Smith v. Second National Bank — 54 N.Y. St. Rep. 181

Majority

p. 181

Charles A. Smith, Ancillary Adm’r, App’lt, v. The Second National Bank of New York, Resp’t.

(Supreme Court, General Term, First Department,

Filed June 30, 1893.)

Headnote

Executors and administrators—Ancillary administrator cannot PLEDGE ASSETS TO ANTICIPATE INCOME.

An ancillary administrator has no right to pledge any part of the assets which come to his possession for the purpose of anticipating income; his only duty is to transmit the estate to the state, territory or country where the principal letters were granted, unless directed by express decree to retain some portion for the purpose of paying debts of resident creditors.

Appeal from judgment dismissing complaint after trial at a circuit court.

H. Parsons, for app’lt; John Notman, for resp’t.

The facts established upon the trial were that on the 1st of November, 1886, one Sidney T. Smith, as ancillary administrator of the estate of one Caroline Q-. Smith, applied for a loan of $600 from the defendant, the Second National Bank, stating to its president that he wanted the money for the purposes of the estate in anticipation of income. The bank made the loan, and it was credited to the account of the ancillary administrator. He delivered a promissory note therefor, together with a New York seven per cent, accumulated debt bond for $5,000, which stood in the name of and formed part of the assets of said Caroline Gr. Smith. The said bond and note have been in the possession of the bank ever since, and no part of the note has been paid, although payment has been demanded. The whole amount of the note was paid to the ancillary administrator on checks drawn by him as such administrator in the ordinary course of business from time to time. The bank subsequently attempted to collect this bond from the city of New York, but its transfer had been stopped by the plaintiff, who had been appointed ancillary administrator in the place and stead of said Sidney T. Smith. The bank subsequently attempted to sell the bond at public auction, on notice to plaintiff, but was enjoined by temporary injunction in this action, which was brought to compel the delivery of the bond in question.

At the close of the trial the appellants moved that the court direct j udgment for the delivery of the bond, which was denied; and, upon motion of the defendant’s counsel the complaint was dismissed, and from the judgment thereupon entered this appeal is taken.

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The sole question involved in this appeal is as to the right of an ancillary administrator to pledge any portion of the assets of the estate which may come into his hands. In the case of Hopper v. Hopper, 53 Hun, 394 ; 25 St. Rep., 132 , decided by the general term of the second department, such right seems to have been recognized, although not necessary to the decision of the case, it having been determined in that case that an ancillary administration is as efficacious as any other administration, so far as the' question of legal title is concerned ; the fact that the administration is ancillary only going to the discretion of the court in the disposition of the assets. The question involved in that case, however, was simply whether an executor, who receives ancillary letters in this state, is liable to be sued here in the same manner as other executors, whether he has assets of the estate in his hands or not.

In the case at bar we thinlc an entirely different question is involved, and that a consideration of §§ 2700 and 2701 of the Code of Civil Procedure shows that the rights of an ancillary administrator, in reference to the estate which comes into his hands, are Very different from those which belong to an administrator or executor of a will proved within this state.

Sections 2700 and 2701 are as follows:

“ Section 2700. The person to whom ancillary letters are issued, as prescribed in this article, must, unless otherwise directed in the decree awarding the letters or in a decree made upon an accounting, or by an order of the surrogate made during the administration of the estate, or by the judgment or order of a court of record in an action to which that person is a party, transmit the money and other personal property of the decedent received by him after the letters are issued, or then in his hands in another capacity, to the state, territory or country where the principal letters were granted, to be disposed of pursuant ro the laws thereof. Money or other property so transmitted by him at any time before he is so directed to retain it, must be allowed to him upon an accounting.

“ Section 2701. The surrogate’s court, or any court of the state which has jurisdiction of an action to procure an accounting, or a judgment construing the will, may, in a proper case, by its judgment or decree, direct a person to whom ancillary letters are issued as prescribed in this article to pay out of the money or avails of the property received by him under the ancillary letters, and with which he is chargeable upon his accounting, the debts of the decedent due to creditors residing within the state, or, if the amount of all the decedent’s debts, here and elsewhere, exceeds the amount of all the decedent's personal property applicable thereto, to pay such a sum to each creditor, residing within the state, as equals that creditor’s share of all the distributable assets, or to distribute the same among legatees or next of kin, or otherwise dispose of the same as justice requires.”

It appears, therefore, by § 2700 that there is only one duty which an ancillary administrator is to perform, viz.: That he must, unless otherwise directed in the manner provided for in the

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section, transmit the money and other personal property of the decedent received by him after the letters are issued, or then in his hands in another capacity, to the state, territory or country where the principal letters were granted, to be disposed of according to the laws thereof. This is his first and primary duty, and the provision is mandatory. He must transmit the same, unless otherwise directed in the decree awarding the letters, or in a decree made upon an accounting, or by an order of the surrogate made during the administration of the estate, or by the judgment or order of a court of record in an action in which the ancillary administrator is a party.

Then by § 2701 power is given to the surrogate’s court, or any court of the state which has jurisdiction of an action to procure an accounting, or a judgment construing a will, to direct the person to whom the ancillary letters are issued to pay out of the money or avails of the property received by him under the ancillary letters, and with which he is chargeable upon his accounting, the debts of the decedent due to creditors residing within this state. And that is all. Having done that § 2700 becomes operative again, and he is bound to transmit the balance, if any, to the state, territory or country where the principal letters were granted, to be disposed of pursuant to the laws thereof.

But it is said that § 2702 enlarges the rights and duties of ancillary administrators, in that it expressly provides that the provisions relating to the rights, powers, duties and liabilities of an executor or administrator apply to a person to whom ancillary letters are granted, except those contained in the fifth title of the chapter, which relates to distribution by principal executor or administrator, and except where special provision is otherwise made in the article, or where a contrary intent is expressed in or plainly to be inferred from the text

It is plain that it was not the intention by § 2702 to repeal any of the restrictions or requirements contained in §§ 2700 and 2701. And, reading all these sections together, it seems to be apparent that the only duty of the ancillary administrator is to transmit the estate, unless he is directed by express decree to retain some portion of the same for the purpose of debts due to resident creditors.

In the case at bar the ancillary administrator obtained this loan, as he stated to the president of the defendant, in anticipation of income. It is difficult to see how, either for the purpose of transmission or even for the payment of debts, the administrator could possibly have any occasion to anticipate income. It would seem therefore to be apparent that the loan was required for some purpose other than connected with the administration of the estate, so far as the ancillary administrator was authorized to administer the same. This being the case, we do not think that the defendant was a bona fide holder of the bond so as to be protected.

The judgment should be reversed, and a new trial ordered, with costs to appellant to abide the event.

Follett and Parker, JJ., concur.