In re the Judicial Settlement of the Account of Henshaw , 37 Misc. 536 ( 1902 )

Ohuech, S.

— On tbe judicial settlement of tbis account objection is made to tbe decree providing for settlement and distribution, on tbe part of certain persons by tbe name of Oving-ton, claiming to be creditors of tbe deceased. Tbe sole question is one of law, and arises from tbe following questions:

Tbe deceased in ber lifetime made a lease to tbe firm of Ovington Brothers of certain real estate in tbis State. Said lease contained tbe following proviso: “ Tbe party of tbe first part hereby agrees to pay for tbe buildings remaining on tbe premises at tbe expiration of tbe term hereby created, the amount to be so paid by tbe party of tbe first part unless otherwise agreed upon shall be determined by arbitrators to be chosen as. follows: Tbe party of tbe first part shall choose one person, tbe parties of tbe second part a second and the two so chosen shall choose a third, and tbe decision of such arbitrators shall be final and binding as to tbe amount to be paid.”

Tbis lease was executed in 1880, and was executed in pursuance of a proviso contained in a previous lease made by. tbe testator’s grantor, which gave to tbe Ovington Brothers the power of renewal, and also containing a similar covenant. The building was destroyed by fire in 1883. Thereupon an agreement was made between tbe decedent and Ovington Brothers extending tbe term of tbe lease until May 1, 1904. After tbis extension bad been given, tbe lessees, who owned premises adjoining tbe demised premises, erected a new building, which covered tbe entire property, there being no division line between tbe property of which tbe Ovington Brothers bad tbe fee and that which they held by lease.

Tbe Ovington Brothers have served .a claim upon tbe executrix, stating that under tbis covenant in tbe lease tbe value of tbe buildings so erected is $40,000, and that there should be no distribution of tbe estate until tbe claim is paid or sufficient money is set aside to pay same when it becomes due.

It appears that there is over $20,000 of personalty and also about tbe same amount in real estate in tbe decedent’s estate.

Tbe Code provides, under certain circumstances, that the accounting party must retain in his hands the probable amount of a claim so as to protect a creditor. The exact character of such claim, however, is as follows: (Section 2745) “Where an admitted debt of the decedent is not yet due ” ; then follows a provision as to the form of decree to make payment when the same becomes due.

This case is certainly not within the class of eases contemplated by the above section of the Oode. That section of the Code obviously was intended to apply to a present debt, the amount of which could not be disputed, but where, as stated in the Code, it was not yet due, and the debtor had a period of time within which to pay the same. This manifestly was intended to apply to a case of a bond or note, where the validity of the bond or note was not questioned, but where, by its terms, it could not be paid until some future date, but it is evident from the language of the section that at the time the matter was presented to the court two facts must certainly appear, namely:

First. That it was a debt.

Second. That the amount of it was admitted.

The liability of the testatrix, under the contract in question, does not fall within this class of cases provided for by the Code. In the first place it is not a. debt. It is simply an executory contract by which, at a certain time, the testatrix might have been liable to pay a certain amount to the lessees. Before the testatrix could have become liable to the lessees it was necessary that there should be “buildings remaining on the premises at the expiration of the term,” namely: May 1, 1904.

It is entirely possible and by no means improbable that this building may, like its predecessor, be destroyed by fire between now and the first of May,-1904; in fact, it might be destroyed by fire on ,the last day of the term. If this contingency should arise absolutely no liability would attach to the testatrix or her estate, as there would be no buildings remaining on the premises for which she was liable to pay.

Tbe testatrix, therefore, is not indebted to tbe Ovington Brothers; tbe mere fact that they have not disputed the contract does not mate it an admitted claim within tbe language of this section.

Tbe next question under consideration is: Was this a covenant running with tbe land ? or is it a mere covenant of payment upon which only a personal liability could be enforced against tbe covenantor.

Upon this matter there is certainly nothing in tbe lease in question which by any specific terms provides that this shall be a covenant running with the land or indicating any intention on the part of the lessee to do other than create a personal liability on the part of the lessor to pay for the value of these buildings. In the absence of any such express proviso is there anything in the contract in question from which such an intention can be gathered ? The general theory of contracts of character similar to this is that where there is no specific provision making it a covenant running with the land that then it can be admitted as a personal covenant only. Spencer’s Case, 5 Coke, 16; Tallman v. Coffin, 4 N. Y. 134.

There is no doubt, from the entire tenor of this matter, that the parties did not intend to make this proviso in the lease otherwise than ¡a personal covenant.

It certainly will not be contended that the lessees get any greater rights against the testatrix’s heirs-at-law and legatees by reason of the testatrix’s death than they would have had against the testatrix if she had lived. If the testatrix lived she certainly could have disposed of her real and personal estate by gift, or otherwise, and they could not bring any action to restrain her from disposing of the same on the ground that at the expiration of their lease the lands or the property would be insufficient to pay the amount of money which she would be liable to pay under this covenant.

I, therefore, see no reason why any decree should be entered herein which would result in preventing the settlement of this estate until the expiration of this lease and until the measure of liability, if any, which the Ovingtons may have against the testatrix shall be determined.

It seems to me, therefore, unnecessary to consider the question as to whether the legacies provided for in the will are a charge upon the real estate or not.

Let a decree be entered, judicially settling the accounts, as presented, and directing distribution.

Decreed accordingly.