[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 326
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 327 The General Term upon defendant's appeal, reversed the judgment for plaintiffs entered upon the report of the referee and granted a new trial, unless the plaintiffs *Page 329 consented to deduct from the judgment the sum of $950.24, with interest from February 23, 1889, "without prejudice to a future action to recover the same or any part thereof," and in case the plaintiffs did so consent, the judgment thus modified was affirmed, without costs of the appeal to either party.
The plaintiffs consented to make the deduction and the amount named was thereupon deducted from the judgment (without prejudice as above stated), and as thus modified the judgment was affirmed, and from the affirmance the defendant has appealed here. The plaintiffs of course did not appeal, having consented to make and making the deduction as provided for by the order of the General Term.
Whether the General Term were correct in ordering a reversal unless this deduction were made, is a question which is not before us and which, therefore, we are not to inquire into. The alternative was granted plaintiffs to reduce their judgment and retain it as reduced, or submit to a total reversal. They elected to reduce it as provided by the General Term and it was reduced accordingly, and as reduced it was affirmed. We must now assume that the original judgment entered upon the report of the referee was erroneous at least to the extent indicated by the decision of the General Term, and the plaintiffs cannot be heard to insist that such original judgment was correct.
This has been expressly decided in this court. (Whitehead v.Kennedy, 69 N.Y. 462.)
Assuming the General Term was right in reversing the judgment and granting a new trial, it is insisted that the privilege permitting the plaintiffs to deduct the sum named without prejudice to a future action by them to recover the same or any part thereof, was illegal and beyond the power of the court to grant. We are of that opinion.
We think the court had no power to grant the privilege to the plaintiff to sue again to recover the amount deducted from this judgment or any part thereof.
So far as the plaintiffs are concerned, the liability of the defendant's testator was solely under the agreement, and it was *Page 330 indivisible and could not be split up into two or more claims or causes of action in their favor. They could have but one cause of action founded upon the agreement, and the liability of the defendant's testator could not be enlarged by any order of the court. The result of the decision of the General Term is to permit a recovery in this action for a portion of defendant's liability upon the agreement, with costs of the trial, and to grant to plaintiffs the right to commence a new action to recover the balance of defendant's liability arising upon the same agreement, with costs in case of recovery. This is improper. (Whitehead v. Kennedy, supra.) If the General Term did not desire to grant a new trial unconditionally, the alternative should have been a modification of the judgment by the deduction of the amount regarded as erroneous, without any privilege of again suing for the same. Such a modification, when assented to by the plaintiffs and resulting in the affirmance of the judgment as modified, would, upon the facts in this case, have operated as an abandonment by plaintiffs of the amount deducted.
If the plaintiffs were not satisfied with such an affirmance, they could refuse to avail themselves of the privilege offered, and go back for a new trial upon the whole issues involved in the case.
Upon this appeal, we think we should now reverse the judgment entered upon the order of the General Term, and also that entered upon the report of the referee, and grant a new trial absolutely. The judgment, as modified by the General Term, we hold to be erroneous, and we ought not, under the facts in this case, to modify it on the terms which we hold the General Term might have legally imposed, because we think there were other errors in the case which in justice require us to reverse the judgment as it stands.
Some questions will arise on the new trial, which it is proper for us to now express an opinion in regard to.
The agreement upon which the action is brought provides that defendant's testator will pay all the debts allowed or legally established against the estate of the deceased, Judson W. Sherman. *Page 331
The decree entered upon the judicial settlement of the accounts of the executors, to which accounting the defendant's testator was a party, would be conclusive of the amount of the debts which had been legally established.
It would also be conclusive evidence of the expenses of settling and administering upon the estate. The defendant's testator agreed that such expenses as were legal and proper in the administration of the estate should be deducted from the proceeds of the Chew mortgage and only the balance thereof should be credited to him.
We do not think the agreement can be construed as including expenses incurred by the plaintiffs in their unsuccessful defense to the defendant's demurrer in this case. Such expenses are not, as between the parties to the agreement, expenses of administration to be deducted from the proceeds of the Chew mortgage. They never could have been in the contemplation of the parties. It is not possible for us to so construe this agreement as to hold that expenses incurred in such a case, or costs paid to the defendant's testator, under such circumstances, were to be regarded as administration expenses and allowed for by him.
While such expenses may properly be claimed by the plaintiffs to have been expenses of administering the estate, and hence justly allowed to them in their final accounting, we do not think they can be so regarded as between the parties to the agreement. Those particular expenses, therefore, are not to be deducted from the proceeds of the Chew mortgage before the defendant can receive the benefit thereof. The decree is, however, conclusive evidence as to what the proper and legal expenses of administration were, and the amount thereof should be deducted from the proceeds of the mortgage, with the exception above stated.
One of the issues to be determined in this action was the amount of the debts of the late Judson W. Sherman, which had been legally established. Another was the amount of the legal and proper expenses of settling and administering upon the estate. Upon both these issues the decree in question was *Page 332 competent and conclusive evidence, and, therefore, it determined a part of the matters in controversy in this action.
The decree was, however, entered subsequent to the commencement of this action, and it allowed among the necessary expenses of administration, disbursements made by the plaintiffs after the action herein was commenced. We think, in order to prove such items by the decree, that application should be made by the plaintiffs under section 544 of the Code for leave to permit them to make a supplemental complaint alleging the entry of this decree as a material fact which has occurred since the former complaint was made, and upon the granting of such order the decree proving all the proper items, subsequent as well as prior to the commencement of this action, can be properly put in evidence on the trial.
There is a question of interest which, we think, was erroneously decided by the referee.
The defendant's testator in the agreement promised that he would "pay to Roxanna Lawrence aforesaid the sum of three thousand dollars, in such manner as will be acceptable to her." The referee allowed interest thereon from the date of the agreement, January 4, 1884. The money by this agreement would become due on demand. I do not think it would draw interest until a demand was made or until a suit was commenced. The plaintiffs were not bound before making the demand to wait for the collection of the Chew mortgage and the closing of the estate, and the final determination of the amount of the "benefit" to be given to the defendant's testator in the way of proceeds of such mortgage.
This "benefit" he was to receive when the mortgage was collected and the deductions for costs of collection and legal and administration expenses had been made, but his promise to pay the $3,000 was not contingent upon the collection of the mortgage, nor was he to pay only the balance of the $3,000 remaining after the proceeds of the mortgage had been applied to such payment. The two matters were in this respect independent of each other. He had agreed unconditionally to pay the $3,000 to Roxanna Lawrence. What he might thereafter *Page 333 be allowed from the proceeds of the mortgage after making the proper deductions would in the final result diminish the amount of his expenditures under and by reason of the agreement, but the receipt of such proceeds was not a condition precedent to his obligation to make that payment. As to interest upon the debts of the deceased Sherman paid by the plaintiffs, the referee allowed it upon the balance of the debts, expenses and commissions over and above the amount of the collection of the Chew mortgage, to be cast from the date of the final accounting, February 23, 1889, and he found the sum to be $449.49. This sum was arrived at by allowing some items for administration expenses, which we have already held to be improper, and hence the result would be less than the above named sum.
The amount of the "expenses and commissions in collecting the Chew mortgage and settling and administering the estate," the defendant's testator did not agree to pay. He merely consented that such amount might be deducted from the proceeds of the Chew mortgage, which he was to receive the benefit of.
While the method of casting the interest pursued by the referee was not based upon precisely accurate principles, the result arrived at was exactly the same as if the other and proper method had been pursued. After the entry of the decree all the items appeared which were necessary to be known in order to arrive at the amount of defendant's indebtedness by reason of the agreement, outside of the $3,000, and that amount was then due the estate and interest should run upon it from the date of the entry of the decree.
Upon the question of the consideration for the agreement we may assume without deciding that the General Term was in error in regarding the defendant concluded by the order entered upon the demurrer. In that case the question is open here. We think the consideration was ample. There were mutual promises and each stood as the consideration for the other.
We think, therefore, that the proper order for us to make *Page 334 is to reverse the judgment in favor of plaintiff entered upon the order of the General Term, and also the original judgment entered upon the report of the referee, and to grant a new trial absolutely, with costs to abide the event, and we direct accordingly.
All concur.
Judgment accordingly.