Gustav Erbe v. Lincoln Rochester Trust Company

[3 N.Y.2d 321 Page 324] Plaintiffs are persons interested in the estate of Gustav Erbe, who died testate in 1931. A predecessor to the defendant
bank, together with others, including the plaintiff Gustav Erbe, Jr., duly qualified as executors of the will. The bank was
also a creditor of the estate. A major portion of the estate assets consisted of shares of common and preferred stock in a
closely held corporation of which the testator was the president and a cofounder. In 1941, the surviving executors, among
whom were the plaintiff Gustav Erbe, Jr., and the defendant bank, submitted a petition to the Surrogate's Court requesting
that their accounts be judicially settled. This petition also contained a proposal for the sale of the aforesaid shares of
stock at public auction and a proposal by the bank to bid at this sale upon the understanding that if it was successful the
amount of its bid might be paid by offsetting the amount determined to be owed it by the estate. The Surrogate approved the
settlement of the accounts, but declined to give any direction or advice concerning the proposed sale of the estate's holding
of stock. In July, 1943, the bank sold the stock to itself at a public auction, paying the purchase price therefor by crediting
that amount against the claims it had against the estate. In April, 1945 a decree concluding the administration of the estate
was entered.