In re the Estate of Hill , 7 N.Y.S. 328 ( 1889 )

The Surrogate.

The exceptions relate to three items allowed by the referee; (1) $250 paid for legal services; (2) $120.75 paid for costs, and disbursements in a suit against the administrators; (3) a claim originally owned by one of the administrators, but subsequently assigned to his daughter. For thirty years prior to her decease, the decedent lived with the administrators who are husband and wife; the latter being the sister of the deceased. Subsequent to her decease, one of the administrators (the husband) presented a claim to himself and his wife as administrators, and subsequently assigned the same to his daughter. The matter was referred as a disputed claim under the statute, and the judgment rendered in favor of the plaintiff. This judgment exceeds in a considerable sum the entire value of the estate. The contestant claims that it was obtained collusively, and is void, and that the claim, being that of the administrator, could not be referred, but must be proved before the Surrogate on the accounting. The only testimony taken before the referee was that of the plaintiff, and her father and mother, the administrators. It appears from the testimony given by the assignee of this claim, the daughter of the administrator, that she was unaware of the fact of assignment, paid no consideration therefor; and knew nothing whatever with reference thereto. It is clear therefore, that the assignment was merely colorable.

The apparent defence of the Statute of Limitations was not interposed to the claim, or any part thereof, and all the material testimony that would in any way be relied upon to sustain the claim was susceptible to objection under section 829 Code Civil Procedure. Had the former defence been interposed, I am of opinion that certainly the greater part of the claim would have been rejected; and, if the testimony is considered as though the latter objection had been insisted upon, the court would find nothing upon which to base a judgment in favor of the claimant. Reading the testimony taken upon the reference of the claim, and comparing the same with that taken on the accounting herein, I am forced to conclude that the judgment was obtained in such a manner that its authority will not be recognized in this proceeding. “ It has become an established rule, settled in the administration of justice, that where a judgment has been fraudulently obtained, it may be either set aside by an action brought for that object, or the judgment itself may be defeated by a defence to any legal proceeding taken upon its authority.” Richardson v. Trimble, 38 Hun 410, and cases cited. It is not necessary to bring an action to avoid the record. Mandeville v. Reynolds, 68 N. Y. 528. See also Ward v. Town of Southfield, 102 N. Y. 287. In Richardson v. Trimble, supra, the term “fraud” is defined by Justice Daniels, writing the opinion of the General Term as follows: “ Fraud, in the sense of a court of equity, properly includes all acts, omissions and concealments which involve a breach of legal or equitable duty, trust or confidence justly reposed) and are injurious to another, or by which an undue and unconscientious advantage is taken of another.” 1 Story Eq. Jur., § 187.

The facts I have briefly recited are established by the evidence, and constitute a valid defence to so much of this proceeding as is based upon the authority of the judgment. The failure of the administrators to interpose the available legal defences was such a neglect of duty as to charge them with the damage occasioned to the estate by such failure.

An executor or administrator is bound to set up the bar of the Statute of Limitations, and will not be allowed in his accounting any sum paid upon a debt which at the time of its payment by him was barred by the statute. Butler v. Johnson, 111 N. Y. 204. The other items which are the subject of exception were for legal services and costs in connection with the reference of the alleged disputed claim of the administrator. I think they should stand or fall with the determination of the main exception. Exceptions to the referee’s report sustained.