
    Mary L. O’Flyn, App’lt, v. George A. Powers et al., Resp’ts.
    
    
      (Court cf Appeals,
    
    
      Filed January 17, 1893.)
    
    1. Executors and administrators—Sale of real estate—Limitation.
    The statute of limitations is suspended as against a debt due from the decedent to the executor from the time of decedent’s death to the first accounting, and he can exercise a power - of sale of real estate contained in the will, to satisfy his own claim, even though he voluntarily made his first accounting fourteen years after decedent's death, if the sale was made within six years thereafter.
    2. Same—Code, § 2750.
    The rights of creditors of decedents who died prior to September 1, 1880, and upon which estates letters had been granted more than three years prior to that date, were saved by § 3352 of the Code.
    3. Same.
    Plaintiff’s grandmother, who died in 1873, devised her residuary estate to defendant in trust for her children, with power of sale of the real estate for the purpose of paying incumbrances, or for any other purpose which, in his discretion, was advisable. Defendant accounted for the first time in 1887, and, at such time, a claim in his own -favor was allowed, and he having no personal property of the estate in. his hands to pay the same, offered the real estate for sale at public auction in 1892, to pay the same, but the purchaser refused to accept title. Held, that the claim of the executor was not barred by the statute, and that he had the right, under said power, to sell the real estate for the balance due him, and that the purchaser must accept the title.
    Appeal from judgment of the city court of Brooklyn, general term, in favor of defendant, granted upon submission of controversy without action.
    The defendant, George A. Powers, is executor and trustee under the will of Sarah Macomber, who died April 3, 1873. The will was proved in Hew York county, April 10, 1873, and letters testamentary thereon were issued to the executor on the same day. The testatrix left three children, Robert D., Edward D. and Mary L. The daughter Mary was the wife of George A. Powers, and died April 4, 1874, leaving six children, the plaintiff being one of them. By her will the testatrix devised her residuary estate, consisting of real and personal property, equally in three separate trusts to the defendant, George A. Powers, for the benefit of her three children respectively for life, remainder to their issue, and upon the death of -either of the sons without issue, the share of the son so dying to go to the daughter Mary, if living, or in case of her death, to her issue.
    Cfc.App.] O’Flyn v. Powers et al.
    
    The children of the daughter Mary L., upon her death, took one-third of the residuary estate in fee. Eobert D., one of the sons of the testatrix, died January 1, 1887, without descendants. The son Edward D. is still living. Two undivided third parts of the estate have, as the result of the death of Mary L. and Eobert D., vested absolutely in the children of Mary L., and one-third part remaining in trust for Eobert D., the sole surviving son of the testatrix. The ninth clause of the will is as follows:
    “ Ninth. I hereby authorize and empower my said executor, at any time before the final division and settlements of my estate, whenever he shall think proper to do so, either for the purpose of paying off incumbrances upon my real estate or for the purpose of protecting the same, or of more equitably and conveniently dividing the same, or for any other purpose which, in his discretion, may render it advisable so to do, to sell and convey, or to mortgage any part or parts, portion or portions, share or shares, * * * in such manner and for such sum or sums, and upon
    such terms as to him shall seem meet and proper, and to execute, acknowledge, stamp and deliver good and sufficient instruments in the law for conveying or mortgaging the same.”
    There was .a large real estate which passed under the will.
    The executor, George A Powers, never filed or rendered any account, or had any accounting or any judicial settlement of his accounts as executor until the 29th of September, 1887, when he voluntarily instituted before the surrogate of the city and county of New York a proceeding for such judicial settlement, and filed an account of all his proceedings as such executor, and on April 24, 1890, a decree was entered settling his accounts. In the accounting he presented a claim for certain alleged debts owing to him by the testatrix, Sarah Macomber, and asked to prove them and have them allowed. They were contested by the plaintiff, Mary L. O’Flyn, and were, upon proof adduced, allowed by the surrogate at the sum (including interest thereon) of $183,700.32, and to the payment of which the surrogate by his decree applied the final balance found against the said George A. Powers, as executor, on the accounting of $56,845.26, less commissions and expenses, leaving the unpaid balance of said debts so allowed, $79,632.56, and it is admitted that he has no assets in his hands as executor to pay such balance.
    After the rendering of the decree on the accounting, and on March 16, 1892, the defendant, George A. Powers, professing to act as executor, offered for sale at public auction a plot of the real pi’operty devised by the will, after due public notice, and the same was bid off by Seaman L. Pettit, one of the defendants herein, for the sum of $77,100, he being the highest bidder, and the executor had offered to execute and deliver as such executor a deed of the premises, which the purchaser refused to accept on the ground that it would not convey a good title. The executor made the sale mentioned for the sole purpose of realizing money to pay to 'himself the balance of the debt against Sarah Macomber, as ascertained and allowed by the surrogate. The parties hereto, on an agreed case, submitted to the general term of the city court of Brooklyn the question whether the said executor George A. Powers has the power under the will of Sarah Macomber to make the sale and conveyance mentioned, and convey a good title in fee thereby. The court below determined that such power existed, and that a conveyance by the executor pursuant to the sale would convey a good title.
    
      Wm J. Gaynor, for app’lt; Edward E. Sprague, for resp’ts.
    
      
       Affirming 49 St. Rep., 325.
    
   Andrews, Ch. J.

It is to be accepted as a primary and undoubted fact that the testatrix, Sarah Macomber, was at her death indebted to the defendant, George A. Powers, and that of this debt there remained due and unpaid by her estate to him at the date of the surrogate’s decree, April 24, 1890, after applying thereon all the personal estate of the testatrix in his hands, the sum of $79,632.56. The only question affecting the validity of the debt, left open by the facts agreed upon, is whether the remainder of the debt remaining unpaid at that date was barred by the statute of limitations.

There is no impeachment of the facts found by the surrogate as to the amount of the original debt, the balance unpaid thereon, nor any suggestion affecting the consideration, or'which casts any suspicion upon the bonafides of the claim. The plaintiff, therefore, has not questioned and is not in a situation to question the validity of the debt of the defendant against the estate of Sarah Macomber, except upon the point of the statute of limitations.

The decree of the surrogate necessarily determined that the statute had not run against the demand. But his decision did riot bind the heirs or devisees of the testatrix, who were not, as such, parties to the accounting. That proceeding was between the executor and the creditors, next of kin and legatees_ of the testatrix, and was conclusive as to the existence and validity of the debt, as a claim against the estate, payable out of the personalty. But where real estate devised or descended is sought to be charged with the debts of the decedent, the validity and existence of the debts are open to contest by the heirs or devisees in the proceeding, and the decree of the surrogate on the_ accounting does not conclude them, and, except in case of a judgment recovered against the executor or administrator on the merits, is mot even prima facie evidence of the existence of the debts. 2 Eev. St., 102, § 10; Laws of 1843, chap. 172 ; Code Civ. Pro., §§ 2755, 2756.

Upon the only point now in controversy affecting the validity of the debt claimed by the defendant, George A. Powers, against the estate of Sarah Macomber, viz.: Whether it was barred by the statute of limitations when the sale of March 16, 1892, was made, it is clear, we think, that the bar of the statute had not then intervened. By § 33 of title 3, chap. 6, part 2 of the Revised Statutes, an executor or administrator was not allowed to retain any part of the property of the decedent for his debt until it was proved before the surrogate, and by the Laws of 1837, chap. 460, § 37, it was enacted that such proof could be made on the return of a citation for that purpose, or on the final accounting of the executor or administrator, and this section was amended by cjhapter 594 of the Laws of 1868, by adding this provision: “ But the statute of limitations shall not be available as a defense to such debt or claim, provided the same shall be presented at the first accounting, and provided the same was not barred by statute at the time of the death of the testator or intestate.” The operation of this statute was to suspend the running of the statute of limitations against the debt or claim in favor of the executor or administrator until the first accounting, and a ■similar provision is contained in the Code of Civil Procedure, § 2740.

The first accounting by the defendant, George A. Powers, was commenced September 29,1887, and terminated in a decree April 24, 1890, and he advertised the land under the power of sale, and it was sold March 16, 1892. The statute of limitations .was, by the force of the statute, suspended as to his debt until the accounting of 1887, and it is not claimed that by adding the period ■which elapsed between the accounting and the sale to the period (if any) during which the statute had run prior to the death of ■the testatrix, the six years statute would have barred the debt. There was, therefore, at the time the executor undertook to exercise the power of sale given by the will a valid debt against the •estate of the testatrix in his favor not barred by the statute of limitations and' to which there was no defense.

The fundamental proposition upon which the plaintiff’s counsel relies to establish that the executor, George A. Powers, could not lawfully sell any part of the real estate of the testatrix, for the purpose of realizing a fund for the satisfaction of his own debt, is that by the lapse of time the right of any creditor under the statute to proceed by application to the surrogate, or otherwise, to procure a sale of the real estate of the decedent for the payment of debts, was barred, and that as a consequence the discretionary power of sale given to the executor by the will could not be lawfully exercised for the payment of debts which could not be enforced against the realty devised, since it is, as claimed, a necessary limitation upon the power that it could not be exercised except to relieve the land of debts legally chargeable thereon. It is also insisted that there is an added disability upon the executor in this case, by reason of the fact that he is seeking to exercise the power for his own benefit. It is not claimed that the power of sale given by the will in question does not extend to a sale for the payment of debts. We understand that it is conceded that it comprehends this purpose, and so it seems to have been decided in Matter of Powers, 124 N. Y, 361; 36 St. Rep., 347.

We are of opinion that the remedy of the executor to apply in his capacity as creditor to the surrogate for a compulsory sale of the real estate of the decedent for the payment of his debt was not barred by the three years limitation contained in § 2750 of the Code of Civil Procedure, or otherwise. It is provided by that section that “ at any time within three years after letters were first duly granted within this state upon the estate of a decedent,” an executor or administrator, or a creditor of the decedent, may Setition the surrogate for a decree directing the disposition of the ecedent’s real property for the payment of debts. This section took effect September 1, 1880. The letters in this case were issued April 10, 1873. If this section applies to this case, then no proceeding in the surrogate’s court could have been taken by the executor, or by a creditor, after September 1, 1880, because the letters were issued seven years before that date.

The same result would follow in every case of administration where letters have been issued more than three years before the section took effect. If in such cases there was a remedy in favor of creditors, to compel a sale of the real estate of a decedent for the payment of their debts prior and up to September 1,1880, not barred on that day, it is impossible to attribute to the legislature an intention to cut off such remedy by the enactment of § 2750 of the Code. By the law in force antecedent to the enactment of this section, an executor or administrator could apply for an order to sell real estate at any time within three years after the granting of the letters, but there was no statutory limitation upon the time within which creditors could make such application, except that it could not be made by creditors until after an accounting by the executor or administrator. Laws of 1837, ch. 460, § 72, as amended by Laws of 1843, ch. 172.

Since, in this case, there was no accounting until 1887, a creditor of Sarah Macomber could not, before that date, under the law as it existed prior to September 1, 1880, have made application to the surrogate for an order of sale. If, as claimed, § 2750 applies, his right was gone as soon as that section took effect.

We think the right of creditors of decedents who died prior to September 1,1880, and upon which estates letters had been granted more than three years prior to that date, as those rights existed when § 2750 took effect, were saved by § 3352 of the Code, which enacts : “ Nothing contained in any provision of this act other than in chapter fourth renders ineffectual, or otherwise impairs, any proceeding in an action or a special proceeding had or taken pursuant to law, or any other lawful act done, or right, defense or limitation lawfully accrued or established before the provision in question takes effect, unless the contrary is expressly declared in the provision in question. As far as it may be necessary for the purpose of avoiding such a result, or carrying into effect such a proceeding or other act, or enforcing or protecting such a right, defense or limitation, the statutes in force on the day before the provision takes effect are deemed to remain in force notwithstanding the repeal thereof.” The right which a creditor of the testatrix, Sarah Macomber, had on the day prior to September 1, 1880, to apply for an order to sell real estate whenever an accounting should occur, was, we think, a right accrued to him within the meaning of this section and was not, we think, affected by § 2750.

The fundamental proposition of the plaintiff's counsel, therefore, that no creditor could proceed to enforce the sale of the real estate of the testatrix at the time the executor proceeded to sell under the power, fails. The executor had a valid debt, not barred by the general statute of limitations; there had been an accounting and the condition existed under which he, as creditor, could have applied to the surrogate for an order to sell real estate for its payment. It was a proper case, therefore, for the exercise of the power of sale given by the will, unless certain other objections which have been urged should bar its exercise. The fact that the executor voluntarily rendered an account, and this, after the time had elapsed when an accounting could be compelled by creditors or legatees, does not deprive him of the benefit of such accounting in determining the question whether there was an en-forcible claim for the sale of real estate, which could have been prosecuted by a proceeding before the surrogate. No fraud on his part in instituting the accounting is alleged or proved, and an accounting was essential to enable him to obtain an order establishing his debt and to secure the application thereon of the personal property in his hands as executor. The appellant was a party to the accounting and any defense thereto should have been made in that proceeding.

As devisee she cannot deny the efficacy of the proceeding as a compliance with the condition precedent to the enforcement of the claim of a creditor against the property devised.

The point that the executor could not exercise the power of sale for the payment of his own debt is not well taken. His debt is established as a valid claim. It was probably the principal debt owing by the testatrix. We are not aware of any authority which excludes an executor, upon whom the will confers a power of sale for the payment of debts, from exercising it for the payment of an honest debt of his own. He cannot become the purchaser on such a sale, and his proceedings are open to the scrutiny of the court. If he should undertake to sell for an invalid or outlawed debt, the court, on the application of the heir or devisee, would interpose for his protection. Butler v. Johnson, 111 N. Y., 204; 19 St. Rep., 85. There is no claim that the sale of March 16,1892, was in any respect unfair or that the price for which the property was sold was inadequate.

The question submitted related to the power of the executor to sell under the circumstances stated.

We think the power existed and the judgment below should, therefore, be affirmed.

Judgment affirmed, with posts.

All concur.  