
    In the Matter of the Judicial Settlement of the Account of Andrew B. Yetter, as Administrator, etc., of William Livingston, Deceased. Andrew B. Yetter, Individually and as Administrator, etc., of William Livingston, Deceased, Appellant; Annie Livingston and Others, Respondents.
    
      Beference to hear and determine in the Surrogate’s Courts— exceptions need not be filed to the surrogate's decree—purchase of property by an administrator from the-estate — his right where it is recovered from him — proof of the value of a partnership interest -s—proof as to a bona fide defense to a suit — liability of an administrator where property of the estate hasdieen. purchased by-him at auction.
    
    Under section 2546 of the Code of Civil Procedure, conforming the practice in Surrogate’s Courts, on references to hear and determine questions arising on the settlement of an account, to that of the Supreme Court, 'it is not necessary, where exceptions taken to the report of the referee are overruled by the surrogate, to file'exceptions to the surrogate’s decree in order to entitle the aggrieved party to- review the error complained of on an appeal from that decree.
    
      Where an administrator, who has purchased property supposed to be a part of his decedent’s estate and has subsequently refused to surrender it to a third person claiming to be its owner, is personally sued for conversion and pays the amount of a judgment recovered against him, he io not entitled to be allowed such sum upon his accounting, but only the amount which he paid to the estate for the property.
    An administrator who unsuccessfully resists a suspicious demand against the estate by one claiming to own a one-half interest in a business which had been conducted by the decedent, is not entitled to be allowed the amount paid by him in satisfaction of a judgment obtained by the claimant against him personally, in the absence of proof showing good faith and diligence in his resistance; simply putting in evidence the pleadings and judgment does not establish it.
    The amount of such judgment is not conclusive upon the. administrator as to the value of the remaining half interest in the business which concededly belonged to the decedent; such value should be ascertained by independent evidence.
    Where property of a decedent is purchased .at an auction sale by a person acting in the interest of the administrator, the administrator is chargeable upon his accounting with the actual value of the property, not merely with the amount which is realized on the auction sale.
    Appeal by Andrew B. Tetter, individually and as administrator, etc., of William Livingston, deceased, from portions of a decree of the Surrogate’s Court of blew Tork county, entered in said Surrogate’s Court on the 7th day of July, 1898,'settling his account as administrator of said estate.
    
      Frederick E. Anderson, for the appellant.
    
      Robert Weil, for the respondents.
   Barrett, J.:

The decree appealed from settles the account of the appellant as the administrator of William Livingston, deceased. The account and objections were referred to a referee “ to. hear and determine all questions arising upon the settlement of said account.” The referee after a full hearing made his report, and both the administrator and the contestant, the decedent’s widow, duly filed exceptions thereto. The surrogate overruled all of the exceptions save •one of the contestant’s and in all, other respects confirmed the report. The administrators thereupon' appealed to this court, but filed no new exceptions to the decree.

The respondents contend, at the outset, that the exceptions to the . referee’s report raise no question for review, the only method of presenting the ease on appeal being, as they insist, by means of further exceptions to the surrogate’s decree. Section 2545 of the Code of Civil Procedure provides:

“An exception may be taken to a ruling by a surrogate, upon the trial by him of an issue of fact, including a finding, or a refusal to find, upon a question of fact, in a case where such an exception may be taken to a ruling of the court upon a trial without a jury of an issue of fact as prescribed in article third of title first of chapter-tenth of this act. * . * * Upon such a trial the surrogate must file in his office his decision in writing, which must state separately the facts found and the conclusions of law. Either party may, upon the settlement of a case, request a finding upon any question of fact, or a ruling upon any question of law; and an exception may be taken to such a finding or ruling, or to a refusal to find or rule accordingly-. An appeal from a decree or an order of a surrogate’s, court brings up for review by each court to -which the appeal is carried each decision to which an exception is duly taken by tire appellant as prescribed in this section.”

Section 2546 gives the surrogate authority, in a special proceeding other than one instituted for probate or revocation of probate of a will, to appeal to a referee “ to take and report to the surrogate: the evidence upon the facts, or upon a specific question of fact; to-., examine an account rendered; to hear and determine all questions arising upon the settlement of such an account, which the surrogate has power to determine; and to make a report thereupon ; subject, however, to. confirmation or modification by the surrogate.” The section further provides that “ the provisions of this act, applicable to a reference by the Supreme Court, apply to a reference made as-prescribed in this section, so far as they can be applied in substance without regard to the form of proceeding.”

The meaning of these provisions seems clear. When the- surrogate himself takes the testimony and tries the issues of. fact, he must-make a decision containing specific findings, and the appellant must-file the required exceptions if he,desires an effective review.' This also applies to a case where a reference is ordered merely to take and report the evidence. Tlie surrogate himself then tries the issuer using the reported evidence as an aid. Where, however, a ■ reference is ordered to hear and determine, there is no trial of the issues by the surrogate within the meaning of section 2545. He may still, it is true, as the section provides, deny confirmation or modify the report. But his action in that regard is in its nature appellate or supervisory, not original. In such-cases section 2546 clearly governs. The intention was to conform the practice upon accountings to the ordinary practice in such matters in the Supreme Court. It certainly was not intended upon such accountings to have two primary trials — one by the referee and another by the surrogate, with two sets of findings and two sets of exceptions. Such a view would deprive section 2546 of all force, would impose upon the surrogate much of the very labor which the reference was provided to save him, and would inflict upon the parties an unnecessary and useless multiplication of routine work. We say useless because in such a case a second set of exceptions would be quite needless to point out to the appellate court the specific error complained of. When the referee in such a case makes separate findings, numbering them properly, and exceptions are duly filed to one or more of such findings, the surrogate, upon the hearing, sustains or overrules each of the numbered exceptions to the numbered findings, and his decree thereupon shows upon its face precisely what, is the subject of further review. No difficulty that we are aware of has ever been experienced on this head in the Supreme Court, and we can see no reason why that practice may not here, as the section directs, be “applied in substance.” Upon an assignee’s accounting in the Supreme Court or upon the accounting which frequently follows an interlocutory judgment, the referee makes his separate findings, and they must-, of course, be excepted to if they are to be reviewed But after that has been done, who ever heard of requiring the court to make findings anew, to be followed by exceptions anew ? The practice has invariably been to bring on such exceptions to referees’ reports for hearing at Special Term, and there to procure a final decree specifying the manner in which the court has dealt with these exceptions. Appeals from such decrees have always been entertained and decided without inconvenience or embarrassment, and it is difficult to perceive what there is in the' characteristics of such an accounting as this in the Surrogate’s Court to call for a variation in such simple and well-understood practice.

FTor do we think that there is any controlling authority requiring a different construction of these sections.'. Mr. Jessup, in his work on Surrogate’s Practice, cites very many cases in support of the opposite view, for which he claims the overwhelming weight of authority. We have examined these cases (Matter of Sprague, 125 N. Y. 732; Hewlett v. Elmer, 103 id. 156; Matter of Kellogg, 104 id. 648; Angevine v. Jackson, 103 id. 470; Burger v. Bugger, 111 id. 523; Matter of Bradway, 74 Hun, 630; Matter of Marsh, 45 id. 107; In re Fall’s Estate, 10 N. Y. Supp. 41; Matter of Otis, 6 N. Y. St. Repr. 631; Matter of Peck, 39 id. 234; Matter of Hood, 104 N. Y. 103), but fail to find there the decisive rule which he lays down. Many of them were probate cases, where the surrogate tried the issues. Some were accountings, where the surrogate himself took the account and- heard and determined all questions arising upon its settlement. Such was the case, most urgently pressed upon us, of Matter of Sprague (125 N. Y. 732). The fact to which we have adverted does not appear in the report of this case, and, therefore, we might easily misapply the language of the opinion. We have examined the record among.the Court of Appeals cases in the Bar Association and find that in that case there was no reference, and that, as already observed, the surrogate tried the whole matter himself, when, of course, findings and exceptions were necessary.

In' other cases there was a reference, but no exceptions were filed to the -referee’s report. In still others no exceptions were filed either to report or decree. The only cases where the precise question was presented and decided are Matter of Keef (43 Hun, 98) and Matter of Niles (47 id. 348). In the-former-it was held that dual findings and exceptions were absolutely required ; in the latter- that they were not. We think the rule stated in the Niles case is in accordance with the intent and meaning of sections 2545 and 2546 of the Code, and is the more reasonable view of the proper practice.

It thus becomes necessary to consider the merits of the appeal. The appellant’s first complaint is of the disallowance of a payment of $447.41, made to satisfy a judgment recovered against him by one Trumbull. Trumbull claimed to o.wn a furniture van and two horses, which came into the appellant’s possession when he entered upon his duties. The appellant resisted the claim, and Trumbull sued Mm personally for conversion and obtained the judgment in question. The evidence tends to show that the appellant bought these articles from the estate. He admits that he took the van, crediting the estate with $100 therefor; and he had extensive repairs made upon it for his own account prior to the trial. His testimony as to the horses is somewhat conflicting. He begins by grouping the van and horses together, and stating that he sold them all. He next says that he sold the van to himself, but cannot remember who bought the horses. Later he states that he gave credit ” for the horses. One of his employees testifies that both van and horses were removed to his place of business before the trial, and, as it would seem, that they were still there when the matter was taken into court. We think, on the whole, that the referee was justified in finding that the appellant bought the horses also.

In our opinion the appellant was rightly compelled to pay this judgment. For action taken on behalf of the estate, in good faith and with reasonable justification upon the facts presented to him, an administrator will not be compelled to respond personally. But herb, both ostensibly and in fact, the appellant was acting, not for the estate, but in his own interest. Had he been successful, the gain would have been his own. The property for which he was forced to pay remains his individual property, not that of the estate. The appellant was simply defending his own interests, and cannot reasonably seek reimbursement for so doing. The referee properly canceled the credits which the appellant extended to the estate for the van and horses, and that is the only relief .to which he is entitled.

The appellant also complains of the disallowance of a payment of $427.57, made to satisfy another judgment obtained against him personally by one Aiken. • We may say that the appellant'was not only justified in resisting Aiken’s demand, but he was bound, under the circumstances, to contest it. Aiken xyas a youthful employee of the decedent at a.small salary. He claimed a one-half interest in a certain second-hand furniture business carried on by the decedent. He did not pretend to have contributed any money to the business, and he offered no documentary evidence of an agreement giving him an interest in it. The claim was plainly suspicious, and the ■ appellant could not properly do otherwise than resist. Unfortunately, however, there is no evidence -of diligent resistance, or of genuine good faith, in the effort to defeat this claim. The recovery of a judgment against the administrator personally was not enough, standing alone, to justify the surrogate in charging the estate with- its amount. The facts and circumstances'attendant upon the litigation and the tidal should, at least, have been shown ; and the referee and the surrogate would then have been enabled to-decide advisedly whether the administrator 'and his counsel had defended the' case with reasonable care and skill; in other words, whether the defense was active and reasonably adequate, or merely formal and perfunctory. The burden-was upon the administrator claiming the allowance against the estate of a judgment rendered against him personally to show good faith and diligence; and lie cannot be said to have discharged that burden by simply putting'in the pleadings .ánd judgment, and leaving all else entirely to presumption. If this item should be allowed upon the bare fact of ■a recovery, without the slightest proof as to how that recovery was secured, an estate could readily be mulcted by collusive suits against its representatives personally, or by ■ failure on its representative’s part in- any such suit to object to incompetent evidence, or by his. neglect to put in evidence which would have defeated the claim.

The items for counsel fees' and expenses in defending these Aiken and Trumbull suits were also properly disallowed.

The appellant was surcharged with the sum of $301 as the valué of the other one-half of the second-hand furniture business con- / cededly belonging to the deceased. This sum was- the amount of the verdict recovered- by Aiken in the action against the appellant personally, to'which we have referred. The referee adopted it as the standard of value of the decedent’s one-half interest-. We think this was clearly erroneous. The judgment in the Aiken suit was between different parties, .that is, between Aiken and the administrator personally, while this proceeding is between the administrator, as such, and those who contest his account. It was not' binding upon the administrator in his representative capacity any more than it would have- been binding Upon the -contestant. As evidence against the administrator in his representative capacity it Was entirely incompetent; in fact, irrelevant and immaterial. If the verdict had been for a nominal sum, it certainly would not have .bound the estate or this contestant. The appellant could only be-charged here upon independent evidence as to the value of this-interest. There was no such evidence, no definite evidence of its-value at all. It follows that this part of the decree cannot stand.

The appellant was also charged with the sum of $1,200 for the-lease and good will of the decedent’s business, instead of $105, the-sum for which they were sold at auction. This was clearly proper. The sale was made nominally to the appellant’s son-in-law; but the latter almost immediately transferred the property to the appellant,, and it is practically uncontradicted that the appellant was the real, purchaser. He was thus accountable for the true value of the property. (Ames v. Downing, 1 Bradf. 321.) Upon this latter question considerable evidence was given, which we have examined carefully. We think, notwithstanding the ingenious and elaborate argument of' the learned counsel for the appellant, that it amply justified the award.

The decree denies costs to the administrator, while allowing him commissions. ' We think that it would have been a justifiable exercise of discretion to deny both costs and commissions, for it appeared, that the appellant omitted important items of property from his-account, and bought in property of the estate for himself at inadecpiate figures. Under such circumstances* the fact that he was. allowed commissions affords him no right to insist upon costs also.

The other points presented by the appellant are unimportant and call for no special consideration. So far as the exceptions to the-refusals to admit certain evidence are concerned the appellant was-not prejudiced; and the provision of section 2545, that a surrogate’s, decree “ shall not be reversed for an error in admitting or rejecting evidence, unless it appeal’s to the appellate court that the exceptant was necessarily prejudiced thereby,” is applicable.

The decree should be modified by disallowing the sum of $30T with which the appellant was charged, and as modified affirmed,, without costs of the appeal.

Van Brunt, P. J., Rumsey, Patterson and O’Brien, JJ.,, concurred.

Decree modified as directed in opinion, and affirmed as modified, without costs.  