Hyperlawhypertext legal databasebeta In re Valentine's Estate 23 N.Y.S. 289

← Cases

In re Valentine's Estate

23 N.Y.S. 289 Court N.Y. Sur. Ct. English

Contents

Majority

p. 289
(1 Misc. Rep. 491.)
In re VALENTINE'S ESTATE. In re BURTIS.
(Surrogate’s Court, Westchester County.
January, 1893.)

Headnote

1. Testamentary Trustees—Accounting—Jurisdiction oe Surrogate.
Where an executor is directed to sell testator’s real estate, invest the proceeds, and pay the income to testator’s daughter for life, the executor is a “testamentary trustee,” within Code Civil Proc. § 2514, subd. 6, which
p. 290
declares that such expression shall include an executor, “where he is acting in the execution of a trust created by the will, which is separable from his functions as executor;” and therefore he may be required to account in the surrogate’s court for the proceeds of land sold by him, and to distribute the same as provided by sections 2802-2811, relating to accountings by testamentary trustees.
2. Surrogates’ Courts—Power to Set Aside Sales by Executors.
The surrogate’s court has no power to set aside, for fraud, a sale of land made by an executor.
Proceeding by Harriet A. Burtis to hold the executor of the will of George B. Valentine liable for damages alleged to have resulted to petitioner from sales by tne executor of certain real estate of testator, some of which sales were claimed to have been fraudulent.
The will, after disposing of part of testator’s property, contained the following items:
“18th. I hereby further give, devise, and bequeath the one undivided % part of all the rest, residue, and remainder of all my property, real and personal, unto my son, Nathaniel B. Valentine, his heirs and assigns, absolutely.
■ “19th. I hereby give and bequeath unto my daughter, Harriet A. Burtis, for and during her lifetime, the use, income, and profits to be derived from the other one equal undivided one-half part of all the rest, residue, and remainder of my real and personal estate and property not hereinbefore specifically and expressly bequeathed and disposed of; and upon the death of my said daughter, leaving issue her surviving, then the principal sum derived from said one half of the said rest, residue, and remainder of my real and personal estate to go to her children in equal shares and portions, on their respectively attaining the age of twenty-one years; and the said principal sum to be derived from ■the said one-half of the said rest, residue, and remainder of my real and personal estate I hereby direct my executor to invest, keep properly invested, on bond and mortgage on good improved and unincumbered real estate, or other good and safe securities, and to pay the interest to be derived therefrom unto my said daughter, Harriet A. Burtis, semiannually, after the sale of my real estate, and for and during her lifetime.
“20th. And, until my farm shall be sold and conveyed, my son, Nathaniel B. Valentine, and his family, shall have the full right to use the buildings thereon, and occupy and to cultivate the said farm for his sole use and benefit, and free of all charge for rent, or accountability to any person whatever for the rent, produce, or profits thereof; my said son, however, to pay all insurance and all taxes that may be charged against the same so long as he may •occupy the same before any sale and conveyance thereof.”
Wm. George Oppenheim, for petitioner.
W. H. Pemberton, for the executor.

In the briefs submitted by the respective counsel there is no discussion of, nor are any authorities cited on, the jurisdictional question. All that appears on the subject is contained in that submitted by the executor’s counsel, in which it is claimed that “the surrogate cannot pass upon his transactions as to sale of real estate.” The result of researches made by me touching the power of the surrogate on the subject are, briefly, as follows: By section 3, c. 252, p. 283, of the Laws of 1822, it is provided that where, by any last will, a sale of real estate is authorized to be made either for the payment of debts or legacies, it shall be lawful for the surrogate to call the executors to account for the proceeds of such sales, and the distribution thereof, etc., (subsequently re

p. 291
pealed.) By section 57, tit. 4, c. 6, pp. 109, 110, of the second part of the Revised Statutes, we find the same provision, except that it applies only to the case where, by any last will, a sale of real estate shall be ordered to be made. Section 75, c. 460, p. 537, of the Laws of 1837, makes a similar provision in a case where the sale is made in pursuance of an authority given by any last will; and the proceeds of sale may be brought into the surrogate’s office for distribution, and shall be distributed in the same manner, and upon like notice, as if they were proceeds paid into his office in pursuance of an order of sale of real estate for the payment of debts. The above section 57 of the Revised Statutes was repealed by subdivision 3, § 1, c. 245, of the Laws of 1880, and the above section 75 by subdivision 14 of the same section; thus apparently leaving no provision for either case. But, in the same year, chapters 14 to 21, inclusive, of the Code of Civil Procedure, were enacted; and it is presumed that subdivision 6, § 2514,[1] and sections 2802-2811,[2] inclusive, were intended to supply the places of the above repealed sections. By a “supplement to part 3 of the" proposed Revised Statutes,” appended to the first report of the above chapters to the legislature by the commissioners of the Code, will be found a section numbered 46, as follows:
“Where real property is sold as prescribed in the last section [in pursuance of an authority given by any last will and testament] the proceeds thereof may be brought, for distribution, into the surrogate’s court having jurisdiction. The surrogate must proceed to distribute the same upon notice, and he has power to compel them to be brought in for that purpose. The executor or administrator selling the real property is deemed a testamentary trustee, within the provisions of title sixth of chapter eighteenth of part third of these Revised Statutes.”

The commissioners’ note to this section is this:

“Proposed as a substitute for Laws 1837, c. 460, § 75, (4 Edm. St. 500,) which confers upon the surrogate the power to distribute the proceeds. See Stagg v. Jackson, 1 N. Y. 206 . We think that section 2319, [2514 of the present Code,] subd. 6, pt. 3, of this revision, in connection with sections 2572-2580, [now being 2802-2811 of the present Code,] sufficiently covers the subject; but we add the foregoing section for greater caution.”

The legislature did not enact this section, thus concurring in the view that the sections above referred to “sufficiently covered the subject.”

The conclusion is therefore reached that the executor, being a testamentary trustee, whose duties, as such, were separable from his duties as executor, is liable to account for the proceeds of sales made by him, in this court. By section 2743, which is made ap

1 The material part of Code Civil Proc. § 2514, is as follows: “Sec. 2514. In construing the provisions of this chapter the following rules must be observed, except where a contrary intent is expressly declared in the provision to he construed, or plainly apparent from the context thereof: * * * (6) The expression, ‘testamentarytrustee,’ includes every person, except an executor, an administrator with the will annexed, or a guardian, who is designated by a will, or by any competent authority, to execute a trust created by a will; and it includes such an executor or administrator, where he is acting in the execution of a trust created by the will, which is separable from his functions as executor or administrator. ”

2 Sections 2802-2811 provide for settlement in the surrogate’s court by testamentary trustees, and distribution of funds.

p. 292
plicaTble to the accounting of a testamentary trustee by section 2811, the surrogate must decree payment and distribution. Thus the powers of the court to decree payment and distribution, in a case like this, are the same as those conferred by the repealed section of the act of 1837. All the acts referred- to empower the surrogate simply to distribute the proceeds of sales received by the executor, and he has power to charge the trustee with any proceeds of sale which he has omitted to charge himself with. He cannot inquire into the validity of any sales of real estate made by him by -reason of fraud, and the like. The court is here asked, among other things, to pronounce a sale of a lot, made by the executor to his son, and by his son to the executor’s wife, void for fraud. This the court has no power to do. Section 58 of the Revised Statutes, immediately following section 57, above referred to, declares that any executor or administrator or other person appointed as therein directed, who shall fraudulently sell any real estate of his testator or intestate contrary to the foregoing provisions, shall forfeit double the value of the land sold, to be recovered by the person entitled to an estate of inheritance therein. This section was not repealed by the repealing act of 1880, and is still in force. See 4 Throop’s Rev. St. (1889,) p. 2568, § 58. It was proposed by the enactment of section 47 of the said supplement to extend the provisions thereof to the case of an executor vested by the will with authority to sell,—the forfeiture to be recovered by an action, etc.; but for some reason it appears not to have received legislative sanction. It will be discovered that in none of these enactments proposed, repealed, or in force is any power conferred upon the surrogate to inquire into and determine any question as to an alleged fraudulent sale, and he cannot do it now unless he is clothed with it by some statute. That question belongs to a higher tribunal. Surrogates’ courts are creatures of the statute, and have a jurisdiction limited thereby. It cannot be discovered that they are clothed with authority by any' express law, nor any power incidental thereto. All their powers on the accounting of a testamentary trustee are defined by sections 2743 and 2812. By the latter section, where a controversy arises respecting the right of a party to share in the money or other personal property to be paid, distributed, or delivered over, it must be determined in the same manner as other issues are determined by them. See In re Rogers, (Surr.) 16 N. Y. Supp. 197 . Here the jurisdiction of the surrogate, as to the questions he may try, ceases, and he cannot go beyond, and try and determine any others. In the case of Fulton v. Whitney, 66 N. Y. 548 , at page 557, the court says that all the surrogate could do was to settle the accounts of the trusts created by the will. This was after the passage of chapter 115 of the Laws of 1866, which act is substantially the same as section 2802 of the present edition of the Code, and was the first which authorized a testamentary trustee to render and settle his accounts before the surrogate. All that may be sought by the petitioner in this proceeding is the recovery of interest on her share of the proceeds of real estate sold; and she has an undoubted right, as already remarked, to show, if she can, that the testamentary
p. 293
trustee has not accounted for all of such proceeds, and her share of the interest thereon. There is no controversy as to her right to so share. All of the objections taken to the evidence tending to show fraud in the sale of lands are sustained. The sole question that remains for determination, therefore, is the condition of the trustee’s accounts.

The account of proceedings filed is very unsatisfactory, loose in structure, confusing, and embarrassing. There are only two schedules,—designed, the one to show all receipts; and the other, all disbursements, embracing legacies paid, funeral expenses, and other expenses of administration, etc. They are not added up, and no summary is furnished. Some of the dates of receipts of proceeds of sale are omitted, as are also any statement showing how and when investments were made, rate of interest, etc. There is no statement of the items of interest paid, or when, to Mrs. Burtis, but the whole is given in a lump sum. Without enumerating other defects, these sufficiently show the careless manner in which the account was prepared. The petitioner is chiefly interested in ascertaining the amount of the proceeds of sales on which she is entitled to one-half the interest. According to the account—

The amount is................................................. $72,703 25
To which is to be added proceeds oí sale to Fraser, conceded to have been omitted............................................ 500 00
. $73,203 25
To this is added one-half interest received..................... 1,361 82
$74,565 07
From which the trustee claims should be deducted, including interest paid to Mrs. Burtis, and excluding charge for service of attorney herein................................................ 19,000 02
Balance .................................................... $55,565 05

On which the petitioner, it is conceded, is entitled to one-half the interest, less expenses of this accounting and commissions. As the proceeds of the sale of the Halfway House were intended to pay the legacy of $500 and interest to the wife of the trustee, and as she was not entitled to interest, which amounted to $90, and with the payment of which he credits himself, there can be no ground of complaint, as he charges himself with $600; being $10 more than he credits himself with. The item of credit of $75 for interest on legacy to George B. Valentine must be disallowed, as the testator made it payable without interest. The trustee credits himself with some items in contempt proceedings in the supreme or county court. . These proceedings appear to have been against him for some neglect of duty. These items, amounting, as nearly as can be ascertained, to $36.50, are disallowed. Adding these items to the above balance makes it $55,676.55. It does not seem to be controverted that the petitioner has received $1,361.82 for interest moneys on her share. There is no evidence furnished, or data given, whereby the court can adjudge as to the correctness of that amount; but it is assumed to be all that her fund earned down to October 20, 1891, with the possible exception of the inter

p. 294
est on $111.50,—the sum of the items above disallowed. If the trustee has failed to produce proper vouchers for any of the credits claimed by him, he is still at liberty so to do. If he fail to do so, or furnish the evidence of payment thereof, as provided by section 2734 of the Code, they will be disallowed, and the fund in his hands increased accordingly. On the settlement of the decree, counsel can be heard as to any matter which may have been overlooked, and as to any other matter to which attention may be called.

Cases cited