91 N.J. Eq. 39 | New York Court of Chancery | 1919
This suit is to recover trust funds fraudulently misappropriated. The facts are few and undisputed.
The complainant, Stokes, is one of the sureties on Wills’ bond of $24,000 given for the faithful performance of the trust. To indemnify himself he filed this bill against Wills’ executor to recover for tire Wood (trust) estate so much of the proceeds of the sale of the Indian Hill Earm as represents the trust funds misappropriated by his principal in its purchase. The Mount Holly Trust Company, as substituted trustee and substituted guardian, filed a counter-claim against Wills’ executor to recover the entire proceeds.
■ The defences interposed by the Burlington County Trust Company, executor of Wills, are technical. It sets up that the com
The objection to the relief prayed for by the Mount Holly Trust Company, as substituted trustee and guardian, is, that the orphans court’s decree of insolvency fastened the claims of creditors of Wills upon the estate in the hands of the executor, equally, and that it has elected to become a common creditor by presenting its claim under the rule to bar creditors, and, consequently, has waived- its right to. trace the funds. The position is untenable. The Orphans Court act (Comp. Stat. p. 3848 § 99), providing that a decedent’s estate, if insufficient to, pay debts, shall be distributed equally among the creditors in proportion to their debts, applies only to the estate proper of a decedent, and does not include trust funds of which he dies possessed. As Vice-Chancellor Howell remarked in Koch v. Feick, 81 N. J. Eq. 120: “It is a decree in favor of creditors only, and can fasten their debts only on those funds which are applicable to the payment of debts.” And there was, manifestly, no waiver because, as admitted by the pleadings, the Mount Holly Trust Company did not know at the time it presented its claims that
As the farm was purchased by the trustee with the joint funds of the trust and guardian estates, the entire proceeds realized by the executor from its sale enures to these estates (Shaler v. Trowbridge, 28 N. J. Eq. 595), and a decree will be advised awarding it proportionately, with costs.