In re Schnabel

• Decision Date: 09 May 1911
• Parties: In re SCHNABEL.
• Court: New York Court of Appeals Court of Appeals

202 N.Y. 134

95 N.E. 698

In re SCHNABEL.

Court of Appeals of New York.

May 9, 1911.

Appeal from Supreme Court, appellate Division, First Department.

In the matter of the accounting of Katherine Schnabel, as administratrix. From an order of the Appellate Division (136 App . Div. 522,121 N. Y. Supp. 54), striking out an item with which the surrogate surcharged the account of the administratrix, a contending creditor appeals. Affirmed.

See, also, 137 App. Div. 923,122 N. Y. Supp. 1144.

Jerome Koehler, for appellant.

Edward Herrmann, for respondent.

GRAY, J.

Upon this appeal the contending creditor is appellant and the administratrix is respondent in a proceeding which was instituted by the former to compel the latter to account. The only one of the questions arising out of their controversy, which we need consider, is over the power of the surrogate to surcharge the account of the administratrix with a sum of money received by her upon a sale of personal property, made after the death of the intestate. The surrogate sustained the claim of the creditor and surcharged the account; but the Appellate Division struck out the item.

The intestate had conducted the business of a liquor saloon for some years, and some time before his death he duly executed and delivered to his wife, this administratrix, a bill of sale, which transferred to her the saloon fixtures and his interest in the business. After his death, she transferred her interest in the property to another, and upon this accounting her account naturally contained no reference to the transaction. Upon the trial before a referee, to whom the matter was referred, the facts respecting it were brought out. The referee found the fact of the making of the bill of sale; but he further found that it was not recorded, that there had been no change of possession, and that the consideration was nominal. Thereupon he found, as conclusions of law, that the bill of sale was fraudulent, and therefore void, as to the creditors of the decedent, and that the administratrix should be charged with the price received by her upon her subsequent sale of the property. The surrogate overruled her exceptions and confirmed the referee's report. Upon her appeal to the Appellate Division from the decree of the Surrogate's Court, it was held that the surrogate was without jurisdiction to hear and determine the question as to the validity of the bill of sale, and that, until competently set aside in a proper action, it was conclusive evidence as to the personal interest of the administratrix in the property.

I think that this determination was correct, and that the decree of the Surrogate's Court was properly reversed upon the exceptions. The appellant contends that the surrogate had the power to decide the question of fraud, inasmuch as there was a contest between the administratrix, who was accounting, and the petitioning creditor, respecting what was property of the estate . Section 2731 of the Code of Civil Procedure, upon which reliance is placed to support this contention, provides that, ‘where a contest arises between the accounting party and any of the other parties respecting property alleged to belong to the estate, but to which the accounting party lays claim either individually or as the representative of the estate, * * * the contest must,...