Opinion
March 13, 1962
Present — Bergan, P.J., Coon, Gibson, Reynolds and Taylor, JJ.
Cross appeals from a judgment of the Supreme Court at Trial Term rendered upon an accounting by defendant as directed by a prior decision of this court as amended. ( Ruzzo v. Kingston Trust Co., 10 A.D.2d 512, amd. 11 A.D.2d 874.) Subject to remitter, a concededly correct audit of the testator's and defendant's cash receipts and disbursements for the period from April 21, 1952 to September 30, 1960 was made by an accountant selected by plaintiffs. For the purpose of completing the record and to enable the court to rule upon plaintiffs' exceptions to the account, the parties thereafter stipulated certain modifications and clarifications of the audit. Upon the original record on appeal as so supplemented the trial was had. Plaintiffs filed exceptions to certain items of defendant's account. Those which pertained to charges for bookkeeping services rendered in connection with the Bowlotorium premises from January 1, 1954 until the testator's death on August 1, 1955, the premium expense of maintaining public liability and fire insurance on the premises thereafter, the cost of publishing a notice of sale of the premises and the amount paid in settlement of an infant's personal injury negligence action instituted against testator as the result of her fall on the sidewalk of the premises while they were not protected by casualty insurance were overruled by the trial court. Such as excepted to payments charged to plaintiffs for increased personal and fiduciary Federal and State income tax liabilities incurred by the superimposure of the realty rentals upon testator's and his executor's other taxable income and to the failure of the executor to credit plaintiffs with interests upon funds borrowed from the Bowlotorium account for general estate purposes were sustained. We think these rulings were correct. The bookkeeping services rendered, the insurance coverage provided — their reasonable value is not controverted — and the settlement of the negligence case not claimed to have been imprudently made constituted indemnities related to "charges and liabilities arising out of the management and rental of the realty" upon which the interlocutory judgment conditioned the reconveyance of the realty and upon appeal we found to have been warranted in the exercise of the equitable powers of the court. ( 10 A.D.2d 512, 518.) The publication expense is obviously a proper charge. Our prior decision left open for determination by the trial court upon a sufficient record the question in respect to the claims for credit for increased income taxes paid. ( 11 A.D.2d 960, 961.) Its holding that such credits could be accorded defendant only in the amount which the corporate owner of the property would have been required to pay had it accounted to the taxing authorities for the rents received is the only result consonant, in our judgment, with the basic finding upon which the reconveyance of the real property was directed, namely, that the testator's record ownership of the premises was acquired "by an improper procedure to enforce payment of the corporation's indebtedness to him." ( 10 A.D.2d 512, 517.) Absent a showing of theoretical corporate taxability no credits, as the trial court has found, could properly be allowed defendant on this score. In settling the accounts between the parties, the trial court included an award of interest upon advances made by the testator to the corporation and the value of his legal services as fixed by this court. This, too, was in conformity with our prior decisions. ( 10 A.D.2d 512; 11 A.D.2d 874.) The balance struck upon the accounting was in defendant's favor. Plaintiffs urge that they were entitled to be awarded interest on certain other items including mainly the full value of the subject real property for deprivation of its use. These issues seem not to have been raised or considered in the court below. Other than those claims for interest which the court has recognized as valid — a determination not here challenged by defendant — plaintiffs' exceptions were limited to a claim for interest "upon such balance as this court shall find due and owing to them upon this accounting proceeding at the full legal rate of interest from the 18th day of June, 1953." However, we have examined the claims now made and find that they constitute no basis to disturb the end accounting result. No costs in the accounting action were awarded either party. In the circumstances we cannot say that this was an improper exercise of the court's discretionary power. Judgment unanimously affirmed, without costs.