In re Rugg — 3 N.Y. St. Rep. 224

Majority

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In re Jonathan G. Rugg, deceased.

(Surrogate’s Court, Cattaraugus County,

Filed June 16, 1886.)

Headnote

1. Executor—Indebtedness to estate—Contempt.

Where an executor was indebted to his testator, and after assuming charge of the estate became insolvent, having accounted, however, for all moneys of the estate received by him, it was Held that he was not amenable to contempt proceedings for failure to pay the debt.

3. Same—2 R. S„ 84, § 13.

The provisions of the Revised Statutes making the debt of an executor to the estate of the testator a part of the assets and the executor liable as for so much money, was enacted to prevent the extinguishment of such debts which prior to that enactment were cancelled by the appointment of the debtor as executor.

:3. Same—Contempt—Code Civ. Pro., §§ 2552, 2553, 2554, 2555.

The provisions of the Code of Civil Procedure, section 2552, et. seq. were passed to permit the punishment by contempt proceedings of trustees who had embezzled the funds of cestuis que tiust, and do not change the character of a contract debt due from an executor.

Torrance & Blackman, for petitioner; W. S. Thrasher, for Executor Jenks.

(Surrogate).—This is a contempt proceeding against Lemuel Jenks, one of the executors of the will of Jonathan G-. Rugg, deceased, arising out of his failure to comply with the decree entered in the surrogate’s court directing him to distribute the funds of deceased among the legatees.

The petitioner is one of the executors and the principal legatee named in the will of testator.

The parties to this controversy were appointed executors of the will of deceased in 1878, and have since continued to act in that capacity.

At the inception of the trust Jenks was solvent, and was indebted to the estate of his testator upon promissory notes and stated' accounts existing in the lifetime of testator, in the sum of $10,000.

In 1883 the executors filed their account in proceedings to settle the same judicially, and in October of that year a decree was entered in surrogate’s court thereupon charging this indebtedness against Jenks, as money in his hands, and. directing its distribution in accordance with the terms of the will of testator. About $7,000 of the undistributed assets were due to the co-executor Rugg, the petitioner in this proceeding now pending. Although this decree was

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entered in surrogate’s court in October, 1883, yet no transcript thereof was docketed in the county clerk’s office until November, 1884. At the time of the entry of the decree in the surrogate’s office it could have been enforced against Mr. denies, and even a prompt docketing of a transcript of the same in the records of the county clerk’s office would have ensured its collection, but in Novenber, 1884, Mr. Jenks was hopelessly insolvent, and at the time of the demand made by the petitioner prehminary to, and with a view to this proceeding, he was, by reason of such insolvency wholly unable to comply with the demand, or pay any part of the sum chargeable to him in the decree.

In the account filed denies accounts for all the money he received as executor, and the only question in this case is as to his liability for contempt in consequence of his failure to pay the debt he owed the estate.

The counsel for Mr. Rugg in invoking this severe remedy rely upon the statute providing that the naming of any person executor in a will shall not operate as a discharge or bequest of any just claim which the testator has against the executor, but such claim shall be included among the credits and effects of the deceased in the inventory, and such executor shall be liable for the same as for so much money in his hands at the time such debt or demand becomes due.” 2 Revised Statutes, 84, § 13.

Prior to the enactment of this statute the appointment of an executor cancelled any claim held by testator against him, and the only purpose of this statute was to prevent the extinguishment of such claims.

To obviate any inconsistency in compelling an executor to sue himself, it was provided that any claim against him should be treated as money in his hands, so that upon the entry of a decree against him it could at once be enforceable by execution. The statute was not designed to change the character of a simple contract debt by making the executor liable to imprisonment or punishment for contempt in case of his inability to pay the same.

The Code afterwards provided that upon an entry of a decree on a judicial settlement of the accounts of an executor, the decree should be “conclusive evidence” of the sufficiency of assets to satisfy the same, and then provision was made for the enforcement of the decree by execution and contempt proceedings, if necessary. Code Civ. Pro., § 2552, et seq.; Matter of Snyder, 34 Hun, 302 .

These statutes were passed to supply an obvious defect in the law, to permit the punishment by contempt of trustees who embezzled and misappropriated the funds of their cestius que trust. It was a very salutary enactment, but it

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certainly was not designed to change the nature of a simple contract debt into one punishable as for a crime. Such an alarming metamorphosis did not enter into the minds of the legislators in providing this remedy for delinquent executors. An executor who received property belonging to his testator and misappropriates the same, commits constructive fraud, and should be punished unsparingly for thus converting the money or property of others.

But if he is simply indebted to the decedent, hable to him in assumpsit, and by some misfortune is unable to pay his debt to the next of kin or legatees of his creditor, the bare fact of his assumption of the duties of executor should not make him amenable to the harsh. and drastic contempt process.

Suppose an executor who is indebted to his testator is abundantly responsible at the time he accepts the executor-ship, but immediately thereafter becomes insolvent, is he to be made the victim of contempt proceedings in consequence of his inability to pay his debts? A preference is already given to this class of debts in that no suit is necessary to obtain judgment in favor of the next of kin or persons entitled on the distribution of the estate, and the law did not contemplate in addition to this to make the executor a criminal because, forsooth, he cannot pay his debts.

In Baucus v. Stover ( 89 N. Y., 1 ), the court of appeals, in construing the section of the Revised Statutes I have-cited, plainly intimate, at page 5, that an executor would not be liable to be punished for contempt in a case of this-kind, and even in the vigorous opinion of Judge Fish (in 34 Hun, 302 , supra), and which is cited and relied upon by the counsel for the petitioner, he holds that an executor would not be hable to punishment for contempt when he has accounted for all the moneys he has received, and is-sought to be imprisoned for his failure to pay his own debt. See pages 308-9; see also Watson v. Nelson ( 69 N. Y., 537 ).

And this construction fully protects the beneficiaries. _ If the executor is indebted to the testator and is in failing circumstances, it would be ground for refusing to issue letters to him, and if he accepts the trust, and one year has elapsed he can be compelled to account, and the entry of the decree and the docketing of the transcript, places them in a situation to enforce the debt if the executor is responsible.

In this case there is another reason why executor Jenks should not be imprisoned. The petitioner is the oo-executor. He was present at the preparation of the account; knew these notes and accounts had not been converted into money; knew that they still existed simply in the form of

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their original indebtedness, and assisted in computing the sums due and unpaid thereon. He thus knew the statement that this indebtedness was “cash” in the hands of executor Jenks, was false. Notwithstanding this fact, he permitted the matter to rest, did nothing to enforce the decree, and did not even cause a transcript of the decree to be docketed until after Mr. Jenks had become irretrievably entangled.

Now, after this exceeding remissness, after his large legacy has slipped away through his culpable carelessness by Jenks becoming a bankrupt, he seeks to proclaim his co-executor a criminal. In 1883, cognizant as he was of every fact, now known to him, he not only permitted the claims to remain uncollected, but openly aided in the preparation of an account misleading to his co-legatees. If there was any obliquity, any delinquency, he was in pari de lictu, and should not now be rewarded because his co-partner has become insolvent. Contribution among wrong doers was never favored.

The petition and proceedings must be dismissed, and as there was a trial on the merits, with seventy dollars costs, and a decree will be entered accordingly.