Lawrence v. Church — 40 N.Y. St. Rep. 406

Majority

p. 406

Roxanna Lawrence et al., Resp’ts, v. Henrietta Church, Ex’rx, App’lt.^[1]

(Court of Appeals,

Filed October 6, 1891.)

Headnote

1. Contract—Agreement to pay debts of an estate.

As a part of an agreement to discontinue an action bmueht by executors, it was provided that defendant should have the proceeds of a certain mortgage held by the estate after paying expenses of the administrator, and pay “ the debts allowed or legally established against the estate of the deceased.” In an action to enf orce said agreement the general term reversed the judgment for plaintiff on the ground of the improper admission of the surrogate’s decree, which had been entered after the commencement of this action, as proof of the amount of such debts, and granted a new trial unless plaintiff consented to deduct a certain sum, without prejudice to a future action to recover the same. Held, error, as illegal and beyond the power of the court to grant such privilege.

2. Same.

The agreement cannot be construed as including expenses incurred by the plaintiffs in their unsuccessful defense to the defendant’s demurrer in this case. Such expenses are not as between the parties to the agreement expenses of administration to be deducted from the proceeds of the mortgage.

3. Same.

The decree of the surrogate was competent and conclusive evidence as to the amount of the testator’s dqbts which had been legally established, and also as to the legal and proper expenses of settling and administering upon the estate.

4. Same.

Application should hdve been made by plaintiffs under §544 of the Code for leave to permit them to make a supplemental complaint alleging the entry of the decree as a material fact occurring since the original complaint was made, and upon the granting of the order the decree could be properly put in evidence.

5. Same—Interest.

The defendant’s testator also agreed to pay to L. the sum of $3,000, in such manner as would be acceptable to her. Held, that the sum would not draw interest until a demand was made or until a suit was commenced.

6. Same.

The amount of the “ expenses and commissions in collecting the Chew . mortgage and settling and administering the estate ” the defendant’s testator did not agree to pay. He merely consented that such amount might be • deducted from the proceeds of the Chew mortgage, which lie was to receive the benefit of.

7. Same—Consideration.

Mutual promises stand as consideration, each for the other.

Appeal from judgment of the supreme court, general term, fifth department, reversing judgment in favor of plaintiffs, and grant

p. 407

ing new trial unless they would consent to deduct $950.24 and interest therefrom, without prejudice to a future action to recover tin same.

Richardson & Robbins, for app’lt; J. H. & C. W. Stevens, for resp’ts.

The general term upon defendant’s appeal reversed the judgment for plaintiff, entered upon the report of the referee, and granted a new trial, unless the plaintiff consented to deduct from the judgment the sum of $950.24, with interest from February 23,1889, without prejudice to á future action to recover the same, or any part thereof, and in case the plaintiff did so consent, the judgment thus modified was affirmed, without costs of the appeal to either party.

The plaintiff consented to make the deduction, and the amount named was thereupon deducted from the judgment (without prejudice, as above stated), and as thus modified the judgment was affirmed, and from the affirmance the defendant has appealed here. The plaintiff, of course did not appeal, having consented to make, and making, the deduction as provided for by the order of the general term.

Whether the general term were correct in ordering a reversal unless this deduction were made is a question which is not before us, and which, therefore, we are not to inquire into. The alternative was granted plaintiffs to reduce their judgment, and retain it as reduced, or submit to a total reversal. They elected to reduce it as provided by the general term, and it was reduced accordingly, and as reduced it was affirmed. We must now assume that the original judgment entered upon the report of the referee was erroneous at least to the extent indicated by the decision of the general term, and the plaintiffs cannot be heard to insist that such original judgment was correct. This has been expressty decided in this court. Whitehead v. Kennedy, 69 N. Y., 462 .

Assuming the general term was right in reversing the judgment and granting a new trial, it is insisted that the privilege permitting the plaintiffs to deduct the sum named without prejudice to a future action by them to recover the same or any part thereof was illegal and beyond the power of the court to grant. We are of that opinion.

We think the court had no power to grant the privilege to the plaintiff to sue again to recover the amount deducted from this judgment or any part thereof.

So far as the plaintiffs are concerned, the liability of the defendant’s testator was solely under the agreement, and it was indivisible and could not be split up into two or more claims or causes of action in their favor. They could have but one cause of action founded upon the agreement, and the liability of the defendant’s testator could not be enlarged by any order of the court The result of the decision of the general term is to permit a recovery in this action for a portion of defendant’s liability upon the agreement, with costs of the trial, and to grant to plaintiffs the right to commence a new action to recover the balance of defendant’s lia

p. 408

bility arising upon the same agreement, with costs in case of recovery. This is improper. Whitehead v. Kennedy, supra. If the general term did not desire to grant a new trial unconditionally, the alternative should have been a modification of the judgment by the deduction of the amount regarded as erroneous, without any privilege of again suing for the same. Such a modification when assented to by the plaintiffs and resulting in the affirmance of the judgment as modified, would upon the facts in this case have operated as an abandonment by plaintiffs of the amount deducted.

If the plaintiffs were not satisfied with such an affirmance, they could refuse to avail themselves of the privilege offered, and go back for a new trial upon the whole issues involved in the case.

Upon this appeal we think we should now reverse the judgment entered upon the order of the general term, and also that entered upon the report of the referee, and grant a new trial absolutely. The judgment as modified by the general term we hold to be erroneous, and we ought not under the facts of this case to' modify it by making the order for modification on the terms which we hold the general term might have legally imposed, be- ' cause we think there were other errors in the case which in justice require us to reverse the judgment as it stands.

As we must assume that the original judgment was erroneous and was therefore properly reversed, we think for the above reason we should now reverse both judgments and grant a new trial.

Some questions will arise on the new trial which it is proper for us to now express an opinion in regard to.

The agreement upon which the action is brought provides that defendant’s testator will pay all the debts allowed or legally established against the estate of the deceased, Judson W. Sherman.

The decree entered upon the judicial settlement of the accounts of the executors, to which accounting the defendant’s testator was a party, would be conclusive of the amount of the debts which had been legally established.

It would also be conclusive evidence of the expenses of settling and administering upon the estate. The defendant’s testator agreed that such expenses as were legal and proper in the administration of the estate should be deducted from the proceeds of the Chew mortgage and only the balance thereof should be credited to him.

We do not think the agreement can be construed as including expenses incurred by the plaintiffs in their unsuccessful defense to the defendant’s demurrer, in this case. Such expenses are not, as between the parties to the agreement, expenses of administration to be deducted from the proceeds of the Chew mortgage. They never could have been in the contemplation of the parties. It is not possible for us to so construe this agreement as to hold that expenses incurred in such a case, or costs paid to the defendant’s testator under such circumstances, were to be regarded as administration expenses and allowed for by him.

p. 409

While such expenses may properly be claimed by the plaintiffs to have been expenses of administering the estate, and hence justly allowed to them in their final accounting, we do not think they can be so regarded as between the parties to the agreement. Those particular expenses, therefore, are not to be deducted from the proceeds of the Chew mortgage before the defendant can receive the benefit thereof. The decree is, however, conclusive evidence as to what the proper and legal expenses of administration were, and the amount thereof should be deducted from the proceeds of the mortgage, with the exception above stated.

One of the issues to be determined in this action was the amount of the debts of the late Judson W. Sherman which had been legally established. Another was the amount of the legal and proper expenses of settling and administering upon the estate. Upon both these issues the decree in question was competent and conclusive evidence and therefore it determined a part of the matters in controversy in this action.

The decree was, however, entered subsequent to the commencement of this action and 'it allowed among the necessary expenses of administration disbursements made by the plaintiffs after the action herein was commenced. We think, in order to prove such items by the decree, that application should be made by the plaintiffs under § 544 of the Code, for leave to permit them to make a supplemental complaint alleging the entry of this decree as a material fact which has occurred since the former ■complaint was made, and upon the granting of such order the decree, proving all the proper items subsequent as well as prior to the commencement of this action, can be properly put in evidence on the trial.

There is a question of interest which we think was erroneously decided by the referee.

The defendant’s testator in the agreement promised that he would “pay to Roxanna Lawrence aforesaid the sum of three thousand dollars, in such manner as will be acceptable to her.” The refei'ee allowed interest thereon from the date of the agreement, January 4, 1884. The money by this agreement would become due on demand. I do not think it would draw interest until a demand was made or until a suit was commenced. The plaintiffs were not bound before making the demand to wait for the collection of the Chew mortgage and the, closing of the estate and the final determination of the amount of the “ benefit ” to be given to the defendant’s testator in the way of proceeds of such mortgage.

This “ benefit ” he was to receive when the mortgage was collected and the deductions for costs of collection and legal and administration expenses had been made, but his promise to pay the $3,000 was not contingent upon the collection of the mortgage, nor was he to pay only the balance of the $3,000 remaining after the proceeds of the mortgage had been applied to such payment The two matters were in this respect independent of each ■other. He had agreed unconditionally to pay the $3,000 to Rox

p. 410

anna Lawrence. What he might thereafter be allowed from the proceeds of the mortgage after making the proper deductions would in the final result diminish the amount of his expenditures under and by reason of the agreement, but the receipt of such proceeds was not a condition precedént to his obligation to make that payment. As to interest upon the debts of the deceased Sherman paid by the plaintiffs, the referee allowed it upon the balance of the debts, expenses and commissions over and above the amount of the collection of the Chew mortgage, to be collected from the date of the final accounting, February 23, 1889, and he found the sum to be $449.49. This sum was arrived at by allowing some items for administration expenses which we have already held to be improper, and hence the result would be less than the above named sum.

The amount of the “ expenses and commissions in collecting the Chew mortgage and settling and administering the estate,”the defendant’s testator did not agree to pay. He merely consented that such amount might be deducted froih the proceeds of the Chew mortgage, which he was to receive the benefit of.

While the method of casting the interest pursued by the referee was not based upon precisely accurate principles, the result arrived at was exactly the same as if the other and proper method had been pursued. After the entry of the decree all the items appeared which were necessary to be known in order to arrive at the amount of defendant’s indebtedness by reason of the agreement, outside of the $3,000, and that amount was then due the estate, and interest should run upon it from the date of the entry of the decree.

Upon the question of the consideration for the agreement, we may assume, without deciding, that the general term was in error in regarding the defendant concluded by the order entered upon the demurrer. In that case the question is open here. We think the consideration was ample. There were mutual promises, and each stood as the consideration for the other.

We think, therefore, that the proper order for us to make is to reverse the judgment in favor of plaintiff entered upon the order of the general term, and also the original judgment entered upon the report of the referee, and to grant a new trial absolutely, with costs to abide the event, and we direct accordingly.

A'11 concur, except Finch, J., absent.