that, as an item of evidence, it might, with other facts, go to show an intention to abandon the debt.
The situation in the third group is practically similar to that which arises in intestate distribution, where the heir is indebted to the ancestor, and is in position to bring an action at law against the administrator for his distributive share, without fear of his own barred debt to the ancestor being successfully used therein as a counterclaim. The representative of an estate in such an action need not set up a barrable debt, even where the heir’s action is laid in Justice Court or in some other court working under section 140 of the Justice Court Act, which makes a counterclaim compulsory; and under section 142 of the same Act declaring what counterclaim the estate may set up; but the estate’s representative still has the right in equity or surrogate practice to retain the barrable debt when the judgment is sought to be executed against the estate, if the statement quoted above
The case at bar appears to belong in the second group, for the evidence is that the will was made in the second last week of the six-year limit; and was made under legal supervision; and the note was probably not brought to the attention of the skilled draftsman. Among the preferred legatees was the maker of the note in question. At the date of the will this debt was still collectible; and the will is silent as to it. Neither the testatrix nor the legatee-debtor did anything in regard to the note in question during the twelve years that elapsed between the due date of the note and the death of testatrix. It was stated as a fact upon the argument that the parties had made some arrangement at the date of the note whereby the maker purchased an automobile in his own name with the proceeds of the loan for which he gave the note; and that he thereafter drove the car around for her personal use and convenience; and that she declined to accept his offer to pay the note. As to the retention of the note by the payee till her death, it was held by the Surrogate in Matter of Timerson (39 Misc. 675) that where an intestate promised to forgive his heirs their debts to him, but never surrendered the notes representing the debts, the equitable right of retention was not altered by the lapse of time; and that the deduction of the debt should be made even though an action to recover the intestate portion could be barred. Mere retention of the instruments does not seem to be necessarily inconsistent with an intention to forgive the debt in making a legacy in simple form to the debtor.
On the whole it seems somewhat more probable than not that in making the legacy to the maker of the note this testatrix intended to forgive the legatee any indebtedness on this $377 note to herself. My conclusion is that the legatee is entitled to his share of the residuary estate without any deduction on account of the note.
On notice submit a decree in accord with this decision and enter.