Stotesbury v. Huber

• Decision Date: 16 September 1916
• Parties: STOTESBURY v. HUBER et al.
• Court: U.S. District Court — Eastern District of New York

237 F. 413

STOTESBURY v. HUBER et al.

United States District Court, E.D. New York.

September 16, 1916

Winthrop & Stimson, of New York City (Dickson, Beitler & McCouch, of Philadelphia, Pa., and Henry L. Stimson and George Roberts both of New York City, of counsel), for plaintiff.

Steuart & Perry, of New York City (James L. Steuart and Frank S Moore, both of New York City, of counsel), for defendants Louis D'Esterre and Anna W. D'Esterre.

Oscar A. Lewis, of Brooklyn, N.Y., for defendant William H D'Esterre.

John F Clarke, of Brooklyn, N.Y., for Huber Estate.

CHATFIELD District Judge.

The plaintiff holds a deed or assignment of a share amounting to $50,000 (and interest from the date of the death of the life tenant) of the vested remainder which the defendant Louis D'Esterre received upon the death of his mother, who was a daughter and one of the beneficiaries under the will of Otto Huber, deceased. This assignment, dated the 30th day of November, 1910, was executed in New York and transmitted, after record in the counties of New York and Kings, to Philadelphia, in the place of a previous assignment which had been executed by the defendant Louis D'Esterre, and by his wife, and which had been turned over in the city of Philadelphia to the firm of Drexel & Co. in return for checks totaling $23,500.

The earlier instrument under date of November 17, 1910, named by mistake, as party of the second part, Drexel & Co., a corporation. Drexel & Co. was in fact a partnership in which certain residents of Philadelphia and certain residents of New York City were partners. The second assignment was made in order to correct this mistake, and, while the moneys concerned were advanced by the partnership, the second assignment was caused to run to one of the partners (the plaintiff), in accordance with a custom by which individual partners took title to firm property and accounted for the same in the partnership books, for obvious reasons of convenience.

The plaintiff had as partner authorized the transaction in question, so, prior to the beginning of the action, he as an individual paid over to the firm of Drexel & Co. the amount involved, which thus became his individual asset, free from any duty to account or as trustee.

The assignment is upon its face an absolute conveyance of the amount mentioned, and was made by the defendant Louis D'Esterre as one of the heirs at law of his mother, who died November 5, 1906. Her father, Otto Huber, died August 31, 1889, leaving property real and personal to his seven children, with a life estate to his wife, who lived until August 28, 1914. A part of the estate of Otto Huber, deceased, had been paid to Mrs. D'Esterre or to her administrator prior to the making of the assignment in question; but a large amount of real and personal property is still in the hands of the executors of Otto Huber, deceased, and they have been made parties to this action.

These executors have objected to the entry of any decree establishing the present claim of Louis D'Esterre or his assignees, in the estate of Otto Huber, deceased, prior to the accounting and recognition of those claims in the Surrogate's Court of this county. These executors have taken the position that this court has no jurisdiction to direct payment by them of any specified amount, or to determine the ultimate value of the share of Louis D'Esterre. Ingersoll v. Coram, 211 U.S. 335, 29 Sup.Ct. 92, 53 L.Ed. 208, disposes of the question involved and upholds the jurisdiction of this court to determine whether or not Louis D'Esterre or his assignees are possessed of a share in the estate of Otto Huber, deceased, and to determine the limitation or extent of such share. It is, however, not within the jurisdiction of this court to perform the functions of the Surrogate's Court, in passing upon the accounts of the executors, nor to direct the distribution of the estate of Otto Huber, deceased, independently of the decree of the Surrogate's Court in that regard. Waterman v. Canal-Louisiana Bank, 215 U.S. 33, 30 Sup.Ct. 10, 54 L.Ed. 80.

In Ingersoll v. Coram, supra, it was held that the United States court had jurisdiction, where diversity of citizenship existed, to determine the rights gained by an assignment of an interest under a will, as between the parties to the action. It was recognized in that case that the Circuit Court of the United States could not thereby supersede the probate court, or take away from the probate court jurisdiction to determine what property should come into the hands of those parties described as executors in the United States court action, or what interest should be subject, in their hands, to the rights which the United States court might decree. A decree of the probate court upon these matters would be res adjudicata. Comity would require the United States court to leave to the exclusive jurisdiction of the probate court the determination of the matters as to which it, solely, should render a decree. The rights of the executors, therefore, are fully protected, and the objections raised by them to the jurisdiction of the court have been overruled.

Their position is made the basis, however, of a defense urged by Louis D'Esterre, under section 629 of the Revised Statutes, now embodied in section 24, par. 1, of the Judicial Code, which prohibits the United States court from taking cognizance of a suit upon a chose in action, in favor of any assignee, unless such suit might have been prosecuted to recover upon the chose in action if no assignment had been made.

It is contended that this prohibits the present action unless the defendant Louis D'Esterre could have sued in the United States court for this district to obtain payment of his share in the estate of Otto Huber, deceased. Louis D'Esterre is admittedly a resident of this district. The plaintiff is a resident of the Eastern district of Pennsylvania, but the other defendants are also residents of the state of New York. But as was held in Ingersoll v. Coram, supra, and in Brown v. Fletcher, 235 U.S. 589, 35 Sup.Ct. 154, 59 L.Ed. 374, an interest in a distributive share of an estate is not per se within the language of the section referred to.

The defendants claim that the case of Ingersoll v. Coram, just cited, had to do with the assignment of an aliquot or definite fractional share in the estate in question. They also urge that the case of Brown v. Fletcher, supra, expressly excepts determination as to the effect of assigning $35,000 out of a $50,000 share, 'if it shall appear that the trust estate in the hands of the trustee consists of property and not of money. ' The Supreme Court, however, says that the words of section 24 of the Judicial Code can refer only to a cause of action based on contract. Kolze v. Hoadley, 200 U.S. 76, 26 Sup.Ct. 220, 50 L.Ed. 377; Shoecraft v. Bloxham, 124 U.S. 730, 8 Sup.Ct. 686, 31 L.Ed. 574. It is further stated, in Brown v. Fletcher, supra, 235 U.S.on p. 598, 35 Sup.Ct. 154, 59 L.Ed. 374, that the relation between trustee and cestui que trust is not contractual.

It is impossible to see how the assignment of $35,000 out of $50,000, or how the assignment of a share amounting to $50,000 out of a supposedly larger legacy, would be any less or any more the assignment of a chose in action than would the assignment of a one-fourth or one-fifth interest in that legacy. If the entire legacy establishes, not a contractual, but a beneficial claim (measured by legal rights between the executors and the beneficiaries), then the United States court would have jurisdiction over one as soon as over the other.

It is urged by the defendants that the existence of citizens of New York as partners in the firm of Drexel & Co. is a bar to the maintenance of an action in the United States court, as the defendants contend that these partners are the real parties in interest, and that the plaintiff is not entitled to be recognized as a party litigant, resident in a state other than that of the defendants.

This brings us to the facts attending the making of the assignment, as they are presented by the testimony. On September 1, 1907, the defendant Louis D'Esterre married the defendant Anna Williams D'Esterre, who is still living. This defendant Louis D'Esterre was born and brought up in Brooklyn, attending the schools of that borough, and receiving no particular business education. Upon leaving high school he went into business with his father and uncles at the Otto Huber Brewery for a few days, and then obtained employment in an electrical concern, where he earned $15 a week, which was the amount of his salary when he married. He thereafter engaged in the millinery business in Jersey City; but this business was unsuccessful, and the money which he put into it was lost. His living expenses for a time were contributed by his father, to such extent as he was able; but by the fall of 1910 he was in debt for household expenses and casual obligations which he had no immediate way of meeting. He had also, some six months previously, borrowed $5,000 upon a six months' note, to secure which h he had made a mortgage of $5,000 on his share in the estate received by him from his mother as one of the heirs of Otto Huber, deceased. This estate was then subject to the life interest of Louis D'Esterre's grandmother, who was 70 years old and in good health. Louis D'Esterre had also made another assignment, to secure the sum of $1,000 and interest for borrowed money.

During the month of September, 1910, Louis D'Esterre consulted various commissioners or loan brokers, for the purpose of obtaining cash for his current needs and to meet the interest obligation upon the $5,000 note which was due October 29 1910. This obligation was held by one Nahm, whose...