Fidelity & Deposit Co. of Maryland v. Moshier
| Decision Date | 23 March 1907 |
| Citation | 151 F. 806 |
| Parties | FIDELITY & DEPOSIT CO. OF MARYLAND v. MOSHIER et al. |
| Court | U.S. District Court — Northern District of New York |
Risley & Love, for complainant.
W. A Matteson, for defendants Sarah M. Moshier and Albert C Boshart.
Charles Moshier, of Oneida county, N.Y., engaged in business as a tea, coffee, and spice merchant at Utica, N.Y., died intestate at Utica aforesaid September 18, 1899. He left him surviving a widow, Carrie H. Moshier, and James C. Moshier William R. Moshier, Mae Moshier, and Floyd J. Moshier, his children and his only heirs at law and next of kin, all of whom are defendants herein. He also left him surviving his father and mother, Sarah M. Moshier and John G. Moshier. Thereafter and subsequent to the writing of the bond in suit and in December, 1899, said John G. Moshier died, leaving a last will and testament, which was duly probated, and the defendant Albert C. Boshart was thereupon duly appointed executor thereof and now is such executor. At the time of his death Charles Moshier was indebted to his father, said John G. Moshier, in the sum of about $5,000, and to his mother, said Sarah M. Moshier, in the sum of about $11,000. He was also largely indebted to other creditors. I do not find in the record any inventory of the estate of said Charles Moshier or any statement of its actual value at the time of his death. Therefore it is impossible to ascertain the exact or even approximate interests of the parties at that time. Shortly after the funeral services of said Charles Moshier, at a conference of certain of the interested parties, a statement was read setting forth the value of the personal as $24,000; of the equity in real estate as $22,000; total, $46,000; and of the indebtedness, aside from liens on real estate, as $29,500; other contingent liabilities payable from personalty, and which were paid, $1,806.25. These personal assets were said to consist of good accounts $15,000; stock, fixtures, etc., $9,000; total $24,000. The liabilities were stated to be accounts payable $9,000 and bills payable $20,500, and contingent liabilities which proved to be $1,806.25. It was known, therefore, to the parties present that the liabilities of the intestate, not including liens on real estate, exceeded the personal estate by $7,306.25, and that, if the estate was settled in due course by converting the personal into money and applying it to the payment of the debts and expenses, it would only pay a percentage, and that the real estate must be resorted to in due proceedings.
At the conference referred to there were present said John G. Moshier and Sarah M. Moshier, the largest creditors, said Carrie H. Moshier, and said James C. Moshier, one H. C. Sholes, the attorney for James C. Moshier, George M. Orton, bookkeeper, and one James B. Phillips, the father of Carrie H. Moshier, and others. It was then and there, in substance, understood and agreed that, instead of closing up the business in due course and making a legal settlement of the estate in accordance with law, the business should be run for an indefinite period, which included the purchase of property in the business and the sale of same even on credit, there being no limitation, and the general understanding being to continue it in the same manner it had been conducted by the intestate in his lifetime; that the outstanding accounts should be collected and the debts paid, except those due and owing to said John G. Moshier and Sarah M. Moshier, which were to wait. This was the proposition of said John G. Moshier, and was expressly assented to by Sarah M. Moshier. He expressly stated he wanted the 'boys,' referring to the children of the intestate, to have the business. It is also true that it was understood and assented to that the administrators of the estate, when appointed, should thus continue and run the business in the interest of the sons, and that the widow, Carrie H. Moshier, and the eldest son, James C. Moshier, should be appointed administrators. It is evident that here was an understanding and agreement to put this personal estate into the hands of administrators, and that they should manage and conduct and continue it, not in accordance with law, not in the proper discharge of their duty as such administrators, not in the interest of all the creditors, but in the interest of those creditors not a party to the agreement and of the sons. Thereafter application was duly made for the appointment of said Carrie H. Moshier and James C. Moshier as administrators of said estate, and they, under their hands and seals, on the 26th day of September, 1899, applied to the complainant to write and execute for them as such administrators and as their surety a bond in the penal sum of $40,000, conditioned as required by the laws of the state of New York. This application contained certain promissory statements, among others, in substance, that the funds of the estate would be deposited to their credit as administrators; that the funds would not be invested, but, 'as soon as notice to creditors expires, will be used so far as necessary to pay debts and balance held for distribution at end of year. ' As to existing facts, they stated the value of accounts and notes to be $12,000; of stock and machinery to be $8,000; real estate to be $50,000. They gave the liabilities of the estate as 'accounts in said business about $10,000; notes about $4,300; mortgage on real estate $18,000. ' It is evident that, in view of the knowledge they had gained at the interview referred to, here were materially false statements and representations, unless it was intended and understood and agreed the claim of the father and mother of the intestate were to be excluded as liabilities. All the representations and statements were certified to be true. No mention was made of the arrangement, understanding, and agreement above stated, and that agreement was not made known to the Fidelity & Deposit Company, the complainant here, at any time until during the accounting. It is quite apparent that had it been made known the complainant would not have written and issued the bond in question. It was the concealment of a material fact. The applicants also stated that it would 'deposit all moneys and funds belonging to the estate now on hand, and also such moneys and funds as may come into our hands, from time to time, during the administration of said estate, from any source whatever, in the bank or banks aforesaid; such money to be withdrawn only upon checks in our fiduciary capacity for the purposes connected with the administration of the trust.'
Instead of administering the estate in the mode and manner required by law, the administrators ran the business as though it had been their own individual property, and bought and sold and gave credit, and acted in conformity with such agreement and understanding, until December, 1900, when the business, not including accounts, was sold by them to said Carrie H. Moshier and James C. Moshier, the administrators, said William R. Moshier, and one Judson C. Phillips, for the sum of $6,000, its alleged full value. This included the stock, fixtures, and machinery. The inventoried value of the stock, fixtures, and machinery at the death of the intestate was $6,943.86. The administrators acted on the understanding had and agreement made and carried it out to the best of their ability, and Boshart and Mrs. Boshart and Mrs. Shumway had actual knowledge of the agreement and of what was being done under it. The administrators paid off all the debts owing by the intestate at the time of his death, except the said claims of said John G. Moshier and said Sarah M. Moshier. All the profits made and money received was used to pay creditors at the death of the testator and the debts incurred in running the business. Said John G. Moshier died in January, 1900, but before his death, and in November, 1899, he transferred the said note of about $5,250, which he held against said estate and before mentioned without consideration, to Albert C. Boshart, his son-in-law, who thereafter became the executor of his last will and testament. Boshart was to collect the note and pay one half to his wife, who was present when the agreement as to running and continuing the business was made, and the other half to a Mrs. Shumway, both of whom were daughters of said John G. Moshier. Hence their facilities for knowledge and actual knowledge. In May, 1901, said administrators, Carrie H. Moshier and James C. Moshier, made and filed their account as such in the Surrogate's Court of Oneida county, N.Y. The complainant here was cited to attend such accounting. The account as rendered was objected to in various respects by Boshart and Mrs. Moshier as creditors. They claimed, amongst other things, that the estate sold at the time of the sale, in 1901, was of greater value by $2,326.64 than the price paid by the purchasers, and charged to the administrators in the account. The surrogate surcharged their account with said sum of $2,326.64, and charged them, including an alleged 'profit' made in the business, with $22,658.17 and credited them expenses $2,031.18, debts of intestate paid $16,132.19, and premium paid on bond $125, in all $18,288.37, thus leaving or showing a balance in their hands of $4,369.80. Of this sum they are ordered, adjudged, and decreed to pay to said Sarah M. Moshier on account of her claim on said note held by her of about $11,000 the sum of $1,968.05, and to said Albert C. Boshart on account of his claim on the said note of about $5,000, the sum of $742.83; also counsel fee $660.79.
It is claimed that the complainant has suffered no damage or loss by reason of the concealed agreement for the maladministration of the estate, inasmuch as the...
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