Collins v. Steuart

Barrett, J.:

On the 5th of December, 1893, Walter S. Collins died. For about four years prior to his death he and his wife, the present plaintiff, lived at Englewood, Bergen county, New Jersey. Mrs. Collins continued to live at Englewood for about five months after her husband’s death, when she came to New York to live. Mr. Collins left a will appointing his wife executrix and the defendant, Steuart, executor. On the 17th day of January, 1894, this will was admitted to probate by the Orphans’ Court of Bergen county, New Jersey. The defendant had previously renounced as executor, and Mrs. Collins was appointed executrix. At the time of Mr. Collins’ death there was a tin box in the house at Englewood which contained certain securities. Mrs. Collins took possession of this tin box, and it was immediately removed by her relative and legal adviser, John W. Loveland, to the latter’s office in New York city. This was with her acquiescence. The defendant also advised Mrs. Collins, and she acted upon his advice as well as upon Loveland’s. The tin box has never since been returned to New Jersey. It has been kept in this State, and here it still remains. An examination of the contents of the box was made upon its removal here, and three classes of securities were discovered: First, some securities which were in Mrs. Collins’ name. Second, some securities which were attached to an instrument signed by Mr. Collins and dated March 14, 1889. Third, general securities in Collins’ name. After Mrs. Collins qualified, she found that her individual claims with regard.to these securities were hostile to the estate, and . thereupon she requested the defendant, as a personal favor" to her, to withdraw his renunciation, qualify, as executor, and permit her letters to be canceled. The defendant acceded to- this request, and, aecord- ' ingly, upon the 21st day of March, 1894, her letters were revoked, his renunciation was canceled, and letters were issued to him. Thereupon the .tin box and its contents were turned over to the defendant by Loveland at his office in this city. Nothing was done thereafter with regard to a settlement of the estate, and on the 18th of October, 1894, this action was commenced.

In her original complaint the plaintiff averred that in the year 1884 she was the owner of certain bonds, mortgages and shares of stock which her husband took possession of as her agent; that he dealt with this property as his own, used it, intermingled it and its proceeds with his own property; that, with a single exception, its identity was lost, and that it could no longer be found, distinguished or separated. Upon those averments she claimed that she was entitled to take so much of her husband’s general property as would “ be sufficient to repay to her the amount and value of her property received as aforesaid by the said Walter S. Collins.” She specified in this complaint the single exception, to which reference has been made, namely, that she had traced seven of her bonds to the First Eational Bank of Staten Island in this State, where they were pledged by her husband on the 14th' day of March, 1889, for a loan of $6,000. She averred that the bank still holds these bonds as security for this loan. She also averred that on the day when the loan was made her husband set apart and pledged, under an instrument in writing, and delivered to himself as her agent certain securities to secure her from loss in case her seven bonds should be forfeited by the non-payment of the loan. But she claimed no equity and asked no specific relief with regard to this trust instrument or the specific securities therein referred to. She simply asked to be paid out of the estate at large.

Upon the 12th day of Eovember, 1894, the defendant interposed an answer to this complaint, admitting, upon information and belief, all its .allegations, and submitting to such decree as the court might see proper to make. Five days later the defendant consented to a reference, and upon that consent the action was referred to a referee “ to hear and determine the same.” The referee reported that all the securities which were found in Mrs. Collins’ name had been delivered to her. He made no report upon the plaintiff’s specific claim to reimbursement out of the estate generally, but confined himself to decreeing the application of Mr. Collins’ entire estate to the redemption of the seven bonds pledged with the First Eational Bank of Staten Island. He directed-that the stocks specifically pledged by the trust instrument of March 14,1889, be sold first, and the rest of the estate afterwards, or so much of it as might be necessary to effect the redemption of the seven bonds. What was left of the estate after such redemption was to remain in the hands of a receiver to be appointed subject to the order of the court.

. As this report was a complete departure from the equity originally pleaded, the defendant consented that tile complaint should be amended by averring the specific equity found' by the referee, and by a prayer that the particular securities “set apart and-pledged ” by Collins to secure the plaintiff from loss by reason of-his appropriation of the seven bonds, and so much of his estate' generally as might be necessary, be sold, .and the proceeds applied to the redemption of the seven bonds. The only consideration which' we observe for this consent is the stipulation on the plaintiff’s part that the answer theretofore served, namely, the defendant’s confes-' sion of the bill, “ be taken to be and regarded as the defendant’s answer to the complaint as amended.” . Upon this consent an order was made upon the 14th day-of January, 1895, the very day when the' referee’s report was dated, amending the complaint accordingly, and on the next day a decree was entered in accordance with the referee’s conclusions..

The next step' in the cause was. upon the 12th day'of February, . 1895. A stipulation was then entered into between the parties vacating the judgment, permitting the defendant to withdraw his confession- and answer anew, and referring any new issues to the original referee. Thereupon the defendant- answered anew, denying substantially all the equities of the complaint, and alleging want of jurisdiction of the subject of the action; also alleging that- Collins’ estate was insufficient to pay its debts, and that none of its debts had as yet been paid; also setting up, as a defect of parties, that neither these creditors nor Collins’ children had been brought'in,

The ca,se was tried before the referee upon these- issues, and.he again reported in the plaintiff’s favor. The only difference between the first report and the second is, that in the first the.- receiver is. required, after redeeming the seven bonds, to retain any surplus of property or money subject to the further order of the court, while ' in the' second he is required to deliver such surplus to the defendant. This shows a complete abandonment of the plaintiff’s original position, and the reduction of her claim to the application of the entire estate, not" to repay the value of all the ■ property originally received by her husband,' but simply to redeem the seven bonds. We all agree that her original claim could not have been sustained in any jurisdiction. We also agree that the referee’s report and.the • judgment thereon, cannot be sustained so far as they direct the application of the estate generally to the redemption of the seven bonds. There is not a particle of evidence that the securities found in the tin box were purchased with the plaintiff’s moneys, or the proceeds of her property. Nor can such an inference be drawn from the undisputed facts. At the time when Mr. Collins received the plaintiff’s property from her mother, he had his own separate estate. That amounted, at the time of the marriage, to between $60,000 and $70,000. He was in active business down to the time of his death. It would, indeed, be an extraordinary inference, that securities in such a man’s possession in the year 1893 were purchased with the proceeds of any particular property received by him in the year 1884. The only question which we deem important is whether the judgment should be sustained so far as it directs the application of the specific securities attached to what, for convenience, may be styled the “trust instrument” of March 14, 1889. The solution of that question depends not merely upon the merits of the decision below, but upon the further question whether the court should have exercised jurisdiction at all in the premises.

The case for the plaintiff, upon which the propriety of exercising the jurisdiction is pressed, rests mainly upon the following facts: That she is now a resident of -this State; that the defendant is within this State, having his office and place of business here; and that the certificates of stock upon which she claims a lien are also within this State, and in the defendant’s- possession here. Upon these facts the learned referee finds that this action is properly brought against the defendant individually for the relief claimed in the complaint “ notwithstanding the fact that said defendant has his residence in the State of New Jersey,” and had been appointed Collins’ executor by the Orphans’ Court of Bergen County in that State; and notwithstanding the further fact that he claims to possess and hold, as such executor, the certificates of stock upon which the' plaintiff’s lien is predicated. This latter claim is founded upon the undoubted fact that he does possess and hold these certificates as such executoi. In one aspect of the case the question whether, upon these facts, the courts of this State should assume jurisdiction over the foreign executor to compel him to do his decedent’s equity with' regard tc the specific juoperty in question, is not, upon the record, - properly before the court. The plaintiff has taken pains not to make the defendant a party as executor. She makes no charge whatever against him in that capacity.. Nor does she ask any relief against him as executor. ' She does not aver that he has been requested, in that or any other capacity, to apply the securities in accordance with his decedent’s trust duty, or that he has refused. All that she avers against him is, that he intends to do his executorial duty by returning the certificates of stock to the State where they were at the time of Collins’ death, and from which they were, with her acquiescence, improperly removed by her attorney, relative and friend, Loveland. The only suggestion in the complaint of even implied hostility to her claim on the defendant’s part, is that he intends to administer the securities in the regular way through the Orphans’ Court of Bergen county, New Jersey. Thus the strange equity of the plaintiff’s complaint treated as a complaint against the defendant executorially — is his intention to rectify the original wrong whereby the res got into'our jurisdiction, and his further intention, if so permitted by our courts, to administer the res in precisely the same man-' her as though the Wrong had never been committed. These, observations, however, are a -deviation from the primary‘question, and that is as to the character in which the defendant is sued.

We agree that the manner in which a defendant is named in the title of - an action is not conclusive as to its nature. The rule is, that if the averments in the complaint- show that the cause of action devolves upon, or exists against, a party in his representative capacity, the action will have a representative character, despite the fact that the party sues, or is sued, individually. (Beers v. Shannon, 73 N. Y. 292; Patterson v. Copeland, 52 How. Pr. 460.) Here, however, although the fact of the defendant’s appointment as executor is incidentally stated in the complaint, and also the- fact that he claims to hold and possess the securities as executor, yet nothing is averred suggestive of a cause of action against him in that capacity. The case, in fact, proceeded against him throughout as an individual. The referee’s report treats him as such,-, and grants the plaintiff relief, not as against the executor, but as against the individual, “ notwithstanding the. fact that said defendant * has been appointed executor.” The judgment is equally precise, and in its first clause decrees that, “ upon the facts established by the evidence, this action is properly brought against the defendant individually in this court for. the relief claimed in the complaint.”

The first question then is, can this action be maintained against the defendant individually % It will be observed that as an individual Mr. Steuart is a mere depositary of the securities. In that capacity he occupies no different position from a safe deposit company. As such, no judgment can properly be rendered against him, except to deliver the property to whoever is legally entitled to it. He cannot be required to apply it equitably, in hostility to the legal title. That can only be required of the person having the legal title, or his legal representatives. No duty to apply the property in accordance with a trust obligation is imposed Upon a mere custodian, a person who happens to have the physical possession. The latter’s sole duty is to restore the property to the owner or person having the legal title. When that duty is performed equity can. require the latter to do his contract or trust duty, or, if he be deceased, may require his legal representatives to perform such contract or trust duty. But it is apparent that where, for instance, a complaint sets out a trust duty on the part of A., who has the legal title to certain securities, and then avers that such securities are in the hands of one B. (who is not the legal representative of A.), no cause of action for the enforcement of the trust is alleged against B. That is, in a complaint against B. alone. B. owes no duty to the cestui que trust. He stands in no privity, so far as the trust duty is concerned, with either trustee or cestui que trust. His sole duty is to hold the securities and return them upon demand to the person from whom he received them. Yet a judgment is sought in this action, the effect of which will be the fulfillment of A.’s original trust obligation, an obligation to which the defendant individually is an entire stranger, and the duties of which are not, in' his individual capacity, imposed upon him directly or indirectly. This idea seems to have passed through the minds of the plaintiff’s advisers, and they have sought to obviate the difficulty by requiring a receiver to perform the trust duty. But this is not an action in rem. One Would think from the plaintiff’s attitude that these securities were likened to a ship that could be libelled and the trust duty enforced against the res. Not so. If Mr. Collins were alive the action would necessarily be against him to compel the application of the securities in accordanee with his trust duty. The party, whose duty it is to execute the trust must he before the court, and the court must be in'a position to render its judgment'against him personally to the effect that he perform such trust duty. . In case of contumacy, the court may well appoint a receiver to execute the judgment, but' the receiver then becomes the right hand of the court to effect the purposes which it had lawfully decreed against the trustee. Here the only charge made against the defendant is, that he has the certificates of stock mhis possession in this State and nothing whatever is decreed agai/nsi him 'except that hie, deliver these certificates to a receiver. The reason for this short cut is obvious. The court could not make a decree against the defendant'requiring him to apply the securities in his hands because he was under no duty to so apply them. His sole duty was to restore the securities to- Collins’ representatives, and they alone could be required to apply such securities in execution of the specific lien which the plaintiff claims. But -these representatives, viewing the case as treated in the judgment and throughout, were not parties and no' decree cGuld be made against them. The defendant, as an individual, certainly could not cut off their rights by failing tó plead non-joinder. ' He. might-cut off - his- own right to have such parties brought in as were necessary for his'individual 'protection. But his failure-to do so will surely not authorize the court to seize the pronerty, and rob the estate of even -a hearing With regard to it.

Here, then, the court has made the . extraordinary decree that its officer take the property out of the defendant’s possession, and do ■ with it what the court has not required the defendant to do' and what'it could not require him-to do. The only j udgment which the court could lawfully have rendered against this defendant individually was- a judgment that' he do with the securities that which he, as tlieir naked possessor, was legally bound to do. ■ That -and nothing more; . Against any -other' or different, judgment he, as an individual, may justly complain. • And whether he complain - or not, the court would not be a party to the plunder of the unrepresented estate by sustaining such a monstrous judgment as the present.

Treating the defendant as an individual, therefore, the court is -practically acting ex parte. , Finding the securities in the defendant’s hands, it takes them out of his hands, and itself takes* posses sion of them. Then, without hearing any one who has a legal status to dispute the plaintiff’s claim, the court adjudicates that such claim is indisputable; that she has a specific lien upon the securities; that that lien is superior to the rights of the general creditors represented .by the executor," and that it (the court, not the defendant) will apply the securities for the plaintiff’s benefit.

If the action, however, should be treated as against the estate, still the court ought not here to exercise jurisdiction. The only property which the plaintiff had in this State at the time of her husband’s death was the seven bonds pledged to the First National Bank of Staten Island. She had a right to redeem these bonds upon payment of the sum for which they were held as security: She may also have had the right to require her husband’s executor to apply the specific securities set apart by the trust instrument, so far as they would go, to the payment of this sum. Doubtless, in a proper action against the bank for the redemption of these seven bonds, the executor might have been made a party defendant, and required, if the facts and the law justified it, to thus apply the specific securities in question. The court would, have properly exercised jurisdiction over him as an incident to its original jurisdiction over the bank. It would have done so whether he lived here or elsewhere, whether the specific securities to he applied were here or elsewhere. It would simply lay hold of him if found here, and require him to aid in the redemption as far as lay in his power, and as far as he might be equitably bound to so aid. But this is not such an action, and the court should not exercise the jurisdiction independently. As an independent action it stands upon the same footiti.g as all actions in equity against foreign executors. The claim of a specific lien is nothing more nor less than a claim against the estate to have specific property in the executor’s hands adjudged to be subject to that lien. The rule with regard to the exercise of jurisdiction in equity over foreign executors is quite well settled, although its application has frequently been lacking in precision.

Apparently the first instance in which equity has asserted jurisdiction over a foreign representative is McNamara v. Dwyer (7 Paige, 239), decided in 1838. The defendant was an administrator, appointed in Ireland; had possessed himself of the personalty of the estate ; bad brought it here ; and was converting it to his own use. It was held that equity had power to maké him account at the instance of a next of kin without the necessity of taking out letters here. Chancellor "Walworth decided that a suitor was not necessarily and under all circumstances confined to the original forum. He said: “ Indeed, to suppose such was the law would lead to the conclusion that cases must frequently exist in which there would he a total failure of justice.” The law of the original forum was, however, held to apply both as to the distribution and liability generally.

Brown v. Brown (1 Barb. Ch. 189) was decided seven years after McNmna/ra v. Dwyer, and by the samé chancellor. It was brought' against Massachusetts executors by a residuary legatee, who sought' to make the defendants account for their administration of the estate, and to obtain a decree for the payment to himself and others entitled , thereto of the surplus found to exist." A demurrer to,the bill was sustained by Yice-Chancellór McCotur, who stated that the exceptional facts which justified the exercise of jurisdiction in MoNamara v. Dwyer did not exist. He said: “ The complainant, in taking ■ his share, must be left at all events to the operation of the lex loci as to his' rights', and, in my opinion, he must also be left to pursue his remedy according to the lex fori in that State, unless, indeed, he could show (which he has not done) that by some act of the defendants in removing their persons or property from that jurisdiction, any remedy which he might undertake to pursue there would be fruitless.” In affirming this decree the chancellor put his decision upon the ground that the vice-chancellor before whom the bill was filed had no jurisdiction, but he takes occasion to intimate in the strongest manner that the case is so different from McNamara v. Dwyer that the suit would not lie at all. Referring to that case, he says: “ It is sufficient to say that where this court interferes in special cases of that or a similar character, it proceeds upon the principle that wherever there is a right, there ought to be a remedy, either in this or some other tribunal.” In other words, the court only interferes to. prevent failure of justice.

. Later cases, and they are numerous, rest primarily 'upon McNamara v. Dwyer. The general rule resulting from a thoughtful, consideration of all the cases is fairly stated by Mr. Redfield in his work on Surrogates (5th ed., p. 413) as follows: ' “ They (foreign executors) cannot be so proceeded against . in a purely legal action; * * * but they are liable to an action in equity, under certain circumstances, and upon proper allegation, to prevent waste of property brought within the jurisdiction, and secure its application to the payment of the debts of the testator according to the law of the State whence they derived their authority. Their responsibility extends to assets shown to have been in their possession within this State, no matter where they have been received. And their character as foreign executors or administrators furnishes no objection to an action against them in a court of equity of this State in their character as trustees, e. g., where the alleged liability is not that of the decedent or his estate, but is predicated upon their own wrongful use or misapplication of trust funds which have come to their hands, or on a breach of contract made by them in their representative character.” It may be that the rule is somewhat understated by the learned writer. A failure of justice might result from other misconduct on the part of the representative than misappropriation of assets, notably from a wrongful refusal to submit himself to the jurisdiction of the courts of the State which granted his letters. But without misconduct of some sort, it is difficult, if not impossible, to see how a failure of justice could result. The rule is undoubtedly broad enough-to cover any case where a failure of justice will result from the refusal to exexcise jurisdiction. But this failure of justice must mean failure of the justice of the appropriate forum. It is the- latter principle which underlies the rule, and which is the foundation of the jurisdiction asserted by the cases. The policy of the law is, that estates. of decedents shall be settled as far as possible in one forum, not in a number. It is only where facts appear showing that the original forum will be unable to perform the duty incumbent upon it, that the courts of this State will intervene. They do so to assist, not to-embarrass, the original forum; and facts must be adduced bringing the exception into play.

That such a case is not made out by proof of the presence of the representative here, with possession merely of the certificates representing the shares of stock, is shown in the most convincing manner by the facts in the present action, These certificates were not brought here by the defendant, but by Loveland, the plaintiffs friend and. adviser. They were brought here even before the plaintiff became executrix of the estate, and while- she was still living in New Jersey., The talk of exercising jurisdiction because -they were “ found”- here is, under the circumstances, ludicrous. The plaintiff alleges in her complaint' -that “ said defendant intends to take 'said property as being the property of said Walter S. .Collins, deceased, from the State of New York to the State of New Jersey, for the purposes of .administration; ” and has enjoined him from so doing. The invocation of the doctrine discussed to such a state of facts is grotesque.. The court becomes the wrongdoer, prevents the defendant from, -doing his duty, and then assumes jurisdiction because of the wrong which it^ and-not the defendant, has committed. It is impossible -for a failure of justice to result when there is not a hint against the -defendant’s management., of the assets except, that he is about to-return them to the jurisdiction which has the right to them, for distribution according to law. If the plaintiff has a specific lien- - upon the securities in question, she can enforce it in equity in New Jersey quite as readily as here., If the certificates had remained where they were at the time of Mr. Collins’ death, the plaintiff , would have had to file her bill in the Court of Chancery -of - New Jersey to enforce her specific hen. There can be no failure of--justice so long as -she is not deprived of the right which she had at. the time when her agent, without the slightest authority, committed' the wrong of taking the certificates out of the original jurisdiction; She cannot deprive the Court of Chancery of New Jersey of its ■proper jurisdiction in the premises, nor can she successfully invoke-•our'aid in that respect by wrongfully bringing the certificates into •our jurisdiction, and by subsequently coming to live here. The sooner the wrong is remedied, and the certificates put back where They were at the time of - Mr. Collins’ death, the better for the-•orderly and decent administration 'of justice, as well as - for the orderly and convenient administration of the decedent’s estate..

Further than this, the facts show that the defendant has colluded with the plaintiff 'throughout. The plaintiff testified that, she .acted originally upon his advice as well as upon that of Loveland. The defendant himself testified 'that he withdrew his renunciation,. and. became executor, at Mrs. Collins’' request, and as a personal favor toiler. This was after he learned that Mrs. Collins would probably. have to assume a position hostile to the estate, and bring suit. When the suit was brought, he confessed the bill, as we have seen, and alleged his willingness to submit to such judgment as the court should see proper to make. The defendant was.called as a witness for the plaintiff upon the original hearing before the referee, but offered no evidence in his own behalf. After the entry of judgment, he seems to have come to a realizing sense of what he had done, for the stipulation upon which the first decree was vacated recites that defendant had “ raised the question whether he was protected by said proceedings and judgment, and desired a further opportunity to plead and submit further proofs and arguments.” One of the conditions of this stipulation was significant, namely, that defendant should not remove the assets from the jurisdiction. The -defendant’s offices were adjacent to Loveland’s (who acted for plaintiff in the probate of the will), and they had often talked over the matter in a friendly way. It was in Loveland’s office that the assets were turned over to the defendant upon his appointment as executor; Between March, 1894, when he received the assets, and January, 1895, wdien he was first enjoined from removing them, he allowed them to remain in New York, and made no effort to settle-up the estate in New Jersey. It is hard to avoid the conclusion that, as far as in him lay, he was endeavoring to keep the estate where the plaintiff might have ready access to it, and the distributing court might not; and that the first indication of a change of purpose was due to an awakening fear that such a course might, despite the judgment of a court of this State, subject him to serious liability. It would be a just ground of reproach against the courts of this State if they upheld a jurisdiction acquired as this has been. The courts of New Jersey would be justified in disregarding such a proceeding as this on the ground of want of jurisdiction; or in enjoining the prosecution of the action, as was done in a similar case (Hutton v. Huttons' Executors, 40 N. J. Eq. 461).

These considerations are applicable to any view which may be taken of the trust instrument. The legal title to the shares was not thereby given to Mrs. Collins, but at the very outside an equitable right to their application upon the happening of the contingency specified therein. The instrument assigns the• shares to her “to secure her from loss in case said (seven) bonds should be.forfeited by the non-payment ” of Collins’ note given to the First National Bank of Staten Island, and it authorizes “ the proper persons to make the transfer of said shares on the happening of the contingency ” therein stated. There is no allegation that the contingency has'happened, or that the bonds have been forfeited. The shares have never been transferred to the plaintiff by the “proper persons,” or at all. On the contrary, some of them have actually been transferred since Collins’ death to the defendant as executor, and a new certificate issued to him. The rest remain in Collins’ name on the books of the various corporations. • Some of the certificates have disappeared entirely, <?. g., the five shares^of the Swan Lamp Company. Some are presumably shares in foreign corporations, and all of the certificates which were found attached to the instrument are dated months —■ some of them years — after the date of the instrument itself. When they were actually attached to the instrument by Collins, it is, of course, impossible to say. The instrument Avas never delivered. The. securities were never delivered. Collins retained both the instrument and the certificates. The situs of the property was the domicile of the owner. That situs was not changed by the removal of the pieces of paper which represented the property, especially by their tmauthorized removal. The delivery of the certificates to the plaintiff would not aid her. She could not have them transferred into her name tvithout the aid of a court of equity in an action to which the executor, as well as the corporations, would be a necessary party. Even a purchaser from the receiver, would ■ be compelled to resort to a court of equity to secure the same relief, and in his action the executor, as' Avell as the corporation, would be a necessary party.

It is apparent, therefore, that, however the trust instrument may be Adewed, whatever, rights, legal or equitable, were by it conferred upon the plaintiff, the estate must be heard before the shares can be transferred to her, or applied for her benefit. She comes into court here claiming no legal right, but planting herself specifically on, her equitable right to have the securities applied to the redemption of her bonds. The judgment proceeded upon that claim, and is limited to its recognition. It is that view of the case, and the judgment founded upon it, which we are called upon to review.

Our ■ conclusion is that the estate is entitled to a day in court before it can be deprived of the shares in question; that that day in court should be had in the jurisdiction where Collins lived and died; where his property was in fact, and where it had its legal situs, and where the will was probated and letters testamentary were issued. We are asked to retain jurisdiction, not to prevent a failure of justice, but to prevent the due and normal administration of justice in the proper forum.

The judgment should be reversed, and as, in the view which we have taken, no recovery could be had upon a new trial, the complaint should be dismissed, but, because of the defendant’s course, without costs of the appeal or of the court below.

Van Brunt, P. J., and Williams, J., concurred; Rumsey and Ingraham, JJ., dissented.