208 F. 381 | S.D.N.Y. | 1913
Gilbert Transportation Company had a contract with defendant for the carriage and delivery of a large quantity of stone. The performance of this contract would have extended over a long time. Before any considerable fraction of the work had been done, the transportation company became insolvent, and Mr. But-terworth was duly appointed receiver.
He was cautious, if not warned, regarding this contract, and never assumed it, but did proceed to transport and deliver a certain quantity of stone, in accordance with its terms, in order to ascertain whether he would assume and fulfill the same. He shortly became convinced that the contract was unprofitable, could never be of any benefit to the estate in his charge, and rejected it. Of such rejection he notified defendant, which has proven damages growing out of nonperformance of contract far exceeding the worth at contract prices of the services rendered by the receiver. It is for the value of such services that this suit is brought.
The matter is probably a deadlock until recourse is had to equitable principles, by which the rights and duties of receivers are governed; and here, I apprehend, equity means especially justice and common sense. A receiver is permitted to experiment with a contract before assuming it, only because experience shows investigation and reflection to be usually for the benefit of the estate in charge. But if the receiver’s acts are for the benefit of the estate, who shall pay for them?
It is the whole contract, and not merely a selected portion thereof, which can be assumed. The receiver can take or leave, but he must act in regard to the whole. If it were otherwise, a contractor in default under many forms of contract has but to suffer a receivership and thereby enable his general creditors to collect the price for (possibly) nearly all the work to be done, if the receiver rejects before completion. This is singularly unjust, and it is not to be presumed that any court of equity would permit such conduct.
It is (I think) because the basis of this plaintiff’s claim is so easily capable of abuse that little applicable case law can be found. It is not doubted that, where a debt is due “for a sale made by a receiver, the receiver is a party to the contract of sale, and his action is not subject to equities against the insolvent by way of set-off. But this is not inconsistent with the existence of such right of set-off when the receiver sues not on his own sale alone, but for the value of goods delivered in part performance of his insolvent’s contract.” Kuebler v. Haines, 229 Pa. 274, 78 Atl. 141. Still more obvious is the result where the contract (as here) is for services, and Parsons v. Sovereign Bank, 107 L. T. Rep. 572, is decisive.
Verdict directed for defendant.