Cluff v. Day

The action was brought under § 2609 of the Code of Civil Procedure, and the plaintiff in the complaint alleges the decrees of the surrogate made upon the accounting of Tower in 1873, and in 1886, and that at the time of the former he did not set apart anything to represent the balance charged against him by the decree, and made no investment of the trust fund pursuant to it, and that he disobeyed each and both of such decrees of the surrogate. The defense rests mainly upon the alleged ground that the effect of the decree of 1873 was to terminate Tower’s duties as executor, and that thereafter his functions were those of trustee only, in respect to the estate; and therefore the defendants as sureties in his bond as executor were no longer responsible for his administration of it. If these premises are correct, such conclusion necessarily follows, because the decree of 1873 remains unimpeached, and as between the parties is conclusive as to the matters within the scope of its determination. That decree purports to and does represent a final accounting of the executor as such, and by it he was charged with a balance, as afterwards modified, of upwards of $10,000. The question presented" here is, whether the executor as such was discharged by the decree of 1873. If he was, the decree of 1886 must be treated as made upon an accounting by Tower as trustee, and if not so discharged, it was within the jurisdiction of the surrogate to require and to take his accounting as executor, although it would not go back of the former decree as to the state of the account, but would have relation to the time and transactions subsequent to it. In re Hood, 90 N. Y.. 512 ; In re Soutter, 105 id., 514 ; 8 N. Y. State Rep., 6. And then liability upon the bond would arise from the failure of the executor to obey the decree of 1886. The former decree did not, in express terms, discharge the executor. The investment and its continuance would seem to call into exercise the functions of a trustee, rather than those of an executor, and it was in view of that purpose that he was directed to retain it, but his retention of it was not necessarily the act of a trustee as distinguished from that of an executor.

The question became one of construction and effect of that provision of the decree, and upon that subject it may be well to consider the question in the light of the authorities having some relation to it. In Laytin v. Davidson, 95 N. Y., 263 , the will referred to contained provisions requiring the exercise of functions executorial, and those of a trustee. A final accounting of the executors was had before the surrogate, and by the decree the amount of the capital of the estate remaining in their hands was determined, and they were directed to retain and hold it “as

And added that “at the time of the decree the executors had not fully performed their functions, and their duties had not terminated. This fact is a complete answer to the position that the executors became trustees after the decree of the surrogate.” And remarked that the Laytin case was not adverse to such views, as “trusts were there created under the will, and the decree •of the surrogate directed the property to be held by the executors as trustees.” The ground of distinction, founded solely upon the decrees of the surrogate in the two cases cited seems to be in the use in the one and absence in the other of the word “ trustee " as relating to the character in which they should retain and invest the fund. But back of those decrees.and in reference to the wills it is said that a period of time was contemplated by the testator in the Ljaytin case when the duties of the executors as such would •end and they should assume the character of trustees only, which was not applicable to the will in the Hood case. The fact, however, remains that in the latter case the direction to invest applied to all the property remaining in the hands of the executors, and allowance was made to the executor Hood of his commissions.

The Matter of Hood, 104 N. Y., 103 ; 5 N. Y. State Rep., 501, again came up on appeal from an order directing him as late ex

These views tend to illustrate the principle of the decision of the court on the former review, and they seem to indicate that to some extent, at least, the distinction between it and the Laytin case was in the direction given by the surrogate’s decrees.

In Matter of Willets, 112 N. Y., 289 ; 20 N. Y. State Rep., 735, it was held that it was not within the contemplation of the will that the two functions of executors and trustees were to co-exist, but that those of the former were to first be executed and the latter to follow. The surrogate settled their accounts as executors and ordered them out of the “balance of principal in their hands to pay to themselves as trustees ” a sum mentioned. It was held that their functions as executors then terminated and they assumed those of trustees. That case came fairly within the doctrine of the Laytin case.

In Johnson v. Lawrence, 95 N. Y., 162 , where the indication in the will was that the two functions might co-exist, and that no separation of them was contemplated, the court said that “ taking the adjudged cases together, they appear to establish that to entitle the same nersons to commissions as executors and as trustees the will must provide, either by express terms or by fair intendment, for the separation of the two functions and duties, one duty to precede the other, and to be performed before the latter is begun, or substantially so performed, * * * and that where the will does so provide 'for the separate and successive duties, that of the trustee muist be actually entered upon and its performance begun either by real severance of-the trust fund from the general assets, or a judicial decree which wholly discharges the executor and leaves him liable only as trustee.” And on the subject see Hall v. Hall, 78 N. Y., 535 ; In re, etc., Mason, 98 id., 527; Phœnix v. Livingston, 101 id., 451.

In all these cases except that of Hood the controversies were in respect to commissions and whether the executors and trustees were entitled to them in both capacities, and more especially in the latter. And to entitle them to commission also • as trustees it must appear by the will that the separation of the two functions was clearly intended by the testator and has been effected, or that

In the present case the trial court found that at the time of the accounting in 1873 Tower had in his hands the money charged in the decree. This must be assumed, as the fact does not necessarily appear to the contrary, and therefore no charge for any devastavit prior to that time arises for consideration, and as the executor was not by the express terms of the decree discharged, the determination of the question presented is dependent upon the nature of the functions which he was, after the decree, permitted to exercise in respect to the fund. It may be observed that all the property of the testator was devised to Tower, “to be held by him in trust,” and he was directed to convert into money, invest it, pay the income to the plaintiff and after her death to divide it among his children. Tower was appointed executor to execute the provisions of the will. The duty of investing the fund and disposing of the income and finally of the principal was that of a trustee. But Tower took the, estate in his hands as executor, and the decree directed “ that the said executor retain, invest and keep invested the balance remaining in his hands * * * according to the trusts and provisions contained ” in the will. Those provisions were for investment, payment of income and final distribution. He could retain the fund as executor as directed by the decree, although the investment and what followed would be within the functions of a trustee. He made no investment and did no act indicating that he treated the fund as held by him in any capacity other than that in which he had received it. It is true that as a general rule when the same hand is to pay and receive, what is required by law to be done to accomplish' it will be deemed done, but it is entirely consistent with the decree that the fund be retained by him as executor until he should take •an opportunity to invest it, and the transfer to him as trustee would be evidenced by the investment. The decree did not, as in the W ilkts case, direct him as executor to pay the fund to himself as trustee, nor, as in the Lay tin case, to hold it as trustee. The only practical effect of the decree was a settlement of the accounts of the executor, and it would have had the same effect for all the purposes to which it was entitled as made, if it had stopped with the adjudication of the balance against him as such, and directed the payment of the costs and expenses of the proceedings as it did. The duty in respect to the investment, etc., was given by the will.

So the case may be treated as if no direction had been given by the decree in that respect. Could it be effectually said that from the time of a mere adjudication of the settlement of the accounts of the executor he ceased to hold the funds as such? It seems quite clearly not until he had in some manner done something to change his relation to it. In such case, as said by Judge Finch in Johnson v. Lawrence, the duties of the trustee must be actually entered upon and performance begun, or the executor be wholly dis

The judgment should be reversed and new trial granted, costs, to abide the event.

All concur.