In Re Witner's Estate.
| Decision Date | 20 April 1943 |
| Citation | 31 A.2d 769 |
| Parties | In re WITNER'S ESTATE. |
| Court | New Jersey Prerogative Court |
COPYRIGHT MATERIAL OMITTED.
Appeal from Orphans' Court, Essex County.
Proceedings in the matter of the estate of Michael Winter, deceased. From an order disallowing exceptions to the report and account of Gertrude Mentz, as executrix, and an order fixing the compensation of the master who heard the exceptions and a decree of insolvency, Joseph M. Mentz and his wife, Ann Mentz, together with Benjamin Solovay, appeal.
Order in accordance with opinion.
1. Letters testamentary have no extraterritorial force and confer no authority on the executor to administer on property outside of the state of his appointment.
2. An ancillary administrator, immediately upon appointment and qualification, is vested with title to assets of the decedent within the jurisdiction of his appointment. The domiciliary representative is not accountable for such assets.
3. Executrix abandoned an action which her testator had begun. In order to surcharge her, it must appear that the cause of action was an asset of real value, and that a reasonable person, using ordinary care, would have continued the prosecution and not abandoned the claim.
4. Persons associating themselves together to carry on business for their mutual profit, create a partnership though the legal title to the firm property is vested in one of them, or in a third person as trustee, where the associates, though called cestuis que trustent, are principals and control the property and business and the trustee is their agent bound to obey their instructions.
5. Where there is no association among the beneficiaries and the trustee has, besides legal title, the sole power to manage the property, there is a trust and not a partnership.
6. A declaration of a business trust gave full power of management to the trustees and none to the beneficiaries but did give the latter power to require the trustees to amend the declaration. Held, to be a trust.
7. A trustee of a business trust who signs a promissory note with the name of the trust, by himself as president, and who is authorized so to do, is not personally liable on the note. R.S. 7:2-20, N.J.S.A. 7:2-20. Within the meaning of the statute, the trustee is a representative and the trust estate is his principal.
8. A trustee is personally liable on the contracts which he makes as trustee, unless from the terms of the contract itself, or from the surrounding circumstances, it appears to have been the intention of the parties to exempt the trustee from personal liability.
9. Where an attorney at law recovered judgment against executrix for services rendered to both testator and executrix, and the judgment does not specify what sum was awarded for services to testator and what for services to executrix, the whole amount of the judgment is a general, unpreferred claim and not an administrative expense.
10. Where executrix, before expiration of the time for filing claims, turns over the assets to a creditor, she acts at her own risk and is accountable for all assets which came into her hands including those turned over to the creditor.
11. She is chargeable with interest at such rate as it equitable in the circumstances shown.
12. On a promissory demand note, which does not mention interest, interest does not run until demand is made either specially or by the commencement of an action.
13. When an estate is insolvent, creditors of the same class much be paid pari passu. This rule applies where an estate is administered in several jurisdictions.
14. A creditor who receives a dividend in one jurisdiction will not be allowed to share with other creditors in another jurisdiction until they have received the same proportionate amount of their claims that he has already been paid.
15. A New Jersey creditor received from the administrator in Germany a dividend consisting largely of mortgages. Collection of the mortgages was prevented by a moratorium, and the export of capital was prohibited by decree. Held, that the actual value in New Jersey, and not the nominal amount of the dividend must be charged against the creditor in determining her share of New Jersey assets.
Joseph M. Mentz, of Newark, for appellants.
Arthur B. Seymour, or Orange, for respondent Gertrude Mentz, executrix.
George B. Astley, of Newark, for respondent Charles Winter, executor, etc., of Mary Winter, deceased.
BIGELOW, Vice Ordinary.
This is an appeal from three decrees or orders of the Essex County Orphans' Court, namely, an order disallowing exceptions to the report and account of Gertrude Mentz, as executrix of the will of Michael Winter, deceased; an order fixing the compensation of the master who heard the exceptions; and a decree of insolvency, all dated June 17, 1941. In January, 1933, the executrix petitioned the court to decree that the estate was insolvent. The following month, she filed a report of claims totalling $42,674, and an account of the estate which showed assets of $10,193 and expenses paid of $1,477. The appellants, Joseph M. Mentz and his wife Ann Mentz, together with one Benjamin Solovay, filed joint exceptions to the report of claims and account. The Orphans' Court reserved action on one exception, sustained one in part and disallowed the others.
The testator, Michael Winter, born in Germany, became an American citizen in 1880, spent a good deal of time in Germany, and had a residence at Stuttgart. One of his daughters married Markus Steble of that city. The last few years of his life, Winter made his home in Stuttgart and there he remarried and eventually died, June 22, 1929. His principal creditor, his sister-in-law, Mrs. Mary Winter, who was a resident of East Orange, N. J., promptly engaged lawyers of Stuttgart, on whose application the court in Munich took jurisdiction of the estate in August, 1929. The assets were administered by the public administrator, who made his final accounting July 16, 1932. The second, third and fourth exceptions relate to the estate in Germany.
Letters testamentary have no extraterritorial force and confer no authority on the executor to administer on property outside of the state of his appointment. While I am not sure whether Winter at the time of his death was domiciled in New Jersey or in Germany, I will assume in favor of appellants that the respondent executrix is his domiciliary representative and the public administrator in Stuttgart was ancillary. Immediately upon the appointment and qualification of the latter, he became vested with title to all the assets belonging to the decedent within the jurisdiction of his appointment. 34 C.J.S., Executors and Administrators, §§ 988 and 989, pages 1232 and 1242. Normand's Adm'r v. Grognard, 17 N.J.E.q. 425. The executrix is not accountable for the German assets and so these exceptions were properly overruled.
The eighth exception complains of the failure of the executrix to charge herself with a cause or causes of action against Esmond P. O'Brien and others.
Under date of March 25, 1920, Winter entered into a contract with ‘The Sugola Company of America, a New York trust estate’. It was signed:
‘Sugola Company of America, by
Esmond P. O'Brien
Trustees H. E. Brown
John T. Holmes'.
The appellants assert that O'Brien, Brown and Holmes, as well as George B. Russell and John M. Sears, were partners doing business under the name of Sugola Company of America, and this contention is the basis of the exception. The American company, as I will call the Sugola Company of America, and Winter each agreed to subscribe for $100,000 of the preferred stock of a new corporation to be organized under the title, Sugola Company of New Jersey, and to pay for the same at the call of the directors.
Under date of August 2, 1920, at Boston, Mass., O'Brien and the other four men named, executed a ‘Declaration of trust establishing the Sugola Company of America’. It is in the general form commonly used for a Massachusetts business trust. Paragraph 9 purports to exempt the trustees and each of them from personal liability upon promissory notes and other contracts executed in connection with the trust. It will be observed that this instrument was not executed until several months after the contract with Winter, but it recites that it is intended as a substitute for a declaration of trust executed by O'Brien, Holmes and Brown on February 7, 1920.
Early in 1921, the New Jersey company called for a 25 percent. payment on subscriptions to its preferred stock. Winter paid the call but the American company, in lieu of payment, gave to the New Jersey company its promissory note for $25,000. The note was signed:
‘Sugola Company of America by George B. Russell, President.’
The trust declaration authorized the trustees to designate one of themselves as president. The note endorsed on behalf of the New Jersey company by Michael Winter, as president, and by his son Frank Winter, as treasurer, was discounted at the Second National Bank of Orange. When it came due, it was not paid by the maker, or so the appellants allege, and instead it was bought by Michael Winter with his own funds and is still unpaid. The enterprise on which the parties had embarked was unsuccessful. Neither the American company nor the New Jersey company continued in business for more than a couple of years.
On May 10, 1927, in the United States District Court for the Southern District of New York, Winter instituted suit against the five alleged partners for $50,000. Counts are based on the promissory note; on the allegation that Winter put up his money in reliance upon the defendants' false representation that the American company was financially able to pay the note; and on the allegation of damages suffered by the plaintiff through the failure of the defendants to meet the call of $25,000 on their subscription for the stock of the New Jersey company. The defendants pleaded a general denial. Mr. Winter died before the suit...
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