Hood v. Hayward (124 N.Y. 1, 1891)

Bradley, J.

In 1864 the will of Andrew Hood, deceased, was admitted to probate, and letters testamentary were issued to the plaintiff and the defendant Frederick Hood; and the latter being a non-resident of this state, gave bond in which the defendant Hayward and David Moffat joined as sureties. The executor Hood.was afterwards charged with devastavit, and in 1883 his letters were revoked. On July 31, 1885, in a proceeding before the surrogate, instituted by petition of the plaintiff, a decree was made directing him to pay to her as such executrix the sum of $31,100. This action- was afterwards brought upon such bond. And the objection is taken that it cannot be maintained, because no execution was issued upon such decree and returned wholly or partially unsatisfied. The disposition of this question is dependent upon the statute by which such remedy is regulated. (Code Civ. Pro. §§ 2607, 2608, 2609.) Those sections provide for three classes of actions upon the official bond of executors and administrators: 1. Where an execution issued upon a surrogate’s decree against the property of an executor or administrator has been returned wholly or partly unsatisfied, an action to recover the sum uncollected may be 'maintained upon such bond by and in the name of the person in whose favor the decree was made. (§ 2607.) 2. Where letters have been revoked, the successor of the executor or administrator, whose letters are revoked, may maintain an action upon his predecessor’s bond, in which he may recover any money or the value of any other property received by the principal and not duly administered by him, and to the full extent of any injury sustained by the estate of the decedent. And the money recovered is regarded as part of the estate in the hands of the plaintiff, and must be distributed or otherwise disposed of accordingly. (§ 2608.) 3. Where the letters are so revoked and no successor is appointed, any person aggrieved may, upon obtaining leave by order of the surrogate so to do, maintain an action on the bond in behalf of himself and all others interested. And the money so recovered must be paid into the Surrogate’s Court for distribution. (§ 2609.)

These are distinct remedies, and each of • them is independent of the others. They were designed to take the place of those given by prior statutes on the subject. Formerly the right to bring actions on such bonds was subject to the direction of the surrogate, or was dependent in the case provided for it, of an assignment by him of the bond to the person in whose favor a decree was made. When an executor or administrator refused or omitted to perform a decree made against him for rendering an account or upon final settlement, the surrogate might cause the bond to be prosecuted. (L. 1830, ch. 320, § 23; 2 E. S. [2d. ed.] 53, § 19.) The provisions of section 2607 are substituted for section 65, chapter 460, Laws of 1837, which provided that after the return of an execution unsatisfied, the person in whose favor the decree upon which it issued was made, might have a right of action upon assignment of the bond to him by the surrogate. The present statute dispenses with the formal act of assignment. And the provisions of sections 260.8 and 2609 seem to be somewhat bro&der in their import than were those of the former statute which provided for the prosecution of the bond of an executor or administrator whose letters had been revoked. . Then it was done by the direction of the surrogate. (2 R. S. 85, § 21.) The actions under such prior statutes other than that of 1837, were prosecuted in the name of the People. Those statutes are referred to in view of the proposition before asserted, that the present remedies are distinct and independent of each other as were those formerly existing. (People v. Guild, 4 Denio, 551.)

The support of an action under section 2607 is dependent upon the return of an execution unsatisfied. That is not requisite for the purpose of actions within the provisions of ■ the two sections following it. This action does not come' within section 2609. The question arises whether it is supported by the provisions of section 2608. And that is mainly dependent upon the fact whether the plaintiff is the successor of the one whose letters were revoked. • When her associate was retired from it, the entire trust was devolved upon her. She succeeded to and necessarily assumed all the powers and duties with which he had been vested and charged as an executor, and in that sense she was his successor. There is apparently no reason for denying to her that relation, for the purposes of the remedy in view, unless the statute requires a construction which defeats it. The purpose of the statute giving the right of action to the successor of an executor or administrator whose letters are revoked, is to indemnify the estate of the decedent against loss so far as the means afforded by the-official bond of the defaulting representative and the remedy founded upon it will permit. It not only seems that the appointment, if authorized, of a successor to the one of two whose letters have been revoked, would be useless for the accomplishment of that purpose, but such supply of another in that manner in his place is not permitted, except when necessary to comply with the express provisions of a will. The statute contemplates that, except in such ease the survivor will perform all the duties of the trust. (Code, § 2692.) And, with that exception, it is only when all the executors or administrators die or become incapacitated, or the letters of all of them are revoked .that letters will be granted to one or more persons as their successors. (Id. § 2693.) It follows that unless the survivor may be treated as a successor within the meaning of the statute, the provisions of section 2608 cannot be made applicable to an action upon the bond of one of two- or more executors or administrators whose letters have been revoked; and that the remedy upon his bond when there is a survivor, is dependent solely upon the provisions of section 2607. That section provides for an action by the person in whose favor is made a decree against an executor or administrator after the return of an execution unsatisfied. The decree in the present case was not against such an officer, but was made pursuant to the statute providing that, upon the petition of the successor, or of the remaining executor or administrator,, the surrogate may compel the'person whose letters have been revoked to account for or deliver over money or other property, and to settle his account. (Id. § 2605.) It has, however, been held in Sperb v. McCoun (110 N. Y. 605) that in such ease an action may be maintained, under section 2607, when an execution has been issued on such decree and returned unsatisfied. It does not follow, from the determination of that case, that the present one cannot be supported. Nor does the view in that case necessarily preclude the application of the provisions of section 2608 to the cause of action, alleged in this case, and to its determination by the trial court as represented by its findings of fact. For the purposes of an action upon the bond of an executor whose letters have been revoked, the issue of execution upon a decree and its return unsatisfied are not requisite to its maintenance. Hor does the application of the provisions of the statute in that respect seem by its terms- or by reasonable implication to be confined to those cases where no survivor remains to proceed with the execution of the trust j and in that view, inasmuch as the statute imposes its performance wholly upon the latter, the remedy upon the official bond, of him whose letters are revoked is entirely with such survivor. And to hold that the latter is not a successor within the meaning of the statute, is to deny any remedy under the provisions of the section last mentioned. Ho definition of the term “ successor ” is given in the statute. There is in other sections of it upon the subject under consideration some language used importing its application to a person who receives an appointment in place of one who has been retired from the position of trust. But it is not so restricted by anything in section 2608. And, although by a process of reasoning the application of some provisions of other sections may be so made as to give to the word successor such restricted meaning, that construction is not within the evident spirit and purpose of the statute. The view here taken is that when the plaintiff became the sole remaining executor, she, for all the purposes of the trust, was-the successor of the one who had been removed, as she succeeded to all the powers before then vested in him in his relation to tiie estate of the decedent, as effectually as they could be taken by one appointed in his place, if such appointment were permitted and had been made. And this action was brought solely for the benefit of the estate, to bring to it a fund to reimburse it pro tanto for the loss it had suffered by the breach of trust of the principal in the bond while he was executor, and in violation of the order of the surrogate. Such money, when collected, is part of the estate and to be distributed and disposed of under the direction of the surrogate. That is the purpose of an action and recovery under section 2608. And these views lead to the conclusion that this action is within the provisions of that section.

In respect to the other questions, the conclusions of Judge Potteb are adopted to the effect that the release of Moffat did not discharge the defendant Hayward from his liability to the extent of a moiety of the obligation assumed by those persons upon the bond; and that the plaintiff was entitled to recover interest only from July 31, 1885.

The judgment should, therefore, be modified by deducting from the recovery interest upon $10,000 from December Y, 1883, to July 31, 1885, and as so modified affirmed.

Potter, J.

(dissenting). The decision of the main appeal involves two questions: Whether the instrument executed and delivered by the plaintiff and the legatees, under the will of Andrew Hood, to Moffat, one of the sureties upon the bond given by the executor, discharged the liability of the defendant Hayward, the other surety upon said bond, and whether this action upon said bond against the defendant Frederick Hood as principal and the defendant Hayward, as surety can be maintained before the issuance and return of an unsatisfied execution against the property of said Frederick Hood, the executor.

These propositions are familiar law and scarcely need the citation of authorities to support them, viz., that the release of the liability of one or more joint or joint and several obligors, or one or more joint tort feasors, discharges the liability of the other; that the rule is the same in law and equity.

But these rules require for their full operation that the instrument should be a technical release without any valid limitation or restriction. The contention in tins case is as to the character of these instruments. Whether they constitute a technical and absolute release, or whether they constitute a release with a valid limitation, or, as more practically stated, whether they release the liability of the surety Moffat and reserve the liability of the surety Hayward upon the bond, or whether they discharged the liability of both Moffat and Hayward upon the bond.

A reference to the instruments under consideration shows that the plaintiff, as executrix and individually, together with all the devisees and legatees under the will of Andrew Hood, deceased, in consideration of $7,000, to them paid by said Moffat, released and discharged him, Ms heirs, executors, administrators and assigns from all causes of action, etc., and especially by reason of the said Moffat having executed with one John Hayward and Frederick Hood a joint and several bond to the People of the State of Hew York in the sum of $20,000, executed by said Hood as principal, and by the said Moffat and Hayward as sureties. The said instrument further provides that this release is intended to discharge said Moffat from all liability by reason of' said bond in every respect, “ but shall not be construed as affecting any claim or demand wMch the parties of the first part, or any of them, have or may have against the said Frederick Hood as executor, or against the said John H. Hayward as surety on said bond or otherwise.”

The same parties, in addition to sigmng the instrument, the substance of which is above stated, also executed and delivered to said Moffat another instrument which provided “ that it was intended thereby to release and discharge the said Moffat, Ms heirs, executors and administrators from all liability whatever of any kind and nature arising or growing out of any and all acts or omissions, neglect or defalcation of the said Frederick Hood, whether done or committed as executor, trustee, or in any other capacity, under said last will and testament of Andrew Hood, deceased, or otherwise, but that said release should not be construed as in any way affecting any claim or demand which they (the parties of the first part thereto), or any of them, had or might have against the said Frederick Hood as such executor or otherwise, or against the said John Hayward as surety on said bond or otherwise.”

“ How it is hereby declared that the intention of said parties is to release'the said David Moffat from any and all claims which they, or any of them, have or might have against him, his heirs, executors or administrators under or by virtue of said bond, to the extent of one-half of the penalty thereof, and it is expressly understood and agreed that the said release is intended to operate as a satisfaction and discharge of one-half of the obligation arising from or under said bond, so that the said Moffat shall be released from all claim or demand for contribution on the part of his co-surety, the said John FT. Hayward, and that this instrument shall be taken and deemed a part of said release and incorporated therein.”

“ It is also understood and agreed that nothing therein contained shall in any manner affect or impair any claim, right or •demand which the parties thereto, or any of them, their, or .any of their, heirs, executors or administrators have or may hereafter have against the said Frederick Hood or as against John H. Hayward as to the remaining half of the amount of .said bond.” •

The evidence in the case shows, beyond question and without substantial contradiction, that these two instruments were •delivered to Moffat at the same time and upon the occasion of the payment and receipt of the consideration specified in them.

The trial court has found as a conclusion of fact “ that David Moffat, mentioned in said bond, has been released from any 'liability on said bond to the extent of one-half the penalty ■thereof, to wit, the sum of ten thousand dollars, saving and reserving however, and excepting all cause or causes of action :against the defendants in tins action and any and all liability thereunder.” And, as conclusion of law, that the plaintiff, as •executrix, is entitled to judgment against the defendant Hood, the executor, and the defendant Hayward, one of the sureties, for the sum of $10,000 (that sum being one-half of the penalty •of the bond) with interest. "* ’ .

The defendant Hayward contends that he was released from .all liability upon the bond by the release of the liability of Moffat.

There is no doubt that if the language of the instruments had simply acknowledged satisfaction of all claims arising upon the bond and released and discharged the' same, the effect would have been to discharge both Moffat and the defendant Hayward from any further liability upon the bond. But the language of the instrument acknowledges the payment of tiie sum of $7,000, being less than one-half of the penalty of the bond, from Moffat, and purports to discharge Moffat only, and expressly declares such to be its sole object -and purpose, and that it shall not be construed as in any way affecting any claim or demand which the releasors have against Hood, as executor, or the defendant Hayward, as surety upon said bond; and in order to make this purpose more manifest and its effect more certain, they executed on a later day and delivered with the instrument just referred to another instrument of an equal degree of dignity and solemnity declaring that it was their intention that said instrument should “ operate as a satisfaction and discharge of one-half of the obligation from or under said bond, so that said Moffat shall be released from all claim or demands for contribution on the part of his co-surety, the said John U. Hayward,” and “that nothing therein contained should in any manner affect or impair any claim, demand or right which they have or may have against said Frederick Hood, or as against John H. Hayward as to the remaining half of the amount of said bond.”

It will be observed that the terms of the instrument do not express that the claim or liability under the bond has been satisfied, which is the essential point in an accord and satisfaction. The terms of the discharge by the instrument expressly limit the operation of the discharge to Moffat and reserve the liability of Hayward. I do not perceive any reason in the relations of the parties to this bond, as between themselves oías to the releasors to prevent the court from giving the precise effect to the instrument intended by the parties to it. Each of the sureties was liable to the releasors for the full amount of the penalty and whatever part of the penal sum either should be compelled to pay, he could compel his co-surety to contribute one-half. Aside from interest neither surety could compel the other to contribute more than one-half of the penalty of the bond, viz.: $10,000, whatever the loss of the estate may have amounted to.

In this case it amounted to much more than the amount of the penalty, so that the releasors could have demanded each surety to pay $10,000. That is the sum which defendant Hayward waá liable to pay under the bond, to the releasors, and that is all he is now compelled by the judgment to pay them. What harm or prejudice has or would have been done Hayward in this case, if the releasors had forgiven the liability of Moffat outright or had received $10,000 of Moffat’s money and subsequently given it back to him ? 1 can perceive none. Certainly, Hayward could not have sued and recovered of Moffat any part of such gift. The contractual relation between co-sureties is that each shall pay one-half of the amount of the liability assumed. There is no other contractual relation between them; certainly none that entitles one surety to share in the voluntary benefits or presents that the obligee may make the other surety. The question in this case is whether the release to Moffat discharged Hayward. What (if any) rights and remedies Hayward mayhave against Moffat in any contingency that may arise, need not here be considered.

But without further discussing the reasonableness of the respondent’s contention, we think there is an unbroken line of decisions supporting the judgment in this case, to the effect that the defendant Hayward was not discharged by virtue of the instrument which discharged Moffat from liability, upon the bond in suit.

It is not worth while to refer to but few of the numerous cases which maintain this view. (Benedict v. Rea, 35 Hun, 34; Irvine v. Millbank, 56 N. Y. 635; Morgan v. Smith, 70 id. 537; Bronson v. Fitzhugh, 1 Hill, 185; Kirby v. Taylor, 6 Johns. Ch. 246; Matthews v. Chicopee Mfg. Co., 3 Rob. 711; Ellis v. Esson, 50 Wis. 138; 36 Am. Rep. 830; Price v. Banker, 4 Ellis & Black, 760; Thompson v. Lack, 3 Com. Bench R. 540.)

The great number of decisions and the discussion in the opinions of the courts upon this branch of the law has arisen, as it seems to me, not from any doubt or diversity of opinion in relation to the effect of an instrument under seal clearly expressing a discharge of one joint obligor in consideration of a sum less than the entire obligation or liability and a reservation of the remainder of the liability against the other obligor, but from a construction of the nature and effect of the various agreements and transactions between one or more joint obligors with the obligee, whether the agreement or transaction shall be held as a full satisfaction of the obligation as to all the obligors or a satisfaction in part and a release of less than all the obligors, or a covenant not to sue one or more of the obligors or whether the instrument affords a presumption of a full satisfaction and discharge of the obligation or whether sufficient in force and dignity to discharge the original obligation. The acts of the legislature from time to time, and as expressed in section 1942, Code of Civil Procedure, are in line with the decisions as respects joint debtors, and under it the presumption is that only the compromising creditor is discharged.

Of the correctness of the decision of the court below in respect to the office and effect of. the instrument given to Moffat by the obligees or beneficiaries of the bond I think there can be no doubt.

The next question to be considered relates to the remedy by which the plaintiff seeks to maintain her right against Hayward. The general rule is that a party must resort to a remedy prevailing at the time the action is commenced to enforce his right. The defendant conten ds that it was necessary before bringing this action to recover against the surety upon an executor’s bond, that the proper surrogate should have made a decree against the executor, and that an execution should have been issued to collect the sum specified in the decree, and that the execution should have been returned unsatisfied in whole or in part.

It is found by the trial court that no such execution had been issued or returned. It will also be borne in mind that the proper surrogate had made a decree or order directing the executor Hood to pay the plaintiff the sum of $29,100, on account of a loss through mismanagement and revoking his appointment as executor and later made an order granting leave to sue the bond.

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