(lOOK fl. COOL
(Circuit Court, /8. D. New York. March 17'.1888.)
ExEOUTORS AND ADMINIS,TRATORS-lNvESTMENTS-Iw BONDS OF FOREYGN CORPORATION.
An investment of trust funde by aNew York administrator with the will an· nexed.'inmortgage bonds of a Pennsylvania corporation. made without order of court. is not good as against the New York beneficiaries; and if such bonds prove to be worthless. the administrator. or. he being dead, his estate in the hands of his sole legatee anil devisee. is liable for the loss.
SAME-WASTE-LIABILITY OF EXECUTOR'S ESTATE-MEASURE OF RECOVERY.
A bill by the life-tenant and remainder-men in fee of asum of money. to subject the estate of the administrator in the hands of his sole legatee and devisee to the payment. of a de'Dasta'Ditwrought bv him, set out the loss at $8.000: The answer of the administrator's executor, and of his co-administrator. admitted that tbat was the aII).ount received, but the answe:r; of the legatee-devisee Jlut it at "about $7,000." The C(jJ'pUB of the fund was $7,072.02. and there wail no administrator in fault had received more than that positive proof that sum. It was in evidence that the last payment of interellt to 'the life-tenant was made in 1884. Held. that the measure of recovery against the estate in the hands of the legatee and devisee was the original corpus. viz.. $7.072:02. with lawful interest thereon for 1884 and each year thereafter, compounded anI).uaIly.
Where the sole and devisee of a defaulting administrator has disposed, of a,Il the real e,state, gotten undl'r his Will,' and th,e personal, est,a,te reo maining in h,er hands ,is sufficient to make good the d6'DaBta'Oit. a decree will not go against the real estate, and this is especially so where the grantee of such real estate is not a party to the bill. ' A decree in favor of the life,tenant and his children. remainder-men in fee of a sum of money, went against the estate of the administrator wit/l the will annexed for a d6'DaBta'Dit wrought by him. To this bill a co-administrator was a party. but there was nothing beyond his refusal to proceed against the.estate to sho,w that he was not, 8 proper person to receive the ,money ll.wardedby the decree. In addition, the trust \fund was to go over upon the death of the lifetenant without children. Held,in New York.-where the appointment and removal of such administrators, and the proper management of the fllnde in their .hands, are for the surrogate's court,-that the federal circuit court would not take the matter out of the surviving administrator's hands In advance of any action by the surrogate, but .that the money should be paid to him· Under Code Civil Proc. N.· Y.§1841, for a creditor of the estate to recover against a legatee it is ol1ly necessary to show that no assets have been delivered to a !lurviving consort or next of kin. and under sections 1844. 1848,1849, to recover against a devisee it must be shown ,that three years have ela.psed without grant of or after such grant, before suit, and that the debt cannot be collected of anyheit. or in the court. against the executor or againSt any other distributee. with anydeg,ree of diligence. Held. that these provisions did not. except so far as the rights of the parties arising therefrom were concerned,' govern the practice in equity in such Caflp.s Of the federal courts sitting in that state. A bill by the life-tenant and rein,ainder-men in fee of a sum of money alleged that the will creating the trust fund had directed that it be invested; that H., who. with C., was administrator with the will annexed. had put the money in United,States bonds. w.hich he subsequently sold al/-d then reiuvested the proceeds in mortgage bonds of a foreign corporation, and that these bonds turned out to be worthless; that B. had died testate, one N. being his sole legatee "nd devillee. and that, his eatate'b.d been wound up .and turned over to .said
'- SAME-RIGHTS OF CO-Ar>:MINISTRATOIL
.. DESCENT AND DISTRIBUTIOl!f-LIABILITIES OF HEIRS AND DEVl8EES.... PRACTICE IN STATE LAWS. ,"
SAME-AcTION AGAINST SOLB LEGATEE-PLEADING.
N., leaving the debt to the trust fund unpaid, and that C" the surviving ad· to procjl,ed. To this bill, which was brought more ministrator, had than three years after·t:ti'6 of estate, C., N., and the ex· ecutor of H. were all made parties. There was no demurrer, and the answer ofthe,billfHeld, .that thee,stl\te in.the hands of N. was liable and that the 'blll'wassufllcient, under the laws of New York, to supher; !lIp.parent that no i!ossets had gone to a'Yife "of neX't'Of kin that ought to'tiereached'before the iJlterest of N" and that the 4el>t :tIot be collected of any heir or in the SUIT.og!lte's court against the pf or against any other degree of diligence.
.Iil':R:ql1itf: for lhe of a L.,4. .F'uller, for complaillapt, \V.g. ,.H. Cook. '(Jh,a,8. 'PiBuc1dey, for defendant George.!. Cook. 'Jo1i'A,., for defendant' Deborah C. Newton.
1. ,-, ,. _ '. '. _. ' . . . , ; ; , _. .,
'The sho'w that the George:I.,,(iJook'and,John O"J:[ewiit'wate administrators with the will Cook, New York, 'and in her will had to invested, and- tbeninterestof it paid anntilally to:theorator during his life, and the principal to his children, ifany, at his decease; that it was invested il}; Sta.tes . of H;ewitt, and which; he converted' into money; and ,inve$tedthemoney in eight mortgage bonds of », c?rp?ration(yf of Pennsy1vama, of$l,OOd each,purportmgJo,Qear mterestl1.t7 percent.; thathe paid the interest, of these bonds to the orator while he lived; that he died on the a will' of real 'and personal bequeathedsqlely.tO the defendant, Deborah C. Newton, ,his sister,; and making, the defendant Wight executorj that Wight executor" ,possession' of the estate,' in61ud,ipg .2Q, '1883;aud paid the interest from them 'Ofthat; orator,dandioffE!ted them to him as belonging to the ;tl;ley were worthless, and no interest was paid,on th;em in 1884; and they were delivered to the officers of the company to'ba used in reorganization; that the defendant Newton' riP as legatee of Hewitt inmqney $3, other personal 'property, $4,.935;ri.nallof personalty, and as devisee a house and lot, No. 136 West TwentY"''.l'hird street,which shehanold aud conveyed ,this waS aIr or the, estate after paY!llent ofoiller debts,andexpenses;andlthat tbeorator requested the defend· a.nt\Cotlk sutvivillg torecbver this fUlid of the)stnte .ungefthe advice of counsel, 'he to do. This suit was brought April ll,,1887, to/compel the defendant Newton to refund or pay this 'amount; with arrears pfinterest, and to ireal theappointIl1ent of a receiver or ,bequest..· ' , :" Counsel'otll'1iehalf ofthe insisUbat Doneaf the trust 'property het banus; that the bill does not nllege any misapl)licatiooofthefund, p,nd that, therefore, no relief.can be granted upon
' COOK ". COOK·.
that ground; .. that the,liapility of legatees and devisees' :for debts ot obli. gations oqhe testa/;or"ffl wholly statutory, and that the requirements. Of the statutes. not followed in this case. . The. case does not show she bas recehl'ed anyspec.i1jic .trust property; therefore, she is not chargeable ont}latground.,;, Thepi11, I,lJ,leges that Hewm ;had the fund, and invested; it ill Mnds of the Upite"a. States; that tbe bonds were paid to him, or ,he sold them, whereby $.8,000; that the avails of them went to Wight\l.s executor; apd. that the of Hewitt went to Newton M devisee and lygatee. :Relief ,must be as is argued, upon these allegations, if 8,tall.. .If the, bill iiJ defective, or is not sustained by the answers or proof to the extent affordirig relief, it must fail. This is elementary... The investmen,t in hands of the United States was a proper one. A' .bill which aUegedthat Hewitt sold or collected the bonds, and then resigned, or was refused to pay over the proceeds to the remaining adminis'trator, would have been gooJi.· This bill alleges the same, except tltat it alleges that he died, and therebytJhe trust to him was terminated, instead.ofby either of the athe.r 'modes, and that the executor refpses to pay t4e fund, but lets it go to the legatee. This would be a good bill against the estate if it remained in the hands.of the executor, if maintained. by answer or proof. The investment in tlie bonds ofthe foreign corpon1-tionis :not claimed to be good so as to bind the cestuis q:ue trust to it. As to them, it was the same as no investment, and left him chargeable with. tbe, fpnd. The bill alleges what he didaceording to its legal effect; and properly enough omits what he did that Was of no effect., The bill chllrges the money into his hands, and the answers admit this/ without up anything that exonerates him or his estate. This part of the bill is therefqre good, an4is well maintained; and these facts make this administrator individually ,liable., 2 Story, Eq.Jur. § 1280; t Perry. Trusti;l, § 417; 4 Bac. Abr. "Executors,"D; Brazer v. Clark, 5 96; Peter v. Eeverly,lO Pet. 532. His estate in the hands of his executor would likewieehave been liable. At common law, from the earliest times, legatees have been liable to refund sncp part of their legacies as shonldbe'necessary to meet debts and obligations of the. testator·· Bract. bk. 2, c.' 26, foJ. 61; 2 Bl. Comm. c. 32; 6 Bac. Abr. "Legacies," II; 2 Redf. Wills, §56. Thetestatorhad no right to dispose of, the legatee acquired no right to have, what was. necessary for the payment of debts. Heirs and devisees were not liable for debts of the ancestor or testator on· account of lands unless named in the obligation. This is changed by statute in England,and in this country lands appear,always to have been holden fOf the debts of the ancestorortestator. 1 Washb. Real Prop. c. 3,§ 73;Watkinsv. Holman, 16 Pet. 25. These liabilities appear to be and enforced by statute in N'ew York; as to legatees and distributees by section 1837,:and astoheira and devisees by section 1843, oithe Code of Civil Procedure. .to present the.claim to the administrator or executor does not impair the right (secti()11, 1837)10 recover against a legatee; itis'orily to show that no assets bave been delivered to a sUfvi¥inghu8'o
qand or wife or next of kin, (section 1841.) To recover agaInst heirs' it-appears to be necessary. that three years elapse without grant ofletW1'8, Of, after such grant, before suit, (section 1844';Ythat there is a deficiency ot assets, (section 1848 j) and that the plaintiffcannot with due diligence collect his debt in the surrogate's court against the executor or and distributeesjandagainst devisees that the debt cannot beppll,ected of the heir, (section 1849;) arid when the same person is liable one suit need be brought, (section and when laud has been conveyed,there may he a personal judgmeut, (section 1851i.) The bill does not allege that tbreE,! years .had elapsed without ,grant oz: after gl'ant of letters, before suit; but it does allege the time of grant, anq,more tllan three years fl'omthaUime had elapsed before the suit brought. This appears to berh fltatute of limitation on ,the right to commence suit, not affecting thehtinging of the suit when the time for it arrives. It is not necessary to allege in any suit that it is brought within a ,statute of limitations. The bill alleges that the defendant Newton is and devisee, that estate real and' personal has, been received by her, and that there is not remainjpg in the hands of the executor any greater sum than $500. The.prooLahows that she has received the whole estate, and that there is nothipgrremaining in his hands. This shows clearly enough that no assets have gone to a wife or next of kin that ought to be reached before tqis legacy"aIid fixes her liability as legatee. It also shows that the debt cannot be collected of iuiy,heir,orin the surrdgate's court against the exec\ltorf!oragainst any. other distributee with any degree of diligence.The.Code of Procedure-o£ the state does not govern-at aU as to practice in;.ca.ses in equity in the courts of the United States. Rev. St. U., SO' §91B.,The proceedirw;s:iri such cases are the same in aU the states, whatever the procedure of the courts of the state may be. . BO'!}le v. Pet. 648; Gaine,s v.-Relf, 15 Pet. 9.' But all the rights of the parties,arising out orany local law must be observed. Irururance Co. v. Oushman, 108 U. S. 51,2Sup.Ct. Rep. 236.' General allegations in ,bills inequity in these courts are ordinarily sufficient. St. Louis v. Knapp ,.o.(j'1104 U'J S.:658. There wasno':demurrer tc>'this bilI pointing out any allegntionsof the bill but it WAS answered, and it pears now to b'e sufficient as a basis,for a decree. ' , The case is l1<)t'very clear in respect to the amount for which Hewitt .wa.s liable. The bill alleges that he received 88,000 for the government b.onds. The answer of Cook admits this on belief. The answer of Wight ll-dmitS,thnt·there·were 88,000 of the corporation bonds;'and the answer of>Newton admits that he received about 87,000 for the government 'bonds. The answer of Cook is not evidence against her; and there is no testimony on the subject. Her answer must govern, and' it is taken to about 87,000, the amount of the fund, which is about that sum. There! is· no showing as to the exact time to which interest was paid to the orator. Her answer shows'nothing further than that the interest was paid to the orator during the life of Hewitt by him, and by his executor afterwards as received frointhe bonds; and the testimony
COOK II. COOK.
shows that payment of interest on the bonds ceased in 1884. On the whole the orator appears to be entitled to have the fund restored to the estate of Mary Cook, and to interest on the fund at the lawful rate for the year 1884, and each year after, with interest on each year's interest from the end of that year. No earlier day can be fixed upon from anything in the case. The orator has prayed that a receiver or trustee be appointed in place of Cook. But this fund still belongs to the eatate of Mary Cook. The orator's right ,to the ihterest is established, but where it may go at his decease cannot now be determined. If he leaves children,-lawful issue,-itis to go to them; if not, it is to go somewhere else, according to'her will'; or, if not disposed of by that, it is tobe distributed to whomsoever may under the law be entitled to it. It is necessary, therefore, that ,it; beinthe hands oLan.administrator with the will annexed. The or such administrator, and the keeping of the estate in 'his hands ,securely, properly appertains to the surrogate's, or other probate court of the state. If there was just ground tos\1ppose that it would not be safe in the hands of Cook as such administrator until proper action could be taken there., a receiver might be appointed; but no such ground He would not proceed to recover the estate, but left the orator to do so. That does not appear to be sufficient ground for taking ,the matter out of llis hands in advance of proceedings in the surrogate's ,Of other proper court. The orator appears to b,e entitled to a decree against the defendant Newton, for the payment of the amounts of the annual interest, with interest thereon, directly to himself; and for the payment of theamou,nt of the fund, $7,072.02, to the defendant Cook, as administrator of Mary CooIt, with, will annexed, and for his costs., This amount will not go any" 1?eyondthe persopal assets, and, if not, no decree against the real, estate would appear to be proper. Besides this, the grantee of that is n,ot a, party: Lefore the court, and .a decree charging it with payment wop.lq. in order, withont that party. ,Let bea decree .for, the, payment by the defendant Newton to the defendantCook, as administrator, of the sum of $7,072.02, and for the payment by hel: to the orator of the' interest on that8um from the' ning of the year 1884 until it is paid, with interest on the interest from the end of eaph year, with costs to the orator; and dismissing the bill as to Wight, without costs.
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D.March 19; 1888.)
r'1 ' :, j .J" (}Jl': 1]A.!iTllj:S. .';i, ".'. tWQ rail:way companills, a "
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. Where;a joint line shall be ,obtained OF supplied for the USe does not 'expressly provIde 'of the 'linie, ithe fact'that one company for several yeal"ll after the contract was in,tQ Paid, otbel' for !the 1:\8e ,0.£ asa cou,str,uctI09.Vl'!olled on ,the partf6s, and will such payment as a part 01 the .' . . , ," ", ' .. .,
. ,In Eqttity.' ··On' exceptions to. mnster's. report.. '. In 're l intervenihg pilL tition of Sit' Keokuk & 'Northwestern Railroad Goilipany. " H. H.Trimble' and Pa1JmJJr Trimble, :for ' .H. S. Prie8t, for receivers.
TnAi'ER, J.The 'question which' on the intervening claim of the St;'1:ohis, Keokuk&'NorthwestethRailroad against' the receivers of the Wabash refetenQe to the provisions of a contract entered irito <on'Febtuary 4, W79, the St. Louis, Kansas City & Northern Railroad as party-of the first part, and the intervenor as patty of the second part;' That contract recited "that the"intel'venor desired to complete it"l,Hne of Tailway from Clarksville,Missouri, to a connection with of the first party at or .near Dardenne(nowSt. Peters, and forlDa joint line between the railroad corilpatIies'from St. Louis over the'railroad of the' first party toth6 proposed ebnnection, and from thence over the railroad of. said second party Iowa, fdr' the bftransporting freight, mail, and express cars on'terms mutually toboth parties. In consideration of the premises, and the undertaking on the part of the second party to construct and complete itsroad,and makesuch connection and. provide the necessary facilities for such joint busine::;s at said connection; the 'first party agreed With the second party to form such 'joint line of from St.Louis, Missouri, to Keokuk, Iowa, for senger, freight, mail, and express the arrangement to commence as soon as the second party had completed its tracksfrom'Clarkesvilleto the connection aforesaid, and to continue for 50 years. The party of the first part agreed to furnish all depot and terminal facilities at St. Louis for the joint-line business; also all the motive power to haul the trains of such joint-line business between St. Louis and the junction aforesaid at or near St. Peters, pay all bridge tolls over the St. Charles bridge on the trains and business of the joint line, and give the business of the joint line the same care, attention, and facilities that it gave its own. It was also mutually agreed between the parties that for the services, facilities, motive power, and bridge tolls aforesaid, including station work at the city of St. Louis for such jointline, the said first party should receive thirty-five hundredths of all the earnings of the joint line, and the