Metropolitan Trust Co. v. Stallo

Scott, J.: The nature of this action and the relief sought therein are stated at length in the opinion handed down herewith on appeal from an order sustaining a demurrer to the complaint. (Metropolitan Trust Co. v. Stallo, No. 2, 166 App. Div. 649.) For the purpose of this opinion it is sufficient to say that plaintiff is the administrator of the estate of Alexander McDonald, deceased; that it was at the time of its appointment a creditor of the estate holding collateral security for its debt; that it had sold such security for the payment of its claim, and that it now holds a part of the proceeds of such sale, as well as certain securities with reference to which claims have been made by persons other than the estate or those ultimately entitled to it. The judgment sought is a general accounting in which it may — 641 — be ascertained with what plaintiff is chargeable, in cash or securities, as administrator, and what valid claims, if any, are held by any of the defendants against money or securities in plaintiff’s hands which are apparently assets of the estate for which it is administrator. It seems to be quite plain that every question respecting the amount of the estate, the valid claims against it and the liability of plaintiff for its acts or failure to act as administrator can be raised and determined in this action, and it is not easy to see how they can all be determined otherwise than in this or some similar action except by a series of actions, which latter course would inevitably result in much confusion and probably great expense to the estate. Immediately after this action had been commenced the defendant Laura McDonald Stallo, one of the two next of kin of the intestate, instituted a proceeding in the Surrogate’s Court for the removal of plaintiff as administrator of the estate of said Alexander McDonald, deceased. An order was subsequently made by the Surrogate’s Court granting the prayer of the petitioner. This order was reversed for reasons not affecting the question now under consideration. (Matter of McDonald, 160 App. Div. 86; 211 N. Y. 272.) By the orders entered on the appeal referred to the whole matter was remitted to the Surrogate’s Court, which, as is conceded, has sole and exclusive authority, in the first instance, to act upon a petition for the removal of an administrator. The present application is for a temporary injunction restraining the defendant Laura McDonald Stallo from prosecuting, during the pendency of this action, the above-mentioned proceeding instituted by her for the removal of this plaintiff as administrator as aforesaid, and from instituting or prosecuting any other action or proceeding concerning or affecting any of the matters set forth in .the complaint herein. The authority of the Supreme Court sitting as a Court of Equity, and indeed its duty, in a proper case, to stay proceedings in another court is so well established that it will not be questioned. The only inquiry is as to when a proper case is presented. (See Erie Railway Co. v. Ramsey, 45 N. Y. 637; 4 N. Y. Annot. Dig. 948.) Nor is it an insuperable objection — 642 — to such an injunction that it restrains the prosecution of proceedings as to which the Surrogate’s Court has concurrent or exclusive jurisdiction. (Pettigrew v. Foshay, 12 Hun, 483; Van Sinderen v. Lawrence, 50 id. 272; Schlesinger v. Schlesinger, 157 App. Div. 633.) While the jurisdiction and authority of the Supreme Court to restrain the prosecution of proceedings in other tribunals are not necessarily determined by the priority of institution, the case for such restraint is much strengthened when, as in'this case, the commencement of the action in the Supreme Court antedates the commencement of the action or proceeding sought to be enjoined. In Schuehle v. Reiman (86 N. Y. 270) the Court of Appeals said: “ Where the object of two legal proceedings is the same, convenience as well as a proper regard for the rights of debtor and creditor require if possible that the fund in which both are interested should be subjected to diminution by one litigation only, and the parties themselves spared the unnecessary labor and expense of conducting two controversies over the same matter. It would seem also that if both tribunals, whose interference has been invoked, have equal or concurrent jurisdiction, it should continue to he exercised by that one whose process was first issued.” In Ludwig v. Bungart (48 App. Div. 613) the present chief judge of the Court of Appeals writing for the Appellate Division said: “While it has many times been held that the Supreme Court may properly decline to take cognizance of a matter over which the Surrogate’s Court has concurrent jurisdiction, such refusal does not seem to be authorized, unless the jurisdiction of the Surrogate’s Court has already been invoked. The rule is that where both tribunals have equal jurisdiction, the cause should be retained and disposed of in the forum where judicial action was first sought. ” To the same effect are Garlock v. Vandevort (128 N. Y. 374); Matter of Farrell (125 App. Div. 702) and many other cases. In considering whether the case at bar presents a proper occasion for the exercise of this undoubted jurisdiction of the Supreme Court we may properly look at the grounds set forth in the petition as a reason for the removal of the administrator, not for the purpose of passing upon the sufficiency of — 643 — those grounds, for that is a matter to be passed upon by the Surrogate’s Court, but for the purpose of determining the imminence of the necessity, if necessity there be,' for the consideration of the question whether or not the administrator should be removed. . It is to be noted in the first place that there is no suggestion anywhere that plaintiff is not amply able to respond to any judgment dr order which may be made fixing the amount for which it is hable to account, and no claim is made that the assets of the estate are liable to loss or diminution by reason of the insolvency of plaintiff. By reference to the petition it appears that the sole ground upon which the removal of the administrator is sought is the claim on the part of the petitioner that plaintiff, occupying the dual position of administrator and secured creditor, failed to credit upon said loan certain sums which should have been credited thereon; sold the collateral securing such debt in violation of an alleged oral agreement to extend the due date of said debt, and improvidently or wrongfully sold said collateral securities at a less price than should have been obtained for them. Thus it appears that every failure or dereliction of duty charged against plaintiff as administrator is something which has already been fully accomplished, and that the questions presented as arising therefrom are questions which can be appropriately raised and disposed of in this action, the principal object of which is to judicially and finally determine for what plaintiff is chargeable to the estate of which it is administrator. The gravamen of the petition is contained in its 28th and 29th paragraphs, which follow the somewhat detailed statement of the several derelictions from duty charged against the administrator. These paragraphs read as follows: <c XXVIII. That said Metropolitan Trust Company admits a part of your petitioner’s claim and denies the remainder, and that your petitioner and said Metropolitan Trust Company are unable to arrive at an agreement as to the amount of its liability and it is necessary to sue said Metropolitan Trust Company for an accounting, for which reason it is necessary that some person not interested adversely to your petitioner should be appointed administrator of the estate of said Alexander — 644 — McDonald, who will bring suit forthwith against said Metropolitan Trust Company for an accounting and for damages. “ XXIX. That said Metropolitan Trust Company occupies a dual position of administrator and creditor of said estate and is not in position to properly protect the rights and interests of your petitioner in said estate. Said trust company in selling and disposing of said securities as herein stated has failed to protect the interests of the estate of said deceased, and has recklessly and wilfully caused loss and damage thereto, and has disregarded its duty as administrator, and has thereby derived large pecuniary advantage.” It thus appears that the purpose sought to be achieved by the removal of plaintiff as administrator is to afford an opportunity to charge plaintiff with the loss suffered by the estate in consequence of its mismanagement of the estate, or its wrongful acts in relation thereto. We are unable to see any reason why the petitioner and her sister will not be in a perfect position to raise any such question as they may be advised in the present action. The natural result of superseding plaintiff as ad min - istrator would be to require it to account to the new administrator. Upon such an accounting these questions would at once present themselves and have to be passed upon. They can equally well be raised and passed upon in this action, but the other questions in which other defendants are interested could not be determined in an accounting proceeding in the Surrogate’s Court. It cannot be questioned that the Supreme Court is a tribunal better equipped than the Surrogate’s Court to determine such a claim as that which petitioner says she wishes to assert against plaintiff and which is the real ground upon which she seeks plaintiff’s removal. Yet it is quite possible and even probable that the action of the surrogate upon the petitioner’s application would operate as res adjudicata of that very serious question. (Demarest v. Darg, 32 N. Y. 281; Culross v. Gibbons, 130 id. 447; Leavitt v. Wolcott, 95 id. 212; Smith v. Zalinski, 94 id. 519.) The mere fact that plaintiff was at one and the same time administrator of the estate and a creditor thereof is not alone a legal objection to its acting as administrator. It was a creditor when it was appointed, and very probably was selected as — 645 — administrator for that very reason. At all events there is no inconsistency in the two relations. Upon the whole we see many reasons why the prosecution of the action for plaintiff’s removal as administrator should be stayed until final judgment in this action, and we find no reason in the interest of the estate why it should not be. In this action an opportunity is afforded, such as could not be afforded in any proceeding in the Surrogate’s Court, to litigate every question that any person interested in the estate may desire to raise, and, so far as any allegation is made to the contrary, the continuance of plaintiff in office as administrator during the pendency of this action will not subject the estate to jeopardy of loss or depreciation. A proceeding to remove an administrator is not one to punish him but to protect the estate. (Matter of Monroe, 142 N. Y. 484, 491.) In that case the administrator was also a secured creditor of the estate, and the charge against him was similar to that made against the plaintiff, to wit, that he had been guilty of wrongdoing, to the damage of the estate, in realizing upon the collateral securities. Referring to that charge the Court of Appeals'said: “The mere fact that the interest of the administrator individually was opposed to that of the estate in the transaction now under consideration presented no embarrassment and did not require his removal from office. A proper plaintiff could have invoked the aid of a court of equity, making the interested parties defendants, and the rights of all would have been fully protected.” This opinion is peculiarly apposite to the present appeal. The orders appealed from should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs. Ingraham, P. J., and Clarke, J., concurred; McLaughlin, and Laughlin, JJ., dissented.