Summary
In Ledyard v. Bull (119 N.Y. 62, 72) the Court of Appeals states: "While an administrator cannot retain from money in his hands the amount of a debt due him from his intestate until it has been legally established and allowed, yet he may do it if all the persons interested in the estate assent thereto.
Summary of this case from Matter of SmithOpinion
Argued December 13, 1889
Decided January 14, 1890
Isaac U. Miller for appellant.
William Allen Butler and W.A. Jenner for respondent.
After the death of his father, Henry R. Worthington undertook, with the assent of his sisters, the only next of kin, to administer upon his estate. He stated an account and distributed the balance, and each of his sisters took and had her share. Although all this was done without letters of administration upon his father's estate, so far as it went, it was binding upon the next of kin. They were the persons beneficially interested in the estate, and they could not take their respective shares in the estate and then through administration claim and obtain a new distribution and thus duplicate their shares. (3 Redf. on Wills [3d ed.] 89; Josey v. Rogers, 13 Ga. 478; Byrd v. Byrd, 44 id. 258; Babbitt v. Bowen, 32 Vt. 437; Walworth v. Abel, 52 Penn. St. 370; Weaver v. Roth, 105 id. 408; Fretwell v. McLemore, 52 Ala. 124; Ricks v. Hilliard, 45 Miss. 359.) In the absence of creditors, an administrator is a mere trustee for the next of kin, charged with the sole duty to collect, convert and distribute the estate among the beneficiaries according to their respective interests. But where the whole trust estate has already been legally and justly distributed, and the purposes of the law thus accomplished, there is no trust duty to be performed and no need of a trustee.
There is no dispute that Henry R. Worthington, discharged a valid debt of his father by the payment he made to or on account of Maria Fraser, his father's housekeeper, and the propriety of that payment is in no way challenged; nor is there any dispute that he made proper distribution among the next of kin of the final balance due from him of about $6,000. At the time of the settlement with his sisters he claimed $11,000, due him from his father for rent, and they assented to it. While an administrator cannot retain from money in his hands the amount of a debt due him from his intestate until it has been legally established and allowed, yet he may do it if all the persons interested in the estate assent thereto. In that event he need not make formal proof of his claim, but the assent takes the place and answers the purposes of proof. Here the sole parties interested in the estate undertook to settle up and divide the estate without administration, and this claim was made, assented to and deducted and the balance distributed. The children of the intestate must have known whether he occupied a house of his son under such circumstances as to make a claim for rent just and proper; and for ten years after the settlement, and for four years after the death of the son, it does not appear that any one raised any question about the propriety of the claim or its allowance. It was, however, open to the plaintiff upon the trial of this action to show that there was some fraud or mistake as to this claim. But she gave no evidence whatever impeaching it, and the settlement and distribution then made must, therefore, stand and bar this action unless interest upon some one or more of the credit items of the account was due from the son to the estate of his father. The main contention at the trial and since has been over the interest, and unless the plaintiff is entitled to recover some interest the judgment below is right and must be affirmed.
The referee held that the statute of limitations did not furnish any defense and, therefore, we need not give that defense any consideration, nor determine whether or not the referee's decision in reference thereto was right.
If Henry R. Worthington was legally bound to pay interest, we do not think that the settlement made in March, 1876, bars the plaintiff from its recovery. If he owed the interest, he has never paid it, and the next of kin never released him from its payment, and his estate, assuming that the claim is not barred by the lapse of time, is still bound to pay it.
We then come to the important question, was Henry R. Worthington legally liable to pay interest on any of the items on the credit side of the account found in his books and rendered by him to his sisters?
As to the interest, we have no material evidence outside of the letter addressed by the father to his son, and the account rendered from his books by the son. The evidence as to the precise relations between them is very meager, and we have no evidence whatever of their dealings, relations or transactions with each other from 1860 to the death of the father in 1875, a period of fifteen years, except what is furnished by the account; and all that shows is the credit items upon one side of the account, and debit items upon the other side for moneys had by the father.
We must assume that the son received the letter written by his father at about its date. He produced it after his father's death, and acted upon it. The credit of the $75,000 was entered in the books of his business and he must have been cognizant of the entries in those books. Those entries are intelligible only by a reference to the letter. He made no claim that it had then recently come into his possession or that he had not assented to the statements therein made. The declarations therein contained are at least binding upon the plaintiff as the representative of the writer.
We will confine our attention to the $75,000, because if that item did not draw interest it would be easy to show that none of the others did. That was a sum agreed upon for the value of the father's services for many years, or for his share of the profits of the business carried on by him and his son.
Interest is payable for the loan or retention of money by express contract, or as damages for non-payment of money due. Here there was no contract to pay interest; and hence, no interest could be claimed upon the $75,000, unless that amount became due and payable, and the son was in some way in default for not paying. The general rule is, that in the absence of an agreement to pay interest, it is implied by law as damages for not discharging a debt when it ought to be paid. The important practical inquiry, therefore, in each case in which interest is in question is, what is the date at which this legal duty to pay as an absolute present duty arose? In the case of a running account it is not sufficient that the account is capable of accurate statement or of liquidation from the facts which it contains, or that its payment may be presently enforced. Interest is refused upon such accounts more upon the ground that there is a running credit, than because the demand is uncertain and actually unliquidated. (1 Sutherland on Damages, 582, 596, 615.) Money payable on demand does not draw interest until after demand, and so, money desposited with a depositary, does not draw interest until after demand. These general rules of law might be more fully stated, but they are sufficient for the present purposes.
Now what are the facts to which these rules of law must be applied? The father did not take from his son any obligation for the payment of the $75,000, and there is no hint in the letter that he expected any interest thereon. He simply entered it as a credit in the books of his son's business. There he left it for nearly fifteen years without exacting any interest and without giving himself credit or asking that he should have credit in the account for interest. Other credits were given him in the same account, and he was annually charged therein with moneys had by him. If there had been any understanding that he was to have interest, would there not have been some mention of a matter of such importance, or would not the interest have been credited against the moneys had? If there had been between father and son a simple adjustment of the claims of the father at the sum of $75,000, and nothing more, that amount would have been presently due and would have drawn interest. But here the father entered this sum as an item of account, giving his son credit therefor in his books, thus leaving it fairly to be inferred that it was not presently to be paid, and that the son must have some forbearance at least. But this is not all. The sum of $75,000 was not definitely fixed as the sum absolutely to be paid by the son. It was merely tentative. It was based upon statements which might or might not prove accurate. In the letter he said: "The sum of $75,000 now passed to my credit appears to be near enough, but time will determine whether these estimates are correct, and I must be debited or credited with the difference, as the case may be. * * * It will be easy enough, by referring to these statements, to determine about the just amount due me at any time the account is settled." It thus appears that a further settlement or adjustment at some indefinite future time was contemplated. The son did not have the $75,000 in money or in assets readily convertible into money, and hence the father said that he did not consider that it was "at present due and payable" to him. He stated that the son had been involved by his imprudence and compelled to take real estate heavily incumbered for his security; that it would take much time before the son could realize from the real estate and that it would be evidently unjust for him or his heirs to demand payment of his claim until his son had had a reasonable time to realize from the assets out of which it arose. If the son's assets did not turn out as estimated, there was to be a corresponding deduction from the sum of $75,000, and the final adjustment in case of his decease, he said: "I must and do confidently cheerfully leave with you."
In the face of these statements and others contained in the letter, how can it be said that any sum was absolutely established as payable to the father? Clearly the $75,000 was not presently payable. The son was not at once in default for not paying it. The father could not have sued him for it without a demand, and could not have recovered it without some proof that it had become payable according to the terms of the settlement as contained in the letter. How much was a reasonable time to realize upon the son's assets? There is no proof showing this, and it may have taken many years. If the $75,000 never became absolutely payable in the life-time of the father, when did it become payable? In the absence of any proof whatever — in the absence of any demand, how is it possible to fix any definite time from which interest would have to be computed? The father evidently treated his son as the depositary of the money due him, and he drew upon his deposit from time to time as he needed money for the support of himself and family, and in this view the sum could not draw interest until demanded. There was, we think, absolutely no basis for the allowance of interest. But if we are wrong in this, yet, we think, upon the facts, the referee could justly draw the inference that it was the understanding of the parties that the sum should not draw interest.
It may be said with much force that it is improbable that the father supposed that he was living upon and using up his principal when the interest would have been ample to support him. Evidence as to the relations and transactions between the father and son during the fifteen years after the settlement might clear up the mystery. But, at the time the letter was written, it is evident that the father did not expect to live long, and for some reason not explained by the meagre evidence nothing was done to set the interest running.
We do not feel certain that in the denial of all interest absolute justice is done to the next of kin. But this action was not commenced until more than twenty-four years after the settlement, nearly ten years after the death of Asa, and nearly five years after the death of Henry R. Worthington, and the great lapse of time has probably rendered it difficult, if not impossible, to furnish a legal basis by evidence, if it ever existed, for the allowance of interest.
Our conclusion, therefore, is that the judgment should be affirmed with costs.
All concur, except RUGER, Ch. J., and PECKHAM, J. dissenting.
Judgment affirmed.