Warren v. Paff

The Surrogate. The testator died in the year 1839, and his will was proved shortly after his decease. The executors were authorized and directed to sell the real estate of the testator, but this power was.never exercised until the year 1856. In March, 1842, there was a final accounting by the executors before the Surrogate, and the personal estate being insufficient to pay all the debts, a dividend was declared, and the surplus remaining .in the hands of the executors, after discharging the expenses of administration, was directed to be .paid and dis [265] tributed among the creditors. The decree provided, that on these payments being made, the executors should be discharged from their official duties and liabilities. Warren & Kiersted were named in the decree as creditors, and they received their dividend. They now apply for payment of the remainder of their claim out of the proceeds of the real estate lately sold by the executors, as directed by the will, and the statute of limitations is pleaded in bar by one of the executors, and also by parties interested in the proceeds of the real estate. It is manifest that before the execution of this power and direction to sell, the creditors having valid demands against the estate could have applied to the Surrogate for the sale of the testator’s real estate, for the payment of his debts. Before the year 1830, the heirs or devisees could have pleaded the statute of limitations against such an application. This was tire rule in equity—the Revised Statutes converted this equitable privilege into a statutory right. It is clear, therefore, that if a proceeding were now pending on the part of creditors of the testator to sell the lands, the statute of limitations would be a good defence against the application. If, on the other hand, we are to treat the direction to sell, contained in the will, as a conversion of realty into personalty, then it is obvious, that for all purposes of administration, this conversion is to be considered as made at the testator’s decease, although not actually effectuated until the sale took place. In that view the creditors could have compelled the execution of the power at any time after the testator’s death, before their claims were barred by the statute. In either case the creditors possessed an adequate and efficient remedy, which they failed to pursue. The demand now presented is over eighteen years old, and fifteen years have elapsed since the entry of the Surrogate’s decree on the final accounting of the executors. I am of opinion, that if the statute of limitations apply, it may be interposed by the executors, or either of them, or by any party interested in the fund. (Shewen vs. Vanderhrost, 1 Russ, & M., 349; 2 Russ. & M. 75.) [266] The statute begins to run against a demand when the cause of action accrues, either .in .the lifetime of the intestate or testator, or after his death. The period of eighteen months after the grant of letters testamentary or letters of administration, is not counted as part of the statutory limitation. The remedy of the creditor is by suit against the executor or administrator, in a com’t of law, or by an application to the Surrogate for a decree, liquidating the claim. A judgment, when recovered at law, is only conclusive as an adjudication of the liability of the estate. Execution cannot issue without the permission of the Surrogate, which will not be granted, unless the executor or administrator be found in assets. When there is a decree of the Surrogate, liquidating the debt, but ordering only the payment of a dividend, the statute will certainly run against the portion of the demand decreed to be paid; but what is the effect as to the portion not ordered to be paid in consequence of a deficiency of assets ? In other words, does the statute run against a Surrogate’s decree, merely liquidating a debt against the estate ? Such a decree is substantially nothing more than a judicial declaration that the debt shall be paid in due course of administration. Is it necessary, in order to save the statute, to have the debt judicially re declared every six years, in order to save the remedy in case new assets should be realized ? I am not prepared to assert this doctrine; the proposition has great difficulties. There certainly can be no decree for payment until assets have been recovered or ought to have been recovered by the representative. In the case of Paff vs. Kinney, (5 Sandford’s Superior C. R., 380,) a controversy arising out of the very estate now under consideration, Justice Parker, of the Court of Appeals, held the following language in reference to assets which accrued in the year 1848 : “We do not see how the defendant can avail himself of the statute of limitations on this demurrer. The statute must be considered as having begun to run at the time when the decree in favor of the corporation was, in fact, satisfied. From that time the amount, became assets in the defendant’s hands.” But, in the present [267] case, I think we are relieved from the difficulty as to the question of the application of the statute where new assets are realized, by the fact that the funds which the creditors now seek to reach, are the proceeds of lands vested in the testator at the time of his decease. Ever since his death, the lands have been real assets, which the creditors might have had sold for the payment of the debts by the order of the Surrogate ; or, if they were to be treated as personal assets, on the ground of the direction for their sale contained in the will, then the creditors might have compelled their application to the discharge of all claims against the estate. To effect either of these results, an adequate remedy existed eighteen months after the grant of letters, and six years having been allowed to elapse without enforcing either of those remedies, the debt, in respect either to the land or its proceeds, is, in my judgment, barred by the statute of limitations. It may be urged that the same objection applies to the claims of the legatees, whose bequests are made payable out of the proceeds of the real estate when sold. Formerly the plea of the statute to an ordinary action for a legacy was unknown, both at common law and in the ecclesiastical courts, and the Court of Chancery refused to adopt the rule, by analogy to the statute, because an executor stands in the relation of a trustee, and whilst the trust subsists, the statute was not permitted to run. (Angell on Limitations, p. 95.) Executors, who are precluded from taking beneficially, and administrators claiming merely as such, were not permitted to set up a title to the general residue. Being simply and technically trustees, they could not hold the residue to the exclusion of the parties beneficially interested. (Angelí, p. 163.) The limitation was not created for the personal convenience of the executor, but for the benefit of the estate of the deceased person and those entitled to it. (Angell, p. 187.) Without inquiring how far this rule has become modified by our statute in relation to general legacies, it is sufficient to say, that on the exercise of any trust power contained in a will, granted and exercised only by virtue of the express terms of tire will, a. right of [268] action accrues to the cestui que trust, interested in the .execution of the power. The act of the executor prevents his denying that the trust continues,- and the duties consequent upon an exercise of the trust, will be enforced against the trustee, within the statutory period after the performance of the fiduciary act. No such express trust exists in this case with regard to the creditors. The debts are not charged on the real estate, nor its proceeds, but are simply ordered to be paid, without specification of the fund to be applied for that purpose. (Bloodgood vs. Bruen, 4 Selden R., 370.) There must be a decree, declaring the claim of Kiersted & Warren barred by the statute of limitations, and directing the.proceeds of the lands sold by the executors, to be distributed among the legatees named in the will as beneficiaries of that fund.