Page images
PDF
EPUB

As already noted, this is not an action in equity asking for an accounting and determination as to the condition of the trust estate. It is an action at law. The complaint does not allege that any accounting has been had by the receiver. It does not allege lack of assets in his custody or inability to pay. It assumes that the recovery of the judgment and the mere omission to pay fixes the liability of the sureties on the bond. It does allege the insolvency of Leslie. If the judgment is regarded as one against him personally, then the sureties are not responsible. People v. Pennock, 60 N. Y. 421. Their liability is for failure by him to discharge “faithfully the duties of his trust.”

After the recovery of the judgment by Casey an order was granted at Special Term of the Supreme Court July 28, 1902, on notice to the receiver, but not to the sureties, directing Leslie, as receiver, to pay to the plaintiff within 10 days the amount of the judgment. There was no accounting in Special Term, the condition of the trust fund was not presented to it, and the order does not add to the force of the judgment against the sureties. That order recites:

“That said $2,950 never became assets in the hands of sald receiver, and should have been restored to the plaintiff on the failure of the defendant to consummate said sale."

If it be true that this money is not to be considered part of the assets of the trust fund, then the sureties are not liable. As was said in 11 American & English Encyc. of Law (2d Ed.) p. 883:

“It is held that the sureties on the bond of an executor or administrator are not liable for property received by him, which is neither assets of the estate nor subject to distribution by him, and to which as the legal representative of the decedent he was not entitled, although the court erroneously authorized him to receive it."

The court below, in denying a new trial, did so upon the ground that the judgment recovered by Casey against the receiver was conclusive upon the sureties, and the case was tried by the plaintiff's counsel upon that assumption. We cannot concur in this opinion. The authority relied upon for the decision was Douglass v. Ferris, 138 N. Y. 192, 33 N. E. 1041, 34 Am. St. Rep. 435. In that case a guardian had made a fraudulent settlement with his ward by turning over worthless property to him. The ward signed a receipt in full to the guardian, consenting that a decree be entered in the Surrogate's Court discharging the guardian, which was done. On discovering the fraud the ward commenced an action in the Supreme Court against his former guardian to set aside the receipt and decree and to recover the sum originally due him, and prevailed in the action. An execution was issued against the guardian and returned unsatisfied, and he then commenced an action on the bond, and recovered a judgment, which was affirmed by the Court of Appeals. There were several reasons assigned by the court why the action was maintainable against the surety without an accounting. In the first place, it was necessary for the ward to commence an action in Supreme Court against the guardian to set aside the decree and receipt, for the Surrogate's Court lacked the power to afford this relief. When the Supreme Court once entertained jurisdiction, it retained it over the whole case, to and 140 New York State Reporter adjust the rights between the guardian and the ward. In the second place, the condition of the bond given by his guardian and his sureties was that he should not only "faithfully discharge his duties as guardian,” but also should "render a just and true account of all moneys and property received by him, and of the application thereof, and of such guardian in all respects to and before any court having cognizance thereof when thereunto required.” The Supreme Court was one having jurisdiction of the subject matter and the judgment was as binding upon the sureties as a decree of the Surrogate's Court settling his accounts. As the court said, at page 201 of 138 N. Y., page 1044 of 33 N. E. (34 Am. St. Rep. 435):

"The duty of the guardian guaranteed by his sureties was to account before any court of competent jurisdiction for the money or property that came to his hands by virtue of the trust, and, as the Supreme Court had such jurisdiction, its judgment against the guardian had, at least, the same force and effect as the degree of the surrogate would have had. The sureties by their contract had so connected themselves with the obligations of the guardian, and with the proceedings to bring him to an account, and with the judgment rendered, that it bound them, as well as the guardian, as to all questions necessarily involved.”

The condition in the bond of an administrator is that he will obey all orders of the surrogate touching the estate committed to him. By reason of this obligation the decree of the surrogate is conclusive upon the surety. The breach is of a condition within the strict letter of the bond, and for the performance of which the sureties have undertaken in express terms to become responsible. The limit of the sureties' undertaking on the bond of the receiver of this corporation was that he would faithfully discharge the duties of his trust, and the authorities place a different construction upon this provision than upon that embodied in the bond of an administrator. Thomson v. Am. Surety Co., 170 N. Y. 109, 114, 62 N. E. 1073; Lesster v. Lawyers Surety Co., 50 App. Div. 182, 186, 63 N. Y. Supp. 804.

In Thomas v. Hubbell, 15 N. Y. 405, 69 Am. Dec. 619, a deputy sheriff gave a bond to the sheriff containing the condition that it was to be void if Hubbell, the deputy, well and faithfully in all things performed and executed the duties of deputy sheriff. The deputy had levied upon property which he allowed to be removed from his custody. On account of this dereliction of duty the sheriff was sued, and judgment obtained against him, which he paid. The deputy had notice of the action, but no notice was given to his sureties on the bond. The sheriff sued the deputy, and the judgment was received in evidence against the sureties. They sought to prove that none of the property taken from the possession of the deputy belonged to the defendant in the execution, and this evidence was excluded. The court, in reviewing the question, held that the judgment was not conclusive against the sureties, basing its decision upon the terms of the condition of the bond.

In Thomson v. MacGregor, 81 N. Y. 592, the action was on the bond of a receiver, which had been given six months after his assumption of the duties of his trusteeship, and which contained the condition:

"If the said Charles B. Riker [the receiver) shall henceforth faithfully discharge the duties of his trust.”

Upon the receiver's accounting, he was directed to pay over to his successor a certain sum, which he failed to do. The surety had no notice of the accounting. In an action against him upon the bond he endeavored to show that the receiver's delinquencies occurred before the bond was given; but the evidence was excluded, and the court reversed for that error. After distinguishing a bond of this character from the condition in an administrator's bond, the court say, at page 598:

"In every decision which has made the adjudication against the principal conclusive upon the surety, it has been founded on apt words or phrases other than a general promise to perform duty, and which indicated an understood purpose to contract beyond the ordinary liability. Where the condition of the bond is to obey the orders of the surrogate, to pay any deficiency arising on a foreclosure, to pay all damages and costs that may be recovered, there is apparent on the face of the instrument a purpose to submit to the judgment as conclusive."

And again at page 599:

"As between the principal and the creditors of the fund, it is the receiver's duty to pay according to the order, for he has been heard, and is bound by the adjudication. But, as between the surety and such creditors, it is not the receiver's duty to pay according to an order made without the surety's knowledge, as to which he has not been heard, and which is not against him, a binding adjudication.”

Of like effect are: Douglass v. Howland, 24 Wend. (N. Y.) 35, 52, · et seq.; Lesster v. Lawyers' Surety Co., 50 App. Div. 181, 63 N. Y. Supp. 804; Aeschlimann v. Pres. Hospital, 165 N. Y. 296, 300, 59 N. E. 148, 80 Am. St. Rep. 723; Thomson v. American Surety Co., 170 N. Y. 109, 62 N. E. 1073; De Colyar on Law of Guaranties (3d Ed.)

P. 207.

If the defendant was able to show that Casey only paid $1,500 on the purchase price of the property which he bid off, or that some portion had been repaid to him, under the authorities cited, he would have been permitted to do so. The defenses upon which proof was given might have been held sufficient by the court to exonerate the defendant from liability, except for the fact that the court decided that the judgment against the receiver was conclusive upon the sureties, not merely of the amount of the demand, but as to all the facts determined by it. The judgment and order should be reversed, and a new trial ordered, with costs to the appellant to abide event.

Judgment and order reversed, with costs to the appellant to abide event. All concur (ROBSON, J., in result), except McLENNAN, P. J, who dissents.

and 140 New York State Reporter

BRYAN V. CARROLL et al.

(Supreme Court, Appellate Division, Third Department. November 13, 1907.)

1. VENDOR AND PURCHASER-REMEDIES OF VENDOR-FORECLOSURE OF INTER

EST OF PURCHASER.

Intestate, being in possession of land under the owner, on January 24, 1881, made a contract under seal with a mortgagee's executrix, whereby the executrix agreed to sell and convey the land to him for a fixed sum on her purchasing at foreclosure sale, and intestate agreed to secure said price by mortgage on receiving the deed. Intestate and his heirs have had possession ever since. In May, 1881, the executrix purchased the land under foreclosure, but did not receive a deed, though entitled to it. She died in 1886. In 1888 the executrix's daughter acquired all interests of the mortgagee's estate and his executrix's estate in the contract, and in 1890 received a deed under the foreclosure. In 1886 intestate owed a balance of $419.58 on the contract, and since then he and his heirs have occupied the land without compensation. The executrix, her daughter, and the daughter's executor have offered to fulfill the contract, and the executor is able and willing to perform the same, but intestate and his heirs have refused to perform their part or to relinquish possession. Held, that the executor may sue to foreclose intestate's heirs' interest in the land, and have the land sold for the amount due the executor; the fact that the daughter received the deed being inconsequential, if irregular,

since she and her successor bave held the title for intestate's heirs' benefit. 2. EXECUTORS AND ADMINISTRATORS-FORECLOSING MORTGAGE-AUTHORITY TO

DISPOSE OF PROPERTY.

As incidental to a mortgagee's executrix's authority to foreclose the mortgage, she could dispose of the property which came to the estate

through the foreclosure. 3. VENDOR AND PURCHASER-CONTRAOT-MUTUALITY.

Where one contracted to sell land to be acquired at foreclosure sale, and became the equitable owner and capable of conveying the property, and the purchaser was in possession under the contract and made pay. ments thereon, the vendor became obligated to fulfill the contract, and the contract is mutually enforceable, though at first it may have lacked mutuality on the ground that the vendor did not absolutely bind herself to convey.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 48, Vendor and Purchaser, 88 17-20.]

Appeal from Special Term, Saratoga County.

Action by William W. Bryan, individually, and as Susan W. Bryan’s executor, against Patrick H. Carroll, John M. Carroil, and others. From an interlocutory judgment overruling a demurrer to the complaint, defendant John M. Carroll appeals. Affirmed, with leave to withdraw demurrer and serve an answer.

The demurrer challenges the complaint, on the ground that it does not state facts sufficient to constitute a cause of action, the judgment demanded is that the defendants be barred and foreclosed of all right, claim, and equity of redemption in certain real estate described in the complaint, and that the said real estate be sold to satisfy the amount due the plaintiff by reason of the facts alleged. Such facts chronologically stated are substantially as follows: In 1868 Daniel Moore executed to William L. F. Warren a mortgage on said real estate. Thereafter Patrick J. Carroll went into possession of said premises under said Moore, and was so in possession on January 24, 1881, when the contract hereafter described was executed. In 1875 said William L. F. Warren died, leaving a last will and testament wherein Eliza War

ren and John A. Bryan were named as executors, and wherein all his residuary estate was devised and bequeathed to his widow, said Eliza Warren, for life, with the remainder after her death to her two daughters, Susan W. Bryan and Elizabeth B. W. Westcott. Letters testamentary under said will were issued to said Eliza Warren in the year 1875, but not at that time to said John A. Bryan, the other executor named in the will. In 1880 Eliza Warren, as such executrix, instituted an action for the foreclosure of said mortgage, making said Patrick J. Carroll a defendant therein. Pending such action, and on January 24, 1881, said Eliza Warren and said Patrick J. Carroll made a contract under seal, whereby said Eliza Warren was to sell and convey to said Carroll, for a price therein specified, the said premises when she should complete the foreclosure of the said mortgage thereon, and should become the owner of the premises by purchase at the foreclosure sale, and said Carroll was to remain in the possession of said premises and execute a bond and mortgage to the said Eliza Warren for the amount he agreed to pay therefor on receiving from her the deed provided by said agreement. In furtherance of said last-mentioned contract, the said Carroll entered into and remained in possession of such premises until he died Intestate in August, 1888, and since that time his heirs at law, of whom the appellant is one, have remained in such possession. In May, 1881, said Eliza Warren became the purchaser of said premises under the judgment of foreclosure entered in the action to foreclose said mortgage as aforesaid, but did not receive a deed of said premises, although entitled thereto. In 1886 said Eliza Warren died, leaving a last will and testament, wherein she devised and bequeathed all of her estate to said Susan W. Bryan, and appointed William W. Bryan and said Susan W. Bryan executors thereof, which will was admitted to probate and the executors therein qualified as such. In 1888 letters testamentary un. der the will of said William L. F. Warren, deceased, were issued to Jolin A. Bryan, the remaining executor named in said will after the death of said Eliza Warren. In 1888 said Elizabeth B. W. Westcott, by an instrument under seal, assigned and transferred to said Susan W. Bryan all her right, title, and interest in and to said contract between said Eliza Warren and Patrick J. Carroll, and at the same time said John A. Bryan, as executor of the will of William L. F. Warren, deceased, and said Susan W. Bryan and William W. Bryan, as executors of the will of Eliza Warren, deceased, by an Instrument under seal, ratified and confirmed the said assignment of the said Elizabeth B. W. Westcott to said Susan W. Bryan, and also assigned and conveyed to said Susan W. Bryan all interests which the said estates separately and respectively had in and to such contract. In 1890 said Susan W. Bryan received the deed of said premises under the judgment in the said foreclosure action. In 1899 said Susan W. Bryan died, leaving a last will and testament, wherein the plaintiff said William W. Bryan was named as executor and empowered with the sale of real estate, which will bas been duly admitted to probate and letters testamentary issued to said William W. Bryan. It is further alleged in the complaint that while in possession of said premises under said contract of January 24, 1881, and from that time down to October 4, 1886, said Patrick J. Carroll made payments on account of the said contract and became entitled to credits for the value of services, so that at the latter date there was due from him on account of said contract $419.58, no part of which has been paid, and that since said last-mentioned date of October 4, 1886, he and those claiming under him have occupied the said premises without compensation, and that said Eliza Warren prior to her death and said Susan W. Bryan after she received the deed of said premises as aforesaid, aud the plaintiff since her death, have offered to fulfill said contract, and that the plaintiff is now able and willing to perform the same, but that the said Patrick J. Carroll, and since his death his heirs, have refused to perform the same or to relinquish possession of the premises, although in occupation thereof.

Argued before SMITH, P. J., and CHESTER, KELLOGG, COCHRANE, and SEWELL, JJ.

« PreviousContinue »