McMahon v. Smith

Rumsey, J.:

On the 13th of February, 1893, Michael Keegan was appointed administrator of the estate of Jane Keegan, and qualified by giving the usual administrator’s bond, upon which the defendant John Smith was one of the sureties. The bond contained the ordinary provisions that Michael Keegan should faithfully execute his trust and obey all lawful orders and decrees of the Surrogate’s Court of the county of Hew York touching the administration of the estate committed to him. More than "eighteen months after the appointment of the administrator, a petition was presented to the surrogate praying for a judicial settlement of the account of such administrator, and thereupon a citation was issued to him to show cause, at the time fixed therein, why he should not render an account of his proceedings as administrator. Upon the return day of that citation, proof of the service of it upon the administrator was made to appear, and thereupon an order was made requiring him to file an account as such administrator on or before the 9tli of Hovember, 1894. On the 21st day of Hovember, 1894, the administrator filed his account in obedience to that order. Exceptions to that account were filed by the petitioner, and the matter was referred to a referee, who, after having heard the testimony, made a report which appears in the case. In that report it is.stated that the administrator had been indebted to the intestate in her lifetime upon certain judgments amounting to something over $800, which he had failed to collect or pay, and he ivas charged with the amount of those judgments as assets in his hands. Ho exceptions to this report were filed, and, upon a hearing before the surrogate, it was confirmed, and the amount in the hands of the administrator, including the amount of these judgments and deducting the expenses to which the surrogate thought he was. entitled, was fixed at $1,076.51.

The decree required that the administrator should pay to-McMahon and others, the plaintiffs in the action first entitled, the sum of $121.99, as their costs of the proceeding, and that, after paying that sum, with some other allowances, the residue of the estate be distributed among the next of loin. A transcript of this decree was duly filed, and the decree was docketed in the county clerk’s office and an execution issued upon it, which was returned unsatisfied in due time. Thereupon these actions were brought by the persons to whom, according to the decree, the money was to he paid. Each action was brought in the City Court, and the defense' in each case was, in the first place, a general denial of nearly all the allegations, and, in the second place, an allegation that no citation was served upon the defendant Smith in any proceeding for the judicial settlement of the accounts of Michael Keegan, as administrator, etc., and that the decree alleged in the complaint, or any decree that was made in the proceedings against the administrator, was without any jurisdiction or validity as against the defendant. Upon the issue thus formed, the actions were tried, and they Avere determined in the City Court upon the ground that, as no citation for the accounting was served upon the sureties, the decree of the surrogate Avas void as to them and could not be enforced in this action. The judgment was affirmed at the General Term of that court upon that ground, but Avhen the case came on for a hearing before the Appellate Term of the Supreme Court upon appeal, it Avas affirmed, not upon that ground, which seems not to have been mentioned or considered, but upon the ground that no citation Avas issued to the next of kin of the testator, and that, therefore, the decree, so far as it directed the distribution, was void for want of jurisdiction. This point Avas not raised in the pleadings and does not seem to have been alluded to upon.the trial, the only point made upon the trial upon that branch of the case being that the defendant John Smith was not bound by the decree of the surrogate because he was not cited to attend the accounting, and that, therefore, the surrogate had no jurisdiction to pronounce it.

From an early day it has been held in this State that the sureties upon the bond of an administrator are bound by any decree which the surrogate has jurisdiction to make touching his conduct in the administration of the estate. (Casoni v. Jerome, 58 N. Y. 315; Gerould v. Wilson, 81 id. 573; Deobold v. Oppermann, 111 id. 531; Power v. Speckman, 126 id. 354.) The reason for this holding, as stated by the courts, is that by his contract the surety puts himself in privity with the administrator, and being so in privity he is bound by any decree that the surrogate has jurisdiction to. make. That rule existed unimpaired until an amendment of the Code of Civil Procedure in the year 1893, when it was provided by section 2728 that in certain cases therein more particularly specified, an e-xecutor or administrator might present to the court his account and a writ-ten petition praying that it be judicially settled and that the sureties in his official bond or the legal representatives of his sureties and other persons therein mentioned, might be cited to attend the settlement. That provision, however, giving the power to the surrogate to cite a surety of the administrator, applied by its terms only to a voluntary accounting on the part of the administrator, and there is nothing in the act, so far as we can discover, which extends that provision to any other than the case mentioned in the section in which it appears. The accounting, of which the decree at the foundation of these actions was the result, was not a voluntary, but a compulsory accounting ; the administrator was cited to show cause why he should not render an account, and the direction for him to account was made without any appearance on his part, on the proof of the service of a citation upon him. It is quite true that, after he had been directed to make and file an account, he was at liberty, if he saw fit, to take the proceedings prescribed in section 2728 and turn the compulsory accounting into a voluntary accounting, upon which all persons mentioned in the section 2728, including his surety, might be made parties to tile proceeding, but he could not be compelled to take any such step. Whether he should do it or not was a matter entirely within his own volition. If he saw fit to do it the surety could be made a party; if he did not see fit to do it there was no way in which the surrogate could be required or indeed permitted to issue a citation to the surety, or to make him in any way a party to the proceeding. If, therefore, he could not be bound by a decree unless he were a party to it, there is no way in which he could be compelled to answer for the default of the administrator in refusing to obey an order made upon compulsory proceedings, because no one is at liberty to . take steps to bring him into court, except the administrator, upon a voluntary accounting, and for that reason he would entirely escape liability, unless the administrator saw fit to bring him in. It certainly could not'be supposed that the Legislature intended any such result as that to be reached, or that they intended that the surety upon an administrator’s bond should be relieved from liability unless the administrator himself saw fit to take the necessary steps to make him liable. The surety, when he signed the bond, must have known that he became in privity with the administrator, and was bound by a decree against him, and there is no hardship in insisting that he should be bound by that decree, because his principal, for whom he voluntarily entered into the contract, is the only one who could require notice to be given to him which would enable him to be present upon the accounting. We are not able to find anything in the statute by which the authority in section 2728, to cite the surety to attend an accounting upon a petition made by anybody else than the administrator, is given to the surrogate, and in the absence of that authority it cannot be deemed that the law has been changed in that regard. In every case, except the one in which the statute authorized the surrogate to issue the citation to the surety, the provisions of the law remain' unchanged, and the surety, by reason of his privity, is liable to respond for a failure of the administrator to obey a lawful order of the surrogate.

But it is said that although the surrogate acquired jurisdiction, yet that jurisdiction was lost because of his failure to issue a supplementary citation to the persons entitled to distribution, pursuant to the requirements of section 2743, after it had become apparent that there was something to distribute. It might be sufficient to say that no such defense was set up in the answer, and no proof was made upon the trial which would warrant the finding that these persons were not cited. But, passing that point, there is no doubt that the surrogate had full jurisdiction, as against the administrator, to make a decree which should conclude him, and if the distributees were willing to adopt that decree, as they seem to have been by bringing an action upon it, it did not lie- in the mouth of the administrator, nor anybody in privity with him, to complain that the decree was not conclusive. This is established by the provisions of the statute itself, which expressly says that with respect to the matters enumerated in that section the decree is conclusive as a judgment upon each party to the special proceedings, who was duly cited or appeared, and upon every person deriving title from such party. (Code Civ. Proc. § 2.743.) One of the matters enumerated in the section is the distribution of any part of the estate which was ready to be distributed, and although the distributees were not brought in by supplementary citation, the statute, by its terms, makes the decree conclusive as to the persons who were brought in, one of whom was the administrator, who was cited to appear. As the decree is conclusive upon him, and there is no requirement that the surety should be cited in these compulsory accountings, we see no escape from the conclusion that the decree is also conclusive upon the surety who is in privity with the administrator.

It was suggested upon the argument that the surrogate had no authority to charge the administrator with the amount of his debt to the intestate as assets of the estate, and to direct that sum to be distributed, and, because he had no right to do that, the surety is not bound by his action. That question is not in any way presented in the case, nor was there any ruling upon it in the court below. The only objection to the decree was that the surrogate had acquired no jurisdiction, because no citation was served upon the surety, and it is not necessary, therefore, to examine the question thus sought to be presented. For the reasons thus stated, we are of the opinion that the court below erred in the disposition made of this case.

The various judgments rendered below should be reversed and a new trial ordered in each case, with costs to the appellants in each case to abide the event of the action.

Patterson and Ingraham, JJ., concurred; Van Brunt, P. J., and O’Brunt, P. J., dissented.