In the matter of McAleenan.

IN THE MATTER OF THE JUDICIAL SETTLEMENT OF THE ACCOUNT OF HENRY McLAEENAN, AS EXECUTOR, &c. OF MARGARET LAVERY, DECEASED.

SUPREME COURT-APPELLATE DIVISION.--FIRST DEPARTMENT, JULY, 1900.

$2545.

Executor's Accounting. Transfer of right to payments from benerolent associations before death of testatrix, so that claims against such institution were not part of estate.

In an accounting in the Surrogate's Court, facts found by the referee stand in place of findings by the surrogate, although there be no findings by the surrogate.

The claim in such a case that, where no exceptions are filed by the appellant, no question is presented to the Appellate Court to review, cannot be sustained.

Where a referee is ordered to hear and determine there is no trial before the surrogate within section 2545 of the Code of Civil Procedure.

Where there has been a transfer of rights to receive payment under certain insurance policies, and an executor is sought to be surcharged therefor he cannot be so charged except for such money or property that was the property of the testatrix at the time of her death.

(Decided July, 1900.)

Appeal by the executor and the guardian ad litem for the infant appellants from the decree of the surrogate settling the accounts of the executor.

Augustine R. McMahon for special guardian-appellant.

W. Arrowsmith for executor and testamentary guardian.

M. Edward Kelley for James Hagerty & Co., creditorrespondent.

In the matter of McAleenan.

James F. Fogerty for Edward T. Cody, creditorrespondent.

A. C. Weil for L. H. Quinn, creditor-respondent.

INGRAHAM, J.-The executor to whom letters testamentary of the estate of Margaret Lavery had been issued presented his account to the surrogate for settlement, and creditors of the estate filed objections to the account, based upon the failure of the executor to charge himself with various sums of money received from benevolent associations, which became payable to the testatrix as widow of John Lavery, deceased. The questions presented on the accounting were referred to a referee. It appeared from the testimony before the referee that the executor received from two benevolent associations the sum of about $5,998: that John Lavery died on the 10th of December, 1897, and Margaret Lavery, his wife, the testatrix, on the 22d of December, 1897; that they left four infant children, who are the appellants in this proceeding, and were parties to the accounting. The executor qualified on the 29th day of January, 1898, and as testamentary guardian of these four infant appellants on the same day, and he subsequently received the amounts payable by the benevolent associations which he held as guardian for the infant appellants. There were two benevolent associations: one known as the Catholic Benevolent Legion, and the other the Royal Arcanum, of both of which John Lavery was a member. After the death of John Lavery proof of loss was furnished to those associations. It further appeared that a certificate of membership of the Catholic Benevolent Legion was issued to John Lavery, and that Margaret Lavery, his wife, was named as beneficiary in said certificate. The benefit payable on the death of John Lavery would be $3,000. This amount was paid by check dated March 19, 1898,

In the matter of McAleenan.

payable to the order of Margaret Lavery, wife and beneficiary of John Lavery, deceased; was indorsed by Margaret Lavery, wife and beneficiary of John Lavery, and by Henry McAleenan, executor, and was duly paid. In regard to the Royal Arcanum, it appeared that John Lavery was a member of the corporation, an organization incorporated under the laws of the State of Massachusetts for the purpose of helping widows and orphans and members; and that association paid $2,298 by a check to McAleenan, as guardian for the children of John Lavery.

66

There were introduced in evidence two instruments executed on December 17, 1897, by Margaret Lavery, and duly acknowledged by, one of which she sold, assigned and transferred unto Henry McAleenan, as trustee for my children, Mary, Catharine, Daniel and Margaret Lavery, all my right, title and interest to the benefit certificate No. 18,753 of the Catholic Benevolent Legion, and hereby authorize him to collect the insurance money due me thereunder from the Supreme Council of the Catholic Benevolent Legion, or from whatever source the same is payable to me." The other instrument was in substantially the same form, and sold, assigned and transferred her right, title and interest in and to the benefit certificate issued by the society known as the Royal Arcanum of the City of New York. It appeared that where these instruments were executed by the testatrix she stated to her attorney who drew them that she wanted this money to go to her children; that after she executed them she handed them back to her attorney, who said, "Mrs. Lavery, I will hand these to Mr. McAleenan?" and she said, "Yes." The constitution of the Royal Arcanum provides that "In case of the death of the person or persons named in the order before deliv ery is made, the order shall be returned to the supreme secretary with a statement of the facts signed by the regent, treasurer and secretary, under seal, and a new

In the matter of McAleenan,

order shall be drawn payable to the person or persons entitled to the benefit."

Upon this evidence the referee found that prior to the decease of Margaret Lavery, subsequent to the death of John Lavery, and before the collection by Margaret of the benefits which she was then entitled to receive from the Catholic Benevolent Legion and the Royal Arcanum respectively, she made and executed two instruments of assignment, under seal, both dated December 17, 1897, one of which specified that she sold, assigned and transferred to Henry McAleenan, trustee for her children, Mary, Catharine, Daniel and Margaret Lavery, all her right, title, &c., to the benefit certificate No. 18,753 of the Catholic Benevolent Legion, and authorized him to collect the insurance money due her thereunder from the Supreme Council of the Catholic Benevolent Legion or from whatever source the same was payable, &c.; and the other of which specified that she sold, assigned and transferred unto Henry McAleenan, as trustee for her children, Mary, Catharine, Daniel and Margaret Lavery, all her right, title and interest in and to the benefit certificate issued by the society known as the Royal Arcanum of the City of New York, all her interest in and to the insurance due to her, and authorized him to collect any insurance money due thereunder or in consequence of her husband, John Lavery, being a member of said order; that at the time of the execution of the said instruments of assignment the said Margaret Lavery was ill, and confined to her bed; that W. Arrowsmith, Esq., was her legal adviser and attorney, and that she directed him to deliver said instruments to Henry McAleenan; that he delivered said instruments of assignment to said Henry McAleenan; that said Margaret Lavery, at the time of her death, was indebted to certain persons specified in the report of the referee for goods sold and delivered to her; and, as a conclusion of law, that Henry McAleenan, the

In the matter of McAleenan.

executor of Margaret Lavery, deceased, was bound to account for several sums of money collected by him as such executor, but that so much of such moneys as he collected and received from these two benevolent associations, aggregating $5,998, is exempt from the claims of the creditors of Margaret Lavery, deceased, and that none of the creditors are entitled to receive any part thereof; that Henry McAleenan is chargeable with and bound to account to the infant children of Margaret Lavery, deceased, for the amount collected from such benevolent associations.

To this report the creditors filed exceptions which, coming on before the surrogate, were sustained, the surrogate holding that the moneys paid by these associations were exempt from the claims of the creditors of John Lavery, and were also exempt from the claims of the creditors of Margaret Lavery until they were actually paid, but that by their payment to her or to her executor they lost their special exempt character and became, like other assets of her estate, subject to the payment of her debts, and a decree was entered sustaining such exceptions and surcharging the executor with the total amount of the money received by him, including the amount paid to him from these benevolent associations. From that decree the special guardian for the infants and the executor appeal.

There were no findings by the surrogate, and it is claimed by the respondent that, in the absence of exceptions filed by the appellants, no question is presented to the Appellate Court for review. We think, however, that this claim cannot be sustained. The facts were found by the referee, and they stand in place of a finding of fact by the surrogate. The surrogate did not disturb these findings of fact, but, upon the facts found by the referee sustained the exceptions to his conclusions of law that the executor was not chargeable with these sums received