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Gallo v. Gallo

Decided: February 24, 1961.

JOSEPH GALLO, ADMINISTRATOR OF THE ESTATE OF PASQUALE GALLO, DECEASED, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
JAMES GALLO, DEFENDANT-APPELLANT AND CROSS-RESPONDENT



Goldmann, Foley and Nadell. The opinion of the court was delivered by Foley, J.A.D.

Foley

This is an action for an accounting of monies disbursed by defendant pursuant to a power of attorney given him by his aged father, plaintiff's decedent.

The power of attorney, executed on June 4, 1951, was in broad terms. By it defendant was authorized to disburse in decedent's behalf funds on deposit in the United States Trust Company, Paterson, New Jersey, and in addition he was empowered to manage all funds of decedent and to collect rents from property which he owned. No direction was given to defendant concerning the keeping of records of either income or disbursements, nor was indication given that defendant would be expected to account formally. Decedent was then 85 years of age and bedridden. Defendant acted under the power of attorney until decedent's death in 1955.

This action was brought to require defendant to account for the sum of $28,252.11 which he claimed to have disbursed in decedent's behalf during the intervening period. The trial court discharged the accountant of $6,703.37 of this amount, leaving a balance unaccounted for of $21,548.74, with interest at a rate of 6% per annum from August 20, 1951 aggregating $11,097.60, or a total of $32,646.34. Defendant appeals; plaintiff cross-appeals from the dismissal of his claim for an accounting of rentals allegedly collected by defendant.

The central question involved is whether the funds of the decedent disbursed by defendant were used entirely for the

benefit of decedent. It was agreed at the outset of the trial that defendant was required to go forward and account for the disposition of all funds of decedent which had come into defendant's hands during the period in which the power of attorney was in effect. It is not disputed by the parties that the legal relationship between the decedent and defendant established by the power was one of principal and agent, as distinguished from trustee and cestui. Rather, the basic disagreement concerns the degree of the burden which the law places on an accountant in circumstances such as are here presented, and the quantum of proof he is required to supply in discharge of such burden. Defendant contends that the trial court erroneously was guided in its factual determinations by the concept that his obligations in these respects were those of a trustee, and thus encompassed a duty to keep and render a clear and accurate account of the administration of the funds, pointing to the reliance of the trial court on In re Atkinson's Estate , 86 N.J. Eq. 173 (E. & A. 1916), and to the disallowance of certain items of discharge claimed by defendant upon the ground that they were not "substantiated." Defendant argues that since the agent was not required by his principal to keep and maintain records in substantiation of disbursements, which would have been his obligation had he been a trustee, his failure to do so should not have been held against him when he was called upon to account. Rather, says defendant, his naked word that he had expended decedent's monies in his behalf was prima facie sufficient for the purposes of accounting in these particular circumstances, and in the absence of contradiction should have been accepted by the trial judge.

Where the principal expressly, or by implication, has led the agent to believe that he would not be required to account, or that a particular method or kind of accounting would be satisfactory, he cannot complain that the agent has not kept accounts with the strictness which might otherwise have been required, providing he has acted in good faith. Pennsylvania Trust Co. v. Billman , 61 F.2d 382 (3 Cir.

1932). Cf. Robbins v. Robbins , 3 A. 264 (N.J. Ch. 1885); Wilson v. White , 223 Mich. 497, 194 N.W. 593, 597-599 (Sup. Ct. 1923). The informality of the arrangements between decedent and defendant negates the idea that it was either intended or understood that defendant would be called upon by decedent to make a formal accounting of his disbursements. Thus, to hold defendant to the strict standards of proof required of trustees would be in disaccord with existing law. However, this did not relieve defendant of his burden of proving that he had expended the funds for decedent's benefit, when called upon to do so. In view of his broad discretion he was not required to show that his expenditures were necessary nor was proof corroborating his testimony requisite. Yet, if he relied solely upon his own testimony to prove that the funds had been expended exclusively for decedent's benefit, his credibility was put in issue. It follows that if the trial court concluded that his testimony was so lacking in probative weight as to fail to persuade the court that the disbursements were made solely in decedent's behalf, the court was free to reject it even if it was uncontradicted. Testimony to be believed must proceed from the mouth of a credible witness, must be credible in itself, and must be such as the common experience and observation of mankind can approve as probable in the circumstances. In re Perrone's Estate , 5 N.J. 514, 522 (1950). Moreover, it is a well established and obviously salutary rule in this State that the testimony of a witness need not be believed when the only person who could have contradicted the witness is dead. Ibid.

Firmly entrenched in decisional law and court rule is the concept that the question of credibility is preeminently one for the trial court, since it hears the case, sees and observes the witnesses, hears them testify, and has better opportunity to judge their credibility than the reviewing court, Capozzoli v. Capozzoli , 1 N.J. 540 (1949). Appellate courts are reluctant to disturb findings of fact made below, Sheehan v. Sheehan , 51 N.J. Super. 276 (App. Div. 1958),

certification denied 28 N.J. 147 (1958), although this court pursuant to R.R. ...


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