Cohen v. Feuerstein

| N.Y. App. Term. | Apr 15, 1913

Page, J.

The complaint alleges that in an action of foreclosure in the Supreme' Court, in which this defendant was plaintiff, Joseph Cohen, the plaintiff herein, was, upon the application of this defendant, appointed receiver of the rents and profits of certain real property and duly qualified; that upon taking possession of the property as suchr receiver he discovered it to be-“ in such condition that immediate repairs thereof were necessary for the preservation thereof, and that had said repairs not been forthwith made the said premises would have become uninhabitable and dangerous to health, life and limb of. the'tenants or persons in occupancy of 'said building; ’ ’ "that thereupon the plaintiff herein, upon the request-of the defendant and with the full knowledge on the *part of this defendant that the moneys which the plaintiff herein, as receiver, had in hand were insufficient to pay for such repairs, proceeded to make such repairs and to incur expenditures and liabilities therefor.. It further states that after the incurring of the said expenditures and before the receiver had collected an amount sufficient to reimburse himself therefor the action was discontinued by consent of the parties to the action and the receivership terminated, all without the knowledge or consent of the receiver. There follows a statement of proceedings had upon the settlement of the receiver’s account wherein certain referee’s, stenographer’s and counsel fees were incurred by reason of objections filed to the account and in which it was finally adjudged that there was a deficiency due to the receiver of $441.03, for which -amount judgment was demanded.

The defendant demurs to the complaint on the ground of misjoinder of parties plaintiff and that the complaint" does not state facts sufficient to constitute a cause of action. The learned judge of the Special Term in effect overruled, the demurrer and from his determination this appeal is taken.

While it has frequently been held that where a receiver is appointed without authority of law the party who was responsible for his appointment is liable for Jiis fees and expenses (Weston v. Watts, 45 Hun, 219). ‘ ‘ The mere inadequacy of the property and its failure to realize at a sale a sufficient amount to cover the costs and expenses of the receivership will not render the plaintiff personally liable for such deficiency, where he has been guilty of no irregularity and has properly invoked the jurisdiction of the court in the first instance.” High Receivers, § 809a. In Atlantic Trust Co. v. Chapman, 208 U.S. 360" court="SCOTUS" date_filed="1908-02-24" href="https://app.midpage.ai/document/atlantic-trust-co-v-chapman-96781?utm_source=webapp" opinion_id="96781">208 U. S. 360, the above principle was affirmed by the Supreme Court of the United States.

It appears from the complaint that the' receiver was properly appointed and no liability of the defendant can be predicated upon irregularity or illegality of the proceedings. It is claimed that his liability arises from the fact stated in the complaint “ that all of the said expenditures and excess of expenditures were incurred by the plaintiff herein for the benefit of and at the request of the defendant. ’ ’ As the account set forth shows that there was not sufficient money collected to defray the expenses of the receivership there was no benefit to this defendant accruing therefrom and he cannot be charged with the burdens and expenses on that ground. Assuming that he requested the plaintiff to make repairs, no liability would arise unless from the circumstances of the request could be implied a promise to pay. The receiver was in no sense the agent of this defendant and was not amenable to his command or direction. It was his duty as an arm of the court to preserve the property from the income of the property, but not otherwise. This is not a case in which the receiver has been requested to do something outside of the usual scope of his duty under a promise to pay for it. At the time the request was made it was certainly the intention of both parties that the expenses should be defrayed from the income of the property and it was not foreseen that the receivership would terminate before sufficient funds were collected. No promise to pay can be implied in fact from the probable intention of the parties and inasmuch as it does not appear that the discontinuance of the action was the fault of the defendant no duty can be imposed by-law upon him by reason thereof. No express promise to pay it alleged and as none can be implied the complaint shows no ground for the defendant’s alleged liability.

The order appealed from should be reversed with ten dollars costs and disbursements and the motion denied, with ten dollars costs.

Guy and Gebabd, JJ., concur.

Order reversed.