In re Estate of Stewart

• Decision Date: 13 October 1890
• Docket Number: 372
• Citation: 137 Pa. 175,20 A. 554
• Parties: ESTATE OF JESSE STEWART, DECEASED
• Court: Pennsylvania Supreme Court

20 A. 554

137 Pa. 175

ESTATE OF JESSE STEWART, DECEASED

No. 372

Supreme Court of Pennsylvania

October 13, 1890

Argued February 24, 1890

APPEAL BY J. F. CONNOLLY ET AL. FROM THE ORPHANS' COURT OF LACKAWANNA COUNTY.

No. 372 January Term 1889, Sup. Ct.; court below, number and term not given.

On June 30, 1884, Dr. Thomas Stewart, executor of the will of Jesse Stewart, deceased, filed his first account, which afterwards passed in due course to final confirmation. On January 14 and June 20, 1885, petitions were presented by distributees interested in the estate, praying for a review of the account. A citation having issued to the accountant, and answer thereto filed, the court made an order opening the decree of confirmation, and referring the account to Mr. J Alton Davis, as auditor.

Among the credits claimed in the account as filed, and objected to by the exceptants before the auditor, was one stated in the following words: "By assignment of judgment $5,000." The following facts relating to that credit were shown:

On May 1, 1877, Jesse Stewart, the testator, who was the father of the accountant, sent to Judge Handley, of Scranton, the sum of $9,276.49, for investment. Of this sum, Judge Handley invested $5,000 in a bond and mortgage given by one Melvin to Annie C. Loag, taking an assignment thereof from Annie Loag to Jesse Stewart; $3,500 in a judgment against John Gibson, and the remainder, $776.49, in notes of one Beardsley. In October, 1877, Jesse Stewart wishing to have $1,400, that amount was sent to him by Judge Handley, who took from him an assignment of the Gibson judgment to that extent. This reduced the interest of the testator in these investments to $7,876.49, upon which amount interest was regularly remitted to him by Judge Handley until July 1, 1881. Prior to the latter date, however, the securities had been changed by Jesse Stewart's direction. Certain notes discounted in bank, given by the accountant and indorsed by the testator and Judge Handley, having been dishonored, were paid by Judge Handley and charged to the Jesse Stewart fund. These payments used up the Gibson judgment and the Beardsley notes, and in addition thereto the sum of $1,780.96 of the Loag mortgage. On March 25, 1880, that mortgage was assigned by the testator, to the extent of $3,000, to John Rudy, as collateral security for a loan made by him to the accountant. The loan and security were afterwards transferred by Rudy to R. Crippen, and were paid to Crippen, after the testator's death, by Judge Handley, and charged against the testator's funds. Thus, all the funds invested by Judge Handley for the testator were used up, except a balance of $219.04. This balance, after the testator's death, was paid in cash to the accountant by Judge Handley.

Jesse Stewart, the testator, lived at Belvidere, New Jersey.

The accountant lived at Scranton. On June 18, 1881, the testator, then about eighty-eight years of age and in feeble health, came to Scranton in response to a telegram from his son, the accountant, and remained there for several days. On the day of his arrival, he received from the accountant a judgment note for $4,000, as security for his past indorsements for the latter. The testimony before the auditor tended to show that, two days later, he made an assignment to the accountant of the debt secured by the Loag mortgage and the judgment bond accompanying the same. In view of the use that had been made of the funds invested in that mortgage, to take up and secure debts of the accountant, the effect of such assignment, if absolute, would practically be a release of the accountant from debts due by him to his father.

On November 25, 1881, the testator died at Belvidere, N.J., leaving a will whereby he appointed his two sons, Jesse and Thomas, as his executors. His will was duly proved in Warren county, N.J., on December 23, 1881. On the same day letters testamentary were granted to the executors therein named, who filed an inventory and appraisement of the estate, containing the following item: "Amount of money received by the Hon. John Handley and Thos. Stewart, M.D., agents of Jesse Stewart, Sr., $9,276.49." On June 27, 1883, ancillary letters were granted to the accountant by the register of wills of Lackawanna county, his co-executor, Jesse Stewart, Jr., declining to act in Pennsylvania; and on June 30, 1883, the accountant filed an inventory with said register, the second item therein being stated thus: "Mortgage and judgment notes amounting to $12,000, upon which there is due thereon the sum of $7,876.49 with interest on the same from the 10th day of July, 1881; total value, $8,805.91."

In the account in question before the auditor, the accountant had charged himself with the whole amount of the Pennsylvania inventory. The principal sum of $7,876.49, mentioned in the item of said inventory above quoted, included the Loag mortgage; and the credit in the account of $5,000 which was excepted to, was taken in pursuance of a claim that the debt secured by said mortgage had been given to the accountant by the assignment in June, 1881, above mentioned.

The auditor, in his first report, surcharged the accountant with $5,000, holding that, by putting into the inventory the amount of the Loag mortgage, he was estopped from claiming title thereto. Exceptions to this ruling were sustained by the court, ARCHBALD, P.J., citing Bell's Est., 25 Pa. 92, and distinguishing Miller v. Springer, 70 Pa. 269; s.c. 88 Pa. 203; and the report was re-committed to the auditor for a finding upon the question whether or not the alleged assignment was in fact made. In his second report, the auditor found adversely to the accountant upon this question, and accordingly recommended that the surcharge of $5,000 be allowed to stand.

Upon exceptions to this report, the court, ARCHBALD, P.J., overruled the auditor's finding upon the question respecting the making of the assignment, but declined to give effect to the assignment as an absolute transfer, and confirmed the surcharge, for reasons stated in the opinion, which was, in part, as follows:

But the fact of the assignment, and the effect to be given to it, are two separate and distinct things. It is in this connection that the facts and circumstances which are so forcibly arrayed by the auditor against the assignment come in, and show that an absolute and unqualified transfer of this judgment to the accountant to hold as his own, could not have been intended and cannot now be sustained.

In the first place, then, it is not pretended that the transfer was for value; it is simply claimed as a gift from the decedent to his son. Now, not only is the evidence of this unsatisfactory in itself, but the subsequent conduct of the accountant with respect to this security entirely dissipates such an idea. . . .

But, going back to the evidence of Judge Handley, how did it come about, if he knew that the Loag mortgage had been given to Dr. Stewart, that on July 26, 1881, he paid to Jesse Stewart the interest on this security for the six months preceding? Or, again, in August, 1882, after the death of the decedent, when Daniel LaBar and Jesse Stewart, Jr., came to Scranton for the express purpose of seeing how the estate stood, and in company with Dr. Stewart went to the office of Judge Handley, how was it that, in the detailed examination of books and accounts there gone into, no mention was made of the accountant holding an assignment of the Loag judgment? Or, still again, in June, 1883, when Dr. Stewart took the appraisers to the same office, to obtain from Judge Handley a statement of the affairs of the estate for the purpose of making an inventory and appraisement of it, why, if this same security was then, to the knowledge of the witness, owned by the accountant, was it given to the appraisers as part of the estate? I can find no satisfactory answers to these questions anywhere in the case; and while it is true that the accountant is not answerable for what Judge Handley did or did not do, I agree with the auditor that these acts may well be weighed against his testimony as a witness, and that the latter is to such extent discredited. I do not mean in this to suggest anything derogatory to Judge Handley. The circumstances simply show that he must be mistaken.

This conclusion is emphasized when we come to consider the conduct of Dr. Stewart himself, with respect to this security. On a trip to Belvidere in December, 1881, about a month after the death of his father, he stated to Daniel LaBar, who was there to become surety for him as executor of the estate, that the property at Scranton amounted to nine thousand two hundred and odd dollars, besides some bank stock. It was at this time that the appraisement in New Jersey was made, and included therein, in funds, the following item: "Amount of money received by the Hon. John Handley and Thos. Stewart, M.D., agents of Jesse Stewart, Sr., $9,276.49." The inventory containing this was signed by Dr. Stewart, and proved before the surrogate by his oath, with that of the other executor and one of the appraisers. The amount so given necessarily included the $5,000 Loag judgment, and we have thus a solemn admission confirmed by the oath of the accountant, that it constituted a part of the decedent's estate.

We have already noted that Dr. Stewart was present at Judge Handley's in August, 1882, when Daniel LaBar and Jesse Stewart, Jr., went over in detail the affairs of the estate, and that no claim was then made to this judgment. We also have a reference to the same investigations in a somewhat remarkable letter from Dr. Stewart to his co-executor, in November, 1982:

"SCRANTON Nov. 14, 1882.

"MR. JESSE STEWART, Stewartsville.

"Dear Sir: . . . You ask me in your...