Fluck v. Lake

• Decision Date: 15 October 1896
• Citation: 35 A. 643,54 N.J.E. 638
• Parties: FLUCK et al. v. LAKE.
• Court: New Jersey Supreme Court

35 A. 643

54 N.J.E. 638

FLUCK et al.

v. LAKE.

Prerogative Court of New Jersey.

Oct. 15, 1896.

(Syllabus by the Court.)

Appeal from orphans' court, Hunterdon county; Chamberlain, Baker, and Kugler, Judges.

Exceptions were filed by Henry A. Fluck and Jacob R. Wert, executors of George A. Rea, deceased, to the account of W. Howard Lake, administrator pendente lite of said estate. From the decree rendered, exceptants appeal. Reversed.

The appellants claim that the decree is erroneous, because it does not charge the accountant a greater sum than $6,388.25 for 202 shares of the capital stock of the Lehigh Valley Railroad Company, which he sold in August, 1893, and does not charge him with a greater sum that $352.50 for interest upon moneys of the estate which he suffered to lie idle, or used for his private purposes, and because it allows him $625.97 for commissions as administrator, and allows to his counsel $280 for their services upon the hearings upon the exceptions which were filed to his account, and because it allows to the counsel of another exceptant than the appellants, Nora Closterhouse, $140.

John A. Bullock, for appellants.

John N. Voorbees, for appellee.

McGILL, Ordinary. The evidence shows that the par value of the stock of the Lehigh Valley Railroad Company was $50 per share; that in June, 1892, when the administrator, Lake, inventoried it and had its value appraised, it was worth $58.50 per share; that in the summer of 1893, a dividend or dividends having been passed, its value fell to 10 or 20 per cent. below par; that, during the summer of 1893, Lake repeatedly declared to one of the appellants that he did not propose to sell the stock, but would hold it, and turn it over to the permanent representatives of the estate; that in May, 1893, he contracted to purchase from one Casterline an hotel, at a place called High Bridge, for $10,000, $4,000 of which would be represented by a mortgage for that amount, subject to which Lake was to take the property, and $6,000 of which Lake was to pay in cash; that the time fixed for the performance of this agreement to purchase was the 1st of September, 1893; that, during July and August, Lake endeavored to borrow the $6,000 needed for the cash payment; that on the 29th of August, without previous conference with the appellants or either of them, the accountant, accompanied by his counsel, went to the office of the Lehigh Valley Railroad Company in Philadelphia, and there consulted two gentlemen, whom, I infer, were officers of the company, and after talking with them, and being advised by his counsel to sell the stock, went to a firm of brokers, and had it sold for $31.75 a share, which was its market value on that day; that although he had accounts, as administrator, in two banks in Flemington, he deposited the broker's check for the proceeds of the sale of the stock, on the 31st of August, in a bank at Lambertville, in his individual name, and on the same day drew upon that bank his check, to the order of himself, for $5,000, and had it certified by the bank, and on the next day, September 1st, took the certified check to Clinton, and there, at the Clinton National Bank, received for it that bank's check for $5,000, payable to his own order, and $500 in cash, which lastmentioned check he indorsed to Casterline as part payment for the hotel, and which $500 in cash he expended to Casterline in buying personal property attached to the hotel; that the remainder of the proceeds of the sale of stock was used by him for his own purposes.

The appellants' argument from these circumstances is that, failing to borrow the $6,000 he needed to enable him to carry out his agreement with Casterline, Lake determined to sell the stock he held as administrator, and use the proceeds of sale for that purpose; and at the same time, to put himself in position to claim that he exercised due care and an honest discretion in the sale, and thereby to justify his action, if it should thereafter be questioned, he took with him to Philadelphia his counsel, and with his counsel went to the railroad office, to inquire about the stock; also, that after the sale, in order that his use of the proceeds of his sale might not be known, he deposited the broker's check in the Lambertville bank, and took from that bank a check, which he exchanged at the Clinton Bank for its check and $500 in cash, and then gave the check of the Clinton Bank, and the cash, to Casterline.

The circumstances proved show a measure of clandestinity in the procedure of Mr. Lake which stands in marked antagonism to the truth of his professions of good faith and concern for the interests of his trust, and leads to the belief that his testimony is not to be relied upon. The inference which the appellants' argument invokes is, at least, strong enough to create serious doubt as to the good faith of the administrator in making the sale, and to call for the full and clear disclosure of the information and conditions which induced his action; not from his mouth alone, but by the oaths of other witnesses, who may show themselves to be entitled to belief. Here is presented an administrator pendente lite, who did not need to sell the stock to pay debts, who could not make distribution of the proceeds of such a sale (Benson v. Wolf, 43 N. J. Law, 78), selling without previous conference with the permanent representatives of the estate, for little more than half the inventory valuation of the stock, under circumstances of self-interest, which must have strongly influenced his judgment, and tended to sway him from fidelity to his trust, and then virtually secreting the fact of the sale by hiding away the proceeds thereof. To justify any sale of this stock, he should snow that he acted upon an honest and well-founded apprehension, predicated upon the exercise of reasonable care...