De Coppet v. . Cone , 199 N.Y. 56 ( 1910 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] It is conceded that the statutory provisions governing the probate of wills in Surrogates' Courts and the issue of letters testamentary and of administration are such that under the facts stated in the complaint, it is impossible to prove the will of the deceased debtor, or to have letters testamentary or of administration issued here. If this concession is well founded the result is that though there is to be found property belonging to the deceased within this state, our citizens who are his creditors have no means of obtaining payment of their demands through the ordinary procedure for the administration of the assets of a decedent. I think that under such circumstances equity will entertain a suit for the administration of the property of the deceased which is situated here and apply it to the payment of creditors. It is true that the plaintiffs in this action have not put their claim into judgment. I do not think it was necessary that they should have done so. It is also true that the claim accrued several years before the death of the debtor, but during that time the debtor was a non-resident. Unless the plaintiffs could serve the debtor within this state, they could not get any personal judgment against him, nor were they bound to follow their debtor into foreign jurisdictions. The debt was contracted here, and both the plaintiffs and their debtor were residents of this state at the time Even if they had obtained a judgment against their debtor in a foreign jurisdiction, before they could attack any fraudulent conveyance it would be necessary for them to have recovered a new judgment here on the foreign judgment. (Tarbell v. Griggs, 3 Paige, 207; Davis v. Bruns, 23 Hun, 648; Rocky Mt. Nat.Bank v. Bliss, 89 N.Y. 338.) But the plaintiffs would have the same difficulty in obtaining a personal judgment in this state when they sued on a foreign judgment as they would have had in suing on the original debt. Nor should the plaintiffs be compelled to resort to the jurisdiction of a foreign administration. It may be that they would find their debt outlawed in that jurisdiction. Therefore, if it should be considered that the plaintiffs must have the same status as is required by a creditor seeking to set aside a fraudulent conveyance, it is apparent that none of the courses suggested would have helped them.

The question is not whether the plaintiffs can maintain an action to set aside a fraudulent conveyance, but whether they may maintain one for administration of the estate. The leading case in this state on the subject is Thompson v. Brown (4 Johns. Ch. 619), where Chancellor KENT, after an exhaustive review of the English authorities, held that equity would entertain an action by a contract creditor against an executor for the administration of the estate and the payment of the debts of the deceased, but that the action must be brought on behalf of all the creditors. The authority of this case has never been questioned and it has been followed in other states. InPeterson v. Poignard (6 B. Mon. 570) the facts were quite similar to those in the present case. The debtor left the state and died. No administrator of his estate was appointed. The plaintiff, a creditor, brought a bill in equity to reach the assets of the debtor in the state. The bill was sustained, the court saying: "The want of an administrator, instead of rendering him powerless, may be the very ground on which in cases where no one can be charged at law as executor de son tort, the chancellor may be bound to interpose his power, as furnishing the only practical means of relief." Hefferman v. Forward (Id. 567) is to the same effect, the court giving as an additional reason for the interposition of equity: "Besides, the personalty might, in the meantime, be sent out of the state to the non-resident heirs, or the debt paid over to them or to some foreign administrator, and the fund, which should be made liable to the creditors here, escape from the power and jurisdiction of the Chancellor." In Cameron v. Cameron (82 Ala. 392) there had been no administration upon the estate of the debtor. A bill in equity was sustained against the widow and children to satisfy the plaintiff's claim out of the estate of the debtor which had come into their hands.

It is to be borne in mind that in the ordinary administration of estates, creditors are not obliged to put their claims into judgment, unless they are rejected by the administrator, and now the validity and amount of such claims may by consent of the parties be adjudicated by the surrogate, instead of in an action. So also a simple contract creditor may apply for the appointment of an administrator of the estate by the surrogate. Therefore, the rule which obtains with so much strictness in actions to set aside fraudulent conveyances and in creditors' bills that the plaintiff must have exhausted his remedy at law by the recovery of a judgment and the issue of an execution thereon, does not apply to an action for the administration of the estate of a decedent. There are also other cases in which the rule does not obtain. (McCartney v.Bostwick, 32 N.Y. 53.) But I am of opinion that the present action was properly disposed of by the courts below. 1st. Because the suit should have been brought on behalf of all the creditors for a ratable distribution of the estate in satisfaction of their respective claims. 2nd. Because to the action either the foreign executor or the persons beneficially interested in the estate, either as legatee or next of kin, are necessary parties. It is not the law that in no case can a suit be maintained against a foreign executor. Ordinarily a suit at law will not lie, but an action in equity will often be sustained. (Johnson v. Wallis, 112 N.Y. 230. See, also,Hopper v. Hopper, 53 Hun, 394; affd., 125 N.Y. 400.)

The judgment appealed from should be affirmed, with costs.