Levi's Estate

Will — Executors and administrators — Carrying on business of decedent — Estoppel. 1. Where a testator directs that his sons shall continue his business after the death of his wife, and one of his sons who was also the sole executor, carries on the business as executor, with the acquiescence of the widow and testator’s children, who are legatees, and it appears that the widow receives her living expenses from the proceeds of the business, neither the widow nor the children can object to the payment of creditors whose claims are based upon transactions with the executor while continuing the business after the death of the testator. Decedents’ estates — Claim of widow — Loan to husband — Evidence. 2. The claim of a widow to recover the amount of a loan from her husband’s estate will be sustained, where a son who was manager of the decedent’s estate, testifies that the money was raised on a mortgage of his mother’s separate property, that it went into the decedent’s business, that after his father’s death the mortgage was paid off out of money received from an insurance policy on the decedent’s life in the widow’s favor, and such testimony is not contradicted, but is corroborated by papers relating to the different transactions. In such a case the mere relationship of the parties is not sufficient in itself to discredit the son’s testimony.

Appeals, Nos. 29 and 30, Jan. T., 1909, by David Levi, executor, from decree of O. C. Lycoming Co., June T., 1906, No. 35, dismissing exceptions to auditor’s report in Estate of Michael Levi, deceased. Exceptions to report of John J. Reardon, Esq., auditor. From the record it appeared that Michael Levi died on April 9, 1906, leaving a will by which he provided, inter alia, as follows: “ Item. It is my wish and I direct that after my death, or if my beloved wife, Hermine Levi, shall be living at that time, then after her decease, my sons, Morris C. and David L., shall continue the clothing business which I am now engaged in, until all my living daughters are married, during which time, and for which purpose, my said sons shall have the use of the money, which I shall have in the bank to my credit at my decease, and during which time the profits of said business shall be disposed of as follows, to wit: ” He appointed his son David to be the sole executor of his will. David as executor carried on the business of the testator, and his mother and brothers and sisters acquiesced in this course, and the widow received her living expenses out of the proceeds of the business. At the audit various creditors presented claims based on transactions with the executor while conducting the business after the father’s death. These claims were allowed by the auditor. The testator’s wife, Hermine Levi, claimed the sum of 356,000 which she claimed she had loaned to her husband during his lifetime. This claim was disallowed by the auditor. David Levi as executor and Hermine, the widow, filed exceptions to the auditor’s report. All of the exceptions were dismissed, Hart, P. J., filing the following opinion: The findings and conclusions of the auditor as to the construction of the will of Michael Levi, deceased, relative to the duty of the executor to marshal the assets of the estate and pay the debts of the decedent contracted during his lifetime; the want of authority contained in the will to conduct the business of the decedent during the lifetime of the widow of the decedent; the ascertainment of the value of the personal estate of the decedent and the valuation placed thereon; the distribution to the creditors of the decedent, and the rejection of the claim of Hermine Levi, seem to us to be sustained by the evidence and warranted under the law. The only part of the auditor’s findings and conclusions about which we have doubt is that part relating to the distribution to the creditors whose claims against the estate were contracted for goods furnished in carrying on the clothing business, as formerly conducted by the decedent, by the executor, after his decease. By the terms of the will, any surplus over and above the amount required to pay the debts of the decedent would belong to the widow of the decedent during the period of her natural life, with remainder to the children of the testator named. A diversion of this fund, or balance left after the payment of debts, could only be justified on the ground that the widow and legatees in remainder had done some act or thing that would estop her and them from denying the right of such creditors to participate in the distribution of such balance, and make it inequitable and unjust to such creditors not to allow them to participate in this distribution. The counsel for the accountant and for the widow of the decedent, in his written argument to the court, says: “The executor openly and notoriously proceeded to carry on the business of the decedent. To this the widow of Michael Levi made no objection, nor did any of her children or legatees, nor did any of his creditors.” And again he says: “The widow, the children and legatees of the testator and all the creditors of the testator must either have interpreted the will of Michael Levi in the same way that his executor interpreted it, namely, as authorizing him to carry on the business, or assented to carrying on of this business as the best way of settling this estate.” It also appears that during the period of time these credits were given and debts contracted, the widow was receiving her living expenses from the proceeds of the business being carried on. Now, this being the situation as disclosed and contended for by the widow’s counsel, it would seem to us as though she cannot be heard now to deny to the creditor his claim, who was led to give credit on the belief that the business was being so conducted as to give him a lawful claim against the estate of the decedent. Whilst this cannot affect the creditors whose claims are based on contract with the decedent in his lifetime, and whose rights to participate in this distribution and to be paid the ■full amount of his claim could only be waived by express agreement based upon a valid consideration, the widow and legatees stand in a different relation to the estate; and being participants in the conducting of the business as carried on by the executor after the death of the testator, and admittedly assenting to the conducting of the same and in obtaining the credit on which these claims are based, it does not seem unjust or inequitable that their claim as widow and legatees should give way to that of creditors whose claims have been contracted on the faith of what they now and what they have always claimed to be the right of such creditor to look to the funds and property of the estate of the decedent for their pay. This being so, the auditor’s distribution to such creditors seems to us justifiable and equitable. And now, January 5, 1909, the exceptions to the auditor’s report are overruled and the report is confirmed absolutely. Errors assigned were in dismissing exceptions to auditor’s report.