8 F. 60 | U.S. Cir. Ct. | 1881
J. B. Grinnell, petitioner, was appointed by this court receiver of the Central Railroad of Iowa on or about the fifteenth day of January, 1876, to succeed one D. M. Pickering, and his compensation was fixed by the order of appointment at $3,000 per annum. Accompanying the order of appointment were instructions
“ It is not expected that you will serve as superintendent. You will continue the present superintendent, or employ another, as your judgment dictates, on the best terms that will secure a good man.”
The petitioner served as receiver during a period of two years and three and one-half months. From January 1, 1876, until May 1, 1877, he had no general superintendent, and performed, during that period of 15 months, the duties of a general superintendent in addition to those of the receivership. By petitioner’s direction the duties of the offices of auditor and cashier were united in one person, whereby a saving to the company of about $100 per month was effected. The petitioner, upon entering upon his duties, reduced the salaries of all officers and employes under him 10 per cent. The company had an attorney employed at $60 per month salary and $20 per day additional when actually employed in court. The petitioner attended in person to some of the legal business of the company, being engaged in this way for about 30 days. In the disbursement of the revenues of the road during his administration, the petitioner applied to the payment of debts contracted by his predecessor during bis receivership the sum of $280,000. After petitioner’s appointment the court and parties interested in the main suit required frequent statements and reports of the accounts in the general office of the road, which called for a greater amount of time and labor on the part of petitioner than would be required ordinarily at the bands of a receiver. During petitioner’s service his general health and eye-sight became much impaired, and it appears that in the discharge of his duties the petitioner was frequently called to travel on the trains and to break his rest at night.
The master finds the foregoing facts, and also reports that petitioner had effected a saving in the expenses, under various heads, in his operation of the road, compared with the similar expenses of his predecessor, of $85,000 in about 18 months. On the part of complainant the master finds that there is still a large balance unsettled on the final account of petitioner as receiver. This balance consists of three items:
(1) An item of $4,000 expended by the receiver to purchase, for the benefit of the company, a half interest in an uncompleted railroad, known as the “Farmers’ Union Railroad,” and this without application to, or order or approval of, this court. (2) An item of $1,177.90, being a note of the “Iowa Terra-Cotta and Fire-Clay Company,” received in payment of freights clue the company as cash, and credited to the receiver in his accounts as such. This*62 note cannot be collected, and is therefore by the master charged back to the receiver. (3) An item of about $190, growing out of a contract for water supply at Grinnell.
The petitioner paid $400 in advance to certain parties who agreed to furnish such water supply, but failed to keep their contract, whereupon petitioner paid back to the present receiver the sum of $210, leaving the above balance unsettled. Upon these facts Mr. Grin-nell petitions the court to increase his compensation to $5,000 per annum. This is asked more specifically upon the grounds following, to-wit:
(1) For performing double service as receiver and general superintendent for a period of 15 months. For this the sum of $2,500 is claimed. (2) For saving effected by joining the offices of auditor and cashier.' For this $1,340 is claimed; (4) On account of duties and responsibilities not anticipated in accepting the office, growing out of debts amounting to $280,000 previously contracted. On this sum half of 1 per cent, is claimed, amounting to $1,400.
The allowance is further urged upon the ground of extra labor, care, and responsibility occasioned by the bad condition of the road, the necessity for new work, and extraordinary expenditures.
The complainant, in its answer to the receiver’s petition, insists:
(1) That the receiver had no right, under this order of the court, to unite the offices of receiver and superintendent; (2) that the petitioner was bound to perform the duties performed by him — if at all — without extra compensation ; (3) it was petitioner’s duty to disburse the money in payment of debts contracted by his predecessor; (4) the trusts and responsibilities imposed upon the petitioner were such only as usually attend upon such avocations.
The answer further set forth the facts in relation to the three unsettled items in the account of the petitioner as receiver, above mentioned, and avers that said payments were unauthorized, and said Grinnell should account to this court for and pay over the amount of said items to his successor, and should be “disallowed any additional compensation for any cause or under any pretext.”
It is further insisted in argument, but not set forth in any pleading, that the petitioner’s claims should be rejected on account of certain transactions by him as receiver, which will be particularly stated hereafter. We will briefly consider two questions:
(1) Whether, assuming that the receiver has faithfully administered his trust without intentional error or fraud on his part, he is entitled to an additional allowance, and if so, how much? (2) Whether by his conduct in office he has justly forfeited any claim to such additional allowance?
We are clearly of the opinion that the salary originally fixed was inadequate, considering the nature of the duties and responsibilities it
Some of the specific claims of petitioner cannot be allowed, because they are based, not upon the performance of extra or unexpected duties, but upon the ground that he discharged the proper duties of his office with fidelity and economy, and in such a manner as to save money to the company. Of this character is the claim for an allowance on account of the uniting, by order of petitioner, of the offices of auditor and cashier; also the disbursement of money in payment of debts due before his appointment, and some others of a similar character. However praiseworthy the petitioner’s conduct may have been .in respect of these matters, he did no more than his duty: no more than was required of him by his contract.
It does appear, however, from the master’s report, and from the record of the long and bitter contest in the foreclosure suit, that demands were made ujjon the receiver for reports and statements of accounts in the general office, requiring a greater amount of time and labor on the part of the petitioner than ivas anticipated at the time of his appointment. Wo think also that it sufficiently appears that the condition of the road, and the state of the litigation concerning it, devolved some extra duty upon the receiver, and some work and travel at night, and outside of the usual hours of labor. X<‘or this extra service we think him fairly entitled to an allowance of $1,300.
It is conceded that during a period of 15 months petitioner discharged the duties of receiver and superintendent, and thus saved the salary of one official. It is clear that this was extra service not contemplated by the original order of appointment. It is also clear that the sum claimed ($2,500) for this extra duty is less than would have been required to pay the salary of a competent superintendent. Rut it is insisted that the receiver violated his instructions by per
“A receiver may be entitled to allowances beyond Ms salary for any extraordinary trouble or expense he may have been put to in the performance of his duties, or in bringing actions, or defending legal proceedings which have been brought against him.” Kerr on Receivers, 219.
All this, however, is upon the assumption that the receiver has been guilty of no such fraudulent conduct as ought to forfeit his right to compensation.
We have already called attention to three items in the account of the receiver which have been rejected by the master as unauthorized, and to the clause in the answer wherein it is alleged that by reason of these the receiver should not be allowed extra compensation. Concerning these items it is sufficient to say that they have never been allowed to the receiver; that they stand charged against him, to be accounted for on final settlement; and that there is no proof upon ■which it can be maintained that any fraud was intended by him with respect to either of .them. All that he did was perfectly consistent with an honest belief on his part that he was acting within his .authority, and for the best interests of the company. But our attention is invited to certain other items in the receiver’s accounts which have been passed by the master, and which are now charged in argument — but not in the answer — as fraudulent, and of such character as to deprive petitioner of extra compensation.
The first of these is an item of $1,757.45 for ties which belonged
The same may be said concerning the charge that the petitioner as receiver purchased for the road lumber in which he was personally interested. It appears that petitioner had nothing to do with fixing the price. It is probable that some of this lumber was of inferior quality, and that General Superintendent Russell and the foreman of the car-shops fixed a higher price upon it than was just; but in the absence of proof we cannot presume that petitioner knowingly and corruptly received more than his interest in the lumber was worth.
As to the other items objected to there is still less evidence of corrupt purpose, and we do not think it necessary to consider them in detail. A clear distinction is to be drawn between the question whether the receiver shall be allowed for these expenditures upon final settlement, and the question whether his conduct with respect to them has been such as to deprive him of the right to receive compensation for his services. It is only upon the ground of deliberate fraud that so severe a penalty as a loss of all pay can be with propriety enforced; while on the ground of error or mistake alone the receiver may be charged with the expenditure upon final settlement. It is manifest that we cannot find fraud established by the proof before us. Indeed, there is nothing in the answer to petitioner’s claim, nor in any of the pleadings forming the issues now on trial,
The order is that petitioner be allowed for extraordinary services the sum of $4,390, to be credited to him on final settlement.