Keegan v. Smith

Rumsey, J.: The action was brought by the next of kin of Jane Keegan upon the bond of her administrator. The administrator rendered his account which had been settled, and a decree of the surrogate entered establishing his liability towards the estate. By that decree he was charged with the amount of three judgments recovered by his intestate against him in her lifetime, which he had not paid. After the decree had been entered, a transcript was filed in the county clerk’s office, an execution was issued against the administrator which was returned unsatisfied, and then this action was brought against his surety upon the bond. The case has been twice tried. Upon the first trial it was held by the court below that the decree of the surrogate settling the accounts of the administrator was not conclusive upon the surety, and for that reason the complaint was dismissed. Upon appeal to this court the judgment was reversed and a new trial ordered, for the reason that the decree was conclusive upon the administrator and the. court erred in holding to the contrary. (McMahon v. Smith, 24 App. Div. 25.) Upon the trial from which this . appeal is taken judgment was recovered by the plaintiffs for the amount of the debt of the administrator due to the intestate. The defendant claimed that the administrator being insolvent and not being able to pay the judgments the surety was not liable for them, and for that reason the plaintiffs should not recover in this action.. That question was not presented upon the former trial. It was, however, litigated at the Trial Term of the City Court upon this trial. The City Court did not pass in terms upon the question whether the administrator was insolvent, but did find that he • had been charged with the amounts of these judgments by the surrogate in the décree rendered against him, and as a conclusion of law found — 170 — that the administrator having been charged with these amounts, the surety was liable for his failure to pay. That judgment was affirmed at the General Term of the City Court, but it was reversed by the Appellate Term for the reason that the case was destitute of a finding that the administrator was able to pay the judgments, and in the absence of this essential fact they held that the judgment could not be sustained. It was held in that court that a mere adjudication of the surrogate that the administrator was liable to the estate, did not establish the liability of the surety, and a breach of the bond of the surety was not established unless it was shown that the administrator could have paid the debt, or that by the exercise of due diligence he could have collected the,same. So the question, presented upon this appeal is whether, when an administrator is charged by the surrogate with the amount of a debt he owes the intestate, the decree thus charging him is evidence, conclusive or otherwise, against the surety, or whether the person who seeks to recover against the surety because of the failure of the administrator to obey the decree of the surrogate, is bound to show not only that the decree was made, but that it was correct, before he is entitled to recover. In other words, is it the duty of the person insisting upon the conclusiveness of the decree to show the correctness of it, or is the. correctness to be assumed and the burden put Upon the surety to attack it in a case where he is permitted to do so by the law ? Prima facie the decree of the surrogate is conclusive. (McMahon v. Smith, 24 App. Div. 25.) The item for which the. administrator was charged in this case was a debt due from him to the intestate, which was evidenced by three judgments. The statute requires that for. any just claim which the intestate has against the administrator, he shall be liable as for - so much money in his hands at the time the debt or demand becomes due, and shall distribute the same in payment of the debts and legacies as part of the personal estate of the deceased. (2 R. S. 84, § 13.) It has been held that upon the accounting of the administrator, it is the duty of the surrogate under this- direction of the statute to charge the administrator with the amount of his debt as so much money in his hands. (Baucus v. Stover, 89 N. Y. 1.) But the court said in that case that while the' debt must be treated as - money in his hands, it did not for all purposes stand upon the same footing as though he had received that — 171 — amount of money. If wholly unable to pay the money in pursuance of the decree, he could not be punished for contempt as he could be had the money actually been received from some other debtor. After the case of Baucus v. Stover had been decidid by the Court of Appeals, an action was brought by a creditor against the executor and the surety upon his bond, to recover for the failure of the executor to comply with the direction of the decree to pay over the money. It was made to appear in that action that the executor was at all times insolvent and unable to pay, and the court held that because he was thus insolvent and unable to obey the decree of the surrogate, the surety was not liable upon his bond for his failure to pay over the money, and the complaint was dismissed. The judgment was affirmed by the General Term (Baucus v. Barr, 45 Hun, 582) and it was fúrther affirmed by the Court of Appeals upon the opinions there reported. (Baucus v. Barr, 107 N. Y. 624.) The result of the cases is that although the surrogate is bound to charge the administrator with whatever debt is due from him to the intestate as so much money in his hands for distribution, yet when the sureties are sought to be made liable for his failure to pay the money, they are at liberty to show that he was unable to pay it, and thereby excuse his failure to obey the decree of the surrogate. But it is quite clear from the reading of the opinions in that case that not only is the administrator presumptively liable for the debt due from him as for so much money in his hands, but that the surety can only release himself from the liability imposed upon him for the default of the administrator, by showing that as a matter of fact the administrator was not able to pay, and so was not guilty of a default. The burden of the proof is upon the person asserting the inability to pay. When, therefore, an action is brought against a surety upon his bond after the return of an execution unsatisfied, all that it is necessary for the plaintiff to do is to prove the decree of the surrogate in the proper way and the other essentials necessary to charge the surety, and if the surety seeks to relieve himself from the liability which is prima facie imposed upon him, the duty is upon him to show that although presumptively the administrator is chargeable with the debt as for so much money in his hands, and has been so — 172 — charged in the decree, yet, as a matter of fact, he cannot pay it and he is not guilty of a default, and that, therefore, the' surety is not liable. This seems to have been the view taken by the defendant’s attorney in this case, because he alleges as an affirmative defense that the administrator was insolvent and unable to pay. As it was necessary for him to allege and prove that fact, the judgment, will not be reversed unless the fact was proved. There was no necessity for the learned court at the Trial Term to make any finding upon this point for the purpose of enabling the plaintiff to recover. All that was required to be found in that respect was the entry of the decree of the surrogate and the performance of the other conditions which the statute requires, in order to establish the default of the surety. Therefore, when this finding of fact had been made, the' plaintiff was entitled to recover without any further finding as to the solvency of the administrator. It appeared that when the accounts of the administrator, were pending before the surrogate objections were filed to it and the amount of the liability was litigated. The matter was referred to a referee, and upon the testimony he found that the administrator was liable for the amounts of the judgments, and that he should have accounted for them as debts due the estate from himself. The learned court at the Trial Term found the fact as to the contest, and found further that the decree of the surrogate determined that the administrator should have accounted for the judgments as debts due to 'the estate, “ as he was able to pay them,” and he was accordingly charged with them. It is claimed by the defendant that the referee did not find that the administrator was able to pay this debt, .and that is true, but as the referee found and as the surrogate confirmed the finding that he should have paid this debt, the presumption arose that he was- able to pay, and, therefore, the court at the Trial Term did not err in stating that presumption in his finding of fact. Except for that finding the court did. not find either way upon the question of the insolvency of the administrator, although requested so to do. But the i court refused to make any finding upon that point. Such a finding was not necessary to sustain the judgment; but, if it had been, the rule is settled that the evidence- may be referred to to see whether there was sufficient proof to warrant it, 9'•though it was not — 173 — made, and if there is sufficient the judgment will be sustained, although the finding is not actually made by the court. (Chubbuck v. Vernam, 42 N. Y. 432; Valentine v. Conner, 40 id. 248.) But while the court is at liberty to examine the evidence to see whether there was sufficient proof to sustain the decision, it is not at liberty .to examine the evidence to see whether there was testimony to supply a. finding to reverse the judgment. (Equitable Co-operative Foundry Co. v. Hersee, 103 N. Y. 25.) So that even if it were necessary for the court to have found that the administrator was not in fact able to pay these judgments, yet if he did not, we may e'xamine the case to see whether there was evidence that he was actually able to pay them. Upon an examination of the case it is quite apparent that there was evidence which was sufficient to warrant the court in making such a finding if he bad seen fit to do so. Although the administrator himself testified that all his property had been sold before the death of the intestate, and had gone to pay other debts, except the sum of $400, which he had given to his wife and had used to live on, yet there was evidence given by James Keegan to the effect that after this time, Michael Keegan, the administrator, was in fact the owner of several thousand dollars which was in the savings bank, and of a horse which he sold for several hundred dollars, which he gave to his wife. So the court would not have erred had it found that the administrator was able in fact to pay these judgments after the death of his sister, the intestate. But it was not necessary for the court to so find. The burden of the proof was upon the surety. The decree was conclusive upon him, and he was liable for the default of the administrator unless he showed that the administrator was unable to pay and consequently unable to perform the decree of the surrogate as directed. If he desired to prove that fact he must obtain a finding, and unless there was a finding in that regard there was nothing to excuse him from his liability upon the decree of the surrogate. So the learned court below was-in error in holding that the burden of showing the ability of the administrator to pay was upon the plaintiff, except so far as a presumption of that ability arose from the decree of the surrogate. It is quite true that the defendant asked for a finding that the administrator was insolvent, and that finding he did not succeed in — 174 — getting. If the question of fact is before us for decision all that we can say is that there was evidence which might have warranted the court below in finding that the administrator was not only not in fact insolvent, but was able to pay, but had not seen fit to do so. For that reason we cannot say that there was error in the refusal of the court to find the fact of the administrator’s insolvency, and accordingly the judgment below was correct, and the determination of the Appellate Term reversing the judgment below should itself be reversed, and the judgment below affirmed, with costs. Van Brunt, P. J., Patterson and Ingraham, JJ., concurred,; O’Brien, J., dissented.