In re Randell's Estate

The testator died on the 22d day of December, 1884. His will was admitted to probate January 21,1885. The testator appointed his widow the sole executrix of his will. At the time of his death, and for many years prior thereto, he had been engaged in the retail gents’ furnishing goods business, at Nos. 554 and 556 Eighth avenue, Hew York city. The executrix, on or about December 26, 1884, caused an inventory or valuation to be made of (he goods and fixtures in this store. This was not, nor has any statutory inventory been made at any time of the estate of the testator. The store remained closed from the time of the death of the testator until or about December 26, 1884, when the same was opened, and thereafter operated, by the executrix. Sheciaims to have then become the purchaser of the stock of goods ami fixtures, and thereafter to have continued the business on her individual account. The accounts herein charge the executrix with this inventory value of these goods and fixtures and proceeds, upon the theory that she thereby became the owner thereof, chargeable with such value, and that the business carried on by her thereafter was her own, and not on account of the estate. The Mutual Life Insurance Company, a creditor, filed objections to the accounts, and tile issues thus raised were litigated. Many of these objections, were general; and I shall not, therefore, notice them, except so far as the same were given some point on the hearings, or pressed upon me by counsel in their oral arguments or briefs, the latter of which were fully and carefully prepared.

The most important question presented arises upon the claim that the executrix should be charged with the value of the good-will of the testator’s business. Before giving this question consideration, I deem it best to dispose of the claim, which for the first timéis presented by the brief of the counsel for the contestant, that the executrix should be charged with the profits made by her in the business since the death of the testator. As remarked, this claim was not made upon the trial, and it was not litigated. If it be assumed, however, that there was no sale of the goods to the executrix, or, if one, that it was illegal, and that she is liable to account for such profits, there is no evidence upon which to predicate an intelligent finding of profits, and, if such there were, the amount of the same. This subject was not gone into at all for that purpose. The inquiry as to purchases, sales, and expenses in the business was confined to the testator’s life-time, except for one year, and as hearing only upon the value of the good-will.. The value of the goods and fixtures as fixed by the inventory was, by express assent in open court, taken as the sum with which the executrix should he charged. Ho attempt was made to follow the property, nor to inquire into any after-acquired property in the

But this claim to an account of profits cannot stand with the one that the executrix must be charged with the value of the good-will. The two are inconsistent. They cannot stand together. One proceeds upon the theory that the business was continued as that of the estate; the other, that the business, with the good-will, passed to the individual benefit of the executrix. She cannot be held for both. If the business was, as matter of legal right, that of the estate, then the good-will must also have gone to the benefit of the estate, and its value passed in enhancement of profits. The contestant has tried the issue resting upon the claim of the liability of the executrix for the goodwill, and should now be held to that election.

Having therefore reached a conclusion adverse to the claim of profits, and that the continuation of the business must be regarded as that of the executrix individually, I shall now proceed to the consideration of the question as to whether or not she is chargeable with the value of the good-will. As to this, I am of the opinion that she must account for the same. It was in contravention of a well-established rule of law, that one acting in a fiduciary capacity shall not deal with the trust-estate to his individual benefit, that the executrix took to herself the property of her testator in the manner that she did; and, upon proper election, I think the business must have been treated as that of the estate. That not having been done, however, she is nevertheless liable to account for all property of the testator of which she has availed herself, including the good-will. It appears from the authorities that the goodwill of the business of a merchant is an asset to be accounted for by an executor or personal representative. In Hitchcock v. Coker, 6 Adol. & E. 438, Chief justice Tindal says it “is a subject of value and price. It may be sold, bequeathed, or become.assets in the hands of a personal representative of a trader.” This case is cited with approval in Howe v. Searing, 19 How. Pr. 14 . The law was so stated by Lord Habdwickb in Gibblett v. Read, 9 Mod. 459, and so held by Lord Kenyon in Worral v. Hand, Peake, *74.

I do not think, however, that this good-will includes the right to use the name of the testator. While, under the common law, in the absence of fraud, it may not have been illegal to trade or do business under a fictitious name, or in the name of a deceased person, still it would seem from authority that the right to use the name of an old firm or trader did not pass as a part of the good will, (Howe v. Searing, supra; Morgan v. Schuyler, 79 N. Y. 490 ;) and I find no case that holds that there is a right to use a name that survives and constitutes' an asset for which a personal representative is accountable. The eases of Hegeman v. Hegeman, 8 Daly, 1 , and Manufacturing Co. v. Hall, 61 N. Y. 226 , are not adverse to this conclusion. The latter is rather a case of trade-mark than of good-will. It relates to the right to use the name of a place or property or of an article or thing, and not the name of an individual or person. The former held that the name could not be used as the naipe of the existing firm. Good-will is generally described as a probability that “the old customers will resort to the old place.” Justice Story describes it as “the advantage or benefit which is acquired by an establishment beyond the mere value of the capital, stock, funds, or property employed therein,” etc., (Story Partn. § 99;) and, on the question as to whether the right to use a firm name is part of the good-will, says: “But it has been thought that this right, however valuable, does not fall within the true character and nature of good-will, ” . (Id. § 100.) Good-will is connected with the place rather than the person, and is an incident to the ownership of or right to occupy or use property. Morgan v. Schuyler, supra.

But, however this may have been prior to statutory enactment as to the use of fictitious names, or the name of another, the fact that such use of names

Is she, then, liable to account for the value of the right to use the name under the act of 1880? I think not—First. Because the evidence is insufficient to establish that she has used the name of the deceased. It is true, the name of “Randell” was used, but that was also her name. Besides, it was rather a designation of the name of the place. Second. Because I think she is only liable in the event that she exercised such right in accordance with the statute. This statute confers the “right to use the name” of the deceased person in the cases therein provided, and, after conferring such right, provides that “in all cases where the right hereby given is exercised such right to the use of such name shall form a part of the personal estate of such deceased, and shall pass, or be disposed of and accounted for, as such.”

To hold that the executrix is liable to account for the use of the name, in the event that such use is exercised without filing the certificate specified in the statute, is equivalent to holding that the legislature intended reviving or conferring the right to do business under a fictitious name, and contrary to public policy, without providing any safeguard for the protection of the public. This statute should be read and construed in connection with the general statute prohibiting the doing of business under fictitious names; and sueli statute should not be held abrogated except by express repeal, or clearly inconsistent subsequent enactment. Nor could it have been the intention of the legislature to hold a person liable for the value of the use of the name of a deceased person as a part of his estate, and at the same time make it illegal to use the name. It is rather to be presumed that the use of the name without filing the certificate is still illegal, but, when sueli use is in accordance with the law requiring the making and filing of the certificate, then such right so exercised must be accounted for as a part of the personal estate. It is the using of the name of another, and not the failure to make and file the certificate, that is declared illegal, and made a crime. Pen. Code, 8 363.

Tins brings us to a consideration of the amount which the executrix shall be charged for the good-will without the right to the use of the name of the deceased. This value of the good-will must be determined as of

As to the claim of the executrix against the testator on the $2,500 note dated May 10, 1879,1 am of the opinion that under the evidence it is established that she is a creditor to the extent of the amount thereof, and interest thereon, from its date, and that she is entitled to share pro rata thereon with the other creditors on the distribution. Even if the note were a gift, I think this is so, gs no attack is made upon the same as fraudulent as against the creditors of the testator. If such a claim were made, its being a gift would not, alone, necessarily invalidate the note. Jackson v. Badger, 109 N. Y. 632 , 16 N. E. Rep. 208 ; Bucklin v. Bucklin, 1 Abb. Dec. 242; Phillips v. Wooster, 36 N. Y. 412 . The case of Insenhart v. Brown, 2 Edw. Ch. 341 , I do not consider as in conflict with this conclusion. The obligations given by the testator in that case were made at such time, and under such circumstances, as to warrant the finding that they were invalid as to creditors for valuable consideration.

But there is some evidence which would seem to authorize the inference that Mrs. Randell had some interest in the life insurance policy cashed by the insurance company for the testator. Within a few days after he received the money, he gave this note for approximately the same amount. Mr. Dow les

The claim of the Mutual Life Insurance Company, that the costs recovered by it in its action against the executrix to establish its claim against the estate are entitled to priority of payment over the debts of the testator, I think is well founded. Both upon principle and authority, this is so. Estate of Douglass, 3 Law Bull. 32; Shields v. Sullivan, 3 Dem. Sur. 296; Hall v. Dusenbury, 38 Hun, 125 ; Insurance Co. v. Stevens, 37 N. Y. 536 . The costs recovered by a creditor in an action brought to establish a claim are not in fact any part of the debt of the deceased. The order of payment of claims against the estates of deceased persons prescribed by the statute applies to the obligations of the deceased. True, the costs are merged in, and form part of, the judgment, and ordinarily enforcement of the payment thereof goes with enforcement of the judgment; but in proceedings for payment out of or against particular funds or properties this is not always so, and, where equitable principles require it, payment of costs should be made separate from the debt. Ho law prohibits this in the case of the settlement of the estates of deceased persons; and where expense is imposed upon a creditor to enforce his claim by resistance thereto made in the interest of the fund or property, or those entitled to the same, I do not see why such creditor should not be first reimbursed to the extent of the costs awarded him for such reimbursement. It is but the marshaling and disposing of funds or properties in court upon principles of equity, where no fixed rules of law intervene to the contrary. The case of Shute v. Shute, 5 Dem. Sur. 1, seems to hold that such costs have no priority. I think, however, that the learned surrogate may not have given the question his usually careful thought.

In making distribution of the assets that shall appear to be applicable to the payment of the debts of the testator, all debts that have been established, either by failure to reject, or otherwise, must share pro rata, including such as may have been paid by the executrix out of her own moneys. The claim of the contestant that such debts as the testatrix may have thus paid shall not -be permitted to share in the distribution is neither equitable nor legal. Stilwell v. Melrose, 15 Hun. 378 ; Redf. Sur. Pr. 532. The principle of valu ntary payments does not apply. There is no doubt but that when she paid these debts the executrix supposed that the estate was solvent. She made a mistake in iso doing, and for this error she must lose to the extent that she has paid such ■claims over and above the amount applicable to each upon the distribution. She cannot, however, be reimbursed for any overpayment. The claim of Dr. Joseph M. Pinch has no preference. It is a general debt of the testator, and must.be paid as such. Costs to each party to be taxed upon bills to be presented. ' Let a decree be presented for settlement, and entry accordingly.