
    In the Matter of the Estate of Henry Muller, Jr., Deceased. Henry Muller, III, as Executor of Henry Muller, Jr., Deceased, Respondent-Appellant; Edwin G. Muller, Appellant-Respondent.
    Argued November 21, 1968;
    decided April 10, 1969.
    
      
      Leo Katzman for appellant-respondent. I.
    An executor should be surcharged for using estate funds for corporate obligations. (Matter of Corbin, 101 App. Div. 25.) II. An executor, who fails to collect debts due to the estate, and fails to explain his lack of effort to effect collection, should be surcharged the amount of such debts. (Matter of Stulman, 146 Misc. 861.) III. An executor is personally liable for loss sustained by his estate on failure to use due care, reasonable business judgment and failure to adequately excuse loss of shrinkage in value of estate assets. (Carrier v. Carrier, 226 N. Y. 114; Matter of Marhowits, 152 Misc. 1.) IV. The equitable powers of the Surrogate permit inquiry into all matters wherein an estate is involved and all parties are before the court. (Matter of Auditore, 249 N. Y. 335; Matter of Gorra, 135 Misc. 93.) V. An executor is liable for interest on preferential payments made to himself or on money which he borrows from the estate. (Matter of Bandler, 172 Misc. 433; Matter of Welling, 26 Misc 2d 182; Matter of McCafferty, 147 Misc. 179.) VT. An executor is personally liable for interest charges or penalties which he incurs through nonfeasance of fiduciary duty. VII. An executor should be surcharged for a fee paid to an expert witness, who did not testify, where no foundation was laid for such expert testimony, and where the fee is disproportionate to the value, of the subject matter. VIII. The burden is upon the executor
    
      to prove payment or delivery in kind on account of a legacy. IX. An executor, guilty of gross mismanagement, neglect and personal dealings with the estate, should not receive commissions or remuneration for his wrongdoing. X. An attorney for a legatee is entitled to a fee from the general estate for services which were rendered and which were of benefit to the general estate. (Matter of Wadsworth, 250 App. Div. 11, 275 N. Y. 590; Matter of Parson, 121 Misc. 747; Matter of Lounsberry, 226 App. Div. 291; Matter of Chaves, 143 Misc. 868; Matter of Foreman, 238 App. Div. 388.)
    
      Paul J. Goodman for respondent-appellant. I.
    Payments made by the executor to a real estate corporation wholly owned by the estate to cover real estate taxes, mortgage payments, and insurance premiums, all valid debts of said wholly owned corporation, were proper expenditures of estate funds especially where the properties were shortly thereafter sold and/or mortgaged to raise cash for Federal and State transfer taxes. (Walker v. Gerli, 257 App. Div. 249; Matter of Downey, 275 App. Div. 1008; Matter of Engel, 140 Misc. 276.) II. The executor should not have been surcharged for paying moneys from the estate to Muller Brothers, Inc. for the carrying expenses of said corporation. (Matter of Corbin, 101 App. Div. 25.) III. The executor should not have been surcharged with regard to the estate claims against Muller Brothers, Inc. and Daniel Keller. (Matter of Cooley, 4 Misc 2d 636; Matter of Stulman, 146 Misc. 861; Matter of Rosenthal, 269 App. Div. 139.) TV. The executor should not have been surcharged for selling a parcel of real estate at a price $2,500 below the amount it was appraised at for estate tax purposes: where there was no brokerage commission paid; it was an all cash deal and the estate needed cash to pay transfer taxes; no specific offer was made to purchase the land by the objecting party, and the land was encumbered by a mortgage of approximately $125,000. (Carrier v. Carrier, 226 N. Y. 114; Matter of Markowitz, 152 Misc. 1.) V. The Surrogate did not have jurisdiction to order the executor to pay to the estate salaries he received from Justice Realty Corporation. (Matter of Auditore, 223 App. Div. 654, 249 N. Y. 335; Matter of Schaefer, 65 App. Div. 378, 171 N. Y. 686; Matter of Brown, 78 Mise. 342.) VI. Payments made on account of a legacy, subsequent to the expiration of seven months from the time of granting letters testamentary, were proper payments by the executor. (Matter of Bandler, 172 Misc. 433; Matter of Welling, 26 Misc 2d 182.) VII. The executor should not be surcharged for any loss resulting from late payment of estate taxes, as he made payments on account to liquidate the same, and exercised due diligence in converting assets into cash for the payment thereof. (Matter of McCafferty, 147 Misc. 179.) VIII. The Surrogate’s decree erroneously sustained the objection to a payment made by the executor to an expert witness, as the court specifically held that said objection would be disallowed. IX. The objectant was properly charged with the receipt of $867 in personal property from the estate. X. Distribution of the net estate as contained in the Surrogate’s decree is not proper as it fails to credit the executor with commissions allowed by the court, and provides for the assignment to him of claims of the estate totaling $16,400. XI. The objectant, and not the estate, is responsible for any counsel fees due the attorney for the objectant. (Matter of Wadsworth, 250 App. Div. 11, 275 N. V. 590; Matter of Attorney-General v. North Amer. Life Ins. Co., 91 N. Y. 57; Matter of Lounsberry, 226 App. Div. 291; Matter of Buttner, 215 App. Div. 62; Matter of Parsons, 121 Misc. 747; Matter of Chaves, 143 Misc. 868; Matter of Foreman, 238 App. Div. 388.)
   Jasen, J.

Henry Muller, Jr., died testate on October 18, 1961, leaving two sons, Henry Muller, III, the executor of the estate before us, and Edwin G-. Muller, the objectant in this case. Muller’s will was quite simple. It provided that his two sons were to share equally in his estate, and that Henry be appointed executor. The will authorized the executor to continue the testator’s businesses if, in the executor’s discretion, it was for the best interests of the estate. The executor was also empowered to sell, mortgage or lease the testator’s real property under such terms and conditions as the executor deemed best.

The major assets of the estate, pertinent to this appeal, are: a 100% interest in Muller Bros. Holding Dorp., a real estate holding corporation having but one tenant, Muller Bros., Inc.; 66%% ownership of Muller Bros., Inc., a domestic corporation engaged in the business of moving and storage of household goods (the remaining one third of this corporation was owned by Henry Muller, III, the executor); and approximately $70,000 in cash.

The objectant raised 31 objections to the executor’s account and demanded the executor be surcharged. After a number of hearings a decree was entered providing for a surcharge of the executor in the sum of $61,178.96. The Appellate Division modified the Surrogate’s decree on the law and the facts, reducing the surcharges to $17,460.44.

We agree with the Appellate Division, except on two issues.

One of the issues raised by the objectant bears on the right of an executor to use assets of the general estate to pay corporate obligations where the testator specifically conferred the executor with the power to continue decedent’s businesses.

The Surrogate surcharged the executor $25,224.96 for the payment of corporate obligations out of the general assets of the estate. The Appellate Division reduced this portion of the surcharge to $3,000, holding that “ [m] ost of these payments were made during the early period of administration, to preserve possibly valuable estate assets. However, certain sums were expended in 1963, after the time at which these assets could reasonably have been sold or distributed. As to these sums, the surcharges were proper.”

The intention of a testator to confer upon an executor power to use general assets of the estate to continue various businesses of the testator ‘ ‘ must be found in the direct, explicit and unequivocal language of the will or else it will not be deemed to have been conferred ”. (Willis v. Sharp, 113 N. Y. 586, 590; Columbus Watch Co. v. Hodenpyl, 135 N. Y. 430, 435.)

Although the will did authorize the executor to continue the various businesses of the testator “ if in his discretion it [was] for the best interest of [the] estate ”, such authorization merely grants to the executor the power to conduct the various businesses with the funds already invested in them at the time of the testator’s death, and to subject only these funds, and not the general assets of the estate, to the hazards of the businesses. (Willis v. Sharp, supra; Thorn v. De Breteuil, 179 N. Y. 64, 78.)

Moreover, a clause in the will giving the executor authority to sell, invest and reinvest the general assets of the estate will not be taken as authority to invest additional money in the decedent’s businesses. (Matter of Gibson, 46 Misc 2d 954, 957.) While there may be a valid purpose in continuing a business to preserve its value as a going concern, rather than to sell it piecemeal (Matter of Gibson, supra; Matter of Ridosh, 5 A D 2d 67; 3 Warren’s Heaton, Surrogate’s Courts [6th ed.], § 245), assets of the general estate may not be used for this purpose unless the will specifically so provides. Such was not the case here.

The other issue concerns three advances made by the executor from the estate, aggregating $27,750, for his own personal use. The executor repaid the .sum only when ordered by the Surrogate to return the money or pay a like amount to the objectant. Upon this accounting, the objectant contended that the executor should be surcharged for the use of the money.

The executor argues that he was a legatee in addition to being the executor and he was entitled to receive these amounts as prepayments of his legacy. He is incorrect.

An executor must at all times discharge his fiduciary duties so that all legatees are treated in like manner and without prejudice or discrimination. (Matter of Bush, 2 A D 2d 526, affd. 3 N Y 2d 908.) He owes an absolute duty of impartiality to all the beneficiaries of the estate. (Matter of Heinrich, 195 Misc. 803, 809; Matter of James, 86 N. Y. S. 2d 78, 89; 3 Warren’s Heaton, op. cit., supra, '§ 217, par. 4, subd. [b].)

While he was also a legatee, Henry Muller, III, was more importantly the executor of the estate and as such was under this duty .to impartially distribute the assets of the estate to the legatees (cf. Matter of Bricks, 27 Misc 2d 570; Matter of Moller, 52 N. Y. S. 2d 205; Matter of Loughman, 52 N. Y. S. 2d 200.) Since the executor withdrew funds of the estate for his own personal use, he should be surcharged with interest for the time that he had the use of $27,750 of estate funds.

Accordingly, the order appealed from should be modified in accordance with this opinion, and, as so modified, affirmed.

Chief Judge Fttld and Judges Burke, Scilifpi, Bergan, Keating and Breitel concur.

Order modified in accordance with the opinion herein and, as so modified, affirmed with costs to appellant-respondent payable out of the estate.  