
    Matter of the Judicial Settlement of the Account of Anna Clark and Ezekiel Fixman, as Executors of Nathan E. Clark, Deceased, for the Acts and Doings of Said Nathan E. Clark, as Executor of the Last Will and Testament of Jacob Rauth, Deceased.
    
      (Surrogate’s Court, New York County,
    
    
      November, 1910.)
    Executors and Administrators—Bights and Liabilities Between Representatives and Estate: Dealings of Representative with Estate, Beneficiaries or Corepresentatives—Use of Property for Individual Profit—Liability for Interests or Profits : Interest on Funds or Property—Sums Deposited in Bank.
    Trusts—Following Trust Property—Recovery of Bank Deposits made by Trustees.
    Where an executor under a power of sale given by the will sells certain premises and deposits the proceeds of such sale to his own credit in two banks, and at the timq of his death the balance in each bank to his credit was a part of such deposit, his executors must pay to the legal representatives of the estate of which he was the executor the aggregate amount of such balances with interest at two per cent, beginning thirty days after the executors of the deceased executor had qualified as such.
    The amount of disbursements made by the deceased executor from such deposits for taxes and repairs on and to his individual real estate is chargeable against the proceeds of a sale thereof made by his executor since his decease; the payment for taxes with Interest at six per cent, from the time of payment to the date of said sale; the amount disbursed for repairs without interest.
    As to disbursements for coal and electric light -for the tenants and for fire insurance of the deceased executor’s real estate, they are chargeable to the income therefrom rather than to the proceeds of the sale thereof, and as to them the estate of which he was the executor stands only as an unsecured creditor.
    Where disbursements from such deposits for premiums on the life insurance of the deceased executor formed only a part of the premiums paid upon the policies, the estate of which he was executor may elect to share in the proceeds of the policies in the proportion that the payments from said estate bear to the value of the policies at the time such payments were made.
    Upon an amount for which the estate of the deceased executor was indebted to the other estate, as to which amount the latter estate was an unsecured creditor, it is entitled to interest at six per cent, from the time that the deceased executor received the money and deposited it to his own account, such interest to be computed semi-annually.
    Proceeding upon the judicial settlement of the accounts of executors.
    Clarence M, Lewis, for petitioner.
    Herman Gettner, for objecting parties.
   Thomas, S.

The present accounting is by the executors of Nathan E. Clark, deceased, and concerns the acts and doings of said Nathan E. Clark as executor of Jacob Rauth, deceased. Nathan E. Clark, as the executor of Jacob Rauth and under a power of sale granted to him in the will of Jacob Rauth, sold the premises No. 104 East Eighty-fifth street and deposited the proceeds of such sale to his own credit in the Twelfth Ward Bank and in the Riverside Bank. It sufficiently appears from the agreed statement of facts that the balance in the Twelfth Ward Bank and that in the Riverside Bank at the time of his death were parts of the moneys improperly diverted from the estate of Jacob Rauth. The aggregate of these sums, amounting to $1,954.27, must be paid to the legal representative of the estate of Jacob Rauth, and the executors of Clark must also be charged with the interest which they might have received from the amount if they had deposited the moneys in a trust company. I fix this interest at two per cent., to begin thirty days after the executors of Clark qualified as such.

Disbursements were made by Clark from the moneys of the Rauth estate, improperly deposited to his own credit as already stated, for taxes and repairs on and to his own individual real estate in East Ninety-first street,. which real estate has been sold by the accountants, his executors, since his death. The payments for taxes relieved that real estate from liens, and part of the proceeds of that real estafe now in the hands of Clark’s executors represents that money, with interest thereon at six per cent, from the time of payment to the time of the sale, which will be directed to be paid to the legal representative of Jacob Rauth. The moneys-paid by Clark for repairs increased the value of the Ninety-first street property to the extent of the moneys so disbursed, and that amount, but without interest, will also be paid to the legal representative of Jacob Rauth. Disbursements for coal consumed in keeping the tenants of the Ninety-first street house warm, for electric light furnished for their comfort, and for fire insurance to indemnify Clark against possible loss by fire, were represented by the income of the Ninety-first street property and not by the money received on its sale. As to these the estate of Jacob Rauth must stand as an unsecured general creditor.

Clark used certain of the moneys of the Rauth estate in making payments of premiums on two insurance policies upon his own life, which policies were payable to himself or his own estate. Since his death the amounts of these policies, to wit, $20,000, less the amount of loans, aggregating $6,170, obtained from the insurance companies upon them by him, have been paid by the insurance company to his executors, and this money is now in their possession. The payments of premiums made out of the trust funds were the last payments of premiums made on these policies, and they were instrumental in keping the policies alive. The use by Clark of the moneys of the Rauth estate in making payments on the policies on his life for the benefit of his individual estate was a breach of trust. It was competent for the legal representative of the Rauth estate to elect either that the Rauth estate become a creditor by the transaction, with a lien upon the policies of insurance for the amount of the premiums advanced from that estate, or to adopt the transaction as one giving to the Rauth estate the rights of a participant in the proceeds of the policies. It happened that the payment of these premiums was a good speculation, and the Rauth estate now elects, as it has a right to do, to demand a share of the resultant profits. If the entire amount of the premiums which formed the price for the resultant payment of the policies had come from the Rauth estate that estate would have been entitled to the whole of the proceeds upon the principles laid down in Holmes v. Gilman, 138 N. Y. 369. Since these premiums formed only a part of the consideration for the policies, the Rauth estate may justly claim a right to share in those proceeds in the proportion that the payments from the Rauth estate bore to the value of the policies at the time those payments were made. This result the representatives of the Rauth estate propose to accomplish by treating the aggregate of premiums paid by Clark from his own funds as the value of the interest of Mr. Clark in the policies at the time when he made the improper use of the Rauth moneys, and this method of computation would seem to have been approved by the Appellate Division of this department in Dayton v. H. B. Claflin Co., 19 App. Div. 120. In this computation it will be noted that no interest on the earlier payments is taken into consideration, nor, as an offset to such interest, has the Value of the insurance that Mr. Clark enjoyed because of the earlier payments of premiums been accorded any weight. The facts in this case differ from those in the case last cited in this, that when Mr. Clark used the money of the Rauth estate the premiums previously paid by him had to the extent of $6,170 been returned to him in the form of loans on the policy, and when the Rauth money was used by him his interest in the adventure represented by the policies had to that extent been reduced. The theory upon which the representative of the Rauth estate asks to share in the benefit of these policies is in my judgment exceedingly conservative, and has the merit of being supported by positive, direct and controlling authority. Its application will require a determination that the Rauth estate is entitled to eleven and one-fifth per cent, of the total amount received under the policies of insurance, to wit, $20,000, and that eleven and one-fifth per cent, of that amount,-or $2,300, belongs to the Rauth estate, with interest at two per cent, since the time of the collection of the insurance.

As a result of all these direct charges in favor of the Rauth estate that estate is still an unsecured creditor for a consider- . able sum, and will be entitled to interest on this balance at six per c,ent. from the time when Clark received the moneys and deposited them to his own account such interest to be computed with semi-annual rests.

Tax costs and settle decision and decree on notice.  