143 N.Y.S. 417 | N.Y. App. Div. | 1913
Lead Opinion
On January 31, 1891, James 0. Ferguson died leaving an estate of $23,274.40. He made some other small bequests, but left the bulk of his property to his only child, Lizzie M. Ferguson. He appointed the defendant, Mark L. Sheldon, the executor of his will. Yearly, after assuming his duties, the executor rendered an account to the surrogate. At each of these armna.1 accountings certain erroneous commissions and allowances were made to the executor, the aggregate of which is $1,102.53. When the plaintiff arrived at the age of fourteen years, upon her petition, the defendant rendered his final account, February 24, 1899, and was discharged. In March, 1909, the plaintiff discovered that the defendant had been allowed and had taken and appropriated to his own use these unlawful commissions and allowances. Thereafter and before the beginning of this action she demanded of the defendant restitution of this money improperly and unlawfully taken out of her estate by the surrogate and awarded to the defendant. The defendant refuses to return it.
If the acts of the defendant in taking these unlawful commissions, costs and allowances do not constitute “constructive fraud ” the Statute of Limitations has run against the claim. The plaintiff recognizes this, and, therefore, her first effort is to endeavor to convince the court that the acts complained of do constitute “constructive fraud,” and thus come within the provisions of subdivision 5 of section 382 of the Code. All attempts to establish actual or positive fraud have been abandoned. A careful examination of the best definitions of “ constructive fraud ” does not warrant or permit us to pronounce the acts of the executor in this case “ constructive fraud.”
" Legal or constructive fraud includes such contracts or acts as, though not originating in any actual evil design or contrivance to perpetrate a fraud, yet by their tendency to deceive or mislead others, or to violate private or public confidence, are prohibited by law. Thus, for instance, contracts against some general public policy or fixed artificial policy of the law; cases arising from some peculiar confidential or fiduciary relation between the parties, where advantage is taken of that relation by the person in whom the trust or confidence is reposed, or by third persons.” (1 Bouvier’s Law Dict. [Rawle’s Rev.] 843.)
“ ‘Constructive frauds’ are acts, statements, or omissions which operate as virtual frauds on individuals, or which, if generally permitted, would be prejudicial to the public welfare, and yet may have been unconnected with any selfish or evil design.” (Anderson Law Dict. 475.)
“Constructive fraud may be described as an act done or omitted, not with an actual design to perpetrate positive fraud or injury upon other persons, but which, nevertheless, amounts to positive fraud, or is construed as a fraud by the court because of its detrimental effect upon public interests and public or private confidence.” (Eaton Equity, 287.)
But even if we extend the definition of “constructive fraud ” so as to include the situation here, the question then arises does the word “ fraud ” as used in subdivision 5 of section 382 of the Code include “ constructive fraud ” or refer only to positive fraud ? It is conceded that the alleged cause of action is barred by the Statute of Limitations unless it is preserved by this subdivision. It can only be preserved under this subdivision .if the word “fraud” used therein embraces “constructive fraud ” as well as actual fraud. So far as there have been any adjudications upon this question. the cases all hold that it is actual fraud against which the statute does not
We discover, therefore, first, that equity actions like actions at law are barred by Statutes of Limitations; second, that the defendant herein was not guilty of “ constructive fraud; ” third, that even if his acts or omissions do amount to “constructive fraud,” the statute has, nevertheless, run against the cause of action arising out of such acts or omissions — subdivision 5 of section 382 of the Code of Civil Procedure having no application. It follows that the judgment of the trial court must be affirmed. This should be without costs.
All concurred, Lyon, J., concurring in memorandum, except. Kellogg, J., dissenting in memorandmn, in which Woodward, J., concurred.
Dissenting Opinion
The executor was allowed excessive commissions, but I think the decree of the surrogate is final upon that subject. It was a matter of computation, fairly within the jurisdiction of the surrogate. The executor was allowed various sums amounting to $1,065 for counsel fee, or by way of counsel fee and allowances, for caring for and managing the securities of the estate, although he had no counsel and although excessive commissions were allowed each year. Upon one accounting he did have counsel, and in addition the counsel was allowed $25, the propriety of which payment is not questioned. The commissions generally are a full compensation for the care and management of the securities of the estate and for transacting its business, and cover all services which the surrogate is permitted to allow to the executor as such. He may allow counsel fees, but that is to reimburse him for fees paid counsel, and in some cases not necessary to consider here certain other allowances may be made. But in a case of this kind the surrogate was absolutely without jurisdiction to grant to the executor any counsel fee or allowances of that nature. The executor and the surrogate both are presumed to know the law, and both are assumed to know that no allowances could be made the executor for these items. But they were made, and we are to assume that the surrogate had some foundation for his action. It appears that the executor asked the allowances. The guardian ad litem consented and they were allowed. Evidently by the request for the allowances the surrogate may have been led to believe that some services by counsel had been performed for which these allowances were to reimburse the executor. But such was not the fact. Unless the surrogate intended deliberately to violate the law and grant the infant’s money to the executor without any authority, we must assume that in some way he was overreached by the executor. When an executor obtains an allowance in his account for charges clearly unwarrantable, and which the surrogate had no jurisdiction to allow, it is, I think, a fraud within the meaning of subdivision 5 of section 382 of the Code of Civil Procedure, in which case the Statute of Limitations begins to run at the time of the discovery of the fraud. I do not think the infant
Woodward, J., concurred.
Judgment affirmed, without costs.
Concurrence Opinion
Unquestionably the defendant has received and retained moneys of the plaintiff to which he was not entitled, and I concur in the affirmance of the judgment appealed from for the reason only that I think that the plaintiff’s remedy is not through an action in equity in this court, but by an application to the Surrogate’s Court to vacate or modify the decrees of that court settling the accounts of the defendant as such executor.
I think that a surrogate has the right to entertain such an application in case of fraud or mistake, and, upon proper proofs being made, to vacate, modify or set aside the erroneous decrees. (Code Civ. Proc. § 2481, subd. 6; Matter of Regan, 167 N. Y. 338, 343; Costello v. Costello, 152 App. Div. 288; Matter of Malone, 150 id. 31; Matter of Peck, 131 id. 81; Matter of Flynn, 136 N. Y. 291; Matter of Hodgman, 82 Hun, 419.)
