JESSUP v. SMITH et al.

(Supreme Court, Appellate Division, First Department. December 30, TRUSTS 227-EMPLOYMENT OF ATTORNEY-LIABILITY OF ESTATE.

1915.)

Employment by a testamentary trustee of an attorney to resist proceedings for his removal imposed no liability on the estate, enforceable by action of the attorney against it.

[Ed. Note. For other cases, see Trusts, Cent. Dig. § 324; Dec. Dig. ~~227.]

McLaughlin and Scott, JJ., dissenting.

Appeal from Special Term, New York County.

Action by Henry W. Jessup against George W. Smith and others, as trustees under the will of Samuel J. Tilden, deceased, and others. From an adverse judgment, entered on a decision, plaintiff appeals. Affirmed.

Argued before INGRAHAM, P. J., and MCLAUGHLIN, LAUGHLIN, SCOTT, and DOWLING, JJ.

Henry W. Jessup, of New York City, in pro. per.

Edwin D. Bechtel, of New York City, for respondent Randolph. Thomas H. Wight, of New York City, for respondents Tilden and others.

INGRAHAM, P. J. Plaintiff, an attorney at law, commenced this action to recover for services rendered by him as attorney at law at the request of George W. Smith, a trustee under the last will and testament of Samuel J. Tilden, deceased. The complaint alleges that the defendant George W. Smith is one of three executors and trustees named by the late Samuel J. Tilden in his last will and testament, which was admitted to probate on October 20, 1886; that one of the trustees, Andrew H. Green, died, and defendant Randolph was designated as executor and trustee under the will; that John Bigelow, another of the trustees, died in October, 1911, and no executor or trustee has been appointed in his place; that in October, 1913, a proceeding was brought to remove defendant Smith, upon the petition of four beneficiaries; that, after that proceeding was brought, defendant Smith, as one of the trustees, employed plaintiff to represent him in that proceeding, and at the request of said Smith, as trustee, plaintiff rendered services to oppose the removal of said Smith as executor and trustee, argued the matter in the Supreme Court, and made a crossapplication for the appointment of a third trustee; that the proceeding to remove Smith was dismissed, and the application made by the plaintiff on behalf of Smith was granted, and C. F. McLain was appointed as trustee to succeed Mr. Bigelow, deceased; that there was an appeal from the order entered to this court, where the plaintiff, at the request of Smith, as trustee, represented Smith on said appeal, and the order denying the motion to remove Smith, and appointing McLean, was affirmed; that the reasonable value of the services rendered by plaintiff at the request of said Smith as trustee was the sum

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of $1,750; that the plaintiff rendered a bill of his services to the three trustees, and demanded payment, and they have refused or neglected to pay.

Plaintiff then presented an application to the Special Term of the Supreme Court to determine the value of the services, imposing the same upon the several interests of the beneficiaries by whom the proceedings had been initiated, and this was denied on the ground of lack of power in the court at Special Term. It is further alleged that the services rendered at the request of Smith were necessary and beneficial to the estate of Tilden and the integrity of the trust created by his will, and that plaintiff rendered his services upon the faith of the trust estate and in the expectation that the deceased's intent would be defeated if the proceeding against Smith, as trustee, were to succeed. The trust estate has been divided by the defendants, who are the trustees thereof, into certain trusts, pursuant to the will of Tilden, and the life tenants or remaindermen in such trusts are defendants. Plaintiff demands judgment determining the reasonable value of his services as attorney rendered as aforesaid to one of the three defendant trustees on the faith of the trust estate, and determining how the said services should be paid out of the trust estate, whether out of the principal or interest thereof, and for other relief.

The court at Special Term filed a decision finding these facts, and further found that the proceedings for the removal of Smith related only to his position as trustee under the will, and that Smith's contract with the plaintiff was made as trustee, and not as executor; that plaintiff was retained by Smith to represent him individually in the proceeding for his removal as trustee; that plaintiff rendered no services to the estate of Tilden, or to the beneficiaries of said estate; and that the will of Tilden did not authorize Smith to employ plaintiff at the expense of the trust, or the beneficiaries of said trust, and Smith was not authorized to make any agreement with the plaintiff to charge the trust with the cost of plaintiff's services; and as conclusions of law that plaintiff was not entitled to recover from the Tilden trust, or the interest of the beneficiaries thereof, for the services rendered by him, and was not entitled to a lien of any sort upon the funds of the estate of Tilden, or the shares of the beneficiaries of said estate, and directing judgment for the defendants, dismissing the complaint upon the merits. Judgment was entered upon this decision, dismissing the complaint, from which the plaintiff appeals.

It is elementary that the obligation of a trustee of a trust or an executor for services rendered by an attorney to him as such trustee or executor imposes no obligation upon the estate, but is an individual obligation of the trustee or executor employing the attorney, which in a proper case, upon the settlement of the accounts of the trustee or executor, can be allowed to him out of the estate. In Dodd v. Anderson, 197 N. Y. 466, 90 N. E. 1137, 27 L. R. A. (N. S.) 336, 18 Ann. Cas. 738, in speaking of the duty of an executor named in a will to submit it to probate, the court said:

"He may cast the burden of the contest upon those who are to be benefited by the probate of the paper, or he may assume the burden himself. If he pursues the latter course, he must be deemed to act with knowledge of the well

established legal rule that even a de jure executor cannot bind the estate which he represents by any contract of his own making, and that any liability which he incurs or expenditure which he makes under such a contract is regarded as his personal obligation until it has been allowed to him upon the judicial settlement of his accounts."

In O'Brien v. Jackson, 167 N. Y. 31, 60 N. E. 238, an action was brought against defendant, an executor and trustee under a will, to recover payments due on a contract for repairs made to some buildings of the testator, which were devised to the defendants on certain trusts. On the trial the defendants made a motion to dismiss the complaint, on the ground that it stated no cause of action against them in their representative capacity. The motion was denied, and verdict rendered for the plaintiff. The court held that the action in its present form could not be maintained, and that the defendants' motion to dismiss the complaint, as not stating a cause of action against them in their representative capacity, should have been granted, saying:

"The general rule is well settled in this state that executors or trustees cannot, by their executory contracts, although made in the interest and for the benefit of the estate they represent, if made upon a new and independent consideration, bind the estate, and thus create a liability not founded upon the contract or obligation of the testator"

-citing, among other cases, Ferrin v. Myrick, 41 N. Y. 315, and quoting from the opinion in the latter case the reason for the rule. That action being upon a contract to repair the property devised to the executors in trust, the trustees were empowered by the will to make the repairs out of which the action accrued, but the authority to incur expense did not imply the right to run in debt for it, and pledge or mortgage the trust estate for the payment of the debt; but what is a proper charge on the estate, and how that should be determined, are to be decided in proceedings between the trustee and the cestui que

trust.

In Parker v. Day, 155 N. Y. 383, 49 N. E. 1046, a case of the employment of an attorney at law by an executor for services rendered in relation to claims against the estate, the court said:

"With reference to the first contention the rule is well settled that the contracts of executors for services to be rendered are their personal contracts and do not bind the estate."

Applying this rule, we think the court below correctly dismissed the complaint. The retainer of the plaintiff had relation to an application to remove Smith as one of the trustees. It had no connection with the property of the estate, was not to protect it, and related merely to the person who should in future execute the trust. When Smith retained the plaintiff, the other two trustees, so far as appears, took no part in the question of Smith's removal. It was not treated by them as a matter involving the interest of the trust, and certainly had no relation to the property of the trust. It is not necessary upon this appeal to determine whether, when the accounts of the trustees come up for settlement, the court should allow this as an obligation incurred by Smith, to be paid from the property in the hands of the trustees;

but the services rendered having no contract relation to the property of the estate, it seems to me clear that the court had no jurisdiction either at law or in equity to decree that the payment for these personal services rendered to Smith should be a charge upon either the principal or income of the estate. That Smith might have considered that his remaining as trustee was essential to the proper execution of the trust was no justification to him, in accomplishing that result, to incur an obligation which would impose a liability upon the estate, and at any rate his employment of the plaintiff did not, as I view it, impose any obligation upon the estate which could be enforced in an action at law or in equity against the property in the hands of the

trustees.

I think, therefore, the judgment is right, and should be affirmed, with costs. Order filed.

LAUGHLIN and DOWLING, JJ., concur. MCLAUGHLIN and SCOTT, JJ., dissent.

GLASSHEIM v. MILLER.

(Supreme Court, Appellate Term, First Department. December 30, 1915.) LANDLORD AND TENANT 33-RENT-MODIFICATION OF LEASE.

Plaintiff, by a sealed lease for six years, leased to defendant certain premises, divided into two stores, for $138 a month, with a provision against subletting without plaintiff's consent. Defendant sublet one of the stores to M. for $70 a month, collected the rent for the month of May, and paid plaintiff $138 for that month. About May 3d it was verbally agreed that plaintiff would deal directly with M., and collect $74 a month from him and $68 from defendant, thus receiving an increased rental of $4 a month, that M. would make a deposit as security, and that new leases to defendant and M. would be drawn up. A lease was drawn up, but defendant's attorney refused to allow him to sign it, and M. received back his deposit and vacated the premises. Held, that defendant was liable to plaintiff for the whole rent for the month of June, and did not discharge such rent by tendering $68, as there could be no surrender of the existing lease by operation of law, in the absence of a new lease valid in law, and, it being the obvious intention of the parties that the modification of the lease was to continue during the unexpired term of the existing lease, a new lease could not be created by parol, under Real Property Law (Consol. Laws, c. 50) § 259, requiring leases for longer than one year to be in writing, and, moreover, the unexecuted parol agreement could not modify the existing sealed lease.

[Ed. Note. For other cases, see Landlord and Tenant, Cent. Dig. §§ 93-96; Dec. Dig. 33.]

Appeal from Municipal Court, Borough of Manhattan, Seventh District.

Proceeding to dispossess a tenant by Morris Glassheim against Joseph Miller. From a final order in favor of the tenant, the landlord appeals. Reversed, and final order directed for the landlord.

Argued December term, 1915, before GUY, PAGE, and PHILBEN, JJ.

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Peirce, Hulbert & Hopkins, of New York City (G. Murray Hulbert, of New York City, of counsel), for appellant.

Fischer, Wolf & Villamena, of New York City (Charles Fischer, of New York City, of counsel), for respondent.

GUY, J. The proceeding was brought to dispossess the tenant Miller for nonpayment of $138 monthly rent of demised store premises, alleged to be due June 1, 1915. The defense litigated was that subsequent to the commencement of the term, and entry and possession by the tenant, under a sealed lease for the term of six years beginning October 1, 1914, the landlord and tenant entered into an agreement modifying the lease, and that under such modification the tenant was confined to only a part of the demised premises, at the rental of $68 per month; that pursuant to such modification the tenant confined himself to such part of the store and vacated the balance; that the landlord entered into an agreement with one Montgomery, by which the said Montgomery leased the portion of the premises vacated by the tenant, and Montgomery agreed to pay the landlord $74 per month for such portion of the premises, and deposited with the landlord $148, being two months' rent for his portion of the store, as security for the performance of the covenants of his lease; that the tenant had tendered to the landlord $68, the amount of rent due under the alleged modified agreement for the month of June, 1915, and that the landlord had refused to accept said sum.

Under the provisions of the lease to Miller, the tenant in this proceeding, the landlord divided the store into two parts, and it was covenanted that the two stores should be used exclusively as stationery and tailor shops, and that the tenant was prohibited from underletting any part of the premises without the landlord's written consent. About the end of April, 1915, the tenant Miller discontinued business in the northerly store, and sublet that store without the landlord's consent to Montgomery, from whom he received $70 rent for the month of May for that part of the premises. He afterwards paid the landlord $138 for the May rent, being the amount prescribed by his lease. On or about May 3d, the landlord, his attorney, the tenant, and Montgomery, the subtenant, had a conversation at the demised premises, and, adopting the tenant's version of what took place on that occasion, which was evidently credited by the jury, it was agreed that the landlord thereafter would deal directly with Montgomery and collect $74 a month from him for the northerly store; that he would accept $68 a month from the tenant Miller, thus getting an increased rental of $4 a month; that Montgomery would deposit $148 as security with the owner of the fee; and that the attorney would draw up two leases, one to the tenant and the other to Montgomery at a cost of $50, to be borne equally by the tenant and Montgomery.

The attorney subsequently drew up one lease, not two, and received $48 from Montgomery for his services, and also the $148 deposit for the owner; but when the attorney for Miller, the tenant, read the proposed lease, he refused to allow the tenant to sign it, on the ground. that it did not conform with the verbal arrangement, and the result