Hyland v. Bayter — 5 N.Y. St. Rep. 219

Majority

p. 219

George Hyland and Johh Hyland as adm’rs of George Hyland, deceased, Appl’ts, v. Bernard Bayter, Mary Ann Baxter, Ella Baxter, Wendell Zimmer, and Bernard Baxter, as adm’r of Bridget Bayter, deceased, Resp’ts.

(Supreme Court, General Term, Fifth Department,

Filed October, 1886.)

Headnote

1 Executors and administrators — Duty of — Supplies for family of INTESTATE.

An administrator has no legal right to furnish supplies for the family of the intestate at the expense of the estate.

2 Same — Trustees — Infants.

When tlie rights of infants are involved, a trustee is usually held strictly accountable in the line of his duty as such, and equities are found in his behalf only in the event of entire good faith on his part, and when it is subservient to necessities of the minors beneficially interested.

3 Same — Allowance for past disbursements.

Allowance of credit for past disbursements will only be made in cases where the court would have permitted it to be made on previous application in behalf of the infant beneficiary.

4 Same — Surrogates court — Accounting — Equities.

Upon an accounting of an administrator as such, the Surrogates Court has power to consider the equities involved.

Appeal from decree of Surrogate of Livingston county, made upon accounting of George Hyland, as administrator, etc., of Bernard Baxter, deceased. It appears that Bernard Baxter died intestate May 27th, 1862, leaving Bridget Baxter his widow, and three infant children, Mary, aged seven years, Bernard, aged two years, and Ella, aged seven months.

And June 5th, 1862, Bridget Baxter, the widow, and George Hyland were appointed administrators. The personal estate consisted of livery property, amounting, as per appraisal and inventory, to $1,481. The administrator Hyland took possession of the property, and for a short time and until he could sell it, continued the livery business. He sold it in August, 1862, on terms of credit, which required monthly payments of $25 each and interest. The purchase money was received by him in installments and the payment was completed in September, 1866. An inventory was made shortly after the appointment of the administrators, but it was not filed until June, 1872, when it

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was done pursuant to direction of the order of the Surrogate, made in proceedings instituted by the guardian for the infants. There was no guardian for the infants until Wendell Zimmer was so appointed in May, 1872. And upon his petition the order was made pursuant to which Hyland filed his account as administrator. It was then referred to an auditor to examine and report thereon. Upon the hearing the evidence tended to prove that the widow and her family were substantially without means of support other than such as were derived from her services and the estate of the deceased, except that a small amount was also received by her from rents of a house in her possession. And that from time to time,the administrator, Hyland, furnished her with money, and articles of merchandize, and paid some taxes assessed to her on houses and lots in her possession.

The auditor reported that the proceeds of the personal property which came to Hyland’s hands were . ' . $1,481 00 And interest as stated in his account . . . 140 00 Interest surcharged . ... . . 100 00 And receipts from use of the livery property, between May 16th and July 31st, 1862, . . . 151 87

Making ..$1,872 87

And that he should be credited with the payment of debts of intestate’s funeral expenses, and commissions, amounting to ..... $631 60

Leaving in bis bands for distribution as of September 1st, 1867 . t? >£■- I-*to

Treating one-third as paid to tbe widow Ox I-J- . 02 —T Cn

Leaving for distribution to tbe next of kin . . $827 52

Adding interest from Sept. 1st, 1867, to time of bis report, Sept. 19th, 1874, . . $415 28

Less commission on that sum . . . 10 38

■- $404 85

Producing a balance in bis bands . . . $1,232 37

Tbe auditor found that tbe administrator Hyland paid the widow chiefly in articles of merchandize, with some money equal to the distributive shares of her and her children in the estate, being tbe same charged in bis account, intending such as payment of their distributive shares, but that such payment in bis opinion was unauthorized by law, and could not be allowed to him as a credit upon bis accounting as administrator in that court, that she received tbe money and merchandise, claiming them in her right as administratrix, and appropriated the same to the support of the minor children.

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And on bringing into court, the widow, as a party to the proceeding of accounting, the auditor afterwards made a further report that she had expended the distributive shares of the minor children “ in providing for their necessaries during their .minority, and that if she had expended the samé as their general guardian, the said payment would have been allowed to her on her accounting as guardian,” but that, in his opinion, she, as administratrix, had no legal right to make such payments, and such court had no power to allow such payments to the administrators as a credit. And consequently they must be jointly charged to them as against the next of kin, but that, as between the administrators, Hyland was entitled to a decree that the widow pay the same, and that she repay to him so muchas he shall pay to the next of kin. The surrogate sustained exceptions to the finding of the auditor that the money and merchandise received by the widow from Hyland were appropriated by her for the support of the minor children, or for their necessary support during their minority; and in other respects apparently confirmed the report. And decree was entered Dec. 22d, 1876, from which this appeal was taken by the administrator Hyland, who afterwards died, and the appeal was continued in the name of the present appellants. And the widow having afterwards also died, Bernard Baxter, as administrator of her estate, was substituted as a respondent.

Oscar Craig, for app’lts; D. W Noyes and Chas J. Bissel, for resp’ts.

The embarrassment of the appellants arises mainly out of the failure of their intestate to observe the statutory direction to him as administrator of the estate of Bernard Baxter, deceased. He as such took possession of the personal estate and converted it into money. He was called upon by the widow of the decedent, his co-administrator, for money and for merchandise and he furnished them to her. She and her three minor children constituted her family, and all of them remained at home with her for about five years after the death of her husband, when the eldest child, Mary, went out to work, and did so a considerable portion of the time thereafter. It may fairly be inferred or assumed that the money and merchandise so received by the' widow of Hyland was used by her in the support of her family, and that some benefit was thus received by all of the children. And it is quite evident, as the court below understood, that Hyland furnished to the widow the merchandise and money in ’ good faith believing that he was properly supplying the family with the means of support from the estate in his hands of his intestate, and that it was used for such purpose.

The family had no means of support other than from the labor

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of tbe mother and this personal estate in the hands of Hyland, except a small amount of rent received for use of a house, until the expiration of five years after the death of Baxter, when some relief was furnished by the absence and labor of the one daughter. The acting administrator had no legal right to hand over to his co-administrator any of the assets in his. hands or to furnish supplies for the family of his intestate at the expense of the estate. The infant children were not represented by any general guardian, and no one was entitled to receive for them any portion of the fund in his hands. And the question arises whether any equities exist in behalf of this administrator which fairly' require any allowance or credit to him as against the shares of the children in the estate.

When the rights of infants are involved a trustee is usually held to a strict accountability in the line of his duty as such. Howell v. Mills, 53 N. Y., 322 . And equities are found in his behalf in case of departure from his legal duty in the event only of entire good faith on his part, and when it is subservient to the necessities of the minors beneficially interested. The denial of the right to break in upon the capital of funds held for infants, or to obtain reimbursement by the trustee, or guardian so doing, has been somewhat rigorously adhered to 2 Perry on Trusts, § 618, Walker v. Wetherell, 6 Vesey. 473.

But in this State that rule is not inflexible, and circumstances may arise to justify the impairment of the principal of the fund for maintenance, and when they have so existed and produced expenditure made in good faith, equitable considerations will be applied to reimburse the trustee. In re Bostwick, 4 John Ch. 100; Hill v. Hanford, 11 Hun, 536 . Such allowance of credit, however, for past disbursements, will be given only in cases where the court would have permitted it to be made on prior application in behalf of the infant beneficiary.

While the failure of the administrator to file the inventory of the estate, or to render and settle his account until required by proceedings taken against him for those purposes, are circumstances of negligence and disregard of duty, they do not necessarily deny to him good faith and purposes in dealing with the fund. The personal estate which came to him was such that he was required to sell it on a long installment credit, which did not wholly result in proceeds to him until four years afterwards. And in the meantime the widow was calling upon him for money and goods for the use of her family, which he supplied, and which was thereafter continued in like manner. The view of the auditor as expressed by his opinion was, that the surrogate’s court had no power to consider the equities, if any existed, in behalf of the administrator Hyland, with a view to allowance to him of any credit for the moneys and merchandise so advanced by him. And the surrogate did not in his opinion ex

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pressly adopt or disaffirm that proposition. He placed tbe confirmation of the report on other grounds.

At all events the apprehension of want of power in that court to treat the equities claimed by Hyland, it seems, induced him to bring an action in the supreme court for such alleged purpose, in which he failing to get relief at the trial court sought review at the general term where the judgment was affirmed. Hyland v. Baxter, 31 Hun, 354 . And on appeal to the court of appeals it was there held that the decree of the surrogate’s court was res judicata, because that court had jurisdiction to fully adjust and award any equities existing between the parties, and in behalf of Hyland, and that his remedy and relief, if he was entitled to any, must be found in the review of such decree, and the judgment was affirmed. 98 N. Y., 610 . If it be assumed that the administrator was equitably entitled to allowance of credit in his account for moneys furnished by him to the support of the infant beneficiaries, there is some difficulty in making the apportionment between them, so as definitely, and correctly, to charge their respective shares with the amounts supplied.

This is one ground upon which the surrogate put his conclusion as appears by his opinion. And such was the view expressed in the opinions of the general term on review of the judgment in the action before mentioned on the facts there presented.

It is contended that by such decision the questions here were disposed of adversely to the appellants. That was a review of the findings of the trial court, and they were entitled to the most favorable vieAV which could legitimately be taken of them upon the evidence. And as appears by the determination finally made by the court of appeals, such question was not properly in the action for consideration.

Although the matter of the accounting and determination were theoretically had before the surrogate, the auditor was instrumental in taking the evidence and making the report upon which the decree was directed. And his view that there was no power in that court to. determine the equities, if any there were, excluded from his consideration that question. And it is not apparent that the surrogate entertained a contrary view of the jurisdiction of his court in that respect. The question at least was one then'not free from difficulty, and there is reason to apprehend that the subject of controversy here may not have received the attention which it would have had if the power to extend the inquiry beyond the legal duties of the administrator, and to equitable considerations, had been clearly assumed by the surrogate’s court. The auditor found substantially that these funds went to the support of the family.

There is no specific finding of necessity of the infants for such contribution to their maintenance. And in the auditor’s

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view of want of power, sucli fact was necessarily deemed by him of no importance. The finding of such fact we cannot say is not justified by the evidence. It tends to prove that on the death of Baxter the family were substantially without means of support, other than such as the estate of the decedent might supply. The question of apportionment between the infants of the fund which may be deemed as applied to their joint maintenance and support, is one of some difficulty. But it does not appear that no means are or can be furnished by the evidence to apply to greater or less extent a rule for that purpose. The question of its accuracy must necessarily be that of judgment, having in view all the circumstances, which should be carefully exercised for the protection of their interest respectively.

It may be seen that the same difficulty may have existed in the accounting of the widow if she had been the general guardian of all the children as they were one family. A rule which requires, the severance of a family for the jDrotection of a guardian in his account would be harsh, and the consequence unnatural.

This matter should go back to the surrogate for rehearing unembarrassed by any question of power or jurisdiction.

But unless special reasons appear, and are applicable to- the account for merchandise rendered in this case, it .should not be allowed as against the infant’s fund. The permission of a trustee to deal with infant beneficiaries by selling to them his property and thus charging the fund, cannot, without liability to great abuse, be permitted. And the rule which ordinarily denies such right is for obvious reasons a salutary one. The administrator was in the mercantile business. A considerable portion of his account rendered is for goods sold from his store. This business was carried on for profit. How much profit was within the prices charged does not, and probably cannot, appear.

While there may be circumstances which will justify the allowance of such a claim and when credit should be permitted, it is safe, generally, to apply the rule somewhat rigorously against the allowance of such dealing with the funds of infants by trustees, than to indulge departure from it.

In the view taken of this case we see no basis upon which direction can be given here which will enable the parties to obviate a rehearing.

The decree should therefore be reversed, and a rehearing had of the matter of accounting, in the surrogate’s court.

Costs of this appeal to abide the final award-of costs.

Smith, P. J., and Barker, J., concur.