In re the Judicial Settlement of the Accounts of Jacob , 38 N.Y.S. 1083 ( 1896 )

Hatch, J.:

After a trial, George P. Avery recovered a judgment against the executors of Elizabeth Carter, deceased, which was affirmed, on appeal and was finally entered for the sum of $4,638.44. The executors did not qualify and enter upon the duties of their trust until nearly five months after the death of their testatrix, when letters testamentary were issued to them. The inventory of the personal estate of the testatrix was not filed until nearly two years after her decease, and as then filed showed a personal estate appraised at '$1,477.91. The executrix, Josephine F. Clason, is a niece of the testatrix, and by the terms of the will took a life estate in all of testatrix’s property, real and personal. The executor, William H. Jacob, is the son of Emma Lawrence Jacob, who takes the remainder of the estate upon the termination of the life tenancy. No settlement of the accounts of the executors having been had, and nothing having been paid upon Avery’s judgment, he presented to the surrogate, on November 12, 1890, a petition upon which a citation was issued requiring the executors to show cause why a settlement of their accounts should not He had. On November 20, 1890, the return day of the citation, the executors presented a petition to the surrogate praying that their accounts might be settled ; thereupon the proceedings were consolidated, the executors filed their account, and Avery filed objections thereto. After the evidence taken upon these proceedings had been closed, Avery procured a citation to be issued requiring the executors to show cause why their letters testamentary should not be revoked. Pending its disposition and that of the proceeding for the settlement of the executors’ accounts, Avery died, and Charles R. Avery, his executor, was substituted as a party in his stead. Thereafter the surrogate entered a decree denying the motion to remove the executors, and subsequently a decree was entered settling the accounts of the executors. An appeal from both decrees brings the matter before this court.

For a proper disposition of this appeal we do not deem it necessary to consider any other questions than such as are presented by the fifteenth specification in the objections filed to the account. It appeared upon the hearing that Mrs. Carter was, at the time of her death, the owner of, or at least that she held in her name, a certain lease of premises, No. 42 Sheriff street, in the city of New York, given pursuant to a sale for unpaid taxes aud water rates, for the term of 500 years; that some years prior to her death she had leased these premises to one John Baldwin, as tenant, for a term of twenty-one years, at an annual rental of $450. Baldwin subsequently assigned this lease to George "W. Baldwin, and the latter having died, possessed of the premises and indebted for rent under the lease, Mrs. Carter brought an action thereon against the executrix of his estate to recover the amount due, which action was pending at her death, and was thereafter successfully prosecuted by her executors, and judgment entered for $2,866.44 damages and costs. This judgment was hot inventoried or set out iu the account of the executors in any form, although there is a charge against the estate of $366 for referee’s fees paid by the executors in that action. After the objection was made which called attention to this omission, the executors filed a supplemental account alleging that the omission was an oversight, and this was the excuse made when examined upon the proceeding. In the account filed the significant statement is made that the judgment is nominally one in favor of the executors, and nowhere is it asserted that the judgment constitutes an asset in favor of the estate for its amount if collectible.' The reason for this and the real claim of the executors will more clearly appear when we consider this claim in connection with the lease of Mrs. Garter and the proceedings by which her estate has been apparently divested of title to it. Mrs. Carter’s lease from the city of New York bore date October 28,1861. A long time prior to this the father of the executrix Clason owned the same premises, and' the title passed from him at the sale by which Mrs. Carter obtained' title. After Mrs. Carter’s death, and after the judgment was recovered against the executor of Baldwin, the executrix Clason commenced an action in ejectment against the executrix of the tenant Baldwin to recover possession of the premises. In this proceeding the attorney for Clason testified : “ I didn’t go back of the time when Mrs. Carter got her title to the time when Mrs. Clason and her ancestors had title. In the case of Miss Clason against Baldwin I did. I' made no reference in that case to the subsequent title of Mrs. Carter in the case.” In other words, when he sued Baldwin in Mrs. Carter’s case for the rent, he relied upon Mrs. Carter’s title. When he sited in ejectment for Miss Ciason, lie suppressed Mrs. Carter’s title, and proved the title of Miss Clason’s father and then established her relation as heir. The executor Jacob was cognizant of the suit brought to recover the reut against the executrix of George W. Baldwin, and knew of Mrs. Carter’s title and made claim to the rents in her name. lie also knew and was present at the trial when his co-executor was seeking by ejectment to defeat the title of the estate in the property. He evidently lent her aid to that end, for at no time did he Suggest that Mrs. Carter had title or seek to bring it to the court’s attention, but either actively consented or passively acquiesced in .the suppression of that title, in order that Miss Ciason might succeed in the action. The effect of this transaction was. to perpetrate a fraud upon the court. (State of Michigan v. Phœnix Bank, 33 N. Y. 9-25; Galatian v. Erwin, 1 Hopk. Ch. 54.)

And if Mrs. Carter had title to the premises under her lease, then such lease constituted an asset of her estate and should have been inventoried as such (Trustees of Elmira, v. Dunn, 22 Barb. 402 Despard v. Churchill, 53 N. Y. 192), and the suppression of her title was a fraud upon her estate and the creditors thereof. And it is quite evident, from the- supplemental account filed, and the attitude of the executors in the action by which this estate was. apparently divested of title, that their claim is that the Baldwin judgment obtained in the action for rent is not an asset of the estate, but is in fact the property of Miss Ciason, for whom Mrs. Carter held as trustee. Such was the view taken by the learned surrogate. He seems to have held that, because an appeal was. pending in the Baldwin action for rent, it did not, therefore, constitute an asset of the estate, and that in any event the evidence warranted the conclusion that Mrs. Carter simply held the lease as trustee for Miss Ciason, and that, therefore, the estate had no interest in the judgment or lease. We find ourselves unable to. agree with either conclusion upon the case as presently developed. The judgment as it stands is the property of this estate, and an asset of the estate. It does not appear that there was any stay of proceedings pending the appeal, or that there exists any obstacle standing in the way of its collection. The pendency of an appeal does not change its character as an asset or prevent its collection by any of tlie remedies known to tlie law, and until some fact appears to relieve tlie executors of tlie duty to collect tliey are chargeable with the consequences which flow from their inaction. "We are not called upon now to determine whether Mrs. Carter’s estate has or has not an interest in this lease. It is sufficient now to say that the evidence disclosed facts from which we can say that the estate may have title to this lease, and nothing which appears in this record conclusively establishes that the estate has not such an interest. Sufficient, however, does appear from which we are able to see that tlie creditor who brings this appeal is not likely to have any active assistance from these executors in realizing upon any property to which the estate might be entitled.

It is the claim of the creditor who has prosecuted this proceeding, and the evidence tends to establish the claim, that the estate is in fact solvent and abundantly able to pay the judgment which he holds. It is quite evident that there is intense hostility upon the part of tlie executors against the claim, which lias been established after a bitter contest. Both executors refuse to recognize any right under it, except so far as they have been compelled thereto by its legal force. Their attorney also testified, without doubt to their satisfaction, that he has benefited the estate by “ preventing Mr. Avery from collecting an unjust claim against the estate.” The unjust claim here mentioned is a judgment of the Supreme Court, and the resistance of the claim has already increased its amount in costs and expenses upwards of $1,000. This attitude upon the part of the executors is in active hostility to the duties which devolve upon them in the proper discharge of their trust. That duty requires that they shall actively preserve all of the property which belongs to the trust estate, and see that it is devoted to the purposes which the trust and the law require. It was the bounden duty of these executors to have called to the court’s attention the lease of their testatrix, when title under it was attacked, and their failure to do so was a fraud upon the court and upon the creditors of the estate. Among the duties solemnly imposed is to pay debts and not resist claims when properly established. This judgment is an established claim, of the highest character known to the law, and it does not comport with the duties of trustees to refuse recognition of it, make no attempt to pay it, and by actions and other proceedings make its collection impossible. One executor is the life tenant of this estate, and stands in irreconcilable hostility to any claim of property in the estate, of the lease held by Mrs. Carter at her death. The other is the son of the remainderman, and is interested as her heir. The debts against the estate, aside from the Avery judgment, are small. The executors, therefore, are parties most deeply interested in the preservation of this estate to the beneficiaries under the will. Such position renders their relation to creditors most delicate and calls for Ihe exercise of the most scrupulous integrity in their disposition of the property that creditors may not suffer on account of self-interest. We have by no means exhausted this record of material to show that these executors have not acted for the best interests of this estate and its creditors, but that they have rather acted for the best interests of the beneficiaries under the will and in active hostility to the creditor before us. This is sufficient to call for their removal. (Haight v. Brisbin, 100 N. Y. 219.) And it becomes the duty of the surrogate, in appointing an administrator of this estate with the will annexed, to succeed the present executors, in view of the relations which they bear to this estate and the fact that the appellant is practically the only creditor, to appoint such a person as will fairly represent the creditor and the estate.

It follows from these views that the decree of the surrogate, settling- the accounts of the executors, should be reversed and a further accounting ordered And that the decree refusing to revoke the letters testamentary of said executors should he reversed, and the motion to revoke said letters testamentary should be granted and an administrator of said estate with the will annexed be appointed in their place, with the costs of this appeal to appellant, to be paid by said, executors personally.

All. concurred.

Decree settling the accounts of the executors reversed and a further accounting ordered. Decree refusing to revoke letters testamentary of said executors reversed and motion to revoke granted and an administrator with the will annexed directed to be- appointed by the surrogate, costs of appeal to the appellant to-be paid by the executors personally.