Holly v. . Gibbons

Gray, J. The judgment, which the plaintiff now has, validates the claim against the testator’s estate and authorizes the disposition of the real estate devised by the will, by a sale, for the purpose of satisfying the amount found to be due. In so far as the plaintiff seeks the equitable intervention of the court to compel the exercise by the executor of the power of sale *526 contained in the will, the action is clearly maintainable; assuming that the debt has been conclusively established. The testator expressly empowered his executor to sell the “ Jay Gibbons farm,” “ for the purpose of paying debts and for the interest of his daughter,” in order that, the. debts being thus paid, the residue of the proceeds of sale of that and of the other real estate mentioned in the clause might be given to the latter. The power of sale thus given was imperative and imposed a duty on the executor, the performance of which might be compelled in equity for the benefit of the creditors, or the daughter. (2 B. S. 734, sec. 96.) The debts were not made a charge upon the testator’s real estate; but a power to sell certain portions of it for their payment was given, the execution of which in nowise depended upon the will of the grantee of the power. Hence, the remedy of the creditor, upon the failure to exercise the power of sale, was by application to a court of equity. (Matter of Gantert, 136 N. Y. 106.) The sale of the real estate for the payment of the debts is not, as it is argued, to be effected, solely, through proceedings provided for in the Code of Civil Procedure. Section 2759 provides that a decree directing the disposition of real property, in a case where,' under section 2750, the creditor of the decedent has instituted a proceeding for that purpose, can be made only where the property directed to be disposed of is not subject to a valid power of sale for the payment of the debts. (Subdiv. 4.) The action, therefore, was maintainable, if the claim of the creditor was an enforceable one, and, as- to that, the appellant argues that the executor could not, by .the acknowledgment of the debt, prevent the Statute of Limitations from running. He argues, in effect, that the principle of the rule, which prevents an executor from reviving a debt against the estate of his testator which is barred by the statute, applies, equally, to his right to keep a debt alive. I perceive no force in such an argument; nor am I aware of any authority in reported cases, which would support it. The demand of the plaintiff was upon an obligation of the testator, subsisting at the time of *527 his death and for which his estate was concededly liable. It was the right and it was the duty of the executor to discharge the indebtedness upon the obligation, either from the personal estate, or, if that was insufficient, by the exercise of the power of sale given to him by the will. There is a plain distinction between the right of an executor to revive an indebtedness against his testator’s estate, which had been extinguished by law, and his right to acknowledge, and to keep in force, a subsisting obligation, by making payments from time to time upon the principal of the debt, or by way of keeping down the interest. (McLaren v. McMartin, 36 N. Y. 88; Butler v. Johnson, 111 id. 204.) In the one case he, in effect, creates an indebtedness; while, in the other, he is performing a moral obligation and is executing a duty recognized by law. It is, further, objected by the appellant that a former adjudication in the Surrogate’s Court was a bar to the maintenance of this action. In my opinion,, that is not the effect of the surrogate’s decree referred to. All that decree effected was, as it states, the dismissal of the creditor’s petition. The statement, which it contained, that “ the proceeding to compel the executor to account is barred by the statute of limitations,” was not a final adjudication upon the validity of the petitioner’s claim. It was the conclusion of the surrogate that, by reason of the lapse of time, the executor could not be compelled to account in such a proceeding. Whether the surrogate was correct or not, in that respect, is not material. He, in effect, nonsuited the petitioner, by dismissing his petition, and, in so doing, has complied with certain provisions of the Code of Civil Procedure. By section 1822, it is provided that, where an executor rejects a claim against the estate, “ unless a written consent shall be filed by the respective parties with the surrogate that said claim may be heard and determined by him upon the judicial settlement of the accounts of said executor, * the claimant must commence an action for the recovery thereof,” etc. By section 2722, if a petition is presented to tlie Surrogate’s Court by a creditor, praying for a *528 decree directing the executor to pay his claim, it is provided that the surrogate must dismiss the petition, “ without prejudice to an action or an accounting,” where the latter files a vo-itten answer, setting forth facts, which show “ that it is doubtful whether the petitioner’s claim is valid and legal and denying its validity or legality.” Obviously, if the proceeding were one, in which the executor was called upon to render his account by a creditor, the validity of whose claim is either expressly denied, or is shown to be doubtful, the result must be the same, as to the surrogate’s jurisdiction. I do not think we can say that the filing of a petition by a creditor, and of an answer thereto by the executor denying the validity of a claim, was equivalent to the filing of the written consent required by the statute. The fact that the claim was disputed deprived the surrogate of jurisdiction to determine its validity and to decree its payment. (Matter of Callahan, 152 N. Y. 320.) It is, further, argued that this action cannot be maintained against the devisees individually. The order of the Appellate Division struck out any recovery against the executor, individually, of any deficiency judgment and there was no judgment at all against JVIrs. Peck. Whether the judgment is maintainable for the sale of the real estate devised to Edward Gib.bons is somewhat doubtful; inasmuch as the averments of the complaint and the proofs do not seem in sufficient comjiliance with the provisions of the Code with reference to an action against devisees and Mrs. Peck was not brought into the action. (Code, secs. 1843, 1846, 1849,1851.) But, as the judgment must be reversed and a new trial ordered, for the failure to bring in Mrs. Peck, we will not discuss this question. The serious feature of this case, and one which requires the reversal of the judgment, is that Mrs. Peck, though made a defendant by name, was never brought into the litigation by a legal service upon her of the summons. The order for the service of the summons upon her was not founded upon the affidavit, which section 439 of the Code requires to be made. Indeed, the respondent conceded, in open court,' that there *529 was no such legal service; but he says that Mrs. Peck has “no interest, vested or contingent, in the land devised, or in that directed to be sold, and that, therefore, she is not a necessary party to the action.” This contention seems rather extraordinary, in view of the allegations of the complaint; to the effect, not only, that Mrs. Peck is a devisee under the will and holds as such, but that the payments made by the executor upon the note and the delay by him in the sale of the real estate were with her knowledge and consent, and in view of the findings, which recited the facts of a personal service upon her of the summons and complaint and of her knowledge of, and consent to, the executor’s acts. If we might disregard these matters, as not necessarily conclusive upon the respondent, we, still, are confronted with the fact that Mrs. Peck did have an interest in the estate of the testator and in the enforcement of the power of sale contained in the will, which made her a necessary party to the action; without whose presence the court would acquire no jurisdiction to render any decree, which would affect her legal, or equitable, interests. Under the third clause, by which the “ Huyck farm ” was given to the testator’s son, “ unless he should die without legal issue,” in which case it was to go to his daughter, Mrs. Peck, she took no interest; because the son survived the testator and the estate had vested in him. Under the fourth clause, however, which empowered the executor to sell the “ Jay Gibbons farm ” and the residence, for the purpose of paying debts and applying the surplus to the testator’s daughter, her interests are very clear and substantial. As one of the two heirs at law of the testator, she had an interest in such real estate ; which was subject, of course, to the exercise of the power of sale. Having such, her interest in any legal proceeding, wherein it was sought to compel a sale for the purpose of paying claims against the testator’s estate, was very substantial. She was very much concerned, by reason of her legal and equitable interests, that such claims should be satisfactorily and legally established, as obligations of the testator which were actually subsisting against his estate. It *530 cannot, truthfully, be said that Mrs. Peck had no interest, which could be injuriously affected by the result of this litigation,' and, therefore, within those rules which govern the judgment of a court of equity, she should have been brought into the litigation. Courts of equity observe a fundamental principle concerning parties, that all persons, who are interested, directly or indirectly, in the subject-matter and in the relief to be granted by decree, should be brought into the suit. When it appears that their rights might be affected thereby, and they are capable of being made parties, a court of equity should not proceed to decide the case without them. (Story’s Equity Jurisprudence, sec. 1526 ; Pomeroy’s Equity Jurisprudence, sec. 114.) In the absence of Mrs. Peck as a party to the action, the court did not obtain jurisdiction to render a judgment for the sale of the testator’s real estate. It was, also, quite unnecessary to the judgment to direct a sale of the real estate through a referee. I am not aware of any authority in the law for such procedure. It not having been charged, or found, that the executor was unfit, or without capacity to execute the power of sale, the judgment of the court should have directed him to effect the sale. For the reasons I have given, I advise that the judgment appealed from should be reversed and that a new trial should be ordered, with costs to abide the event. Haight, Yann, Cullen and Werner, JJ., concur; Bartlett, J., votes for reversal on the ground that Mrs. Peck had such an interest in the “ Jay Gibbons farm ” as rendered her a necessary party defendant; Parker, Oh. J., not sitting. Judgnlent reversed, etc.