Opinion
July 12, 1906.
Henry T. Fay, for the appellant.
Addison C. Ormsbee [ Jordan J. Rollins with him on the brief], for the respondent.
By virtue of the provisions of section 2802 of the Code of Civil Procedure, section 2729, regulating an accounting by an executor or administrator, is rendered applicable to accountings of testamentary trustees. Section 2729, so far as material, provides as follows: "* * * On an accounting by an executor or administrator, the accounting party must produce and file a voucher for every payment, except in one of the following cases:
"1. He may be allowed, without a voucher, any proper item of expenditure, not exceeding twenty dollars, if it is supported by his own uncontradicted oath * * *.
"2. If he proves by his own oath or another's testimony, that he did not take a voucher when he made the payment, or that the voucher then taken by him has been lost or destroyed, he may be allowed any item, the payment of which he satisfactorily proves by the testimony of the person to whom he made it; or, if that person is dead or cannot after diligent search be found, by any competent evidence other than his own oath or that of his wife. * * *."
The theory upon which the trustee moved for leave to file the amended account evidently is that it is entitled to the benefit of the rule applicable to executors and administrators who without authority continue the business of the testator or decedent or use the funds of the estate in their own business. It is the duty of an administrator or executor, unless the will of the testator otherwise directs, to collect the debts and obligations owing to the estate and close out the business, if any, of the decedent or testator with all reasonable dispatch, and to apply the moneys coming into his hands in satisfaction of the debts owing by the decedent or testator and distribute the surplus after deducting the expenses of administration according to the Statute of Distribution or the directions of the will. If in violation of this duty the administrator or executor continues the business or uses the money in his own business, his act is wrongful and the estate is not liable for any obligation incurred or loss sustained, and he may be charged interest upon the money thus wrongfully used, or, at the election of those interested, with the profits made in the business in which it is used; but in that event the burden is upon them to show the amount of the profits, and the business being unlawful and his own so far as the estate is concerned, he is not required to file an itemized account of the receipts and disbursements therein, or vouchers for such disbursements. ( Estate of Munzor, 4 Misc. Rep. 374; Matter of Peck, 79 App. Div. 296; affd., 177 N.Y. 538; Matter of Suess, 37 Misc. Rep. 459, 461; Willis v. Sharp, 113 N.Y. 591; Kenyon v. Olney, 39 N.Y. St. Repr. 839.)
The referee undoubtedly was authorized to allow the trustee to file an amended account in a proper case ( Estate of Munzor, supra); but the trustee filed the original and supplemental accounts upon the theory that the business in which the money was used was not his individual business, but that of his cestui que trust. The amended account is not filed for the purpose of supplying any omission or correcting any error in the original or supplemental accounts.
The provisions of the will creating the trust are not set forth, nor is it alleged that the business of conducting this hotel was not authorized by the will or by the beneficiaries. If in any case a trustee could be heard to say on a voluntary accounting, that, in investing the money of the estate, he had departed from his authority under the will and engaged in a private venture on his own account, which proved profitable, but that merely because it was not authorized by the will he only charged himself with the amount of the estate that came into his hands and interest thereon, which it is unnecessary now to decide, it seems quite clear that it would be incumbent upon him to show that the business in which he used the trust fund was not authorized by the will or by the beneficiaries, and especially should this be true where he applies for leave to amend, in this respect, an account once filed by him.
We are of opinion, therefore, that the moving papers were wholly insufficient to authorize the filing of the amended account. The amended account becomes a substitute for the original and supplemental accounts. The order of the court authorizing the trustee to file the amended account constitutes a decision that the trustee is only obliged to account for profits, because if it were not so, the original and supplemental accounts should have been allowed to stand as the basis of the accounting, whereas under the order from which the appeal is taken, the amended account is in effect a substitute therefor. It seems extremely doubtful whether in any case the rule applicable to an administrator or executor continuing a business without authority, is applicable to a trustee, but since the facts material to present any phase of that question for decision are not contained in the record, we refrain from expressing a definite opinion thereon.
It follows that the order should be reversed, with ten dollars costs and disbursements, and motion to file the amended account denied, with ten dollars costs.
O'BRIEN, P.J., PATTERSON, McLAUGHLIN and HOUGHTON, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs. Order filed.