Bergmann v. Lord, 194 N.Y. 70 (1909)

When the statutory provisions governing probate and administration make it impossible to administer a non-resident decedent’s estate in New York, equity will entertain a suit for the administration of property located in New York to pay creditors, even if they haven’t obtained a judgment.

Summary

Bergmann, a creditor of Lord, a non-resident who died leaving property in New York, sued to administer Lord’s estate in equity to satisfy their claim. The statutory probate procedures were insufficient to address the situation. The Court of Appeals held that equity could entertain such a suit even without a prior judgment against the debtor, as the normal legal remedies were inadequate. The court emphasized that the suit should be on behalf of all creditors and that necessary parties, such as the foreign executor or beneficiaries, should be included.

Facts

The plaintiffs were creditors of a deceased debtor, Lord. Lord was a non-resident of New York when the debt was incurred. Lord died leaving property within New York State. The statutory provisions governing probate in Surrogates’ Courts and the issuance of letters testamentary made it impossible to prove the will or obtain letters of administration in New York.

Procedural History

The lower courts dismissed the plaintiff’s action. The New York Court of Appeals reviewed the case to determine if equity could provide a remedy when standard probate procedures were insufficient.

Issue(s)

1. Whether a creditor can maintain an action in equity for the administration of a non-resident decedent’s property located within the state when the statutory provisions for probate and administration are inadequate to address the situation.
2. Whether the action should be brought on behalf of all creditors for a ratable distribution of the estate.
3. Whether the foreign executor or the persons beneficially interested in the estate are necessary parties to the action.

Holding

1. Yes, because equity will intervene to provide a remedy where the normal legal channels are insufficient to administer a decedent’s estate and satisfy creditors’ claims.
2. Yes, because the suit should be brought on behalf of all creditors for a ratable distribution of the estate’s assets.
3. Yes, because either the foreign executor or the persons beneficially interested in the estate are necessary parties to the action.

Court’s Reasoning

The Court reasoned that when the existing statutory probate procedures are inadequate to handle the estate of a non-resident debtor with property in New York, equity provides a remedy to ensure creditors can be paid. The Court cited Thompson v. Brown, stating that equity would entertain an action by a contract creditor against an executor for the administration of the estate and the payment of the debts of the deceased, but that the action must be brought on behalf of all the creditors. The court also recognized that creditors typically don’t need to obtain a judgment unless their claim is rejected by the administrator. Addressing the need to have a judgment to bring the suit, the court stated that