Hood v. Hayward

The decision of the main appeal involves two questions, whether the instrument executed and delivered by the plaintiff and the legatees under the will of Andrew Hood to Moffat, one of the sureties upon the bond given by the executor, discharged the liability of the defendant Hayward, the other surety upon said bond, and whether this action upon said bond against the defendant Frederick Hood as principal, and the defendant Hayward as surety, can be maintained before the issuance and return of an unsatisfied execution against the property of said Frederick Hood, the executor.

These propositions aré familiar law and scarcely need the citation of authorities to support them, viz 1 that the release of the liability of one or more joint or joint and several obligors or one or more joint tortfeasors, discharges the liability of the other; that the rule is the same in law and equity.

But these rules require for their full operation that the instrument should be a technical release without

A reference to the instruments under consideration shows that the plaintiff as executrix and individually together with all the devisees and legatees under the will of Andrew Hood, deceased, in consideration of $7,000 to them paid by said Moffat, released and discharged him, his heirs, executors, administrators and assigns, from all causes of action, etc., etc., and especially by reason of the said Moffat having executed with one John Hayward and Frederick Hood, a joint and several bond to the people of the State of New York in the sum of $20,000 executed by said Hood as principal and by said Moffat and Hayward as sureties. The said instrument further provides that this release is intended to discharge said Moffat from all liability by reason of said bond in every respect, “ but shall not be construed as affecting any claim or demand which the parties of the first part or any of them have or may have against the said Frederick Hood as executor or against the said John N. Hayward as surety on said bond or otherwise.”

The same parties in addition to signing the instrument the substance of which is above stated, also executed and delivered to said Moffat another instrument which provided “ that it was intended thereby to release and discharge the said Moffat, his heirs, executors and administrators from all liability whatever of any kind and nature arising or growing out of any and all acts or omissions, neglect or defalcation of the said

“ Now it is hereby declared that the intention of ■said parties is to release the said David Moffat from any and all claims which they or any of them have or might have against him, his heirs, executors or administrators under or by virtue of said bond, to the extent •of one-half of the penalty thereof, and it is expressly understood and agreed, that the said release is intended to operate as a satisfaction and discharge of one-half of the obligation arising from, or under said bond, so that the said Moffat shall be released from all claim or demand for contribution on the part of his co-surety, the said John N. Hayward, and that this instrument ■shall be taken and deemed a part of said release and incorporated therein.”

“It is also understood and agreed that nothing therein contained shall in any manner affect or impair any claim, right or demand which the parties thereto, or any of them, their or any of their heirs, executors •or administrators have or may hereafter have against the said Frederick Hood, or as against John N. Hayward as to the remaining half of the amount of said bond.”

The evidence in the case shows beyond question and without substantial contradiction that these two instruments were delivered to Moffat at the same time and upon the occasion of the payment and receipt of the consideration specified in them.

The defendant Hayward contends that he was released from all liability upon the bond by the release of the liability of Moffat.

There is no doubt that if the language of the instruments had simply acknowledged satisfaction of all claims arising upon the bond and released and discharged the same, the effect would have been to discharge both Moffat and the defendant Hayward from any further liability upon the bond. But the language of the instrument acknowledges the payment of the sum of seven thousand dollars, being less than one half of the penalty of the, bond, from Moffat, and purports to discharge Moffat only and expressly declares such to be its sole object and purpose, and that it shall not be construed as in any way affecting any claim or demand which the releasors have-against Hood as executor cr the defendant Hayward as surety upon said bond ; and in order to make this purpose more manifest and its effect more certain, they executed on a later day and delivered with the instrument just referred to, another instrument of an equal degree of dignity and solemnity, declaring that it was their intention that said instrument should “ operate as a satisfaction and discharge of one half of the obligation

It will be observed that the terms of the instrument do not express that the claim or liability under the bond has been satisfied, which is the essential point in an accord and satisfaction. The terms of the discharge by the instrument expressly limit the operation of the discharge to Moffat, and reserve the liability of Hayward. 1 do not perceive any reason in the relations of the parties to this bond, as between themselves or as to the releasors to prevent the court from giving the precise effect to the instrument intended by the parties to it. Each of the sureties was liable to the releasors for the full amount of the penalty and whatever part of the penal sum either should be compelled to pay, he could compel his co-surety to contribute one half. Aside from interest neither surety could compel the other to contribute more than one half the penalty of the bond, viz: ten thousand dollars, whatever the loss of the estate may have amounted to.

In this case it amounted to much more than the amount of the penalty, so that the releasors could have demanded of each surety to pay ten thousand dollars. That is the sum which defendant Hayward was liable to pay under the bond to the releasors, and that is all he is now compelled by the judgment to pay them. What harm or prejudice has or would have been done Hayward in this case, if the releasors had forgiven the liability of Moffat outright or had received ten thousand dollars of Moffat’s money and subsequently given it back to him? I can perceive none. Cer

But without further discussing the reasonableness -of the respondent’s contention, we think there is an unbroken line of decisions supporting the judgment in this case to the effect that the defendant Hayward was not discharged by virtue of the instrument which discharged Moffat from liability, upon the bond in suit. It is not worth while to refer to but few of the numerous cases Avhich maintain this view (Benedict v. Rea, 35 Hun, 34 ; Jervine v. Millbank, 56 N. Y. 635 ; Morgan v. Smith, 70 Id. 537; Bronson v. Fitzhugh, 1 Hill 185 ; Kirby v. Taylor, 6 Johns. Ch. R. 246; Matthews v. Chicopee Mfg. Co., 3 Rob. 711 ; Ellis v. Esson, 56 Wis. 138 (36 Am. R. 830;) Price v. Barker, 4 Ellis & Black, 760; Thompson v. Lack, 3 Com. Bench R. 540).

The great number of decisions and the discussion in the opinions of the courts upon this branch of the law has arisen, as it seems to me, not from any doubt or diversity of opinion in relation to the effect of an instrument under seal clearly expressing a .discharge of one joint obligor in consideration of a sum less than the entire obligation or liability and a reservation of the remainder of the liability against the other obligor, but from a construction of the nature and effect of the various agreements and transactions between one or

“ In all the cases of actions on bonds of executors and administrators, a compliance with the statutory formalities has been regarded as essential to the maintenance of an action against the sureties.” Hood v. Hood, 85 N. Y. 561 -574. All the statutory prerequisites for the commencement of actions upon the bonds of executors and administrators were abolished by Chapter 245 of the Laws of 1880, and the provisions contained in the Code of Civil Procedure were adopted in their stead. The orders or decrees of the surrogate revoking the letters testamentary to Frederick Hood and directing the payment of the sum of $29,100, the loss by his misconduct to the estate of the testator, to the plaintiff, and granting leave to her to bring an action upon the bond, were made subsequent to the change of the laws relating to the bringing of actions upon such bonds. The laws applicable to that subject are to be found in sections 2607, 2608 and 2609 of Code of Civil Procedure. Section 2607 provides : “ Where an execution issued upon a surrogate’s decree, against the property of an executor, administrator, testamentary trustee, or guardian has been returned wholly unsatisfied, an action to recover the sum remaining uncollected, may be maintained upon his official bond, and in the name of the person in whose favor the decree was made. If the principal debtor is a resident of the State, the execution must have been issued to the county where he resides.”

This section manifestly embraces all cases where an order or decree is made by the surrogate for the payment of money by the executor or administrator as formerly existed under the provisions of the revised statutes and chapter 460 of the laws of 1873 and perhaps other statutes upon that subject.

The proceeding under this section is based upon a

It is sought to obviate this objection and to maintain the action upon section 2608 which provides that “ Where letters have been revoked by a decree of the surrogate’s court the successor of the executor, administrator or guardian, whose letters are so revoked, may maintain an action upon his predecessor’s official bond, in which he may recover any money, or the full value of any other property, received by the principal in the bond, and not duly administered by him ; and to the full extent of an injury, sustained by the estate of the decedent or of the infant as the case may be, by any act or omission of the principal. The money recovered in such an action is regarded as part of the estate in the hands of the plaintiff, and must be distributed or otherwise disposed of accordingly ; except that a recovery for an act or omission, respecting a right of action,, or other property appropriated by law for the benefit of the husband, wife, family, or next of kin of a decedent, or disposed of by a will for the benefit of any person, is for the benefit of the person or persons so entitled thereto.” But it seems to me that cannot, be done with a proper regard thereto of the plain language of the provision and the scheme contained in sections 2607, 2608 and 2609.

As before stated, section 2607 does and is intended to embrace all cases where there is a decree against the executor for the payment of money. The money is to be collected by the ordinary process of execution if practicable before resort can be had to the bond of the

A successor is one who follows another into a position, and not one who went into the position with and survives such other in the position after it has been vacated by such other. Other sections of the code are only consistent with this construction of section 2608 and 2609. Section 2605 provides “. . . the successor may complete the execution of the trust committed to his predecessor.” “ The surrogate’s court has the same jurisdiction upon the petition of the successor or of a remaining executor . . to compel the person whose letters have been revoked to account . . . . ” as was done in this case.

It is provided by section 2692 “ Where one of two or more executors or administrators dies, or becomes a lunatic, or is convicted of an infamous offence, or becomes otherwise incapable of discharging the trust reposed in him, or where letters are revoked with respect to one of them, a successor to the person whose letters are revoked shall not be appointed, except where such an appointment is necessary, in order to comply with the express terms of a will, but the others may proceed and complete the administration of the estate, pursuant to the letters, and may continue

And by section 2693 it is provided that “ When all the executors or all the administrators to whom letters have been issued, die or become incapable, as prescribed in section two thousand six hundred and ninety-two, or the letters are revoked as to all of them, the surrogate must grant letters of administration to one or more persons as their successors, in like manner as if the former letters had not been issued, and the proceedings to procure the grant of such letters are the same, and the same security shall be required, as in case of intestacy, except that the surrogate may in his. discretion, in case where the estate has been partially administered upon by the former representative or representatives, fix as the penalty of the bond to be given by such successor or successors a sum not less than twice the value of the assets of the estate remaining unadministered.”

Besides, the tenor and design of section 2608 prescribe what is to be done by the successor. A surviving executor is already charged with those duties, and there is no. occasion to re-charge him. Section 2609 is intended for a case where the letters have been revoked and no successor - has been appointed. In the latter case any person aggrieved may obtain from the surrogate leave to prosecute the bond given by the executor whose letters have been revoked, and the duties cast upon such person are conferred in the same language as the duties cast upon the successor under section 2608. And it may be remarked in considering section 2609,. that it alone presents a case where the surrogate has-any occasion to grant leave to sue the executor’s bond-under existing laws.

I am reluctantly constrained to the conclusion that, the omission to issue execution upon the decree against the executor is fatal to the maintenance of this actions

If the conclusion in relation to the objection that an execution should have been issued and have been returned unsatisfied in order to maintain this action is correct, the appeal must result in a new trial, and there is not any necessity or perhaps occasion to discuss the question of the amount of interest involved in the cross-appeal. But as I have discussed the question of the effect of the release of Moffat, notwithstanding my conclusion that a new trial is necessary, it may not be -amiss to indicate, but without deciding it, the impression of the court upon the subject of the extent of the ■interest recoverable upon the bond of the surety in suit.

As appears from the case, the letters of the executor, "Frederick Hood, were revoked December 27, 1883 ; ;and the court below has allowed interest upon $10,000, ¡one-half of the penalty of the bond and the limit of Hayward’s liability, I am of the opinion that the allowance of interest from that date was erroneous. The decree revoking the letters did not necessarily or judicially determine the amount or extent of the loss to the estate arising from the misconduct of the executor ■whose letters were revoked.

A revocation of letters may be granted for various -grounds of misconduct of the executor, and among ' those grounds are investments made by him in securities not authorized by law or in violation of the decree or order of the surrogate, and regardless of the sum so •misinvested. Section 2865, Code of Civil Procedure. It appeared incidentally from the order of revocation that the executor had misinvested at least the sum of $29,100, of the sum of $53,710.69, which he was directed to invest by. the decree of the surrogate dated January

This is the period -at which the amount of the loss to the estate by the misconduct of the executor and the liability of the defendant as his surety was adjudicated, and the executor was on that day directed by the order of the surrogate to pay the amount to plaintiff.

The executor upon demand of payment of that sum failed to pay it or any part of it. It seems to me very plain upon principle that the interest should begin to run from the date of the last named decree. On that day for the first time was the breach of the bond adjudicated, and the amount of damages resulting therefrom liquidated (Mansfield v. N. C. & H. R. R. Co., 114 N. Y. 331 ).

While there was formerly some contrariety of decisions in respect to allowing interest to be added to the penalty of the bond, or, more accurately speaking, ■of allowing the damages to be added to the penalty for withholding it after it was due, I think now it may be regarded as settled law that interest or damages may .be added to the penalty from the date at which it is determined there has been a breach of the condition of the bond.

In case the condition of the bond is the payment of money on a day certain, the interest or damages will begin to run from that date, and in case the condition pf the bond is that an act shall be performed, the interest or damages will begin to run from the date that it is adjudicated by a competent court that the act has

The action is brought by plaintiff as executrix, a trustee. The alleged counterclaim sets forth no facts except possibly the fact that the plaintiff, as such executrix, acted with Hood, executor, in the management of the assets and property of the estate, and the legal conclusion therefrom that she is jointly liable with the executor for loss and waste. It is not alleged in the counterclaim that the respondent ever had any individual interest in the estate, or if she had, that it continued to exist at the time the loss was made by the investment. As executrix and trustee for others she may maintain this action notwithstanding any complicity with the misconduct of the executor, and any cause of action against her individually cannot form a counterclaim against her as the trustee for others; (Wetmore as Exr. v. Porter, 110 N. Y. 605 ; Boyle v. St. John, 28 Hun. 455 ; sub. 3, § 502, Code of Civil Procedure).

The allegation seems to me wholly inconsequential, and. would not constitute a defense ora basis for affirmative relief if it was admitted for want of a demurrer or reply to be true, for the omission to demur or reply will not impart a cause of action or a defense where none was contained in the preceding pleading. But in this case the trial court refused to find upon defendant’s request, that the plaintiff had any possession of the fund or any knowledge of its investment, until after the loss had been incurred, and the evidence in the case was such as to make such refusal necessary.

If the view I have taken above of the time when the -cause of action matured and the defendant became liable to pay interest upon one-half of the penalty named in the bond, is correct, that disposes of the ■defense of the statute of limitations.

I think the judgment should be reversed and a new trial ordered with costs to abide the event.

In 1864, the will of Andrew Hood, deceased, was admitted to probate, and letters testamentary were issued to the plaintiff and the defendant, Frederick Hood ; and the latter, being a non-resident of this State, gave bond in which the defendant Hayward and David Moffat joined as sureties. The executor, Hood, was afterwards charged with devastavit, and in 1883 his letters were revoked. On July 31, 1885, in a proceeding before the surrogate instituted by petition of the plaintiff, a decree was made directing him to pay to her as such executrix the sum of $31,100. This action was afterwards brought upon such bond. And the objection is taken that it cannot be maintained, because no execution was issued upon such decree and returned wholly or partially unsatisfied. The disposition of this question is dependent upon the statute by which such remedy is regulated' {Code Civ. Pro. §§ 2607, 2608, 2609). Those sections provide for three classes of actions upon the official bonds of executors and administrators: x. Where an execution issued upon a surrogate’s decree against the property of an executor or administrator has been returned wholly or partly unsatisfied, an action to recover the sum uncollected may be maintained upon such bond, by and in the name of the person in whose favor the decree was made (§ 2607). 2. Where letters have been revoked, the successor of the executor or administrator, whose letters are revoked, may maintain an action upon his predecessor’s bond, in which he may recover any money or the value of any other property received by the principal, and not duly administered by him; and to the full extent of any injury sustained by the estate of the decedent. And the money recovered is regarded as part of the estate in the hands of the plaintiff, and must be distributed or otherwise disposed of accordingly (§ 2608). 3. Where the letters are so revoked, and no successor is appointed,

These are distinct remedies, and each of them is. independent of the others. They were designed to take the place of those given by prior statutes on the. subject. Formerly the right to bring actions on such bonds was subject to the direction of the surrogate, or was dependent in the case provided for it of an assignment by him of the bond to the person in whose favor a decree was made. When an executor or administrator refused or omitted to perform a decree made against- him for rendering an account or upon final settlement, the surrogate might cause the bond to be prosecuted. (Laws 1830, ch. 320, § 23, 2 R. S. 2d ed. 53, § I9-) The provisions of § 2607 are a substitute for § 65, ch. 460, Laws 1837, which provided that after the return of an execution unsatisfied, the person in whose favor the decree upon which it issued was made, might have a right of action upon assignment of the bond to him by the surrogate. The present statute dispenses with the formal act of assignment. And the provisions of §§ 2608 and 2609 seem to be somewhat broader in their import than were those of the former statute, which provided for the prosecution of the bond of an executor or administrator whose letters had. been revoked. Then it was done by the direction of the surrogate. (2 R. S. 85, § 21.) The actions under such prior statutes other than that of 1837, were prosecuted in the name of the people. Those statutes are referred to in view of the proposition before asserted that the present remedies are distinct and independent of each other as were those formerly existing (People v. Gould, 4 Denio, 551 );

The support of an action under § 2607 is dependent

The view here taken is that when the plaintiff' became the sole remaining executor, she, for all the purposes of the trust, was the successor of the one who had been removed, as she succeeded to all the powers, before then vested in him in his relation to the estate of the decedent, as effectually as they could be taken by one appointed in his place if such appointment were permitted and had been made. And this action was. brought solely for the benefit of the estate, to bring to it a fund to reimburse it pro,,, tanta for the loss it had suffered by the breach of trust of the principal in the bond while he was executor, and in violation of the order of the surrogate. Such money when collected is part of the estate, and to be distributed and disposed of under the direction of the surrogate. That is the purpose of an action and recovery under section 2608. And. these views lead to the conclusion that this action is within the provisions of that section.

In respect to the other questions the conclusions of Judge Potter are adopted to the effect that the lease-of Moffat did not discharge the defendant Hayward from his liability to the extent of a moiety of the obligation assumed by those persons upon the bond ; and that the plaintiff was entitled to recover interest, only from July 31, 1885.

The judgment should, therefore, be modified by

All the judges concurred except Follett, Ch. J,, not voting, Potter, J., who dissented and read the-opinion first above given, and Haight, J., absent.

Note on the necessity of an accounting as a preliminary TO SUING ON THE BOND OF AN EXECUTOR, ADMINISTRATOR, ADMINISTRATOR WITH THE WILL ANNEXED, TEMPORARY ADMINISTRATOR, GUARDIAN, RECEIVER OR TESTAMENTARY TRUSTEE,

As a general rule no action lies against the sureties in a bond conditioned in substance like the usual bonds of executors, administrators, guardians, etc., except in case of disobedience by the principal of some order of the surrogate, or other proper court. Per Potter, J., in Perkins v. Stimmel ( 114 N. Y. 359 , 367), applying to guardian’s bonds the same rule applied in Hood v. Hood ( 85 N. Y. 561 ), to executors’ bonds, and in Haight v. Brisbin (100 Id. 219), to the bond of an executor and testamentary trustee and in Bieder v. Steinhauer ( 15 Abb. N. C. 428 ), to a guardian’s bond.

The same rule applies to a receiver’s bond (French v. Dauchy, 57 Hun, 100 ; s. c. 32, State Rep. 544, 10 N. Y. Supp. 468 ).

If the principal is deceased, his administrators may in the absence of any allegation to the contrary, be presumed to be in possession of the assets ; and without an allegation, that they are not, there must be an accounting before suit against the sureties (Perkins v. Stimmel, 114 N. Y. 359 ), overruling on this point ( 42 Hun, 520 ).

The possession of Code. Civ. Pro. § 814, authorizing ah action for breach of the condition of a bond given in the course of an action or special proceeding—has no application to the bond of an executor, who is claimed to be liable for damages for misconduct in failing to sell real estate as directed by the will, where such liability has not yet been established by proceedings before the surrogate (Haight v. Brisbin, 100 N. Y. 219 ; rev’g 36 Htm, 579, which aff’d 1 How. Pr. N. S. 199 ; 7 Civ. Pro. R. 152).

The sureties ordered to be charged personally, are liable-for the costs and disbursements of a proceeding revoking-the letters (West v. Crosby, 2 City Ct. 305).

Whether the sureties of an executor insolvent at the-time of his appointment are liable for a debt due from him

It seems that in case of a default which the surrogate had no jurisdiction to redress, the remedy of the party injured would be in equity to charge the executor, instead of at law upon his bond (Haight v. Brisbin, above cited).

A surety of a guardian, though sued on the bond after decree rendered by the surrogate against his principal, has been held to have no standing in the surrogate’s court to move to open the decree (Smith v. Lusk, 2 Dem. 595 ; Corbin v. Westcolt, 2 Id. 559). Whether this rule is sound, or applies to the bond of an executor or administrator, compare (Deobold v. Opperman, 111 N. Y. 531 , aff’g 4 State Rep. 514).

And in the last named case it was held that it is no defense to the sureties upon an administrator’s bond that a decree which had- been entered discharging the administrator and his sureties, was afterward, without notice to the sureties, set aside for fraud in its procurement, although it appears . that the sureties relying upon the original decree so set aside, have parted with indemnity received by them from the administrator, where such indemnity consisted of the funds of the estate deposited with the sureties'to secure their liability upon the bond.