Thomas E. Clark, as Sole Surviving Executor, etc., of Mary F. Farnham, Deceased, Respondent, v. Mary Elizabeth Truslow, Appellant

Thomas E. Clark, as Sole Surviving Executor, etc., of Mary F. Farnham, Deceased, Respondent, v. Mary Elizabeth Truslow, Appellant. Second Department, March 20, 1914. Decedent’s estate — executor and administrator — action by executor for return of payment made on account of legacy — insufficiency of assets — negligence of executors in allowing moneys to remain in bank which had been insolvent—evidence—admissibility of refunding bond as part of circumstances attending payment. In an action by an executor to recover the amount of a payment made to a residuary legatee on account of her legacy, prior to any judicial settlement of the accounts of the executors, because the assets of the estate had subsequently proved insufficient to pay the general legacies, it was alleged as a defense that the deficiency in the assets of the estate arose after the payment in question, and was due to the negligence of the executors. It appeared that prior to the death of the testatrix, a bank in which she had money deposited had closed its doors temporarily, but it had reopened by authority of the State Banking Department on condition that the depositors would accept payment of their deposits in fixed installments. The testatrix did not withdraw any part of her account at the fixed periods up to the time of her death. Her executors, after examining the bank and finding it solvent, left the funds temporarily on deposit therein, but the bank subsequently failed and the deposit became uncollectible. Held, on all the evidence, that a judgment for the amount of the payment, with interest from the date thereof, based on a finding that the executors were not negligent, should be affirmed. A refunding bond executed by the defendant and her husband, providing for the repayment of the amount received, with interest, if it should be necessary for proper administration of the estate, was properly admitted in evidence as a part of the circumstances attending the payment, and tended to establish plaintiff’s right to interest. Appeal by the defendant, Mary Elizabeth Truslow, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 6th day of February, 1914, upon the decision of the court after a trial before the court without a jury at the Kings County Trial Term. Henry W. Jessup, for the appellant. William G. Phlippeau, for the respondent. [MAJORITY — Carr, J.:] Carr, J.: The defendant is the residuary legatee under the. last will of Mary Farnham, deceased. The plaintiff is the sole surviving executor of said will. At the request of the defendant, in September, 1909, the executors made her a payment of $5,000 in cash on account of her residuary legacy. This action was brought to recover the amount of said payment, with interest from the date thereof, because the assets of the estate proved subsequently to be insufficient to pay the general legacies, unless there was a recovery back of the amount prepaid on account of the residuary legacy. The defense was that the deficiency in the assets of the estate arose after the prepayment in question, and was due to negligence of the executors which resulted in a waste of said assets, and that, therefore, the defendant was not obliged to make any payment back. The facts involved in the action are undisputed. The case was tried without a jury, and the court found that the executors were not negligent in their care of the assets of the estate. The whole burden of this appeal rests practically upon the plea that this finding by the trial court was against the evidence. The appellant goes a little further, however, and contends that the undisputed evidence shows negligence on the part of the executors as a matter of law. It appears that Mrs. Farnham carried a considerable amount of money on deposit in the Union Bank of Brooklyn, and that after her death her executors found a large balance to her credit in that bank. Before Mrs. Farnham died the Union Bank had closed its doors temporarily, and went into the charge of the State Banking Department. It was allowed to reopen on condition that the depositors would accept payment of their accounts in fixed installments, falling due at fixed periods. Mrs. Farnham did not avail herself of the privilege of withdrawing any part of her account at the fixed periods, up to the time of her death. Her executors drew out subsequently about $6,000, and left a large balance remaining to the credit of Mrs. Famham’s estate on the hooks of the Union Bank, under an entry thereon showing her death and the appointment of executors. Things remained in this condition for some months, and the bank subsequently closed its doors again, and the amount remaining on deposit to the credit of the Farnham estate appears by concession of the respective counsel to be uncollectible. The defendant, appellant, claims that, under these circumstances, the Farnham executors were negligent in that they should not have allowed any part of the funds of the estate to remain on deposit in the Union Bank, hut should have withdrawn them as soon as possible. The proofs offered by the plaintiff show that Mr. Clark, the executor, had taken notice of the reports of the Union Bank, which purported to show a large surplus and that the institution was in an entirely solvent condition. These funds were simply temporarily on deposit, awaiting the winding up of the estate. The payment made by the executors to the defendant, appellant, on account, was before any judicial settlement was had of their accounts. I am unable to find in this record proofs which would justify a reversal of the determination of the trial judge on the question of negligence, The defendant, by requesting and receiving a prepayment on account of her residuary legacy before a judicial settlement of the accounts of the executors, took such prepayment at her own risk to the extent that, in the absence of a judicial accounting, she subjected herself to the same liability to refund as if she had received the money with knowledge that the other legacies and the debts of the decedent had not been paid or provided for. (Buffalo Trust Co. v. Leonard, 154 N. Y. 141.) Of course, if the inability of the executors to meet the other legacies and debts of the decedent arose from their own fault, she was under no obligation to respond. But the executors were not insurers or guarantors as to the funds they held at the time of the payment to the defendant, and when they left these funds temporarily on deposit in a going bank, apparently amply solvent, they met the measure of care imposed upon them bylaw, viz., reasonable diligence. There is another point made by the appellant, namely, that she should not have been charged with interest on the moneys paid to her from the time of payment. There is an allegation in the complaint that demand was made upon her for repayment before this action was brought, but there is no daté of demand set forth. Eeither in the findings of the trial court is there any specific finding as to the date of the demand, nor is this date of demand to be found in the evidence. Under these circumstances, the appellant contends that it was improper to allow any interest, as she was not in default in failing to make repayment until a demand was made upon her. This point is not free from doubt, but I think the circumstances, which I will state below, justified the allowance of interest. The defendant introduced in evidence on her own account a letter from Mr. William E. Dykjman, dated September 9, 1909, to his clients, the two executors of the Farnham estate,-in which he recommended a compliance with the request of Mrs. Truslow for a prepayment on account of her residuary legacy, on condition that she give a refunding bond, and likewise a letter from Mr. Dykman to Mr. Jessup, the attorney for Mrs. Truslow, stating that the executors were willing to pay the $5,000 in question providing that Mrs. Truslow and her husband gave a refunding bond. It appears that Mrs, Truslow and her husband thereupon gave a refunding bond, which provided for the repayment of the amount thereof with interest if such should be required for proper administration. After the delivery of this bond, the prepayment in question was made to Mrs. Truslow. The appellant contends that it was error to receive this bond in evidence over objection, inasmuch as the complaint did not claim liability upon it. It was received, however, in evidence by the trial court, on the distinct ground that it was a part of the circumstances attending the prepayment by the executors and the acceptance thereof by Mrs. Truslow, and not to establish any independent liability thereon. I think it was properly received on such theory. If so, then the prepayment was received by the residuary legatee on the distinct understanding that, if she should be obliged to pay the whole or a part of the amount of the prepayment, it should be repayable with interest thereon to the extent that it was necessary to meet the requirements of the Famham estate. This is a hard case, however it be decided. But the burden of its hardness cannot be placed upon the Farnham executor unless he be in fault. The trial court has found against the defendant on this point on ample evidence. The judgment should be affirmed, with costs. Jenks, P. J., Burr, Rich and Stapleton, JJ., concurred. Judgment affirmed, with costs.