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Dickinson v. Powers

140 A.D. 105 Court Third Department, Decision date 1910-09-21 English

Delivered by Houghton, J.:

Contents

Majority

p. 105
Sarah M. Dickinson, Respondent, v. Joseph A. Powers, Appellant, Impleaded with John Doe and Richard Roe, Defendants.
Third Department,
September 21, 1910.

Headnote

Equity—when court will not administer estate of partners engaged in banking business — when Surrogate’s Court has jurisdiction—relation of surviving partner to creditors — injunction and order for deposition based on insufficient complaint.
One who deposited money with a copartnership engaged in the banking business cannot maintain a suit in equity on behalf of himself and other depositors who may care to join to restrain the surviving partner, or on his .death his executor, from administering the assets of the firm and to obtain an administration thereof by the Supreme Court through a receiver, where it is not shown that the executor is incompetent, dishonest or insolvent, or is wasting the assets, or that adequate relief cannot be obtained in the Surrogate’s Court.
The surviving partner of such firm has legal title to its assets; he is not the trustee of an express trust for the benefit of the firm creditors, but is personally liable for the firm debts and on his death his personal representatives have a right to administer the estate.
While the surviving partner of such firm does in a sense occupy a trust relation toward the firm creditors and the representatives of his deceased partner, the trust is not one which on his death passes, as a matter of law, to the Supreme
p. 106
Court for administration. Primarily the administration passes to his executor and settlement should be had in the Surrogate’s Court.
While the Supreme Court has jurisdiction over the estates of decedents, a suit in equity respecting such estates will not be entertained unless facts be pleaded which show that the case is one requiring relief of such a nature that the Surrogate’s Court is incompetent to grant it, or that for some reason complete justice cannot be done in that court.
Where the complaint in such suit in equity states no cause of action, an injunction restraining the executor from administering the assets and an order for the deposition of witnesses fall with the complaint.
Appeal by the defendant, Joseph A. Powers, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the cleric of the county .of Bensselaer ou the 15th day of August, 1910, upon the decision of the court, rendered after a trial at the Bensselaer Special Term, overruling the said defendant's demurrer to the complaint; -also from an order entered in said clerk’s office on the 12tli day of August, 1910, as amended by an order entered on the 15th day‘of August, 1910, appointing a referee to take the depositions of certain persons, and also from an order entered on the 13th day of August, 1910, denying the said defendant’s motion to vacate an injunction.
Thomas O'Connor and William J. Roche, for the appellant.
H. D. Bailey, for the respondent.

The action is brought in behalf of the plaintiff and all other persons similarly situated, and the complaint states that for a number of years Nathaniel B. Powers and Albert E. Powers conducted a banking business as copartners under the firm name and style of “ Bank of D. Powers & Sons,” in which deposits were made to “ check accounts ” and “ interest accounts,” and that a large num her of people deposited money in such so-c'alled bank, the aggregate amounting to upwards of $1,000,000, and that Nathaniel B. Powers died in July, 1905, and that the business was continued by Albert E. Powers as surviving partner until June, 1910, when he died, leaving a will which named the defendant Powers as executor, application for probate of which had been made at the time of bringing the action but the same had not been probated; that on

p. 107
the death of Albert E. Powers the banking house was closed and the defendant executor named in the will took possession of the same and the assets and property thereof although no letters testamentary had been issued to him, and without giving any security therefor, and removed a portion of said assets, and that although the plaintiff has demanded the balance of the deposit which she had had with the banking institution some years before the death of Albert the defendant has refused to pay the same; that there are a large number of other depositors whose names she does not know whom she invites to join in the litigation if they so desire, and she asks in the interest of herself and such persons that the defendant be enjoined from interfering with the assets, or selling or removing or disposing of the same in any manner, or administering or handling the same, and that a receiver may be appointed by this court to take charge of the affairs of such copartnership and administer and distribute the same.

The defendant demurred to the complaint on the grounds that it failed to state facts sufficient to constitute a cause of action and that the court had no jurisdiction of the subject-matter involved. The demurrer ivas overruled and from the interlocutory judgment entered thereon the defendant appeals.

We are of the opinion that the complaint does not state facts sufficient to constitute a cause of action. On the death of Nathaniel the legal title to the partnership assets passed to the surviving partner, Albert. He did not take as trustee, but as surviving partner, holding the legal title, subject, of course, to the equitable rights of the representatives of the deceased partner to have them applied to the payment of the firm debts and to the distribution to such representatives of any surplus. (Williams v. Whedon, 109 N. Y. 333 .) Albert having the legal title to all assets and not being a trustee for the firm creditors, and being personally liable for all the firm debts, his personal representatives have the right to administer his estate. He was not trustee of an express trust in winding up the partnership business as surviving partner nor did the administration of his estate necessarily devolve upon the Supreme Court upon his death. While in one sense he was trustee for the representatives of the deceased partner and also in a sense occupied a trust relation toward the partnership creditors, his trusteeship,

p. 108
of whatever character it may have been, was not such a one as on his death, as matter of law, passed to the Supreme Court for administration. Primarily, therefore, the _ right to further "wind up the partnership affairs passed to his executor. No facts appear in the complaint, notwithstanding the large number of creditors and the large amount involved, requiring the court to assume jurisdiction and to take over the administration of the partnership affairs through the appointment of a receiver. It is not alleged that the defendant, who is. named as executor, is incompetent or dishonest or insolvent or that he is wasting the ^assets’. It was not an unlawful interference with the assets for' him to take charge of the testator’s property prior to the actual probate of the will if it needed care or to remove it to another place for safekeeping. The death of Albert occurred on the seventeenth day of June. Application for probate of the will was made by the defendant on the thirtieth day of June, and the complaint was verified on the first day of July. No unreasonable delay on the part of the defendant is shown. Letters testamentary have been issued and probate of the will has been had, as appears by the record on the appeal from the injunction order considered herewith.

While the Supreme Court has jurisdiction over the estates of decedents, an equitable action respecting such estates will not be entertained unless facts are pleaded showing that the ease is one requiring relief of such a nature that the Surrogate’s Court is not competent to grant it, or that for some reason complete justice cannot be done in that court. (Sanders v. Soutter, 126 N. Y. 193 , 200; Post v. Ingraham, 122 App. Div. 738 .) Without the allegation of such facts the Surrogate’s Court is the appropriate tribunal for the administration of estates. (Hard v. Ashley, 117 N. Y. 606 .)

The defendant can be speedily compelled to file an .inventory in the Surrogate’s Court. Discovery of assets can be had therein, and how assets shall be marshalled can be determined. Until it shall be developed that the Surrogate’s Court has not jurisdiction over such matters as may arise, the plaintiff and other depositors similarily situated have adequate remedy in the Surrogate’s Court and have no right of action in the Supreme Court and can allege no facts authorizing that court to take jurisdiction over the estate of the defendant’s testator. In our view nothing is alleged in the

p. 109
complaint justifying the taking of the estate out of the ordinary and proper tribunal of the Surrogate’s Court.

It, therefore, follows that the defendant’s demurrer was well taken and improperly overruled.

The injunction order appealed from and the order for the taking of depositions of certain persons necessarily fall if the complaint states no cause of action. In any event the injunction order should not have been granted.

The interlocutory judgment should be reversed, with costs, and the demurrer sustained and the complaint dismissed, with costs, and the orders appealed from reversed, with ten dollars costs.

All concurred.

Interlocutory judgment reversed, with costs, and the demurrer sustained, with costs, and the plaintiff given usual leave to amend upon payment of such costs. Orders, appealed from reversed, with ten dollars costs.

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