Sayles v. Best — 55 N.Y. St. Rep. 779

Majority

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Helen S. Sayles, App’lt, v. George F. Best et al., Ex’rs, Resp’ts.^[1]

(Court of Appeals,

Filed December 12, 1893.)

Headnote

f Will—Equitable conversion—Rights of lienors.

Where the heir and thé distributee of the proceeds under the will are the same person, upon a conversion" of the realty into personalty by the execution of a power of sale given by the will, the intervening rights of purchasers and lienors will be protected.

#. Same—Judgment—Executobs and administbatobs.

One B., by his will, gave a life estate in certain land to his widow for life, and directed his executors to rent other land until his youngest child came of age, and upon the happening of that event and of the death of the widow respectively gave the executors power to sell said lands and distribute the proceeds among his legal heirs, share and share alike. The plaintiff is the owner of judgments recovered prior to B’s death against one of his heirs, and on which the latter’s interest was sold on execution after the events on which the power of sale depended had occurred. Prior thereto the heir had conveyed his interest to one W., and after said sale also conveyed his interest to the executor of the widow, who held certain notes made by him. The executors thereafter sold the property without notice of the execution sale, and upon an accounting were directed to pay said share of the estate to W. and the widow’s executor, which they did. Meld, that the heir took an estate in remainder in an undivided share of the first mentioned land and a present estate in fee in an undivided share in the latter, subject to the execution of the power of sale ; that such estate was alienable and was subject to the judgments ; that the deeds from the heir conveyed the share subject to the lien; that the execution of the power of sale transferred the lien of the judgments to the fund; that the executors were discharged from personal "liability by the accounting and payment in pursuance of the decree of the surrogate, and that plaintiff’s remedy was against the parties to whom said fund was paid.

Appeal from judgment of the supreme court, general term third department, affirming judgment dismissing the complaint on the merits.

Peter K Best died February 17,1878, leaving a will, by which he devised his homestead farm in Stillwater, Saratoga county, to his widow during life, and after her death he empowered his executors to sell the same at public or private sale at such time, upon such terms and in such manner as to them should seem meet and to the best interest of his estate, and to divide the proceeds therefrom equally among his legal heirs, share and share alike. He directed and empowered his executors to rent another farm upon which his son Jacob then lived, from year to year, until his youngest child became twenty-one years of age and then gave them the same power to sell and divide the proceeds as in the ease •of the homestead. He appointed his widow and the defendants

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Jeremiah I. and Tristram C. Best the executors of his will. The youngest child became of age March 21, 1887, and the widow died August 25th of the same year. The plaintiff is the owner of two judgments recovered against Alfred B. Best, one of the testator’s sons, in 1877 and 1878, upon one of which execution was issued and the interest of the judgment debtor in these two farms sold September 29, 1887, and the judgment creditor became the purchaser, and the usual sheriff’s certificate of sale was executed to him and filed and recorded in Saratoga county cleric’s office-October 7, 1887. The sheriff’s deed upon the sale was delivered December 31, 1888, and recorded January 16, 1889. The defendants, as executors, executed the power of sale given them in the will of April 2,1888, and sold both farms and received the proceeds, amounting to $22,700, of which the share of Alfred B. Best was $2,245. On March 6, 1884, Alfred executed to Edward T. Williamson a conveyance of all his interest in the property which came to him under the will of his father, which deed was recorded April 7, 1884. Alfred was indebted to his father in his lifetime upon two notes given in 1873, amounting to $2,200 and interest, which passed to the widow under the will, and were held by her at the time plaintiff’s judgments were recovered. On October 12, 1887, Alfred executed to the executor of his mother’swill a conveyance and assignment of all his right, title and interest in the estate of his father. The defendant Tristram C. Best knew of the existence of the plaintiff’s judgments on April 30,. 1879, bnt he had no personal notice of the sheriff’s sale and deed; and the defendant Jeremiah I. Best never had any personal knowledge or information in regard to the judgments until after the sale by the executors and the distribution of the proceeds. In April, 1888, the executors rendered a final account before the surrogate of Saratoga county, and such proceedings were had that a decree-was entered by the surrogate May 29, 1888, adjudging that Alfred had no interest in the property, and that Williamson and the executor of Jane B. Best were entitled to his share as grantees and assignees, and adjudging the amount which should be paid to each, which was immediately thereafter paid over to them by the executors as directed by the decree. February 25, 1889, the plaintiff demanded of the defendant Tristram C. Best the share of Alfred in the proceeds of the sale of the real estate, which he neglected to pay, and on March 1, 1889, plaintiff brought this action against the executors individually, in which he demanded judgment for the sum of $2,245, the amount of Alfred’s share received and distributed by them. The cause was tried before the court, without a jury, and upon findings embodying the facts here stated the complaint was dismissed upon the merits. The plaintiff has appealed from a judgment of the general term affirming the judgment entered upon the decision of the trial court.

E. F. Bullard, for app’lt; Charles S. Lester, for resp’ts.

Upon the death of Peter K. Best in 1878, his son Alfred became seized of an estate in remainder in the equal

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undivided twelfth part of the homestead farm, liable to be defeated by the exercise of the power of sale by the executors. 4 R. S. (8th ed.), p. 2489, § 59. With respect to the other farm the situation was different. No precedent estate in it was given to any one and no valid trust estate created in the executors. The utmost that can be said is that a power in trust was given to the executors to rent the lands until the youngest child became twenty-one, and then to sell and divide the proceeds among the heirs. Id., § 58. It follows, therefore, that immediately upon the death of the testator the son became vested with a present estate in fee to the undivided one-twelfth part of this farm, subject to the execution of the power in trust. His estate could not be defeated until the youngest child became of age, when the executors were authorized to sell and distribute the proceeds. The estate which Alfred had in both farms was descendible, devisable •and alienable in the same manner as if it had been an estate in possession. Id., § 85. It was consequently subject to the lien of any judgments that might be recovered against him while it continued, and to sale under execution thereon, and the purchaser would take the estate which he held and succeed to whatever rights he had in the property. Code Civ. Pro., §§ 1251, 8848, sub. 6. It must then be held that the plaintiff acquired a lien as a judgment creditor upon the estate which Alfred had in these farms by the judgments recovered against him in 1877 and 1878. The deed from Alfred to Williamson in 1884 conveyed this estate to the grantee, subject to the lien of the plaintiff’s judgment. The power of sale became operative as to the homestead farm June 25th, 1887, and as to the other farm March 21st, 1887, and the subsequent execution of the power on April 2d, 1888, became effective as of these dates respectively to extinguish the estate which Alfred had in the land, and resulted in an equitable conversion of the land into money as of the times when the power might have been exercised, and thereafter the rights of all parties interested in the estate which Alfred had in the land were transferred to the fund, including the lien of the plaintiff’s judgment. The sheriff’s sale on execution, September 29th, 1887, made no change in the relative rights of the parties to this action, inasmuch as the judgment creditor became the purchaser, and it was overreached by the subsequent execution of the power of sale.

On May 29, 1888, when the executors had their final accounting, the legal situation may be thus summarized: The executors had in their hands a fund of $2,245, which represented the share to which Alfred was originally entitled in the testator’s real property ; the plaintiff had a lien upon the fund for the amount of his unpaid judgments, and Williamson and another had the legal title to the fund by transfer from Alfred subject to the lien of plaintiff’s judgments. In a proceeding instituted by the executors in conformity to the statute, and to which all persons were presumably made parties whom the law required to be cited, the surrogate on that day directed the executors to pay over this fund to the grantees of Alfred, which decree the executors obeyed. The plaintiff was not a party to this proceeding, and the Code did not require

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his presence in order to confer jurisdiction upon the surrogate to make the decree, and his right to or interest in the fund was not affected by the decree. So far as he was concerned its sole effect was to discharge the executors from all further responsibility as custodians of the fund and transfer the fund into the possession of Williamson and the executor of Jane E. Best’s estate. Whatever lien he had on it in the hands of the executors remained unimpaired by the change of possession, and whatever remedies the law authorized him to adopt for the purpose of enforcing his lien were available to him after the payment of the money to the judgment debtor’s grantee to the same extent as before. The decree, therefore, did not operate to deprive him of any rights, and the guaranty of the Constitution that his property shall not be taken from him without due process of law was violated.

The plaintiff seeks to make the executors individually liable upon the ground that money in the hands of one person to which another is entitled, may be recovered in a common-law action. Roberts, v. Ely, 113 N. Y., 128 ; 22 St. Rep., 185 ; Hovey v. Elliot, 118 N. Y., 124 ; 28 St. Rep., 761 . But this principle has no application to the case of an executor having funds for distribution belonging to the testator’s estate. He owed no active duty to the plaintiff beyond that involved in the faithful administration of his trust. There is no law which authorized or required him to pay the- plaintiff’s judgments out of the moneys in his hands. His full duty was done when he brought the fund intact into the surrogate’s court, and, after citing the legatees and next of kin and creditors of the testator, if any, distributed it in accordance with the surrogate’s decree. If the plaintiff did not desire to be compelled to follow the fund into the hands of the distributees, there are different ways in which he might have protected himself; either by the proper equitable action to establish his lien, or by applying to the surrogate to be made a party to the proceedings for an accounting; or if he was not aware of the decree until after it had been entered by making a seasonable application to open it so far as it related to the distribution of this fund. He could have filed a caveat with the surrogate, disclosing his interest in the fund, and requesting to be notified of the proceedings for an accounting whenever they might be had, and it cannot be doubted that the surrogate would have complied with so reasonable a request. In any view of the situation the burden of activity was upon the plaintiff and not upon the executors, and he cannot complain if he is now required to assert whatever claim he may have to the fund against the party to whom, by the judgment of a competent tribunal, it has been transferred.

It has been urged by the respondents’ counsel that by the execution of the power of sale, the land was converted into personalty and the legal title of the heir was thereby divested and defeated, and that the legal title and estate of the heir failing the lien of the judgment must fall with it. That would necessarily be the result where the heir and the distributee of the proceeds under the will are different persons; but where they are the

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same person another rule, we think, must prevail. The conversion of the realty into personalty proceeds upon equitable principles. While the change in the quality of the property is made in accordance with the will of the testator, equity requires that the intervening rights of purchasers and lienors shall be protected.

A purchaser from the heir and distributee acquires a good title to the estate in the land before the sale, and to the proceeds after it has been coon verted. If the heir incumbers his estate in the land by mortgage, the conversion of the pledge into money, which still belongs to him, ought not to be permitted to involve the destruction of the security, and a judgment is a contract of as high a degree of solemnity by means of which he permits a lien to be created upon the land, and is entitled to equal protection. The-ownership of the property in both of the forms, which it may assume, is continuous and uninterrupted, and so far as practicable, all the incidents of ownership should be preserved. The stability of property rights should not be unnecessarily disturbed in effecting the transformation. In fact, the conversion may never occur, for it has been repeatedly held that the legatees may elect to take the lands instead of the money, in which case the power of sale is extinguished, and it was held by the supreme court at general term that where the heir and legátee conveyed his estate in the land before the power of sale became operative, that it was an election on his part to treat the property as realty, which as between him and the grantee becomes final. Reed v. Underhill, 12 Barb:, 113.

The judgment must be affirmed, with costs.

All concur.