Opinion
Argued April 10, 1894
Decided June 5, 1894
William H. Henderson for appellant. A.C. Wade for respondent.
This is a proceeding instituted by a creditor in the Surrogate's Court of Chautauqua county to remove Charles C. Allen as administrator of the estate of Josiah H. Monroe, deceased. On the 23d of May, 1889, a decree was entered to the effect that the administrator had mismanaged and injured the estate and the property committed to his charge, and by reason of his mismanagement, misconduct and dishonesty in the execution of his office he was unfit to fill the same, his letters of administration were revoked, and he was charged personally with the costs and disbursements of this proceeding. The General Term affirmed the decree, and the administrator appealed to this court, and having since died, his executor, Thomas J. Fenton, has been duly substituted. The record discloses that the administrator received his letters September 24th, 1883; filed his inventory the following December; presented his first account in January, 1887, and a supplemental account in March, 1888. Objections were filed to the first account and the accounting stood adjourned to June 24th, 1887. Pending the adjournment this proceeding was instituted to remove the administrator, and adjourned to the same date as the accounting. Both proceedings came up before the surrogate on the 24th of June, 1887, and the administrator asked to go on with his accounting. The request was refused, the accounting postponed, and this litigation allowed to proceed. It remains for us to determine whether the decree in this long and expensive proceeding, which has postponed the settlement of the estate for years, and subjected the late administrator to public disgrace and removal from office, can be sustained. This proceeding is instituted under sections 2685 and 2686 of the Code of Civil Procedure. The petition states three grounds for the removal of the administrator which were relied upon at the trial, viz.:
1. That the administrator has wasted and improperly applied money and assets belonging to the estate which have come into his hands as administrator.
2. That he has improvidently managed and injured the estate and the property committed to his charge.
3. That he has been guilty of misconduct in the execution of his office in numerous instances and upon divers occasions.
The very general charges of this petition were sought to be sustained by affidavit proof as required by the Code, in order that citations might issue. (Code C.P. § 2686.) As this court has no power to weigh the evidence on disputed questions of fact, and can only deal with legal error, it becomes necessary to examine the findings of fact and conclusions of law upon which the decree rests. The case on appeal is voluminous and the evidence has been introduced to a considerable extent without regard to the issues framed by the petition and answer. There are findings of fact upon matters not included in the allegations of the petition; there are numerous alleged findings of fact the mere statements of conclusions, entirely destitute of specific facts and utterly without value. The Code does not contemplate such practice, and to permit it would be to impose upon an appellate tribunal the laborious duty of searching the record for facts that should be incorporated in the findings. Of the thirty alleged findings of fact in this record nearly one-half of them are defective. The findings of fact, which are in form and substance sufficient, deal substantially with three distinct topics: First, a few items of personal property alleged to have been omitted from the inventory, the value of which would not aggregate two hundred and fifty dollars; second, an alleged corrupt offer said to have been made by the administrator to one Amos Bills, to allow as a claim against the estate a note presented by said Bills on which he insisted there was due a little more than three hundred dollars and interest, if Bills would divide with him the amount he received from the estate; third, alleged profits realized by Charles C. Allen individually, from sales of real estate formerly owned by the intestate on which said Allen held mortgages, foreclosed after intestate's death, the mortgagee buying the property at the sales.
The petition herein, among other things, charges substantially that at the time of intestate's death the administrator owned certain mortgages covering intestate's real estate, and that after he had entered upon the discharge of his duties as administrator he proceeded to foreclose them; that at the sales the mortgagee prevented bidding by promising the creditors of the estate to bid in the properties for the amount of his respective liens, make a private sale of the same, and account to the estate for the profits realized in these transactions and thus save the expense of surplus money proceedings; that creditors and others did refrain from bidding at these sales; that the mortgagee did take title, make subsequent private sales and realized profits for which he refused to account to the estate or its creditors. The administrator denies these charges in his answer, and in substance avers that the foreclosures of the mortgages were duly and regularly conducted. It seems to have been the theory of the petitioning creditors that the administrator, acting as an individual in the pursuit of his legal remedies as mortgagee, became, by reason of the facts stated, a trustee in invitum, and liable to the estate and its creditors for the profits alleged to have been realized in the subsequent sales of real estate bid in by him at the foreclosure sales. It is difficult to understand upon what theory the Surrogate's Court proceeded to try questions lying wholly outside of its jurisdiction, and make elaborate findings relating to the same; it does not possess the general powers of a court of equity; if Charles C. Allen, as an individual, was liable to account for the moneys alleged to have been realized by him as before stated (we express no opinion as to his liability) a court of equity is alone competent to try the issues presented and render a binding decree as to all parties after a full investigation of the facts. An administrator, as such, has no authority or control over the real estate of his intestate, and assumes no obligations in reference to it, and owes no duty to the heirs; he is not, therefore, precluded from purchasing such real estate at a foreclosure sale, and from holding the same in his own right. ( Hollingsworth v. Spaulding, 54 N.Y. 636.) If the alleged profits in the hands of Charles C. Allen are to be regarded in equity as surplus moneys, they would be real estate and recoverable as such. ( Dunning v. Ocean National Bank, 61 N.Y. 497.) 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. A Surrogate's Court has no jurisdiction to declare a trust and enforce it by decree. ( Fulton v. Whitney, 66 N.Y. 557.)
It may, however, be urged that admitting the Surrogate's Court had no jurisdiction to try the issues growing out of the administrator's mortgagee interests, and compel him, by final decree, to account for alleged profits in his hands to which the estate is entitled, yet it was competent for the court to take testimony bearing on this subject upon the theory that the acts of the administrator showed him to be hostile to the estate and unfit to continue in office.
We do not decide that such evidence would not be competent under proper limitations.
If legal and substantial grounds for removal had been alleged and proved, it might well be that such evidence would tend to characterize the attitude of the administrator towards the estate.
In the case at bar we have no such situation presented; the record discloses findings covering all of these mortgagee transactions, and we cannot assume that the surrogate based his decree of reversal upon the trivial matters already referred to, but we are satisfied he must have given undue importance to the real estate transactions which could not be the basis of a decree removing the administrator from office.
This is a proceeding, not to punish the administrator, but to protect the estate, and it was invoked in this case under circumstances wholly unnecessary and unjustifiable.
The court found that the administrator and his sureties were financially responsible and able to make good the estate if it suffered loss. The unimportant and vexatious questions litigated in this proceeding could have been disposed of on the accounting and the administrator charged in a final decree for all losses he had caused the estate, if any such were proved.
Creditors now find themselves, after years of wasting and fruitless litigation, standing at the threshold of the accounting proceedings which afforded them an abundant remedy at the outset, and compelled to resume the settlement of this estate at the point where it was interrupted in June, 1887.
The decree of the Surrogate's Court and the judgment of the General Term should be reversed, with costs to the appellant in all courts.
All concur.
Judgment accordingly.