City of New York v. United States Trust Co.

This is a suit in equity to impress a trust fund in the hands of the appellant, being the proceeds of an insurance policy on the life of Louis J. Jordan, which was payable to his estate, with the lien of a judgment recovered by the respondent against said Louis J. Jordan and John Lynch. The judgmént was recovered and execution was issued and returned unsatisfied, during the lifetime of Jordan. He left a last will and testament, and his wife was sole executrix. The executrix duly published notice for creditors to present claims, but the city’s claim was not presented. It seems that the debts, with the exception of this judgment, were paid. The widow and the testator’s three surviving children were his sole beneficiaries. After the payment of the other debts and the expenses of the administration, there was a balance of $16,954.90, which, pursuant to a trust agreement between the widow and the children, was transferred by the executrix to the appellant, in trust, to apply the *1011income thereof to the use of the two daughters of the testator in equal shares during their lives, and on their death to transfer the entire estate to the testator’s son. The executrix never filed an account with the surrogate, and was never discharged as such, but she was released by the beneficiaries. It appears that the executrix knew of the existence of the judgment, and during the lifetime of her husband she paid $250 thereon.

Payment of this judgment could not be enforced against the next of kin or beneficiaries under section 1837 of the Code of Civil Procedure, for the reason that no part of the fund has been “paid or distributed to them.” The creditors are entitled to payment of their claim out of the estate of a decedent (Code Civ. Proc. § 2719), and, when his property has been distributed to his widow and next of kin or legatees before the payment of all claims, the creditors have a right of action for the amount thus distributed (Code Civ. Proc. § 1837). This fund has not been paid or distributed, within the meaning of section-1837 of the Code, but it remains intact, and is, in equity, so far as creditors are concerned, still part of the estate of the testator ; and it is readily identified, and should be followed and impressed with the lien of the respondents’ judgment to the extent necessary to satisfy the same.

It follows that the judgment should be affirmed, with costs. All concur.