In this compulsory accounting proceeding, the petitioner has now been paid $115,556 on its claim and the only remaining issue is whether it is also entitled to $43,136.60 in interest, computed at the statutory rate of 9% from February 22, 2001 to January 13, 2006.

The decedent entered the petitioner's nursing home on February 22, 2001 and resided there until her death on August 16, 2002 at the age of 90. During that period, the petitioner did not receive any payment other than three "SSA" payments. It has not been established whether or not the petitioner ever presented bills to the decedent for its services while she was alive. The decedent's distributees are the administratrix, who is her sister, and six nieces and nephews.

Prior to the commencement of the compulsory accounting proceeding, the petitioner served a claim upon the administratrix on or about September 24, 2005, seeking $115,786, plus interest from February 22, 2001, for "services consisting of housing and caring for Decedent" in its nursing home from February 22, 2001 to August 16, 2002. On the return date of process in this proceeding, counsel for the administratrix stated on the record that the estate was honoring the claim, but payment could not be made until the sale of the decedent's house. In contemplation of the proceeding being withdrawn upon payment of the claim, the compulsory accounting proceeding was adjourned until after the closing date for the sale of the realty.

On January 13, 2006, the petitioner sent a bill to the administratrix for $158.702.60,of which $115,566 was for the balance due for the services rendered and $43,136.60 was for interest. On January 25, 2006, the administratrix sent a check to the petitioner for $115,556, stating that the estate would not pay interest on the claim without a court order. Thereafter, the parties stipulated on the record that the issue of the petitioner's entitlement to interest would be submitted upon papers. Although the parties were afforded the opportunity to submit additional documents after their original submissions, no additional papers were submitted.

The petitioner asserts that the validity of its claim was established when the administratrix indicated on the record that the claim would be honored (see SCPA 1807[1]) and, consequently, the estate is obligated to pay interest at the rate of 9% per annum (CPLR 5004). The petitioner also contends that an award of interest from February 22, 2001 is mandatory under CPLR 5001(a), which provides that "interest shall be recovered upon a sum awarded because of a breach of a performance of a contract" and that under CPLR 5001[b], "interest shall be computed from the earliest ascertainable date the cause of action existed." [*2]

The administratrix contends that an award of interest is discretionary with the court and relies on the holding in Matter of Reiss (203 Misc. 144 [1952]) for the proposition that a surrogate's court must act under principles of equity in allowing interest on claims. She argues that, upon balancing the equities, no award of interest is warranted because the administratrix was of an advanced age, the sole asset was a home that was abandoned and vacant for a period of five years and the delay in administering the estate was not as a result of bad faith, wrongdoing or inequitable conduct.

At the outset, it is noted that there are some small discrepancies with respect to both the amount of the petitioner's claim and the amount that was paid to satisfy the principal sum due. Specifically, the original claim was for $ 115,786 while the amount demanded for principal in the January, 2006 bill was for $220 less, i.e., $115,566. Moreover, it appears that the estate paid $115,556, i.e., $10 less than the principal amount demanded in the bill. As neither party makes any reference to these discrepancies, the court is treating them as de minimis and deeming that the principal amount of the claim is now paid in full.

The record fails to support the petitioner's contention that the administratrix specifically agreed to pay interest on its claim. Although the claim that was served upon the administratrix stated that the petitioner was seeking interest from February 22, 2001, it did not state either the rate of interest that it was seeking or the amount of interest that was then owed. Of even greater significance, when counsel for the administratrix stated on the record that the claim would be paid, neither party indicated whether or not it was inclusive of interest. Moreover, even if the portion of the claim for interest should be deemed allowed by the administratrix pursuant to SCPA 1807(1), that section explicitly provides that "if the court sustains the objections" that the claim was improperly allowed, "the claim shall thereupon be dismissed if it has not been paid." Thus, the statements made on the record in open court on the return date of process in the compulsory accounting proceeding are not dispositive of the issue sub judice.

CPLR 5001(a) provides that "in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court's discretion." However, the court cannot agree with the administratrix' contention that the surrogate's court has discretion to treat any claim against an estate as an equitable action. A claimant's right to interest should not depend upon whether the claim is being adjudicated in the surrogate's court or another court. Even in those instances where, as appears to be the case here, there is no express agreement to pay interest for goods or services, there is an implied contract to pay interest and "the mere presentment of the bill . . . constituted a sufficient demand to start interest running" (Davison v Klaess, 280 NY 252, 258 [1939], citing Backwell v Finlay, 233 NY 367). Furthermore, the general rule is that the estate of the decedent is subject to paying the same interest on a claim as the decedent would have been obligated to pay during her lifetime (6 Warren's Heaton, Surrogate's Court Practice, § 71.07[5], at 71-86 [7th ed rev]). Accordingly, a debt for services rendered usually bears interest from the date payment has been demanded or a bill rendered (Davison v Klaess, supra; 6 Warren's Heaton, Surrogate's Court Practice, supra, at 71-87).

The papers submitted herein reflect that the petitioner served a claim upon the administratrix in September, 2005, which asserted its right to recover interest, and thereafter presented a bill to her dated January 13, 2006, in which the amount sought for interest was stated. However, the record fails to reflect that any bills were ever presented to the decedent during her lifetime. The documents supporting the January 13, 2006 bill reflect that "SSA" [*3]made three payments between June and August 2002 for the services the petitioner rendered to the decedent. Thus, on this state of the record, it would be mere speculation for the court to conclude either that bills were presented to the decedent while she was alive or that the petitioner intentionally did not submit any bills to the decedent because it expected to receive payment from "SSA" or some other governmental program, or because the petitioner agreed to not seek payment until the sale of decedent's home, whenever that might occur. Consequently, the petitioner, who has the burden of establishing each aspect of its claim by clear and convincing proof (Matter of Adams, 1 AD2d 259 [1956], affd 2 NY2d 796 [1957]), has failed to establish that it demanded payment for its services prior to September 24, 2005, the date that the instant claim was served upon the executrix.

Based upon the above, the court holds that the petitioner is entitled to interest on the sum of $115,566 (the principal amount of the claim stated in the January, 2006 bill) at the rate of 9% per annum from September 24, 2005, the earliest date that it was established that either the decedent or her estate received a demand for payment, until January 26, 2006, the date that the sum of $115,556 was paid to the petitioner. The petitioner is also entitled to interest at the rate of 9% on the amount of the above allowed interest from January 26, 2006 until the date of payment of all interest in full.In effect, the court's determination does not allow claimants to delay in presenting bills or claims for services rendered until several years after the services were performed and then recover from the date the services were performed statutory interest of 9%, a rate which presently greatly exceeds the rate of interest paid by financial institutions for either savings accounts or time deposits. To the extent that the administratrix complains that the result is unfair to the beneficiaries of the estate because the estate could not pay the claim until the real property was sold, no greater hardship is imposed upon beneficiaries than is imposed upon a decedent while alive. Moreover, if the real property could have been mortgaged at an interest rate that was substantially less then 9%, the prudent course for the fiduciary would have been to mortgage the property and pay the claim with the mortgage proceeds. In any event, to the extent that the present statutory interest rate imposes an unfair burden on debtors, it may only be changed by legislation.

Settle decree.

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SURROGATE