FIRST DEPARTMENT, MARCH TERM, 1899.

[Vol. 38.

The petitioner should, in such a case, establish his position as a creditor by first resorting to an action in a court which has jurisdiction to try the disputed claim.

In or during an accounting upon the application of such a petitioner the surrogate cannot be said to have exercised the discretion conferred upon him by section 2726 of the Code of Civil Procedure, as to requiring executors to account.

The mere presentation of a claim to executors, who are silent in respect thereto, does not establish it so as to give the surrogate jurisdiction to decree its payment on a settlement of the executors' accounts.

APPEAL by Charles H. Steinway and others, as executors, etc., of William Steinway, deceased, from an order of the Surrogate's Court of New York county, entered in said Surrogate's Court on the 14th day of December, 1898, directing the executors to file their

accounts.

J. Delahunty, for the appellants.

George H. Bruce, for the respondent.

INGRAHAM, J.:

The petitioner presented to the surrogate a petition alleging that he was a creditor of the estate of William Steinway, deceased; that he had filed his claim with the executors, and that his said claim was thereupon admitted; that more than eighteen months had expired since the granting of letters testamentary; and that his claim had not been paid, and no accounting had been made by such executors; and the petitioner prays that a citation may issue directed to said executors requiring them to show cause why an order should not be made directing that the executors judicially settle their accounts as such executors of the estate of William Steinway, deceased. Upon the return of the citation an answer was filed on behalf of the executors, denying that the claim had been admitted; denying that the petitioner was a creditor of the estate, and alleging facts which, if true, show no liability on the part of the estate. This answer was verified by one of the executors. The petitioner replied, setting up facts which, if true, would tend to show that he had a valid claim against the estate. Neither the petition nor the reply was verified by the petitioner, but by his attorney upon information

App. Div.]

FIRST DEPARTMENT, MARCH TERM, 1899.

and belief, alleging that the attorney's knowledge of the facts was derived from statements made to him by the petitioner's agent and from papers, writings and documents in the deponent's possession. Upon these papers the surrogate made an order directing the executors to account. We think this order should be reversed.

The jurisdiction of the surrogate to compel payment of a claim against an estate is confined to undisputed claims. If the executors dispute the claim, or have such knowledge of it as enables them to doubt its validity, the surrogate has no power to order the payment of the claim. The claimant is compelled to resort to his action in a court having jurisdiction to try disputed claims. (Lambert v. Craft, 98 N. Y. 342, 347.) The only object in the surrogate's requiring the executors to account upon an application of a creditor, is that a decree may be entered under the provisions of the Code directing the executors to pay the claim if they have assets of the estate in their hands sufficient for that purpose. It is true that, under section 2727 of the Code of Civil Procedure, a creditor may present a petition to the surrogate praying for a judicial settlement of the accounts of the executors, and that, unless the executors show good cause to the contrary, an order should be made directing them to account; but where the executors show that the claim is disputed and allege facts which, if true, would tend to show that the petitioner was not a creditor, then we think that good cause has been shown to the contrary and the petitioner should establish his position as a creditor by resorting to an action in a court which has jurisdiction to try a disputed claim. The mere presentation to the executors of a claim, with silence on the part of the executors in respect thereto, does not render the claim an established one so as to give to the surrogate jurisdiction to decree its payment on a settlement of the executors' accounts. (Matter of Callahan, 152 N. Y. 320, where the court say: "We are of opinion that mere silence on the part of an executor or administrator after the presentation of a claim under the statute, accompanied by lapse of time, will not in any case preclude the representative from thereafter contesting its validity. * **But the claim does not become established from mere silence of the executor or administrator.") In this case the executors have distinctly disputed the claim by a verified answer, and the surrogate APP. DIV.--VOL. XXXVIII.

41

FIRST DEPARTMENT, MARCH TERM, 1899.

[Vol. 38.

was without jurisdiction to determine the question whether the disputed claim was valid or to decree its payment.

It is said, however, that, under section 2726 of the Code, a surrogate has power in his discretion at any time to require an executor to account, and that such power may be exercised with or without a petition or suggestion from any one, and that the surrogate having exercised his jurisdiction, the fact that the petitioner was not a creditor would not justify a reversal of the order. It is a sufficient answer to this to say that the surrogate has not exercised this power. The proceeding was commenced by a person claiming to be a creditor for the purpose of establishing his interest in the estate as such creditor; and it was to enforce this alleged right of the petitioner that the order was made. So far as appears, no one whose interest in the estate is undisputed requests an accounting at the present time. It now appears that the petitioner's claim is disputed by the executors; that the surrogate would have no power to order payment of that claim by the executors, and that the estate is not in such a condition that there can be a final accounting. The only result of decreeing such an accounting would be that an expensive preliminary account would be required when the estate is not ready for final distribution and when no benefit could accrue to the petitioner, as the surrogate would have no jurisdiction to decree payment of his claim.

Counsel for the executors states that this estate is very large, exceeding $1,500,000. An accounting of such an estate would involve great expense which must be borne by the estate, and so far as appears would be of no advantage to any one. We think that to order an accounting under such circumstances was an abuse of the discretion vested in the surrogate and justifies the interference of this court.

The order is, therefore, reversed, with ten dollars costs and disbursements, and the proceedings dismissed, with ten dollars costs.

VAN BRUNT, P. J., BARRETT, RUMSEY and O'BRIEN, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and proceedings dismissed, with ten dollars costs.

App. Div.]

FIRST DEPARTMENT, MARCH TERM, 1899.

In the Matter of the Voluntary Dissolution of HULBERT BROTHERS

& Co.

WILLIAM M. BULKLEY, Substituted Trustee for the Benefit of Creditors of the E. C. MEACHAM ARMS COMPANY, Appellant; FREDERICK P. FORSTER, as Receiver of HULBERT BROTHERS & COMPANY, and Others, Respondents.

General assignment, with preferences, by a foreign corporation its validity in the State of New York sustained — evidence of public policy-proof of execution of an assignment by a foreign corporation.

A general assignment, executed by a corporation organized under the laws of another State, by which it conveys all its property to an assignee, in trust for the benefit of its creditors, certain of whom are preferred under the terms of the assignment, will be recognized as a valid transfer of a claim existing against a domestic corporation organized under the laws of the State of New York, which has commenced proceedings for its voluntary dissclution; and a receiver appointed in such proceedings will be directed to pay over the amount of such claim to a trustee appointed, by the court of the State in which such foreign corporation was domiciled, in place of the deceased assignee named in such instrument of assignment.

In the absence of proof that, by the laws of the foreign State, the domicile of such corporation, such assignment was not a valid, legal transfer of the property of the assignor, the rules of the common law will be deemed to prevail, and the preference of certain creditors given by the assignment will not invalidate it.

Such an assignment by a foreign corporation which does not transact business within the State of New York, does not contravene the statutory law of the State of New York, prohibiting transfers of property by an insolvent corporation with an intent to give a preference to particular creditors, nor is it repugnant to its general policy.

Semble, that the Legislature of the State of New York has no power to restrict the authority of a foreign corporation not transacting business within the State of New York, and prevent it from exercising the power vested in it by the law of the State of its domicile.

To justify the court in refusing to recognize and enforce in the State of New York a transfer of property, made by a foreign corporation, and valid in the State of its domicile, as opposed to the policy of the State of New York, there must be a clear declaration that the State of New York has adopted a policy, in relation to the transfer of property within that State, which would be interfered with by the recognition of the right of the foreign corporation to exercise its powers, authorized by the State which created it and in which the act of transfer was executed.

FIRST DEPARTMENT, MARCH TERM, 1899.

[Vol. 38. To establish the existence of such a public policy something more is required than proof that domestic corporations are prohibited from making such a transfer. Where it appears by the record that an assignment was properly acknowledged on behalf of a corporation, and that the instrument was signed and sealed by authority of its board of directors, and that an adjudication was had by a court of competent jurisdiction of the domicile of the corporation, to the effect that, by this deed of trust, the corporation conveyed to the assignee, as trustee, all of its assets, real and personal, wherever situated, the execution of the instru ment is properly established.

APPEAL by William M. Bulkley, substituted trustee for the benefit of creditors of the E. C. Meacham Arms Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 31st day of January, 1899, denying a motion to amend the decree entered upon an accounting of the receiver appointed in this proceeding, by inserting before the words "E. C. Meacham Arms Company" the words "William M. Bulkley, the Trustee of."

John Larkin, for the appellant.

James M. Kerr, for the respondents.

INGRAHAM, J.:

This proceeding was commenced for the voluntary dissolution of Hulbert Bros. & Co., a domestic corporation. A receiver was appointed, and subsequently, on February 7, 1898, the receiver filed his account, with a list of the claims against the said corporation which had been filed with him. A referee was appointed to settle the accounts of the receiver, who made his report, which was, on May 27, 1898, duly confirmed. By the order entered confirming such report it was adjudged that the E. C. Meacham Arms Company, a foreign corporation, was a creditor to the amount of $7,929.09, and the receiver was directed by the said order to distribute the balance of the money remaining in his hands among the creditors of the corporation therein named, one of whom was the said E. C. Meacham Arms Company, for the proportion which the aggregate amount of the said claim bears to the balance of the said sum to be distributed. The said order contained the further provision that "where said claims have heretofore been assigned said receiver is authorized to pay the dividend to such assignees respectively." It further appeared that the receiver of this domestic cor