In re the Estate of Johnston

It appears that on February 24, 1886, Archibald Johnston, deceased, was the owner of a two-eights interest in a leasehold, and that on that day he assigned to his wife, through one Harris as an intermediary, one-half of his interest, being one-eighth of the leasehold. He died August 31, 1887, and in February, 1888, the other one-eighth was sold by the administrators to one James Kenney for the consideration of $110.

With respect to this sale to Kenney, the referee held that it was improvidently made and in violation of their duty as administrators, and that the administrator Hart should be personally charged with the value thereof, with interest. With respect to the assignment by the testator to Harris, and by Harris to Mrs. Johnson, the referee held that it was for a valuable consideration and valid. The surrogate confirmed so much of the report of the referee as held the administrator Hart chargeable with the value of the leasehold interest sold to Kenney, and also charged him with the costs, and refused to allow the administrators any commissions; and in the conclusion thus reached we concur, for the reasons which are clearly set forth in the opinion of the referee, and in the interlocutory and final decrees of the surrogate.

This leaves us to a consideration as to whether the view of the referee or that of the surrogate should prevail respecting the one-eighth interest assigned to Harris and bv Harris to Mrs. Johnston, and by the latter, for a valuable consideration, assigned to the administrator Hart individually.

Upon a former appeal it appeared that Johnson, for years prior to his decease, was insolvent, and that the administrators had knowledge of his insolvency. It further appeared that in 1886 he conveyed to one Harris one-eighth interest in the leasehold estate, which Harris, upon the same day, conveyed to the wife of

Upon this new proceeding before the referee additional evidence was offered, tending to show that, although the nominal consideration of one dollar was expressed in the assignment, Mrs. Johnston paid her husband $2,000 out of moneys which she stated she had obtained upon a mortgage of $8,000 on property owned by her. That $2,000 by check of the person from whom the loan was obtained, she gave to her husband, subsequently receiving the assignment in question. In addition, the. administrator Hart testified that Mrs. Johnston, shortly after the death of her husband, had informed hitn that she had paid, this consideration; and this testimony is supported by that given by Mrs. Johnston, who says that she did so tell the administrator Hart, and the latter states that thereupon he applied to counsel and was told that it was not his duty to attempt to set aside the Harris and Johnston assignments.

The referee thought, as is apparent, that the former decision, if these facts were supported, would not be applicable, because they are entirely different from those appearing upon the former appeal. The referee was not inclined to give much weight to the statement of Mrs. Johnston that she had loaned the $2,000, placing his decision upon the ground that the administrator was not liable for the reason “ that the counsel for the administrator advised him to bring no action after Mrs. Johnston had declared that she paid value for the assignment.” The learned surrogate seemed to think that little weight should be given to this conclusion ; otherwise, the report would have been in this, as in other, respects, confirmed.

We think, however, that the conclusion reached by the referee might have been placed upon both grounds; and without referring again to the one upon which he placed his decision, which appears in his opinion, let us for a moment consider the effect of the testimony now presented upon the question of whether it was the duty of the administrators to bring suit, or whether or not the creditors could successfully assail Mrs. Johnston’s statement that she was a purchaser for value.

Having regard to the price, viz., $1,500, at which she sold the interest to the administrator Hart, and the sale of the entire property for $6,300, as made in the partition suit, it must be assumed that $2,000 was full value for one-eiglith interest in this leasehold, which she testifies she loaned to her husband, subsequently receiving the assignment. Assuming, nevertheless, that it was the duty of the administrator to sue, we think that if it can be shown that in such an action he could not have prevailed, in the light of all that now appears, it would be extending the liability

Had he brought such a suit, he would have been met by testimony such as was produced before the referee in this case, of Mrs. Johnston asserting that she had loaned her husband $2,000, which was the consideration for the subsequent assignment to her of the leasehold interest. She testified to the sources from which she received this money and gave the date thereof. Her testimony is that she paid $2,000 in check, which, upon cross-examination, she stated was obtained by mortgaging her house on Fourth or Park avenue to one Buchanan Winthrop for $8,000, and that out of this $8,000 the $2,000 was paid. Upon Mr. Winthrop’s examination it appeared that he had made a loan, which was secured by the bond and mortgage of Mrs. Johnston and her husband upon her house, but that in payment thereof he gave one check to Edward S. Dakin, which money was undoubtedly paid,subsequently to Mrs. Johnston, but in what checks or in what way does not appear. It does appear, however, from Mr. Winthrop’s statement, that this payment was made on the 21st day of December, 1881. And, by a bank book of Mrs. Johnston’s husband, it would appear that upon the same day he deposited in the Bank of the Metropolis the sum of $1,889.52 — or almost $2,000. The fact, therefore, that the husband and wife on that day raised a mortgage, and the further fact appearing that the husband was insolvent, renders this deposit of the intestate to some extent confirmatory of the inference that could be drawn that this $1,889.52 was given to him by his wife.

Ilowever, without regarding this as conclusive evidence, we think it clearly appears that had the testimony been elicited in an action brought by the administrator against Mrs. Johnston to set aside the assignment to her, standing as it does upon the record uncontradicted, it could not have supported the burden of proof which would have been upon the plaintiff of showing that the assignment to Mrs. Johnston was without consideration, and, therefore, void as against creditors of her insolvent husband.

Upon this new testimony elicited and for reasons given, in addition to those assigned by the referee, we think that the modification made in the report of the referee in respect to this interest, should be reversed, and that the referee’s report as presented should be confirmed, and the interlocutory and final decree of the surrogate, in all other respects, affirmed, without costs to either party upon this appeal.

Yan Brunt, P. J., and Follett, J., concur.