In re Meng

• Citation: 125 N.E. 508,227 N.Y. 264
• Parties: In re MENG. In re BISCHOFF'S ESTATE.
• Decision Date: 25 November 1919
• Court: New York Court of Appeals

227 N.Y. 264

125 N.E. 508

In re MENG.

In re BISCHOFF'S ESTATE.

Court of Appeals of New York.

Nov. 25, 1919.

In the matter of the judicial settlement of the account of James S. Meng, executor of the estate of Henry Bischoff, deceased, with respect to a fund recovered as damages for negligence causing the death of the testator. From an order of the Appellate Division (188 App. Div. 69,176 N. Y. Supp. 290), affirming a decree of the Surrogate's Court (96 Misc. Rep. 126,159 N. Y. Supp. 535), settling the account of James S. Meng, as executor, Elizabeth Bischoff and such executor appeal.

Reversed.

Pound, J., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Samuel Seabury, of New York City, for appellant James S. Meng.

Francis M. Scott, of New York City, for appellant Elizabeth Bischoff.

Morgan J. O'Brien, Jr., of New York City, for respondent Morgan J. O'Brien, Jr., special guardian.

COLLIN, J.

This proceeding was an accounting in the Surrogate's Court of New York County by James S. Meng, as executor of the last will and testament of Henry Bischoff, deceased. It was instituted December 22, 1915, by the selling of the petition and account of the executor, under section 2720 of the Code of Civil Procedure. The estate involved was the sum of $82,036.70, the avails of a judgment recovered, under sections 1902-1905 of the Code of Civil Procedure, as damages for negligence causing the death of the testator. The avails were paid to the executor December 2, 1915. The decree of the surrogate surcharged the account in the sum of $11,211.45, and directed a distribution of the distributable amount between the testator's widow and his two infant grandchildren. The executor appealed from the part of the decree surcharging the account. The widow appealed from the part directing that the distribution should be shared with the grandchildren. The Appellate Division affirmed the decree.

The decree surcharging the account was based upon the facts: The executor, in retaining a firm of attorneys to prosecute the action, contracted that the compensation for their services in the action should be contingent upon and be one-third of the recovery. He paid them from the avails of the judgment, pursuant to the contract, the sum of $27,345.56, with which payment he credited himself in his account. The fair and reasonable value of their services, as found by the surrogate, was $15,500; their disbursements were the sum of $634.21. The executor therefore should have paid them the sum of $16,134.21 only.

[1][2] We sustain the decree in the surcharge of the account. The surrogate had not the power to allow the executor for any expenditure by him in the action a credit exceeding a just and reasonable sum. When the action was commenced the statute provided:

‘The compensation of an attorney or counselor for his services is governed by agreement, express or implied, which is not restrained by law. * * *’ Judiciary Law (Consol. Laws, c. 30) § 474.

When the accounting proceeding was instituted, section 1903 of the Code of Civil Procedure contained the provision that the reasonable expenses of the action to recover damages for a death wrongfully caused may be fixed by the surrogate upon the judicial settlement of the account of the executor or administrator maintaining the action, and may be deducted from the recovery. In this jurisdiction, and others, a contingent fee contract made between client and attorney in retaining the latter is, in the absence of legal fraud, valid. Matter of Fitzsimons, 174 N. Y. 15, 66 N. E. 554;Morehouse v. Brooklyn Heights R. R. Co., 123 App. Div. 680,108 N. Y. Supp. 152, affirmed 195 N. Y. 537, 88 N. E. 1126. When the contract is between the executor or administrator under section 1902 and an attorney, for the purpose of prosecuting or maintaining an action under the section, the law imposes the additional condition that as to the damages recovered, or, as to the beneficiaries, the contract is subject to the power of the court to determine the reasonable or suitable compensation or expenditure to the attorney which may be deducted from the recovery. The contract, as a matter of law, through implication, includes that rule of law. Matter of Reisfeld, 227 N. Y. 137, 124 N. E. 725;Lee v. Van Voorhis, 78 Hun, 575, 29 N. Y. Supp. 571, affirmed 145 N. Y. 603,40 N. E. 164, upon the opinion of Haight, J., below. In the accounting of the executor, the surrogate shall not adjudge the contract, free from legal fraud, invalid. Whether the contract was at the time it was made fair and reasonable in the matter of compensation to the attorney depends, in the accounting to the beneficiaries, upon whether or not the compensation it provided and would effect is, in the judgment of the court, under all the conditions including the uncertainty on the part of the attorney of receiving compensation, a suitable and reasonable expense in the action. The authority of the executor or administrator, defined and delimited by the statute, did not empower him to expend or agree to expend for the compensation a greater sum. An act of his transcending the authority may cause him personal loss or liability-a proposition not presented by the record and with which we do not deal. His contract, made under whatever conditions, is not, as to the beneficiaries of the fund or the court, the test or gauge of the reasonableness of an expense. It was the duty of the executor to employ counsel to prosecute the action. The executor was bound to carry on the litigation, in all respects, with reasonable diligence, prudence, and good judgment. The beneficiaries were entitled to the distribution of the recovery, diminished by the expenses warranted by the statute, including those for counsel, in an amount adjudged by the surrogate to be reasonable for the services rendered. We have considered the other several claims of the parties concerning the allowances, or disallowances, by the surrogate, reviewable by us, and deem discussion of any of them unnecessary.

[3] The decree directed the division of the distributable recovery in equal shares among the widow and the two infant grandchildren of the testator. The widow claims the entire thereof. A statement here of additional facts is necessary. The testator was injured and died March 28, 1913. He left him surviving a widow and, as his only next of kin, the two infant grandchildren, the children of a deceased daughter. At the time of his death, and at all times subsequent to September 1, 1911, section 1903 of the Code of Civil Procedure contained the provisions:

‘The damages recovered in an action, brought as prescribed in the last section, * * * are exclusively for the benefit of the decedent's husband or wife, and next of kin; and, when they are collected, they must be distributed by the plaintiff, * * * as if they were unbequeathed assets, left in his hands, after payment of all debts, and expenses of administration; subject however to the following provisions, to wit: (1) In case the decedent shall have left him surviving a wife or husband, but no children, the damages recovered shall be for the sole benefit of such wife or husband.’

Those provisions became as we have quoted them through an amendment taking effect September 1, 1911, Laws of 1911, c. 122. Prior to the amendment of 1911 the part of the section we have quoted was:

‘The damages recovered in an action, brought as prescribed in the last section, are exclusively for the benefit of the decedent's husband or wife, and next of kin; and, when they are collected, they must be distributed by the plaintiff, as if they were unbequeathed assets, left in his hands, after payment of all debts, and expenses of administration.’

The section as it was prior to the amendment of 1911, in connection with other statutes, which we need not quote, would, without question or dispute, have entitled the grandchildren here to share in the distribution.

The surrogate decided that the proper construction of the word ‘children,’ in the amendment of 1911-‘in case the decedent shall have left him surviving a wife, or a husband, but no children, the damages recovered shall be for the sole benefit of such wife or husband’-signified children generally in a direct line, and was not limited to immediate offspring, and therefore the two grandchildren were beneficiaries. The Appellate Division decided that the word had its primary sense of comprehending only the immediate offspring of the decedent and therefore did not include the grandchildren, but decided additonally that the amendment of 1911 violated, in the instant case, section 18 of article 1 of the Constitution of the state, adopted in 1894, as follows:

‘The right of action now existing to recover damages for injuries resulting in death, shall never be abrogated; and the amount recoverable shall not be subject to any statutory limitation’

-and therefore did not change the section as it was prior to the amendment, under which the grandchildren were beneficiaries.

We approve of the decision of the Appellate Division that the word ‘children’ in the amendment did not include the grandchildren, and the reasoning which supports it. The language of the sections (1902-1905) relating to the action is not in any aspect or application inimical to the primary and common meaning of the term ‘children’ as immediate descendants, or indicative that the term should have the very comprehensive meaning of descendants generally. The reasoning of Mr. Justice Shearn, concerning this question, in the court below (Matter of Meng, 188 App. Div. 69, 77,176 N. Y. Supp. 290, 296), is sound and comprehensive and we do not repeat or enlarge upon it. The established rule is there well stated:

‘The word ‘children’ is always considered to have been used in its primary sense, and to exclude grandchildren, unless there be something in the document in which it occurs, whether statute, will, or contract, which requires a different...