Clarence W. McKay, Fletcher C. Peck and William A. Sutherland, for the appellants.
Hiram R. Wood, for the respondents.
The claim for payment out of the fund in this proceeding is made under subdivision 6 of section 2793 of the Code of Civil Procedure as it existed prior to September 1, 1904 (see Laws of 1894, chap. 735) which, so far as material here, is as follows: "Out of the remainder of the money must be paid the sum, if any, which has been found to be due to the executor or administrator, upon a judicial settlement of his account, after applying thereupon the proceeds of the personal property * * *."
We think the claim was improperly rejected and should have been allowed. A number of authorities upon the question of who may institute proceedings, etc., are cited and cases that arose before the present provisions of the Code of Civil Procedure went into effect are referred to, but none as authority binding upon us for the position contended for by the respondents.
It is quite true that at common law the real estate of a decedent descended to the heirs free from any debts, but our statutes have entirely abrogated this rule, and no question is made as to the power of the Legislature to enact the existing statutes.
By an amendment of the Revised Statutes passed in 1863 (Laws of 1863, chap. 400, amdg. 2 R.S. 106, § 36) the executor was allowed any sum found due upon the settlement of the account after applying thereon the proceeds of the personal estate; and, by subdivision 5 of section 2793 of the Code of Civil Procedure, as originally enacted (Laws of 1880, chap. 178), which was subsequently re-enacted and renumbered subdivision 6 by chapter 735 of the Laws of 1894, the executor was not permitted to receive any sum in repayment of moneys paid by him to a creditor beyond that which the creditor would have been permitted to receive upon the distribution of all the assets of the estate of the decedent and the proceeds of real property disposed of as prescribed in title 5 of chapter 18 of the Code of Civil Procedure. Evidently this provision was intended to prevent collusive settlements with creditors by which one creditor would receive more than another.
It is not necessary to discuss the right of an executor to institute proceedings, or his right to share as a creditor, for if these questions are open ones they are not in the case.
This case arises under subdivision 6 of section 2793 of the Code of Civil Procedure ( supra). It is intimated that the construction contended for by appellants will not lead to equitable results, but it is difficult to see why it will not. Under the statute all of the property of a decedent is applicable to the payment of his debts. The executor or administrator is bound to administer the estate, and the expense incurred, so far as it is reasonable and necessary, is a charge to be paid before distribution can be had. No good reason is suggested for charging the executrix personally with the payment of the expenses of administration, and by a judicial settlement, which is conclusive upon all parties, and in a proceeding where all have been heard, it has been adjudicated that the expense of administration incurred by the executrix is a reasonable charge upon the estate, and the sum expended has been found due the estate. Why should a distinction be made between the distribution of proceeds of real estate and that of personal property? Under the statute each is liable for debts of the deceased, the object being to apply all the property of decedent to the payment of debts. No more equitable reason exists against the payment of proceeds of a sale of real estate for expenses of administration than there would if the deceased had converted it into personal property just before his death. The statute charges the real estate with debts, directs the manner of disposing of it and the disposition of the proceeds. It may be that in some cases creditors will not be paid in full, or that expenses of administration may be larger than the proceeds of the sale. Yet this is not sufficient to charge the executrix personally with the payment of the expenses.
In this case the executrix was bound to conduct a long litigation, in which she finally succeeded. It has been adjudged that the expenses incurred were necessary, and the sum expended has been declared due. Under the plain provision of the statute she is entitled to payment after payment of liens.
The decree of the Surrogate's Court, in so far as it disallows the claim of the executrix, should be reversed and the decree corrected by directing the payment of the sum found due the executrix upon the settlement of her accounts, after applying thereon the proceeds of the personal property, if any, applicable thereto, and directing the payment of the remainder according to law, with costs to the executrix appellant.
All concurred, except McLENNAN, P.J., who dissented upon the ground stated in the opinion of the learned surrogate refusing to allow the claim in question.
The decree of the Surrogate's Court, in so far as it disallows the claim of the executrix, reversed, with costs, and the decree ordered to be corrected by directing the payment of the sum found due the executrix upon the settlement of her accounts, after applying thereon the proceeds of the personal property, if any, applicable thereto, and directing the payment of the remainder, if any, according to law.