Opinion
09-05-1896
McMAHON et al. v. WEART et al.
C. Linn and Mr. Edwards, for complainants. R. H. McCarter, for defendants.
Suit by Bernard J. McMahon and another against Jacob Weart, administrator of Bernard McMahon, deceased, and another, for injunction. Heard on demurrer to bill.
C. Linn and Mr. Edwards, for complainants.
R. H. McCarter, for defendants.
EMERY, V. C. This bill is filed by the two next of kin of Bernard McMahon, deceased, against Jacob Weart, his administrator against the F. O. Mathieson, etc., Company, a debtor of the estate, and F. O. Mathieson, who has procured assignments of claims proved against the estate. The administrator having been cited to account by the Hudson orphans' court, on the application of one of the complainants, filed his accounts in that court, and filed therewith a petition to have the estate declared insolvent, under section 91 of the orphans' court act. Exceptions were filed to the account by one of the complainants, and in these proceedings the orphans' court directed that the hearing on the accounting should be stayed pending the application to have the estate declared insolvent, and proofs havebeen taken on both sides on this proceeding. The present bill is filed to enjoin the prosecution of the application to the orphans' court upon the petition for insolvency, and to require the settlement of the accounts in this court. The defendants have demurred, assigning specially the want of jurisdiction pending the orphans' court proceedings. The right of an administrator to make this application in insolvency to the orphans' court is expressly conferred by statute, and, unless it is clear that the facts now relied on to enjoin its prosecution cannot be considered by the orphans' court in adjudicating upon the application, this court should not interfere with the orphans' court. As it now strikes me, the orphans' court, under this ninety-first section, would have the right to refuse the application of the administrator upon sufficient grounds, either legal or equitable, and to apply the principles of equity in determining the issues raised. But, whether or not it has this general power, it would seem to be clear that the orphans' court has power to adjudicate upon the questions raised by the bill as to this application. One is whether the debts proved against the estate were barred by the statute of limitations at the time of the application, more than 20 years having elapsed between the time of proving the claims and the application in insolvency; another is whether the claims, after being proved, having been purchased at a discount by the debtor of the estate, or in its interest, and by connivance with the administrator for the purpose of offsetting against the debt, can now be allowed as claims for anything beyond the amount paid. These are questions which seem to me to be within the jurisdiction of the orphans' court to consider and determine on this application, and no sufficient reason is shown for ousting their jurisdiction. One other reason for transferring the jurisdiction, strongly urged, is that by the administrator's account, filed under' order of the court, it appears that the administrator has entered into an agreement with the Mathieson Company, the judgment debtor of the estate, agreeing to compromise the judgment which on February 24, 1894, the date of the agreement, amounted, principal and interest, to over $28,000, for $2,500, upon the condition that the administrator should charge himself with this amount in his account, and pay it if the account was confirmed; and that, if rejected as fraudulent and void by the orphans' court, and this order should be sustained on appeal, the agreement for settlement should be void. Counsel for complainant urges that the orphans' court has no authority or right to pass upon the validity of the proposed compromise. I agree with counsel in this view as to the power of the orphans' court to sanction a compromise in advance. If a compromise is actually made by an executor or administrator, and allowance is prayed in his account, then, on the question of allowing or disallowing the account, so far as relates to the compromise, the orphans' court has authority to act upon the question of the compromise; but when, as here, the agreement is practically an agreement to submit the question of its fairness to the orphans' court before it is carried out, I think it is clear that the orphans' court cannot thus adjudge in advance, nor advise the administrator; nor does it now strike me as certain that in this matter of adjudicating in advance the court of equity has any greater power. And if the orphans' court has not, as counsel claims, the power to adjudicate upon the validity of this compromise, it must be presumed that it will not exceed its power. If it should do so, the remedy will be by appeal, but there is no remedy in advance by injunction based upon the theory that it will proceed beyond its powers. All the questions relating to this application for insolvency seem to be fairly within the jurisdiction of the orphans' court, and can be as fairly disposed of there as here. So far, therefore, as relates to the right to proceed upon the petition, that must be decided in the court which has the statutory jurisdiction. So far as relates merely to the accounting of the administrator, no sufficient reason is shown by the bill why the account should not be settled in the orphans' court. On this ground, therefore, the demurrer is sustained.
The ground of demurrer that the complainants have no interest, because the estate, on their own showing, will or may be all exhausted in paying the debts, does not seem to me to be well founded. The principle laid down in Dunham v. Marsh (Err. & App., 1894) 52 N. J. Eq. 831, 31 Atl. 619, seems to control the case on this point. As next of kin entitled to the estate, if the debts are barred, as they claim, they have the right to question, not only the administrator's account, but also his application to have the estate declared Insolvent.