In re Peck

This record presents two appeals, — one from the decree of the surrogate of Essex county, finally settling the accounts of-George W. Peck as executor of the will of George W. Banker, deceased; the other an appeal from a decree made by the same surrogate upon the judicial settlement of said Peck’s accounts as executor "of the will of Henrietta Banker, deceased. The said PIcnrietta was the widow of the said George W. Banker, and she died on the 5th day of December, 1899. He died on November 23, 1899. The will of George W. Banker left all his property to his wife, Henrietta. No party had any interest in the settlement of his estate save his said wife and his creditors. By her will she gave all her property to her husband, but, in the event that she survived him, her estate passed to certain legatees therein named. Some of these legatees filed objections to the accounts of said Peck, as rendered by him, in both estates. The surrogate sustained some of those objections and denied others, and from the decision so made in each proceeding both the contestants and said Peck have appealed to this court.

We can consider upon this appeal those questions only which were raised by the surrogate’s rulings upon the objections taken. The most serious one arises under the following conditions: At the time he died, Banker was engaged in the business of dealing in certain merchandise under patents owned by himself. Peck and his. son, Oscar, had for some years been in his employ, and were skilled in carrying on such business. During the two-weeks interval between Banker’s death and that of her own, his wife, Plenrietta, who-was the executor named in his will, and who alone took his whole estate as the absolute owner thereof, entered into a copartnership agreement with Peck, under which they were to continue the business that Banker had left. Upon her sudden death, and after he was appointed executor of both estates, the scheme of a partnership seems to have been abandoned, and he concluded to continue the businéss himself until a purchaser could be found for it upon what he considered would be favorable terms. He was then informed by his counsel that, if he did so, he would be liable to account and make good to the estate for any loss that might occur to the assets thereof, and that, as to any profits that he might make, they must be deemed the property of such estate, and accounted for as assets thereof. He continued the business something over a year in the store-

It is clear that Peck was not acting as executor in continuing this business. He was not required by the will so to do, but individually, and of his own'motion, he continued it for something .more than a year before he sold the same as assets of the Banker estate. He was, therefore, under no obligations to account to the surrogate for the details of such business. His receipts and expenditures in such business were no part of his executor’s account. He was obligated to report and account to the surrogate for the actual net profits made in such business, because, under the well-settled and familiar rule of equity, such profits became an asset of the .estate; but he was in no way responsible to the surrogate, nor to the estate, for not having made more. His primary liability was for all the assets of the estate, and for such profits as he actually made from them, not for what he might have made had he managed the business more economically, and with greater discretion. And the burden is upon the beneficiaries to show that the net profits were more than the executor reports. If they fail to show that he made any profits, and he reports none, but yet show that he used the trust fund in his own business, they may have interest thereon because of his wrongful use of the same. These principles are well stated by Ransom, S., in the Munzor Case, 4 Misc. 374 , 25 N. Y. Supp. 818 . It seems clear, therefore, that the amount which Peck paid to his son for assisting him in canning on this business was not a proper subject of inquiry before the surrogate. True, he might have made more profits if he had not paid so1 high salaries to his help, but, as stated above, he cannot be surcharged by the surrogate for not making larger profits. He was under no obligation to the estate to make any, and hence the only inquiry before the surrogate was whether he accounted as executor for all that he did make. There is no pretense that he had not actually paid to his son the full amount of $2,371.53; no claim that he had it still in his hands, and was seeking to appropriate it to his own use in this indirect way. Hence it was not within the scope of the inquiry before the surrogate, and the surrogate was in error to surcharge the executor’s account with» any part thereof.

As to that part of the earnings of the business retained by the executor on account of his own services, a different question is presented. Confessedly, he has not paid out any part of it. It can hardly be said

A further objection to the account assails the amount of attorney’s fees and counsel fees which the executor asks to be allowed. From the beginning an attorney seems to have been employed by the executor, and also another firm as counsel; the two acting in each estate. On a final accounting an unassailed voucher for the payment of the debt of a deceased throws upon 'the contestant the burden of impeaching the justice, as well as the fact of the payment, of the claim. But the burden of proving the justice and necessity of a payment made upon a claim created by the executor rests upon him, and hence it devolved

There are three several items, viz., Geo. B. Glover, $50, F. B. Candler, $37.50, and W. E. Stiger, $25, for which the executor claims to be allowed in the George W. Banker estate; and the following, W. E. Stiger, $37.50, E. L. Winthrope, $50, and F. B. Candler, $37.50, in the other estate. Neither of them is warranted as counsel or attorney’s fees. There is no evidence to show that they rendered any such services to the estate. Within the above-stated rule, they should have been disallowed.

As to the other disbursements for which the executor asks to be allowed in each of the estates, and to which objection is made, there is no serious claim that they were not actually paid. But many of them seem very large, and as to some there is very slight, if any, proof that they were necessarily incurred. All such items, however, are to some extent supported by some proof, and whether reasonable or not depends very largely upon matters of fact, which the surrogate was better situated to pass upon than we are upon the record before us. I consider them purely as questions of fact. The conditions surrounding this case are peculiar to it. The' executor very clearly had to meet many perplexing questions; not only legal ones, but as to what was the most judicious way in which to care for and sell the property which came to his hands. And the surrogate’s disposition of these questions I am not disposed to interfere with.

As to the objection that the sale of the business and property employed therein of George W. Banker at private sale was for a much less sum than it was fairly worth, it does not appear that any facts were furnished the surrogate upon which he could charge the executor’s account with any other sum. The suggestion that the purchase was in the interest of Peck himself is utterly unproven, and I see no error in the surrogate’s decree in this respect.

There is another question presented by the contestants, which we are called upon to determine. By the codicil to his last will George W. Banker, in the event that he survived his wife, gave to several persons named therein certain money legacies, amounting in all to the sum of $8,500, “out of the capital employed in my business and the proceeds of sales of machinery, molds, patents, and good will of the business”; and the balance, if any, he gave one-half to the National Woman’s Suffrage Association, and the other half to the town of Keene in Essex county. A similar bequest to the same persons was contained in a codicil to the will of his wife, in the event she survived him, executed at the same time and place. The fund from which such legacies are to be paid, as described in her codicil, is “out of the capital employed in my husband’s business and proceeds of the sale of machinery, molds, patents, and good will of the business.” Some years prior to the execution of such codicils, the wife had, from time to time, loaned to her husband money for the purpose of being invested in such business, and at the time of his death it was so employed, and amounted to $9,369.67. The surrogate finds that the cash and such machinery, molds, and patents constituted the capital employed in the husband’s business, and that it amounted to $21,-119.84; that there were outstanding debts on account of the business to the amount of $6,416.99, leaving a balance of $14,702.85, from which balance the legacies given by such codicil were properly paid by the executor. The contestants claim that said sum of $9,369.67, which had been loaned by the wife tO' the husband, was a debt due from him to her, and should have been deducted from the $21,119.84, as was the $6,416.99, and that the balance of $5,333.18, only, constituted the capital employed in the husband’s business within the meaning of the codicil to the wife’s will. If such construction is correct, then the $9,369.67 was no part of the fund from which the legacies given by that codicil could be paid, but it should have been distributed to the legatees named in the will. I am of the opinion that the construction adopted by the surrogate was the correct one. Both husband and wife evidently used the word “capital” in the sense of money or property, and their joint scheme was to dispose of the property which they jointly had put into the business. It is inconsistent with their evident purpose to conclude that the capital referred to in the wife’s codicil was $9,369.67 less than that referred to. in the husband’s codicil. If he survived his wife, and then died, both knew that the $9,369.67 would have become his, and so, beyond all controversy, become a part of the capital invested. Is it credible that she intended, in the event that she survived him, and then died, that

It is complained that the surrogate -erred in holding that upon the husband’s death all this business and property passed at once to the wife, and must be administered by Peck as her property. In my judgment, it matters little whether that view is or is not correct. If erroneous, the interests of the contestants are in no way affected thereby. Whether treated as the property of the husband or of the wife, the fund in question, under the above views, would be applicable to the payment of the legacies named in the codicils, and so the same result would follow.

The decree of the surrogate should be modified in each case in accordance with the suggestions herein contained, and the executor’s commissions should be adjusted accordingly, and, as so modified, affirmed, with costs of appeal to the executor, to the contestants, and to the guardian ad litem, payable out of the estate. But one bill of costs to each of such parties should be allowed for the two appeals. All concur.