On the 21st day of July, 1902, Edward E. Gwynne, now deceased, was acting as the executor of the estate of Louise Gwynne, deceased, and had a large amount-of money to his credit as such executor in the Fifth Avenue Trust Company in the city of New York. On that day he drew a check on this account in his name as executor, payable to the order of the appellants, under their firm name of James M. Leopold & Co., who were conducting the business of stockbrokers as copartners and delivered it to them, and thereupon he opened an account with them in his name as executor for the purpose of speculating in stocks, bonds and other securities on margins. They credited his account with the amount of the check and subsequently collected it. The account shows various transactions, but none of the stocks or securities purchased were delivered to the executor or transferred to his name on the books of the corporation issuing them. This action is brought to recover the amount of that check, with interest, and it is alleged in the complaint that it was a wrongful diversion of trust funds and that *250they and the deceased executor were joint tort feasors. The appellants denied, by their answer,, the right of the plaintiff to maintain the action upon the ground that the plaintiff Steele was not a party to whom' letters of administration with the will annexed could be issued, and that, therefore, the Surrogate's Court was without jurisdiction to issue the same; and they also raised the objection by answer that the right of action; if any, was in the trustee of the trusts under the will of Louise Gwynne, deceased ; and they further claimed that they were at least entitled to a credit for the sum of $550 paid to the deceased executor from the account which he opened with them. Appellants also contend that they should have been awarded judgment over against the personal representatives of the deceased executor. They made other claims upon the trial which are. hot pressed here and, therefore, need not be consided. Appellants have been held liable for the full amount." ' '
This action was commenced on the 23d day of November, 1905, by the plaintiff Steele, as administrator, and by Helen Steele Gwynne, as administratrix with the will annexed of the deceased Louise Gwynne. Louise Gwynne, the plaintiff’s testatrix, died on the twenty-fifth or twenty-seventh — it appears by the complaint and by a deposition that it was on the twenty-fifth, and by a stipulation that it was on the twenty-seventh — day of Hay, 1902, leaving a last will and testament, in and by which she appointed her son, Edward E: Gwynne, her executor. The will was duly probated and letters testamentary were issued to him on the 31st day of Hay, 1902, and he duly qualified and acted as executor, but died without having accounted and insolvent on the 9th day of Hay, 1904, having been duly adjudged' a bankrupt on the 3d day of June, 1902. On the 18th' day of August, 1904, Helen Steele Gwynne presented to the Surrogate’s Court a duly verified petition, showing, among other things, that she was a resident of the county of New York ; that oil the 2'Tth day of July, 1904, she' was duly appointed the general guardian of the person and estate of the three grandchildren of the plaintiff’s testatrix'by the surrogate of the county of New York ; that they were the sole legatees under the will,, the probate of the will and issuance of letters testamentary to her husband and his death, having assets of the estate in his hands and praying that letters testamentary be issued to her and to her father who resided *251at the city of Washington, D. C. A decree was duly'made on the 1st day of September, 1904, appointing her and her father, Franklin Steele, administratrix and administrator with the will annexed of Louise Gwynne, deceased. It appears by the will of Louise Gwynne, deceased, that after directing the payment of her debts, funeral charges and expense of administration and making a specific bequest of her jewelry, she directed that her executor divide the rest, residue and remainder of her property “into three-equal shares or parts ” and that he pay over the income of one of such shares or parts to each of her three grandchildren therein named until such grandchild should attain the age of twenty-one years, at which time the grandchild, if living, was to receive the principal, and in the event of his death before such time his share was to go to the survivor’s or survivor of the grandchildren. The executor was authorized to sell the real estate of the testatrix and to invest and reinvest the proceeds thereof “ in such securities as he in his judgment may deem best.”
Helen Steele Gwynne is the mother of the grandchildren and the widovv of Edward E. Gwynne, deceased. It is not claimed that she was not authorized to receive letters of administration with the will annexed, but the contention is that her father was not so authorized and that he could not be joined with her. We are of opinion that this contention is not well founded. It is based on the provisions of section 2643 of the Code of Civil Procedure, which expressly authorize the surrogate to issue letters of administration with the will annexed, in the event that by death or otherwise "there is no executor or administrator with the will annexed qualified to act. Section 2643 provides that the proceeding may be instituted by a person interested in the estate. It is manifest that the guardian of the property of the sole legatees was such a person. The petition was sufficient to give the Surrogate’s Court jurisdiction to issue letter’s of administration with the will annexed, and in the absence of fraud or collusion with respect to the jurisdictional facts jurisdiction is conclusively presumed. (Code Civ. Proc. § 2473.) Any one of the residuary legatees, or' in case he is a minor, his guardian, if competent, is by virtue of the express provisions of section 2643 first entitled to such letters, and, therefore, it is perfectly clear that she was entitled to receive the letters *252of administration. With respect to the validity of the letters issued to her father the learned counsel for the respondents relies on a provision in or following subdivision 9.of section 2660 of the Code of Civil Procedure, as follows : “ If there are several persons equally entitled to administration, the surrogate may grant-letters to one of more of such persons, and administration may be granted to one or more competent persons, although not entitled to the same, with the consent of the person entitled to be joined with such person or persons ; which consent must be in writing and filed in the office of the surrogate.”- Most of the provisions of that section do, as claimed by counsel- for appellants, relate to cases of intestacy, but- it seems clear that subdivision 9 relates to cases in which the decedent has left a will, for, after specifying in eight subdivisions, the order in which persons are entitled to letters, it is -provided in the 9th as follows: “ To- an executor or. administrator of a sole legatee named in a will whereby the whole estate is devised to such deceased sole legatee.” This subdivision, we think, relates to letters of administration with the will annexed, which is the case at bar, and it has been so held by two of the learned surrogates of Hew York county who ■ in their opinions trace the history of the legislation •which ultimately resulted in the incorporation of these provisions in this section of the Code, and such they, state has been the practice thereunder. (Quintard v. Morgan. 4 Dem. 168; Matter of Moehring, 24 Misc. Rep. 418.) We see no reason why the general provisions with respect to joining- a competent person with, one entitled to letters of administration, in case of intestacy, should not apply likewise to letters of administration with the will annexed-. The provisions of the statute herein quoted refer to persons “ entitled, to administration.” This provision is general and is not confined to administration in cases of intestacy. The guardian of the sole legatees was entitled to administration and fairly comes within the statute. But if this were not s'o, by the express provisions of section 2591 of the' Code of Civil Procedure the letters of administration are made conclusive authority of the administrator to-act until - the decree upon which they were issued is reversed on appeal or revoked, at least in the absence of allegations and proof of fraud or collusion in attempting to give the Surrogate’s Court jurisdiction to issue them. (Hoes v. N. Y., N. H. & H. R. R. Co., *253173 N. Y. 435.) The person to whom letters are issued is accountable to the estate for any property received under or by virtue of them and it was competent for the Legislature to preclude a litigation over the validity of the letters where the Surrogate’s Court had jurisdiction to issue letters and the claim of invalidity is based, not on want of jurisdiction to issue letters, but on lack of authority to issue them to a particular party.
It appears that pending the action, and on the 1st day of April, 1907, Helen Steele Gwynne, duly accounted and letters of administration to her were revoked. The decree, however, expressly provided that the plaintiff, as her coadministrator, should continue the administration of the estate under the letters theretofore granted to him. On. the first day of November thereafter, by an order of the Special Term, Helen .Steele Gwynne, as administratrix, was stricken from the record as a party plaintiff, and Steele, as administrator, permitted to prosecute the action as the sole plaintiff; and' at the instance of the appellants he was thereupon by the same order required to bring in as parties defendant Helen Steele Gwynne and himself as administratrix and administrator of Edward E. Gwynne, deceased, and to issue and serve what is described as “ an amended and supplemental summons ” and “ an amended and supplemental complaint,” bringing them in. This was done and the original sole defendants, these appellants, who had unsuccessfully demurred to the original complaint (Gwynne v. Leopold, 116 App. Div. 913) answered jointly and served answers on the plaintiff and on their codefendants thus brought in. The personal representatives of the deceased Edward E. Gwynne, thus brought in, appeared but did not answer, and are represented by the same counsel who represents the plaintiff. It appears that the theory upon which the personal representatives of Edward E. Gwynne were brought in was that the appellants claimed a right to have them in to the end that a recovery over against them might be had. No objection was taken by answer to the right of the plaintiff to continue the action, based on the ground that his appointment as administrator with the . will annexed, although valid when made, fell with the revocation' of the letters to Helen Steele Gwynne, nor is that point presented on the appeal, and, therefore, it is not decided. It may be observed, however, that it would seem from the provisions of section 2591 of the *254Code of Civil Procedure that- when the Surrogate’s Court obtains jurisdiction, as - it clearly did by the petition, to issue letters of administration, and the. issuance thereof is authorized, they remain valid until the decree'pursuant to which they, were issued is reversed, or until they are revoked by an order of thé Surrogate’s Court, and that they cannot be questioned collaterally in the absence, of course, of fraud or collusion with respect to the jurisdictional facts. .(See Code Civ. Proc. § 2473.)
The further point is taken by the appellants that the deceased Gwynne was not acting as executor at the time of this unauthorized investment or appropriation, of the trust fund's for the purpose of speculating therewith. This claim is based upon.the theory that his duties: as. executor had terminated, and that, he then, held the fund as trustee under-the will for the benefit of the three residuary legatees,, and that, therefore, he became a trustee, and the cause of the action', if any, vested in. him,' not as executor, but as trustee of those trusts. This objection is untenable. It will be observed that less than two months had elapsed after he received the letters of. •administration before he violated his trust by thus appropriating the . , funds. The time for the presentation of claims against the estate 'had not expired. ' The funds had not been divided into-the,separate-, trusts, even by the executor, and no report had been made thereon to the Surrogate’s. Court, and the' executor had not accounted or been discharged as executor or directed to turn over the fimds to himself as trustee or to hold them, as trustee. On this state of facts it seems perfectly clear that the deceased Gwynne was at the time acting, as executor and held the. funds as such, for his sole authority to hold them was derived.from the will, wherein he was designated as executor and not as trustee, and hi's duties as executor had not terminated. (Matter of Hood, 98 N. Y. 363; S. C., 104 id. 103; Lansing v. Lansing, 45 Barb. 182; Matter of Underhill, 35 App. Div. 434; affd.,158 N. Y. 721; Cluff v. Day, 124 id. 195.) The doctrine of these cases is not modified by Laytin v. Davidson (95 N. Y. 263) and Olcott v. Baldwin (190 id. 99), wherein an accounting as executor and setting apart of the trust funds wére not deemed conditions-precedent to the termination of the duties of. executor and the commencement of his duty as a trustee. In those cases, by special provisions of the will, it was contemplated *255that the executorial duties should end, and the trust duties commence at a given time, or on the happening of an event which had transpired. The cause of action, which arose immediately on account of the unauthorized use of, the trust fund, was one which accrued to Gwynne as executor to recover the money, if it remained intact in the hands of the appellants, or for an accounting by which the appellants would be required to return the money, together with interest thereon, or, at the election of the executor^ the profits made thereon. '(Marshall v. de Cordova, 26 App. Div. 617; English v. McIntyre, 29 id. 439; Thompson v. Whitmarsh, 100 N. Y. 35; Moore v. American Loan & Trust Co., 115 id. 65 ; Deobold v. Oppermann, 111 id. 531; Matter of Myers, 131 id. 409; King v. Talbot, 40 id. 85.) The contract with the brokers being unauthorized the rule applicable to actions on contracts made by an executor in the administration of the estate by which he is required to sue individually (Austin v. Munro, 47 N. Y. 360; Thompson v. Whitmarsh, 100 id. 35) doubtless would not be applicable and the cause of action would vest in him in his representative capacity as if for an action to recover property belonging to the estate. Moreover, appellants dealt with Gwynne as executor and they should not be heard to question the capacity in which he was acting. It appears that on the 4th day of March, 1905, before the action was commenced, the plaintiff Steele accounted as administrator in the Surrogate’s Court, and a decree was entered settling his account. It is manifest, however, that that was an intermediate accounting, for the decree does not discharge him as administrator, but on the contrary expressly directs that he shall hold the remainder of the ¿ssets “ under and pursuant to the last will and testament of Louise Gwynne, deceased.” This accounting did not terminate the right of Steele, as administrator, to maintain this action, and it is perfectly clear that he will be accountable to the estate for the benefit of the cestui que trust under the three residuary trusts in the will for any moneys which he may recover in this action and that the recovery will cancel the liability of the appellants. (See Moss v. Cohen, 158 N. Y. 240, 247; Bingham v. Marine Nat. Bank, 112 id. 661; Spies v. Michelsen, 2 App. Div. 226.) Since we are of opinion that the cause of action vested in the executor, as such, and not in him as a trustee by implication,, by virtue of the *256provisions of the will, it becomes unnecessary to consider the further question as to whether, if the cause of action were vested in Steele as trustee, the fact that he was formally appointed a trustee of the trusts under the will by an order of the Supreme. Court on the 25th day of September, 1907, would enable him to maintain the action as administrator, as contended by -counsel for respondent, being accountable as administrator to himself as trustee for the fruits of the action.
A serious question is presented by the exceptions of the appellants to the refusal of the court to find that they were. entitled to credit for certain amounts which they paid to the executor. As has been seen, the account was opened on the books of the appellants with the executor in his representative capacity. It appears by ' uncontroverted evidence that the appellants paid to the executor from this account and charged him as executor in the account therewith, the sum of $200 on the eighth day of August by a “ cash draft ” and in cash $35 on the fifteenth, $55- on the sixteenth, $10 on the twenty-second and $200 on the twenty-sixth days of August respectively, and $75 on the twelfth day of September, aggregating the sum of $575. The learned trial justice disallowed this claim for ■ credit on.account of these items upon the theory that'the appellants and tlie deceased executor were joint tort feasors, and for the same-reason he denied the right of ■ the appellants to contribution or a recovery-over against the personal representativea of the deceased executor. We are of opinion that in this the trial court erred. Of. course, if the appellants and the executor were guilty of bad faith, or if they violated the express command of a statute, or if their acts were inherently dishonest, then they would be joint tort feasors (Moss v. Cohen, 158 N. Y. 246, 247; Holden v. N. Y. and Erie Bank, 72 id. 286; Knapp v. Roche, 94 id. 329); but such are not the facts in the case at bar. Speculating in stock on margins is not'prohib- , ited bylaw. It is perfectly lawful (Hurd v. Taylor, 181 N. Y. 231), but courts of equity, by a long line of decisions,, have established' a rule that an investment of trust funds in a speculative enter.prise or in business is not consistent with the exercise of the. care which a trustee owes to. the cestui que trust to safely hold, invest and preserve the funds,, and, therefore, the trustee who makes such an investment or use of trust funds is at liberty to, and it is his duty *257to, disaffirm his own acts and restore or recover the funds thus applied. (Deobold v. Oppermann, supra; Matter of Myers, supra; Moore v. American Loan & Trust Co., supra; King v. Talbot, supra.) Such an appropriation of trust funds is regarded, as- a devastavit, and the funds are at once recoverable, but it does not follow that the act is in all cases regarded as corrupt or so contrary to the rules of public policy that it must necessarily be considered tortious. The Legislature has authorized investments by trustees in certain securities, but it has not expressly prohibited other invests ments by them. .(See Pers. Prop. Law [Gen. Laws, chap. 47; Laws of 1897, chap. 417], § 9, as amd. by Laws of 1902, chap. 295, and Laws of 1907, chap. 669 ; Decedent Estate Law [Consol. Laws, chap. 13; Laws of 1909, chap. IS], §111; Pers. Prop. Law [Consol. Laws, chap. 41; Laws of 1909, chap. 45], § 21.) It has long been the settled law of England that there is a right of contribution between trustees who become liable to the cestnii que trust for an unauthorized or improper investment, and moreover that a trustee in such case may recover against a cestui que trust who induced the investment to the extent of the interest of the latter therein. (Chillmgworth v. Chambers, 74 L. T. Rep. [N. S.] 34.) This use of the trust funds was unauthorized and the appellants had notice by the form of the account and they thereupon became liable to the estate immediately ; but the question is, are they wrongdoers in the sense that their act necessarily involves or implies a state of facts or mind on account of which they should be left without remedy by the courts as between themselves. We are of opinion that it does not. (See Moss v. Cohen, supra.) The testator might lawfully authorize the investment of his property in a business enterprise (Willis v. Sharp, 113 N. T. 586), and I know of no law prohibiting him from directing that his executors continue or open and conduct for a given time a speculative account for the benefit of his estate. The executor evidently supposed that he had such authority, for he did not attempt to gain any private advantage by the speculation. He did not convey trust funds to his individual use. He, in effect, represented to the appellants that as executor he Vas authorized to open the account. He and the brokers, apparently acted openly and in good faith. The estate would have had the *258right to ratify his acts, and as executor he, as already observed, had a right of action to recover the moneys, which he might have enforced at any time.- The account showed certain moneys to his 'credit. Of these moneys the appellants concededly paid over to him the sum of $575. He was only entitled' to the moneys as executor. He is charged in .the account, with them as executor. The fair and,, we think, the only reasonable inference is that they were paid to him as executor, . The learned counsel for the plain-, tiff on the argument conceded that if these moneys had'beeri repaid ' to the executor by check drawn to his order in his representativé capacity, the appellants would, have been entitled to credit therefor. The learned, counsel fo.r the plaintiff, however, .invokes the doctrine of the cases of Squire v. Ordemann (194 N. Y. 394) and Moore v. American Loan & Trust Co, (supra) to the effect that the burden is on the ■ appellants to show that' the money has actually been restored to the estate or that the estate has had the benefit .thereof. We are of opinion that the doctrine of those cases and kindred cases, is not controlling .here, f<?r the reason that as executor the deceased G wynne had the right to receive .back this money any time after it was delivered to the appellants, and on account of the form of the account we are of opinion that it cannot be successfully maim tained that the payments made were made to him individually and not as executor, Of course, the burden was upon the appellants to show repayment to Gwynne as executor, or. to some one: authorized to receive the money for the estate (Marshall v. de Cordova, supra; Moore v. American Loan & Trust Co., supra), but we are of opinion that the appellants satisfactorily bore that .burden, and established a defense, in part (Knapp v. Roche, 94 N. Y. 329, 332) and, therefore, unless the judgment can be modified, there must be a reversal. The learned court found that no' part of this "sum “ was ever restored or repaid to the estate of said Louise .Gwynne.” "If this finding is to be taken literally, we cannot modify the judgment . by allowing credit for the amount which the appellants, paid to the executor, with interest from the; date of such payments. Counsel fdr plaintiff contends, in effect, that the finding is sustained literally by the evidence. The facts, however, are tmcontroverted .and there is nothing to indicate'that they can bé changed upon, a méw trial. We are of opinion that this finding should receive the. *259construction that the learned court meant thereby that a payment to the executor was not .sufficient, and that, as contended by counsel for the respondents, appellants were called upon to show further that the executor used the. moneys which were repaid to him for the benefit of the estate. Of course, we are precluded by this finding from modifying the judgment on the theory advanced by appellants, that the estate actually received the benefit of the moneys thus Repaid, which was not very satisfactorily sliown, but a new trial should be avoided, if possible, and we think that we are not ■precluded by this finding from modifying the judgment upon the theory that by the uncontroverted evidence, which it is not claimed can be changed on a new trial, it appears that the moneys were paid to the deceased G wynne as executor. We deem this sufficient to entitle the appellants to credit for the amount so paid, and the judgment should be modified by allowing them credit therefor, together with interest on the amount of each payment from the time it wás made.
The appellants further contend that they are entitled to a judgment over against the estate of the deceased executor. If they' were joint tort feasors with him, they would not have such right of recovery over, but in the view we take of the case, they probably have that right. However, that is a matter with which the plaintiff is not concerned and it should not be litigated .in this action. The plaintiff saw fit to elect to bring the action against the brokers and no claim is made against the estate of the deceased ' executor. There was, therefore, no propriety in bringing in the representatives of his estate and the fact that they were brought in does not compel the court to adjudicate the question of a right to contribution or a recovery over as between them and the appellants. Since, however, the representatives of the deceased executor were brought in and appellants have served an answer on them, setting forth the facts in which judgment over is demanded; to prevent any question with respect to the judgment being a bar.to an action that may be brought hereafter by the appellants against the representatives of the estate of the deceased executor, if, in view of his bankruptcy, they deem such course profitable, the judgment should be further modified by inserting a provision to the effect that it is without prejudice to any action which the appellants may hereafter bring *260against the personal representatives of the deceased executor, or on account of the facts set forth in their answer herein.
The judgment should, therefore, be modified in accordance with these views, and as modified affirmed, without costs. Let the order be settled on notice.
Ingraham and Scott, JJ., concurred; Clarke, J., dissented and voted for affirmance; Patterson, P. J-., not voting. ■
Judgment modified as. stated in opinion, and as modified affirmed, without costs. Settle order on notice.