[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 414
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 415
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 416 It is to be accepted as a primary and undoubted fact that the testatrix, Sarah Macomber, was at her death indebted to the defendant, George A. Powers, and that of this debt there remained due and unpaid by her estate to him at the date of the surrogate's decree, April 24, 1890, after applying thereon all the personal estate of the testatrix in his hands, the sum of $79,632.56. The only question affecting the validity of the debt, left open by the facts agreed upon, is whether the remainder of the debt remaining unpaid at that date was barred by the Statute of Limitations.
There is no impeachment of the facts found by the surrogate as to the amount of the original debt, the balance unpaid thereon, nor any suggestion affecting the consideration, or which casts any suspicion upon the bona fides of the claim. The plaintiff therefore has not questioned and is not in a situation to question the validity of the debt of the defendant against the estate of Sarah Macomber, except upon the point of the Statute of Limitations.
The decree of the surrogate necessarily determined that the statute had not run against the demand. But his decision did not bind the heirs or devisees of the testatrix, who were not, as such, parties to the accounting. That proceeding was between the executor and the creditors, next of kin and legatees of the testatrix, and was conclusive as to the existence and validity of the debt, as a claim against the estate, payable out *Page 419 of the personalty. But where real estate devised or descended is sought to be charged with the debts of the decedent, the validity and existence of the debts are open to contest by the heirs or devisees in the proceeding, and the decree of the surrogate on the accounting does not conclude them, and except in case of a judgment recovered against the executor or administrator on the merits, is not even prima facie evidence of the existence of the debts. (2 Rev. St. 102, § 10; Laws of 1842, Ch. 172; Code Civ. Pro. §§ 2755, 2756.)
Upon the only point now in controversy affecting the validity of the debt claimed by the defendant, George A. Powers, against the estate of Sarah Macomber, viz.: Whether it was barred by the Statute of Limitations when the sale of March 16, 1892, was made, it is clear, we think, that the bar of the statute had not then intervened. By section 33 of title 3, ch. 6, pt. 2 of the Revised Statutes, an executor or administrator was not allowed to retain any part of the property of the decedent for his debt until it was proved before the surrogate, and by the Laws of 1837, Ch. 460, § 37, it was enacted that such proof could be made on the return of a citation for that purpose, or on the final accounting of the executor or administrator, and this section was amended by chapter 594 of the Laws of 1868, by adding this provision: "But the Statute of Limitations shall not be available as a defense to such debt or claim, provided the same shall be presented at the first accounting, and provided the same was not barred by statute at the time of the death of the testator or intestate." The operation of this statute was to suspend the running of the Statute of Limitations against the debt or claim in favor of the executor or administrator until the first accounting, and a similar provision is contained in the Code of Civil Procedure. (§ 2740.)
The first accounting by the defendant, George A. Powers, was commenced September 29, 1887, and terminated in a decree April 24, 1890, and he advertised the land under the power of sale, and it was sold March 16, 1892. The Statute of Limitations was, by the force of the statute, suspended as to his debt until the accounting of 1887, and it is not claimed *Page 420 that by adding the period which elapsed between the accounting and the sale, to the period (if any) during which the statute had run prior to the death of the testatrix, the six years statute would have barred the debt. There was, therefore, at the time the executor undertook to exercise the power of sale given by the will a valid debt against the estate of the testatrix in his favor not barred by the Statute of Limitations and to which there was no defense.
The fundamental proposition upon which the plaintiff's counsel relies to establish that the executor George A. Powers could not lawfully sell any part of the real estate of the testatrix, for the purpose of realizing a fund for the satisfaction of his own debt, is that by the lapse of time the right of any creditor to proceed by application to the surrogate or otherwise, to procure a sale of the real estate of the decedent for the payment of debts, was barred, and that as a consequence the discretionary power of sale given to the executor by the will could not be lawfully exercised for the payment of debts which could not be enforced against the realty devised, since it is, as claimed, a necessary limitation upon the power that it could not be exercised except to relieve the land of debts, legally chargeable thereon. It is also insisted that there is an added disability upon the executor in this case, by reason of the fact that he is seeking to exercise the power for his own benefit. It is not claimed that the power of sale given by the will in question does not extend to a sale for the payment of debts. We understand that it is conceded that it comprehends this purpose, and so it seems to have been decided in Matter of Powers (124 N.Y. 361).
We are of opinion that the remedy of the executor to apply in his capacity as creditor to the surrogate for a compulsory sale of the real estate of the decedent for the payment of his debt was not barred by the three years limitation contained in section 2750 of the Code of Civil Procedure, or otherwise. It is provided by that section that "at any time within three years after letters were first duly granted within this state upon the estate of a decedent," an executor or administrator, or a *Page 421 creditor of the decedent, may petition the surrogate for a decree, directing the disposition of the decedent's real property for the payment of debts. This section took effect Sept. 1, 1880. The letters in this case were issued April 10, 1873. If this section applies to this case, then no proceeding in the Surrogate's Court could have been taken by the executor, or by a creditor, after September 1, 1880, because the letters were issued seven years before that date.
The same result would follow in every case of administration where letters had been issued more than three years before the section took effect. If in such cases there was a remedy in favor of creditors, to compel a sale of the real estate of a decedent for the payment of their debts prior and up to September 1, 1880, not barred on that day, it is impossible to attribute to the legislature an intention to cut off such remedy by the enactment of section 2750 of the Code. By the law in force antecedent to the enactment of this section, an executor or administrator could apply for an order to sell real estate at any time within three years after the granting of letters, but there was no statutory limitation upon the time within which creditors could make such application, except that it could not be made by creditors until after an accounting by the executor or administrator (Laws of 1837, Ch. 460, § 72, as amended by Laws of 1843, Ch. 172).
Since in this case there was no accounting until 1887, a creditor of Sarah Macomber could not before that date, under the law as it existed prior to September 1, 1880, have made application to the surrogate for an order of sale. If, as claimed, section 2750 applies, his right was gone as soon as that section took effect.
We think the right of creditors of decedents who died prior to September 1, 1880, and upon which estates letters had been granted more than three years prior to that date, as those rights existed when section 2750 took effect, were saved by section 3352 of the Code, which enacts: "Nothing contained in any provision of this act other than in chapter fourth renders ineffectual or otherwise impairs any proceeding *Page 422 in an action or a special proceeding had or taken pursuant to law, or any other lawful act done, or right, defense or limitation lawfully accrued or established before the provision in question takes effect, unless the contrary is expressly declared in the provision in question. As far as it may be necessary for the purpose of avoiding such a result, or carrying into effect such a proceeding or other act, or enforcing or protecting such a right, defense or limitation, the statutes in force on the day before the provision takes effect are deemed to remain in force notwithstanding the repeal thereof." The right which a creditor of the testatrix, Sarah Macomber, had on the day prior to September 1, 1880, to apply for an order to sell real estate whenever an accounting should occur, was we think a right accrued within the meaning of this section and was not we think affected by section 2750.
The fundamental proposition of the plaintiff's counsel, therefore, that no creditor could proceed to enforce the sale of the real estate of the testatrix at the time the executor proceeded to sell under the power, fails. The executor had a valid debt, not barred by the general Statute of Limitations; there had been an accounting and the condition existed under which he as creditor could have applied to the surrogate for an order to sell real estate for its payment. It was a proper case therefore for the exercise of the power of sale given by the will, unless certain other objections which have been urged should bar its exercise.
The fact that the executor voluntarily rendered an account, and this after the time had elapsed when an accounting could be compelled by creditors or legatees, does not deprive him of the benefit of such accounting in determining the question whether there was an enforcible claim for the sale of real estate, which could have been prosecuted by a proceeding before the surrogate. No fraud on his part in instituting the accounting is alleged or proved, and an accounting was essential to enable him to obtain an order establishing his debt and to secure the application thereon of the personal property in his hands as executor. The appellant was a party to the accounting and *Page 423 any defense thereto should have been made in that proceeding. As devisee she cannot deny the efficacy of the proceeding as a compliance with the condition precedent to the enforcement of the claim of a creditor against the property devised.
The point that the executor could not exercise the power of sale for the payment of his own debt is not well taken. His debt is established as a valid claim. It was probably the principal debt owing by the testatrix. We are not aware of any authority which excludes an executor, upon whom the will confers a power of sale for the payment of debts, from exercising it for the payment of an honest debt of his own. He cannot become the purchaser on such a sale, and his proceedings are open to the scrutiny of the court. If he should undertake to sell for an invalid or outlawed debt, the court, on the application of the heir or devisee, would interpose for his protection. (Butler v. Johnson, 111 N.Y. 204. ) There is no claim that the sale of March 16, 1892, was in any respect unfair or that the price for which the property was sold was inadequate.
The question submitted related to the power of the executor to sell under the circumstances stated.
We think the power existed and the judgment below should therefore be affirmed.
All concur.
Judgment affirmed.