In re Accounts of Peck , 52 N.Y.S. 1028 ( 1898 )

Adams, J.:

Before entering upon the consideration of the principal question which we are asked to review in this case, it will be profitable to advert very briefly to some of its more important features concerning which there appears to be no* dispute whatever; and first we are led to observe that no charge of fraud or bad faith is made against the appellant. On the contrary, it is virtually conceded that in whatever he has done he has acted from the best of motives and with the sole desire to so administer the estate of his testator as to increase its value to the beneficiaries named in the will.

It is undoubtedly true that in his efforts to accomplish this result he made some investments of the trust funds in his hands which can hardly be sanctioned by a court of equity ; but it is a curious fact that these investments, with one or two insignificant exceptions, have proved to be valuable ones, from which the estate has derived a larger income than would have been the case had the moneys been deposited in a bank. Again, it is to be noted that, not only is the element of bad faith absent from the case, but there appears to be no disposition upon the part of the appellant to either conceal or palliate the irregularity of his transactions; for upon the accounting he stated that he had made investments which were, strictly speaking, illegal; and admitted with commendable frankness that he should be charged personally with such of those investments as had been made upon his own responsibility and without the acquiescence of his co-executor. But just here the line is drawn, and it is insisted that as to certain other investments which were the subject of inquiry upon the accounting, the executrix should not be permitted to escape all responsibility, inasmuch as such investments were made with her knowledge and consent. We are thus brought to a consideration of the sole question in the case, which is: To what extent, if at all, is Mrs. Peck chargeable with the consequences of any improper dealings with the assets of the estate by her co-executor ?

There can be no doubt, we think, as to the rule which should govern in cases of this character, which is, that where one executor knows, or has the means of knowing, of irregular investments by a co-executor, and assents thereto, either expressly or passively, he cannot, in the absence of fraud or misrepresentation, escape responsibility therefor. (Matter of Niles, 113 N. Y. 547.) And in this case, as in the one just cited, the question is not complicated by the dual capacity of Mrs. Peck, because here as there it may be said that: “ The elements of concurrence, of knowledge, or of acquiescence in the individual are equally available to the adminis- ' trator * * * (executor Peck) as weaknesses in either position which she may take in her attack upon him.” (Matter of Niles, supra.) .

The learned surrogate has found that as to certain investments made by her co-executor, Mrs. Peck certainly did acquiesce ; for in one or two instances they were taken in her name ; and it is said that as to some others she would have to be held liable, but for the fact that the beneficiaries under the will do not seek to charge her with liability. In reaching this conclusion we think the learned surrogate has overlooked two very important facts, one of which is that Mrs. Peck is herself a beneficiary under the will of her husband, and the other is that this is a settlement between her and her co-cxecutor, in which she is seeking to divest herself of all responsibility for irregularities of administration in which she appears to have participated.

Without going very much into detail, we think the evidence contained in the record before us shows quite conclusively that while, as has already been stated, the principal management of the estate was left to the appellant, he frequently consulted Mrs. Peck in regard to his official transactions, and she knew in a general way, and had ample opportunity to know in each particular instance, how the estate was being managed, what investments were being made, and the income which was being derived therefrom. On one occasion, just before she departed for Europe, Mr. Peck furnished Mrs. Peck with a statement, showing the amount of moneys remaining in his hands and the securities which had been taken by him. On another, a loan of §25,000 was made at the special instance and request of Mrs. Peck. A part of the consideration for the purchase of the Crouse avenue property was a mortgage upon what is known as the “ Granby property,” which was executed by Mrs. Peck. In short, the appellant testified that he “ never made any transaction while she (Mrs. Peck) was here that she did not know of,” and the evidence seems to bear out this assertion.

In these circumstances we are not satisfied that any foundation is ■furnished for holding the appellant solely liable for the consequences of his acts.

This case in its essential features is singularly like the Niles Case (supra), in which letters of administration were issued to a Mrs. Miller, a daughter of the in testate, and one Nathaniel Niles, a lawyer, and an old friend of the family. The management of the estate was intrusted to Niles, just as it was to Peck in the present case, and upon his accounting Mrs. Miller attempted, as Mrs. Peck is now attempting, to relieve herself from all responsibility for the consequences of her co-administrator’s maladministration, and the court in referring to the relation which the parties occupied towards each other, and the reciprocal obligations which that relation imposed, made use of this significant language, which is quite as applicable to the present case as to the one in which it was employed: “ Now, what was Mrs. Miller’s position in this case ? She was co-administratrix and at the same time the next of kin and prospective distributee of two-tliirds of the estate. Niles was joined with her to aid her in the office, which she could have filled alone. Except that she chose to leave the custody and management of the affairs of the estate to her co-administrator, she was, at all times, a factor in the administration, and was legally chargeable, with what was done therein, in the absence of any fraudulent practices of deception or concealment upon her by her co-administrator. She had frequent consultations with him and at various times sought and obtained information as to the affairs of the estate. There is no evidence that she was in any sense excluded from the administration by Niles. She relied upon his judgment, and, by her own testimony, we are informed that she ‘never failed, whenever he told her anything about investments, to assent to it.’ At another time she says, ‘I did not object to any one of these investments when I heard of it.’ There is enough in this record to show that, if not in all instances, in many, she knew of the investments which were made by her co-administrator, and if she did not concur, either she assented, or by raising no objection acquiesced. Her attempt to distinguish between authorizing and directing an act of the other administrator, and assenting to it when done, is quite futile and ineffectual for any purpose here. Upon her equally with her associate in the office of administration, rested the duty to be vigilant to guard the estate from waste, loss and impairment. Having sought the office, while she remained in it she could not stand by and see an improper use made of the assets, and thereafter claim immunity in her official capacity, or advantage in her private capacity; whether such claim should be grounded upon ignorance of lier legal duties and rights, or upon her mistaken reliance upon her associate in office. * * *

“ We hold, therefore, that just so far as Mrs. Miller had the means of knowing of her co-administrator’s acts and assented to, or acquiesced in them, she is bound. The question is merely between the two. Where concurrence in the action of Niles can be proved, or, with adequate knowledge of it, she is proved to have assented, expressly, or by her passiveness should be deemed to have acquiesced in it, as co-administratrix she is chargeable with its consequences, and as beneficiary she is estopped from objecting to it; provided that she is unable to prove fraudulent practices by Niles, by which she was misled and deceived as to the facts of each transaction.” (Matter of Niles, supra, 557, 559.)

With the rule of law thus stated in mind, we are unable to discover upon what theory the decision of the learned surrogate can be sustained, and we are, therefore, constrained to reverse the decree entered upon his decision and remit the case to the Surrogate’s Court for further proceedings, in accordance with the views herein expressed.

All concurred, except Gbeen, J., dissenting.

Decree of the Surrogate’s Court reversed and the case remitted to that court for further proceedings, with costs to the appellant payable out of the estate.