
    Matter of the Judicial Settlement of the Account of John B. Whitbeck, as Sole Surviving Executor of and Trustee Under the Last Will and Testament of David Whiting, Deceased.
    (Surrogate’s Court, Greene County,
    January, 1898.)
    Accounting for distribution — Former accounting under Code Civ. Pro. § 3742, not a bar to a claim — Equitable assignment.
    Upon an accounting for distribution, under the Code of Civil Pro- . eedure, § 2743, it appeared that the will of a testator declared an equitable conversion of all his real into personal property except "as to certain real estate devised to bis Wife for life, which was subsequently to be sold and divided, and gave each of his.six children an equal share in' all his property. In 1873 one of two acting executors loaned a part o.f the share of a minor to her brother, who gaye her a note therefor and also an order on'the executor for its payment from his share. In 1885 the surviving executor procured a judicial settlement of his account, •under the Code of Civil Procedure, § 2742, to which the minor, then of age, Was made a party, but did not appear personally, nor present her note and order, or advise her counsel that she had them. The decree entered, after reciting that the executors had made certain other subsequent advances to the brother of the minor upon pledges of his interest in the estate, charged, them upon his share and authorized the surviving executor to retain a sufficient amount of it to pay or if, it was insufficient, to pay, in their order, the. other subsequent advances which had been made. Held, that the advance made by the executor himself from the moneys of the minor was prior in time, was "secured by the order, which' amounted to an equitable assignment ' pro tanto of the share of the brother and was entitled to a preference; and that the decree of 1885 made when,, as it -appeared, there were no moneys to distribute and when others distributable had not been, realized, was not a bar to the allowance óf the claim of the minor in the proceeding for distribution,- taken after the death, in 1894, of the widow, the time when- a final distribution could first be made.
    . Proceedings on judicial settlement of the accounts of an executor.
    A. Frank B. Chace & Sons, for executor.
    Frank H. Osborn, for legatees.
   Sanderson, S.

David Whiting died in March, 1872, leaving a last will and testament, which was admitted to prohate by the surrogate of Greene county, April 10, 1872. Two of the executors named in the will, namely, Hiram Macy and John B. Whitbeck, qualified. The third executor, George Titus, failed to qualify. The testator left him surviving, his widow, Anna Whiting, and seven children, viz.: David T. Whiting, John F. Whiting, Addison E. Whiting, Ann Louisa Case, Armenia Whiting, Etta Whiting and Ira C. Whiting.

The will states that certain real estate having been conveyed to Ira 0. Whiting, no provision is made for him. Armenia Whiting married since the date of the will, and is known in this proceeding as Armenia W akeman. A portion of the real estate is devised to the widow during her widowhood, or life and occupancy. The executors are directed to invest a sufficient sum of money to produce an income of $1,400 a year and to pay the same to the widow during her fife. The executors are also directed to sell all tire real estate belonging to the testator, excepting that portion which was devised to the widow, as soon as. conveniently could be done, after the testator’s death. On the death of the widow or her remarriage, or ceasing to occupy the premises, the real estate which had been devised to her was directed to be sold, and converted into money. The will, therefore, makes an equitable conversion of the real estate into personal property. Subject to the above provision for the widow, all the property belonging to the testator is to be divided equally between the ,six children first above mentioned.

Hiram Macy, one of the executors, died in May, 1884, and John B. Whitbeck has continued to act as sole surviving executor and trustee under the will.

■ At the time of her father’s death Etta Whiting was a minor. While she was yet a minor, the executor John B. Whitbeck loaned $1,500 out of her share of her father’s estate, to her brother, David T. Whiting, who gave back his note which reads as follows:

“ State of Illinois, .Chicago, May 13, 1873.

“ On demand for value received ! promise to pay Etta Whiting, or order, $1,500 with interest from date at eight (8) per cent, per annum. -

“ David T." Whitixg.”

On the back of the note the following words are written:

“ Chicago, May 13, 1873. Mr. I. B. Whitbeck:. Please pay to the order of Etta Whiting, fifteen hundred dollars’ with interest at 8 per cent, from date at the final settlement of the estate of David Whiting, deceased, unless sooner- redeemed. The above order is to secure this. note.

“David T.. Whiting.”

The following payments are indorsed on this note: “ Received on the within note June 1, 1875, $240; for two years’ interest, August, 1876, $15; and September, 1876 $11; September,. 1878, $2.75.

Mr. Whitbeck-delivered this note with the order indorsed on.it to Etta, and at the same time told her that he had let David T. have $1,500 out of her interest in her father’s estate; that David T. had given his note as security and that she would be paid at the final settlement of the estate without fear of any loss. From what appears in the evidence the words “ final settlement of the estate ” evidently refers to the settlement that would be made after the death of the testator’s widow. This $1,500 was charged to Etta in the accounts of the executor filed in this court in 1885.

The delivery of this note to Etta with the order on Whitbeck operated as an assignment pro tanto of David T. Whiting’s interest in his father’s estate and the knowledge and notice which Whit-beck had of this note and order made it binding on him. to pay the same when due to the payee and to no one else. Brill v. Tuttle, 81 N. Y. 454; Lauer v. Dunn, 115 id. 405, 409.

A judicial settlement of the account of the executor was had in 1885. Personal service of the citation to attend this accounting was máde on all the legatees including the executor of Hiram Macy, deceased. The executor appeared by counsel and the legatees appeared by counsel. Ho personal ■ appearance was made by Etta. Whiting nor was the note. she held against David T. presented for payment in this proceeding. Ho information reached her counsel that she held such a note. At the time of this accounting Etta.was of full age. On the 21st day of September, 1885, a decree was entered judicially settling the account, of John B. Whitbeck and Hiram Macy, executors of and trustees under j;he will of David Whiting, deceased, and of John B. Whitbeck as‘survivor of said executors and trustees. In' the summary of the- account included in decree Whitbeck is charged with $102,022.92 and is credited with. $106,388.42, leaving a balance of $4,365.40, dne from the estate to Whitbeck; the estate of Hiram Macy is charged with $12,328.55 and is credited with $11,436.96, leaving a balance dne the estate of Whiting of $891.59. The widow had been paid the full amount of the annuity due her and each of the legatees had .been paid $4,710 excepting John F. Whiting and Anna L. Case, to each of whom had been paid $4,610 “ on account of their respective distributive shares in the estate of their father.” A number of. assets are mentioned in the. decree as still in the hands of the executor which had not yet been converted into money and were not, therefore, ready for distribution. The balance.due Whitbeck, as settled and .allowed, amounting to $6,569.59 with interest, was charged upon the estate and Whitbeck was directed to retain the same but of the proceeds of the estate unadministered and undisposed of, when and as received. Then follows a provision which as it brings up the principal question in dispute is given in full:

“And it appearing that on the 15th day of June, 1873> at Chicago, in the state of Hlinois, the said John B. Whitbeck advanced to the said David T. Whiting the sum of $2,000 upon his promissory note dated on that day at Chicago aforesaid for $2,000, payable five years from the date thereof, with interest thereon at the rate of 8 per cent., payable semi-annually, seemed by a transfer and pledge of his share and interest in the estate of David Whiting, deceased, and upon which there was paid May 28, 1875, the sum of $110 and July 12, 1877; the sum of $100; and that thereafter and on the 1st .day of February, 1876, the said executors and trustees, John B. Whitbeck and Hiram Macy at Geneva, in the state of Wisconsin, out of the funds 'of the estate of the said David ' Whiting, deceased, advanced to said David T. Whiting a further sum of $1,750, upon his certain other promissory Uote in writing, dated on that day at Geneva, aforesaid, for $1,750 payable on demand, with interest at the rate of 10 per cent, per annum secured by a transfer and pledge of his remaining share and interest in said estate of David Whiting, deceased; it is further ordered, adjudged, and decreed that the said several sums so advanced to said David T. Whiting as aforesaid, with interest on said sums respectively from the time of such advancements respectively at the rates rer spectively above stated less the payments above mentioned as having been made on one of such advancements, be a charge upon the share and interest of the,said David T. Whiting in the said estate-of the said.David A¥Mting, deceased; and that the said John B. A¥hitbeck be, and hei is hereby authorized tp retain suffi- : cient of such share and interest to pay the full amount principal and interest remaining unpaid upon the same and each of the same; and that in case the said share and interest of the said David T. A¥hiting shall not be sufficient to pay both of the same with interest as aforesaid in full then that he be and is hereby authorized and directed to apply the same thereto, in the order above stated and in the order in which advancements .were made as aforesaid. And that all sums applied to said note for $1,750 and the interest thereon be held and treated as part of the estate of said David A¥hiting, deceased, and disppsed of by such executor, ■ as such.” .

There were no moneys on hand ready to lfe distributed at the time this decree was made, and no provision for distribution was made except the provision for the executor AYMtbeck to retain in his hands sufficient, funds of the estate and of the shares of the legatees to whom advancements had been made over and above what had been received: In-fact there is nothing attempted to' be done in the decree except the settlement of the executor’s account. The widow of David A¥hiting died August 4, 1894, and the surviving executor now asks that his account as executor and trustee be settled and a distribution made of the funds- in his hands!

In this proceeding Etta AFhiting produces her note and the order indorsed thereon made by David T. A¥biting and asks that it be paid as a first lien on the share of David T.

The executor objects to her claim on the ground that the decree made in September, 1885, is conclusive as to his rights and is a bar to recovery by Etta at least as a prior claim to his. The executor, during the course of his -administration, has paid or substantially so, all that was found due him in the decree made in 1885, but no payment has been made on his advances to David T.,' for which he was secured by the notes of David T., and by an assignment of his share in his father’s estate. All the funds belonging to. the estate of David A¥hiting remaining to be distributed on this accounting, excepting a few hundred dollars, have been deposited in bank under a stipulation and are to be drawn out only on an order of this court. Ro payments have been made to any \of the ' legatees since the last accounting, except to John F. A¥hiting, to whom has been paid $100. Presumably at the time these notes were given it was thought that the share of David T! in Ms father’s estate would be sufficient to pay them all when the time arrived for distribution. It is now certain that the amount due on David T.’s share will be insufficient to pay either one of these notes with the interest. The note to Etta as well as the order indorsed on it are prior in date to either of the advances made by the executors to David T., being prior.in time they are also prior in right. The executors had knowledge :of the order on them to- pay to Etta out of David T.’s share the amount due to her on his note. They had, therefore, no right to make advances either out of money belonging to the estate or out of their own funds on David T.’s share which could be a prior claim to hers on his interest in his father’s estate. The only objection made to the payment of her claim on the distribution to be made on this accounting is that the decree made in 1885 is conclusive on her and a bar to her claim.

There are two adjudications made by a surrogate in the settlement of an estate; one is an adjudication on the settlement of the executors’ or administrator’s account; another is on the distribution of the funds of the estate. The questions arising on these adjudications are different, and the force and effect of the decree as it relates to the settlement of the executors’ account, or as it relates to the distribution of the-fund among those who are entitled to it, also differ. These adjudications may be made in separate decrees or they may be made in the same decree. Johnson v. Richards, 3 Hun, 454, 457. The Code has also carefully preserved this distinction. 'Section 2472, subdivision 3, gives surrogates jurisdiction to settle the accounts of executors, administrators and testamentary trustees, and by subdivision 4 of the same section, to enforce the payment of debts and legacies; the distribution of the estate of decedents.” Section 2742 provides for the judicial settlement of the account of an executor or administrator and states what is the force and effect of a decree upon such settlement. Section 2743 provides for a distribution of the estate to the persons who are entitled thereto according to their respective rights. The force and effect of such a decree is also stated. The decree made by the surrogate in 1885 was a judicial settlement of the accounts of 'the executors. It showed a large amount due to the executors by the estate and that there was no money in the hands of the executors to pay this indebtedness. There was no money in the hands of the executors for distribution and no1 provision was made in the decree for distribution among the legatees. The decree directs the surviving executor to retain in his hands any money that may come into his possession, for the purpose of paying the balance found due him.; this he could have done without such a provision in .the decree. The decree also permits the executor to reimburse himself from David T.’s share for the amount he had advanced'to him. ' This also the executor could have done without a •decree provided there was anything coming to David T. from .the estate, which he had a.right to receive.- The .executor stood in David T.’s shoes.- If David T. had nothing coming.to him out of the estate which he had a right to' receive, the.executor could not reimburse himself at the (expense of a prior claimholder, of • whose claim he had due notice. The question which arises on this accounting was not :an issue in the former proceeding. Ho question as to the priority. of the executors’ advances. over the assignment of David T.’s share to Etta was made before the surrogate at that time. Under these circumstances is the decree of 1885 a bar?

A decree settling an executor’s account is conclusive only in regard to the facts specified in the statute. ' Section 2142, Code of Civil Procedure, provides that a judicial settlement of an executor’s account by a decree “ is conclusive evidence against all the parties who were duly cited or appeared, ■ and all persons deriving title from any of them at any time, of the following facts, and no others: ■ ■

1. That the items allowed to the accounting party, for money -paid to creditors, legatees^ and next of kin, for necessary expenses, ■and for his services are correct.

“ 2. That the interest charged to the accounting party and embraced in his account is all for which he is legally accountable.

- “ 3.' That the money charged to the accounting party as col-' lected is all that was collectible, at the time of the settlement on the debts stated in the account.

4. That the allowances made ,to the accounting party for the decrease and the charges against him for the increase'in the value of property were correctly made.”

It is evident that the decree made in 1885 is not a bar to Etta’s claim unless it is embraced within the first subdivision of the above section. Ho objection was raised on the former accounting and none, is raised on this to the correctness of the items allowed to the executor for the money paid to the legatees, including the .advances to David T.' The decree does not attempt to determine the amount of David T.’s share nor what portion, if any, of his share' belongs to others. The rights of assignees of legatees can only be ascertained and determined when an executor has money in his hands ready for distribution, as provided for in section 2743 of the Code. The life estate of the widow was outstanding in 1885 and there was no money in the hands of the executor, therefore a decree for distribution could not then be made. The order on the executors to pay Etta out of David T.’s share would be due only on the settlement of the estate of which order the executors had knowledge. The settlement made in 1885 was not such a settlement as was contemplated in the order. The decree did not determine what Etta’s rights, if any, were in David T.’s share. It is very doubtful whether she had a right to have them determined at that time. The account of the executors was settled and that is all that was determined by the decree. Ho form of words used in the decree can give it greater force and effect than that which the statute gives it. In Johnson v. Richards, supra, the court says: “ It is obvious that a decree on final settlement determines nothing beyond the amount received and paid out by the executor and (unless the two accounts balance each other) the balance in his hands belonging to the estate, or due to him from it.”

There is no provision in section 2742, for the distribution of any portion of the estate or for the determination of the rights of the respective parties as individuals between each other. Section 2743 is the only one that provides for the distribution of' the funds of the estate and for the settlement of the rights of the parties unless we except the general power given in section 2472. By section 2743 when an account is judicially settled “and any part of the estate remains and is ready to be distributed to the creditors, legatees, next of kin, husband or "wife of the decedent, or their assigns, the decree must direct the payment and distribution thereof to the persons so entitled according to their respective rights.” This is the first and only accounting in which any of. the funds of the estate have been ready to be distributed. How then can I forbid Etta, as assignee of David T., from coming in and asking that she be paid the share of David T., out of any portion of the estate which is now ready to be distributed? Under the strong light that section 2743 throws' upon it this question admits of only one answer. Her claim cannot be shut out. The decree of 1885 is not a bar.

My attention has been called to section 2812 of the Code of Civil Procedure. It is claimed that on an accounting by a trustee the rule is different from what it is on an accounting by an ex- ■ ecutdr. But section 2811 makes section 2743 applicable to air accounting by a trustee. Besides the account settled in 1885 principally relates to the account of the executor. All that portion of the decree, then made, which relates to the payments made to the legatees, including the advances to David T., is in settlement of the executor’s account, with which the trustee as such has nothing to do.

It would be misleading to reason from an ordinary judgment in a court of record to that of a decree in a Surrogate’s Court. Rot all matters which could have been litigated upon an accounting and settled in a surrogate’s decree are barred from being put in issue on a subsequent accounting.

In Van Rensselaer v. Van Rensselaer, 113 N. Y. 207, the executor had had a judicial settlement- of his account. Upon that accounting against the objection of a legatee the executor was allowed to exclude from his account the proceeds of farm sales ¡and the account was settled without regard thereto. Ho- appeal was taken from the decree. Held, that the decree of the surrogate upon such settlement was no bar to an action to recover á legacy charged upon the proceeds of the sale ¡of a farm. The same objection was urged in that case as is urged in this proceeding, namely, that the decree was conclusive upon the issues raised in the action.. The court says (p. 214), “ That decree has no effect upon what was not involved in the settlement.” The Gode of Oivil Procedure (§ 2742) provides “upon what facts the) jirdicial settlement of an executor’s account shall be conclusive and expressly excludes all others.” Many matters which might have been included in an account are not by reason of a decree concluded from being brought in issue on a subsequent accounting.

The force and effect of a surrogate’s decree made upon the judicial settlement of the account of an executor or administrator is well considered in Bank of Poughkeepsie v. Hasbrouck, 2 Seld. 216. The facts of that case, bear a close resemblance to. those of the one in hand. The above case was decided while the provisions of the Revised Statutes in relation to the settlement, of executors’ and administrators’ accounts were in force. But for all the purposes of the question arising in this proceeding there is no practical: difference between the Revised Statutes and the Gode of Oivil Procedure. In the bank case the question was between the as- . signee of a creditor and the administrator, here it is between the assignee, of a legatee and the executor. In both cases the executor and administrator claimed as individuals to be entitled to the fund. The bank was transferee of a note made by the testator. The administrators advertised for creditors to present claims. The payee ■ mentioned in the note presented a claim for the note, the bank did not. The administrators had no knowledge that the bank was the owner of the note. In the case in hand, Whitbeck, one of the executors, had knowledge of the assignment to Etta. The administrators made partial payment on the note, and finally one of the administrators became the owner of the note. In this respect this case tallies with the one in hand, except that when payments were made by Whitbeck to David T., he had knowledge of the assign.ment to Etta. After the expiration of eighteen months the administrators of the deceased maker of the note had a judicial settlement of their account. The bank had legal notice of this proceeding. The payee of the note appeared in the proceeding, but the bank did not. The payee stated that the note had been mislaid so that he could not produce it. In the final account the note was credited to the 'defendant, who was one of the administrators, and the decree directed that .the creditors should be paid at the rate of sixty cents on the dollar. The defendant received the proportionate amount due on this'note. The decree which was here made, was made not only for the settlement of the executors’ accounts, but also for the distribution of the funds in the.administrators’ hands. In an action brought by the plaintiff to recover of the defendant the amount received by him on this note, it was held that the surrogate’s decree was not a bar, and that the plaintiff was entitled to recover. It was claimed that the bank was negligent in not presenting its claim, pursuant to the notice to creditors; second, that the defendant had no knowledge that the bank was the owner of the note, and, therefore, the administrators had a right to make' payments on the note; ánd, third, that the bank was concluded by the decree.

So, here, it is, claimed that Etta was negligent in not presenting her claim at the time of the former accounting; but whether'she was or not, the statute gives the surrogate the power to decide who are entitled to the fund in a decree for the distribution of the funds then on hand. It was said in the bank case that the fact that the payee did not present the note was a suspicious circumstance and should have put the administrators on inquiry. Still stronger is the present case, for Whitbeck had actual knowledge of the assign- , ment to Etta, and that to the extent of her interest in .David T.’s share; the latter had ho right to assign his share. Any advancement therefor made by the executors would.be at then’ individual risk.

In Sheldon v. Sheldon, 33 N. Y. St. Repr. 754, the plaintiff held a claim against her husband’s estate. In 1883 there was a judicial settlement of the executor’s account, to which proceeding the plaintiff was a party. A decree for the distribution of the funds then in hand was made. Do provision for the payment of the widow’s _ claim was made.' In an action 'subsequently brought by the widow for an accounting by the executor it was held that the surrogate’s decree was conclusive only so far as it went. It did not prevent the widow from sharing in any future assets when ready for distribution: ■ This case is sufficient authority to show that a claimant, though he has neglected to present his claim at one accounting, is not shut out from presenting it . at another and sharing in the assets of the estate then on hand and ready for distribution. In the Matter of White, 6 Dem. 375, it was held that a decree judicially settling an executor’s or administrator’s account which includes a bill for expenses of administration, shown to have been only partly paid, protects the accounting party as to that part ■ only of the bill so paid, and leaves the question of the propriety of further payments on account thereof open for future settlement.” In Bowditch v. Ayrault, 138 N. Y. 222, it was held that where trustees had had several accountings and paid out money in pursuance of the decrees which had been made, but upon an erroneous theory as to who were entitled .to- take, the decrees which had been made were conclusive upon all past transactions and payments covered by them. They form no bar, however, to the proper- decision of the question now presented as to the distribution of the property now in, the hands of trustees.” So in .the present case we see' no sufficient reason why the decree made upon a former accounting when all the facts of the case were not before the surrogate should prevent 'a decree from being made on this accounting as to the .funds now in the hands of the executor- and trustee' such as will be just and equitable.

The conclusion is that the decree made in 1885 is not a bar t.o Etta’s, claim. Her right to be paid first out .of David T.’s share depends upon the question whether she has a superior right to it. It is conceded that her claim has priority in date, and the proof is that WTitbeck had knowledge of the assignment made to her, before either of the advances by him had been made to David T. The direction is, therefore, given that she be paid first out of David T.’s share.

Decreed accordingly.  