
    
      In re Hobson’s Will.
    
      (Supreme Court, General Term, First Department.
    
    November 13, 1891.)
    1. Executors and Administrators—Liabilities—Accounting.
    A mortgage drawn nayable to testatrix was as matter of fact a part of a trust-es-tote in which she had only a life-interest. The administrator received payment of the same, and disbursed a portion of the proceeds in such capacity. Held, that the administrator had the right to receive paymentand discharge the security, it being in terms payable to his testatrix, and that, receiving the fund in his representative capacity, he was, in such capacity, bound to account for it, and his bond was liable therefor.
    2. Same—Transfer to Administrator as Trustee.
    An administrator collected a mortgage payable to his testatrix, which in fact was a portion of a trust-estate in which testatrix had only a life-interest. Subsequently the administrator was ordered.to pay over such fund to the substituted trustee of the trust, and was himself appointed such trustee-, on giving a bond in a required amount. He gave a bond for only half such amount. It did not appear that he ever made any transfer of such fund to himself as trustee. Held, that he was liable to account for the same as administrator.
    8. Same-Payments for Support of Infants.
    An administrator paid a portion of a trust fund due to infant beneficiaries to their mother. Held, that he was not entitled to credit for the same unless it appeared that such moneys were devoted to the support, maintenance, and education of such infants. It is not enough that it appear that they were devoted to the support of the mother and children.
    4. Same—Misconduct—Right to Commissions.
    An administrator who collects funds belonging to the estate, and with knowledge thereof illegally disposes of the same, is rightfully deprived of commissions and charged with costs and allowances on a decree for an accounting.
    Appeal from surrogate’s court, New York county. Modified. °
    Proceedings for the settlement of the accounts of John L. Hobson, as administrator with the will annexed of Sarah M. Hobson, deceased. From the decree of the surrogate settling the accounts of the administrator, and from an order denying a motion to amend the account presented for settlement, the administrator and his surety appeal.
    Argued before Daniels and Lambert, JJ.
    
      R. H. Underhill, for appellant John L. Hobson. Moore, Low & Wallace, (Frank W, Arnold and Thomas S. Moore, of counsel,) for appellant Fidelity & Casualty Company. Howard R. Bayne, for respondents James E. Heath and others. Anson Maltby, for respondents Ellen L. Norris and others. Fielding L. Marshall, for respondent Florence Hobson.
   Daniels, J.

The controversy, as it was presented to and decided by the surrogate, related to the liability of John L. Hobson, as administrator with the will annexed of Sarah M. Hobson, deceased, to account for the amount of a bond and mortgage payable to her, and collected by him after his appointment as administrator of her estate. The debt, as it was first created, seems to have been the property of George G. Hobson, the husband of Sarah M. Hobson, who were the parents of the administrator, John L. Hobson. On the 19th of May, 1866, George G. Hobson created a trust for the benefit of his wife during her life, and for his own benefit during his life in case of his survivorship; and a bond and mortgage, executed by Austin, Falk & Co. on or about the 1st of May, 1866, to Sarah M. Hobson, was made a part of the capital of this trust. That mortgage was satisfied, and another taken in its place, payable in the same manner; and this second mortgage was also discharged upon the retirement of George W. Falk from the firm whose members executed the mortgage, and another mortgage was taken in its place, executed by the remaining members of the same firm. This last mortgage was dated on or about the 18th of November, 1874, and, together with the bond accompanying it, was in like manner payable to Sarah M. Hobson. She died, after enjoying the income of the trust, as she was entitled to do by the instrument creating it, on the 28th of July, 1875, nominating her husband as the executor of her will. But he did not prove the will, but continued to receive the proceeds of the trust until he died, on the 14th of February, 1882. During his life-time, and in 1878, he brought an action to establish the trust, making his son, John L. Hobson, one of the parties, and a judgment was recovered in that action to that effect, and in that judgment the mortgage is mentioned as one of the items of the trust. As a matter of fact, therefore, this mortgage belonged to the trust-estate as a part of its capital; but after the decease of his father, and on the 14th of July, 1882, John L. Hobson applied to the surrogate for letters of administration with the will annexed on the estate of his mother, Sarah M. Hobson, stating its value to be the amount of this mortgage. Letters in that form were issued to him, the will at that time having been probated, and his bond was fixed at the sum of $30,000, and the Fidelity §o Casualty Company, in the city of New York, one of the appellants from the surrogate’s decree, became the surety in this bond. After becoming in this manner qualified as the administrator of the estate with the will annexed, he received a large number of securities, including this bond and mortgage for $15,000, and gave a receipt for them, describing himself as the administrator of the estate of S. M. Hobson, deceased. An appraisement of the estate was also made at his instance, in which this bond and mortgage was the property appraised as the estate of the deceased testatrix; and this administrator with the will annexed has in that capacity received the money secured by the mortgage, and discharged it as satisfied; and in October, 1884, he applied to the surrogate for the settlement of his accounts, charging himself in his application with the amount of this mortgage and the interest he had received upon it, and then crediting himself with certain payments made by him, leaving a balance, as he stated it, of $6,104.95, in his hands yet to be distributed. His petition and accounts were verified in the usual manner, affirming the accuracy of the statements contained in them. It appeared upon the hearing before the referee appointed by the surrogate, and whose conclusions were substantially, confirmed by the surrogate, that he had made certain disbursements in his capacity of administrator, and also paid to two of the legatees entitled to share in the distribution of the estate after the expiration of the trust under the terms of the wills to which it was subjected, further sums of money, leaving a balance in his hands of the sum of $7,587.37, and that balance he was ordered by the decree within 30 days to pay over, with interest, to a substituted trustee, who liad been appointed to take charge of the trust-estate in that capacity. In November, 1882, John L. Hobson, the administrator, applied for his own appointment as trustee of the trust-estate, and an order was made, .with the consent, of parties interested in the trust, appointing him such trustee on giving a bond in the sum of $10,000. But in point of fact the bond given by him upon that appointment was in the sum only of $5,000; and from the evidence in the case, as well as the conclusion of the referee before whom it was taken, whicli was adopted by the surrogate, it did not appear that John L. Hobson, as administrator, had ever made any transfer, either directly or indirectly, of this bond and mortgage, or of the moneys received upon it, to himself as trustee under this appointment; and, in the absence of that proof, and his continued action as administrator, the presumption was warranted that he still continued to hold the proceeds of the mortgage in the capacity in which he had received the security itself, which was that of administrator with the will annexed. In re Hood, 104 N. Y. 103, 10 N. E. Rep. 35.

Exceptions have been taken to the decree of the surrogate holding the administrator, who also appealed from the decree, and afterwards deceased; and the public administrator of the city of Hew York was made a party to the action in his place, so far as it held the administrator with the will annexed liable to account for this bond and mortgage and the disposition of its proceeds, and to the direction contained in the decree to pay over the residue to the substituted trustee of the trust-estate; and in support of these objections it has been contended, as the bond and mortgage formed a part of the trust-estate, it could not be collected and administered upon by the administrator of Mrs. Hobson with the will annexed. But it is quite clear from the form in which the bond and mortgage were taken that lie, as the administrator of the estate with the will annexed, was entitled to collect this indebtedness. The contract authorized him, as the administrator of the estate, to receive the money, and discharge the security. Caulkins v. Bolton, 31 Hun, 458, 98 N. Y. 511; Schluter v. Bank, 117 N. Y. 125, 22 N. E. Rep. 572. He not only received the security by virtue of his appointment as the administrator of the estate, but he also collected the moneys upon it, and disbursed them, so far as they were paid out, in that capacity, and throughout his entire management of the estate acted in that manner, and not in any sense as a trustee of this trust; and, after having received the security and collected and retained the money upon it in that capacity, he was liable to account for it under his obligations of administrator of this estate. A similar question of .liability was considered in De Valengin’s Adm'rs v. Duffy, 14 Pet. 282, where moneys had been collected by the administrator of an estate which belonged to another party, and in point of fact formed no part of the assets of the estate; and it was there objected that the party accountable could not be called to account for such money in the capacity or under the liability of an administrator. But it was said in the opinion of the chief justice that, “upon a full, consideration of the nature and of the various decisions on the subject, we are of opinion that whatever property or money is lawfully recovered or received by the executor or administrator after the death of his testator or intestate in virtue of his representative character lie holds as assets of the estate, and he is liable therefor in such representative character to the party who has a good title thereto. In our judgment, this, upon principle, must be the true doctrine.” Id. 290. And it was further added: “We do not mean to say that the principal may not, in such cases, resort to the administrator in his personal character, and charge him de bonis propriis with the amount thus received. , We think he may take either course, at his election; but that, whenever an executor or administrator in his representative character lawfully received money or property, lie may be compelled to respond to the party entitled in that character, and shall not be permitted to throw it off, after he has received the money, in order to defeat the plaintiff’s action.” Id. 291. This is a direct authority supporting not only the jurisdiction but the correctness of the surrogate’s decree so far as it depended upon the liability of this administrator to account for these moneys in that capacity. And the cases of Graham v. Van Duzer, 2 Redf. Sur. 322; Calyer v. Calyer, 4 Redf. Sur. 305; and Perkins v. Perkins, 46 N. H. 110,—support the conclusions in this manner declared by the court; and so also, but not so fully, do the cases of Wells v. Wallace, 2 Redf. Sur. 58; In re Collyer, 4 Dem. Sur. 24; and Du Bois v. Brown, 1 Dem. Sur. 317. Other authorities have been relied upon and brought to the attention of the court in support of the appeal, which have been cited as in conflict with the surrogate’s decree; but they do not appear to be so upon an examination of them, for in Shumway v. Cooper, 16 Barb. 556, where the jurisdiction of the surrogate was considered as to the disposition of the proceeds of the sale of infants’ lands, it did not appear that the personal representative had received those proceeds in his character as such, and they consequently became no part of the assets of the estate in his hands. The same" is true of the case of Vulte v. Martin, 44 How. Pr. 18, where the proceeds were received by the party as a trustee, which, of course, excluded the jurisdiction of the surrogate over their disposition. In Anderson v. Thompson, 38 Hun, 394, the funds collected were held in trust, and the personal representative was in no sense entitled to receive and mingle them as assets with the estate. The same thing is also true of Levy’s Estate, 1 Tuck. 148, where the disposition of the rents of real estate came up for consideration; and, as they were disposed of by the statute relating to the descent of real estate, it was rightly held that the administratrix had no legal right to receive them. The matter of Calyer v. Calyer, 4 Redf. Sur. 305, is similar in its effect, for the moneys there in controversy neither formed any part of the assets of the estate, nor were they collected or received under any obligation entitling the personal representative to interfere with them. In re Collyer, 4 Dem. Sur. 24, was a proposal to bring the personal representative to an account for trust funds on deposit in a savings bank. There was clearly no such liability on his part, and no jurisdiction over the subject-matter vested in the surrogate; and no case has been cited or discovered where the administrator of the estate was entitled, by the contract passing into his possession by virtue of his appointment, to collect a sum of money, which was afterwards received by him in his representative capacity, and so managed and accounted for, in which it has been held that he should be relieved from such accounting, or exonerated from liability, for the moneys acquired by him in that manner. But where the administrator is authorized by the contract itself—as he was by the form of those securities—to take, possession of them and collect the money as administrator, there he has been held accountable after receiving it in that capacity under the decree of surrogate having jurisdiction over the administration of the estates of deceased persons, and there seems to be no valid reason for making this case an exception to the operation and effect of that principle. The Code of Civil Procedure, by subdivision 3 of section 2472, has vested in the surrogate jurisdiction to direct and control the conduct and settle the accounts of executors, administrators, and testamentary trustees; and that seems literally to include the case of this administrator, for he not only became the administrator of this estate, but his appointment was apparently upon the basis that this bond and mortgage was an asset of the estate. It was received by him as such, and he collected it in that capacity, and made a deposit of the amount collected to his credit as administrator, and distributed the moneys disbursed by him as the administrator of this estate; and when that had been accomplished he applied for the settlement of the accounts, including this as the asset of the estate, in the same capacity. There seems to be no substantial reason, therefore, for doubting his liability as administrator, created in this manner, or for doubting the jurisdiction of the surrogate over the case as it was presented to him for his decision.

It was proved by the evidence that the sum of $1,108, and perhaps more than that, was paid over by the administrator to Mrs. Florence Hobson, who is the mother of Florence and Georgiana Hobson. They were entitled, as the daughters of a deceased son of the testatrix, to participate in the distribution and division pf the trust-estate. Their father was deceased, and this money was paid over to their mother, with whom they resided, and it would undoubtedly have been allowed, in whole or in part, by way of credit to the administrator in the settlement of his accounts, if it had been made to appear that the money was devoted to the support, maintenance, and education of these two infant children; but that, as a matter of fact, was not established upon the hearing before the referee, or the surrogate, but the most that was made to appear was that the money was expended by Mrs. Hobson in the support of herself and these two infant children. What amount was expended for their benefit was not made to appear, and neither the referee nor the surrogate had any means of determining what proportion of the money had been devoted to the benefit of these two infant children. In the absence of that proof, it may be assumed that it was mainly appropriated by Mrs. Hobson for her own support and maintenance, leaving but a small part of it devoted to the necessities of these children, and the surrogate consequently had no evidence before him by which it could be declared or held that any specific part of this money had been devoted to the benefit of the infants. Mrs. Hob-son was not their guardian, and it was incumbent upon the administrator, after he had paid the money over to her; to prove the amount that had been used in the support and maintenance of the infants, to entitle him to credit for these payments. That he failed to do, and for that failure this credit was properly rejected by the surrogate.

It appeared in the course of the proceeding that the administrator had delivered the sum of $1,256.78 to his counsel for safe-keeping, and that this had been reduced by disbursements made in the payment of referee’s and stenographer’s fees to the sum of $642. So far as the balance still remains, the right to have it applied as a credit to the administrator is not denied, but it has not been formally paid over, it seems, to the trustee, and, whenever that payment shall be made, to that extent the amount will be deducted from the decree; and there seems to be no good reason for denying the administrator the right to credit for the balance of this sum of money, inasmuch as the money has been used to defray the necessary expenses of the accounting. To that extent the decree should be modified, as it does not appear by the statement of the credits contained in it that these disbursements have been allowed to the administrator. But in no other respect does it appear that the decree should be subjected to any change or modification, for, as the large balance still remaining has been illegally disposed of by the administrator, knowing, as he seems to have known, by reason of his being a party to the suit brought for the construction and establishment of the trust, that these moneys belonged to the trust-estate in point of fact, and should have been paid over as such by him, he was rightly deprived of his commissions, and charged with the costs and allowances made by the decree. The action of the surrogate in denying the motion to amend or change the account was entirely proper, for the administrator had deliberately presented it in the form in which it was verified by him, and all the facts touching his liability to account for these moneys as administrator were as fully and clearly before the court as they would have been if this amendment had been permitted, and no injustice, therefore, was caused to the administrator by the denial ot' the motion. The order of the surrogate disposing of that motion should be affirmed, with $10 costs and such disbursements as may have been expended on account of it in the appeal, and the decree of the surrogate should be so far modified as to include the deduction of this sum of $1,256.73 upon the payment to the trustee of the balance remaining of $642, and, as so modified, the decree should be affirmed, without costs of the appeal.  