Estate of Leavitt — 28 Abb. N. Cas. 457

Majority

p. 457

ESTATE OF LEAVITT.

N. Y. Surrogate's Court;

June, 1892.

Headnote

1. Exectitors, etc,; investments.] Articles of co-partnership provided, that in case of the death of either partner, the business should be settled up by the consent of the survivor and the legal representatives of the party dying, and that the interest of each should be determined and the business continued or sold as might be mutually agreed upon. One of the partners died and the surviving partner alone qualified as his executor. —Held, that the executor was disqualified from agreeing with himself as surviving partner as to matters referred to in the co-partnership articles, and that he could not, therefore, under such provision justify the retention of the capital of his deceased partner in the business.^[1]

2. The samel\ An executor was not removed because he retained in his business money belonging to the estate, but was only required to give bonds to secure the estate against loss, where it appeared that the petitioners for his removal had assented to the retention of the money in the business, and its immediate withdrawal would embarrass the business and involve a loss to the estate.

Petition to revoke letters testamentary and to remove an executor and testamentary trustee.

p. 458

Josephine A. Knubley and Margaret Robert Leavitt petitioned for the removal, and the revocation of letters testamentary of John Howard Foote, executor and trustee of Henry M. Leavitt, deceased, on the ground that as surviving partner of deceased he had continued the business in which they had been engaged, and had retained in the business a sum of money representing the interest of decedent in the firm, admitted to be due the estate.

The further facts are stated in the opinion.

Robinson, Biddle & Ward, for petitioners.

Miron Winslow, for executor.

Application to revoke letters and to remove testamentary trustee. The ground for the application relates to the disposition of a fund of $30,000, which represents the interest of decedent in a firm of which the respondent is sole surviving partner. It remains (the Jarger part) still invested in the business at six per cent, interest. The articles of co-partnership provided that “ in case of death of either party the business shall be settled up as soon thereafter as may be deemed expedient by consent of the survivor and the legal representatives of the party so dying, and the interest of each shall be determined and the business continued or sold as may be mutually agreed upon.” But one of the executors qualified—the surviving partner—and it seems clear that under the circumstances he could not agree (as executor) with himself (as surviving partner) as to the matters referred to in the co-partnership articles. There would be an absolute disqualification on his part.

The respondent shows that shortly after testator’s death the widow and one of the petitioners herein wrote the respondent that the interest of testator in the business might be continued until such time as respondent

p. 459

could conveniently arrange to close it without embarrassment or loss to him or any interruption to the success of the business. It is certain that up to the present time no complaint has been made of the conduct of the executor on this score. It is equally plain that the executor fears a possible embarrassment of his business may be caused by the withdrawal of this large sum from the capital of his concern. ' The petitioners allege, but cannot be said to have established, the financial irresponsibility of the respondent.

On the accounting of the executor there was a contest as to the amount due to the estate from the firm. The referee allowed certain deductions but was overruled by the surrogate, whose decision was affirmed at General Term. An appeal is now pending to the court of appeals. The prosecution of this appeal by this respondent will not be prejudiced by the determination of this application in favor of petitioners, as the judgment against respondent is personal as well as official, and he can personally prosecute the appeal notwithstanding his letters may have been revoked.

The suggestion of respondent that the estate may suffer if there is an immediate liquidation of the business forced by the necessity of paying the estate the balance due from the firm, is not reconcilable with his other statements, where he seeks to impress the court with his undoubted financial responsibility. The fund is earning six per cent, interest in the executor’s hands, which is considerably in excess of the income usually derived from investment of trust funds. But the investment is not sanctioned by the law, and it may be that the estate would have the right to hold the executor to account for a sum in excess of six per cent, if by its illegal investment in respondent’s business it has earned a greater rate of profit. Section 2685, subdivision 2, makes an investment in securities unauthorized by law ground for revocation of letters. Under section 2687, subdivision 3, the surr

p. 460

ogate may direct the executor to give a bond within five days where the circumstances of the executor are such that they do not afford adequate security to persons interested. I think that under the circumstances this latter provision should be required.

The respondent must give a bond as provided in section 2687, subdivision 3, for the funds retained by him as executor.