| N.Y. App. Div. | Jul 1, 1898
The following is the opinion of the referee:
The plaintiff is the receiver of the Union Warehouse Company, a ■corporation organized under the laws df the State of New Jersey. He was appointed such receiver for the State of New York on June •8, 1894, a receiver having theretofore been appointed hy the Court ■of Chancery in New Jersey. The order of appointment conferred upon him the usual powers of receivers according to the laws of the State of New York and the practice of the Supreme Court, and also power to continue the business of the corporation until the further order of the court.
At the time of his appointment, the Union Warehouse Company held by assignment from E. B. Bartlett & Co., dated January 8, 1892, a lease from the executors of one Prentice to Bartlett & Co. of certain warehouses, bulkhead and piers in Brooklyn. Bartlett & Co. had sublet to the defendants in this action three piers and part of the bulkhead hy a written lease upon which the present action is brought. Said sublease had also been assigned hy Bartlett & Co. to the Union Warehouse Company.
Both the principal lease and the sublease contained covenants of quiet enjoyment of the respective demised premises “ without let, suit, trouble or hindrance of or from the parties of the first part (the landlords), or any other person or persons whomsoever.”
The principal lease contained a covenant on the part of the tenant to keep the demised jiremises in good order and repair “ except .as hereinafter otherwise expressly provided.” This exception referred to two subsequent provisions of the lease, the first being a provision and condition that, if the demised premises should “ly fire
By the sublease to the defendants in this action, the Bartletts agreed that, upon written request from the tenants, they would make such repairs as were caused by ordinary wear and tear and were found to be necessary, reserving the right to enter upon the premises at all reasonable times for the purpose of making such and. any and other repairs and of due inspection.
In the clause in the sublease providing for such repairs, the words- “ or rebuilding ” had been stricken out. Before this omission, made upon execution, the wording of the sublease had been such as to reserve the right to the landlords to enter upon the premises at all reasonable times for the purpose of making repairs or rebuilding.
The sublease contained another provision in the following words: “ It is further agreed between the parties hereto that, if during the term of this lease, either of the piers, bulkheads or sheds or any of them are destroyed iy fire or other elements, or so injured as to be untenantable or unfit for occupancy, a proportionate part of the rent for such part of the premises as are thus injured or destroyed shall cease until such premises are rendered tenautable, the parties-of the first part (the landlords) having the option to repair or rebuild such premises or such part as may be injured or destroyed.” ■
By an express provision of the sublease, it was agreed- that that lease should be subject to the covenants, conditions and agreements of the principal lease, except the covenant to pay rent.
Prior to the appointment of the plaintiff as receiver, the Prentice executors employed contractors, who entered upon the demised
I am satisfied that what they did, besides repairs proper, amounted to a rebuilding of one of the piers rented to the Sandersons by the sublease. It was conceded, upon the trial, that if any legal damage was thereby caused to the Sandersons, its measure in money was $3,103.32. It was also admitted that the entry was not at the request or with the formal consent of either of the parties to this action, or of the Union Warehouse Company.
Promptly after the appointment of the plaintiff as receiver, the attorneys for the Sandersons notified him that their clients claimed demurrage on vessels and allowance for interruption of their occupation of the demised premises. In addition to verbal notice, they sent him on June thirteenth a copy of a letter from the Sandersons, in which the latter mentioned a verbal arrangement with E. B. Bartlett for demurrage on lighters, the unloading of which was prevented by the repairs proper; claimed the right to a reduction of rent during the rebuilding of pier No. 2, and suggested an amicable arrangement with the receiver in reference to both allowances.
The rent under the sublease was payable in advance in equal monthly installments of $4,375. The attorneys for the Sandersons responded to the receiver’s demand for payment of the installment which fell due July 1, 1894, by calling his attention to their claims against him, which they wanted adjusted before they paid any rent.
On July 18 or 19, 1894, the plaintiff accepted from them in full payunent of the Jnly rent a check for $1,271.68, being the difference between the July rent for $4,375 and $3,103.32, and signed a paper, the material part of which is as follows :
“New York, July 18th, 1894.
“Messrs. Sanderson & Son, Agents,
“Nos. 21 &22 State Street,
“ To E. B. Bartlett & Co., Dr.
* -x- *
“ July 1, to rent of piers, Prentice Stores,
month ending 31st inst., as per lease............... $4,375 00
“ Less deductions as agreed ■—■
“■£ rent pier # 2, June 1 to 23rd inc....... $630 14
“ Entire rent pier % 2, June 23rd to 30th„. 383 56
*550 “Entire rent pier 2, July 1st to 31st.... $1,698 62 “Extra expenses trucking cargo, demurrage'
on boats, lighterage, &c................ 391 00
---$3,103 32
$1,271 6&
“WM. W. GOODRICH,
“Rear. TI. W. Oof
The amount of the deductions appears to have been adjusted by negotiation between the Sandersons and a Mr. Woodruff, who, prior to the appointment of the receiver, had been vice-president of the Union Warehouse Company.
The receiver appears to have claimed the right to have a similar deduction made in his favor by the Prentice executors. They refused to make it, sued him for rent and obtained judgment in full, Mr. Justice Gaynor, before whom the action was tried, deliving a brief opinion to the effect that, if the acts of the Prentice executors amounted to a trespass, that would not excuse the lessees, Sanderson & Son, from paying their rent to the Union Warehouse Company, it not having been a party to the trespass, and that the receiver of the Union Warehouse Company could not, therefore, allow any deduction of rent to Sanderson & Son. The judgment entered upon this decision has been affirmed by the Appellate Division in the second department.
The action referred to me is brought to recover as rent the said amount of $3,103.32. The complaint demands $3,180, but the actual amount in controversy is $3,103.32.
The issues referred to me arise only upon the answer of the-defendant Oswald Sanderson, which alleges a breach of the covenant of quiet possession and an agreement with the plaintiff adjusting damages at $3,103.32. By a separate paragraph, the answer sets up the settlement made in July, 1894, as an account stated and an accord and satisfaction. It also alleges that, prior to the commencement of this action, the plaintiff had assigned the cause of action to a corporation known as the Brooklyn Wharf and Warehouse Company.
I am satisfied that the cause of action has not been assigned by
I am not satisfied whether the defendants had at any time a valid offset or counterclaim against the rent due under the lease for the interruption of their possession. They clearly had none under the covenant for quiet possession. The words “ or any person whomsoever ” are usual words in such a covenant, and the authorities, including of course the opinion of Hr. Justice Gaynor, are decisive that that covenant in a lease is not broken by the intrusion of any person other than the landlord, those acting under his authority, or some one having a paramount title to his.
1 am, however, satisfied that in negotiating for a settlement, the defendants pressed their claim in good faith, and that it was conceded as a valid claim by the plaintiff in equally good faith, and the amount adjusted by negotiation, the result of which both parties accepted.
Reserving for later discussion the question whether the plaintiff as receiver had power to settle with the Sandersons, I have reached the conclusion that, as between parties acting sui juris, the settlement in July, 1894, would have been a perfect and binding accord and satisfaction.
The case of Fuller v. Kemp (138 N.Y. 231" court="NY" date_filed="1893-05-02" href="https://app.midpage.ai/document/fuller-v--kemp-3588837?utm_source=webapp" opinion_id="3588837">138 N. Y. 231) states the rule to be that “ there must be present in the transaction upon which it (an accord and satisfaction) rests, all the elements of a complete agreement— a lawful subject-matter, a sufficient consideration, and the aggregatio mentium or mutual assent of the parties.”
■ These elements appear to me to have been present in the transaction in question. The subject-matter included the plaintiff’s claim for rent, and the claim of the tenants for reimbursement on some ground for the interference with their possession. The latter was an unliquidated claim, and its adjustment at a fixed sum, so that the tenants could not claim more, furnished, in connection with the payment of the balance, a sufficient consideration.
As I find other good consideration, I do not feel bound to consider whether the rule as to accord and satisfaction by negotiable instrument is applicable to transactions with a receiver.
The receipt by the plaintiff of the defendants’ check for the balance agreed upon as due, taken in connection with the statement of account which he signed, proves the meeting of the minds of the parties.
It was argued on behalf of the plaintiff that there were several reasons why the settlement was not binding as an accord and satisfaction. Among other things, stress was laid upon an expression which occurs in some of the cases on the topic, that it is a requisite to a valid accord and satisfaction that there should have been a disputed claim.
It does not seem to me that it would add anything to the strength of the plaintiff’s case if I were to hold that he did not dispute the defendants’ claim to an offset. If so, it must be on account of some purely technical rule, because to the ordinary mind an undisputed claim would naturally appear to furnish at least as good a consideration for a settlement as the same claim if it were disputed. I do not think that the use of the word “ disputed,” in the cases cited by plaintiff, means that one who omits to dispute a claim may after-wards insist that a settlement of it was invalid on account of that omission.
However this may be, 1 think that there was in fact a dispute between the receiver and the Sandersons preceding the settlement of July 18, 1894. Immediately after the appointment of the receiver, he was notified that the defendants expected a rebate of rent and other compensation for the interference with their possession of the pier. On or about July 1, 1894, he demanded payment of the July rent. The claim of the Sandersons was called to his attention as ground for their refusal to pay until it should have been adjusted. On July 17,1894, he wrote to the attorneys for the Sandersons, saying: Will you kindly arrange for the payment of the Wilson rent? 1 believe our clients have agreed upon the amount of
I think that this letter shows that there had been matter requiring adjustment, and I can see no distinction between such matter and matter in dispute. Furthermore, the receiver’s attorney had meanwhile threatened to sue for the July rent, and the Sandersons’ attorney had suggested the determination in such an action of their claim for a deduction.
It is further argued that the Sandersons’ claim was admitted in full, and, therefore, that there was no dispute and no compromise, and that it follows that there was no accord. I do not find any evidence whether or not the Sandersons had ever claimed more than was allowed them, but I am entirely clear that their claim was an unliquidated one prior to the agreement referred to in the receiver’s letter of July seventeenth. Even if the amount of the demurrage could be regarded as a liquidated item, 1 cannot find any evidence that, prior to that agreement, there was anything binding either party as to the relative rental value of pier No. 2.
The plaintiff construes the admission that $3,103.32 was the actual amount of the damage as a concession that that sum was the Sandersons’ whole claim allowed in full. I am not sure that I ought so to construe the admission. At any rate, I cannot see that the effect of that admission is to remove from the case the actual fact that, prior to the settlement of July 18, 1891, neither party was bound to any definite figure.
Nor can I agree with the contention that there is no accord unless there is compromise. I do not find any case so holding. It seems to me that the case of Nassoiy v. Tomlinson (148 N.Y. 326" court="NY" date_filed="1896-01-28" href="https://app.midpage.ai/document/nassoiy-v--tomlinson-3591871?utm_source=webapp" opinion_id="3591871">148 N. Y. 326) is inconsistent with such a proposition.
In that case the facts stated indicate that the only dispute was whether the plaintiff was entitled to one per cent upon $30,000, oi five per cent upon the same sum. The defendant sent him a check for $300, with a request that he sign a voucher in full. He collected the check, sent a receipt on account and brought action for $1,200. The jury found that, according to the original agreement upon which he sued, his compensation was to have been at the rate of five per cent, and, further, that he had not agreed to accept the
The plaintiff further urges that an offset is not the equivalent of a payment, and cites Renard v. Fiedler (3 Duer, 318" court="None" date_filed="1854-05-20" href="https://app.midpage.ai/document/renard-v-fiedler-8316438?utm_source=webapp" opinion_id="8316438">3 Duer, 318). I do not think that that case draws any distinction between an erroneous payment of money and an erroneous allowance of deduction. In my. judgment the transaction which took place between the plaintiff as receiver and the Sandersons is subject to no different construction than if Sanderson & Son had drawn and delivered to the plaintiff a check for $4,375 for rent, and he had drawn and delivered to' them a check for $3,103.32 in payment of their claim. It seems to me that there is no legal difference between the payment by one party of the balance of an account stated and the payment by each party of the gross amount to his debit before a balance is struck-
It is urged that the same case of Renard v. Fiedler is authority for the proposition that if the plaintiff made an error of law in allowing the deductions he may recover. It is true that it was-argued by the defendant in that case that the error made by the plaintiff was one of law; but all that the court said on the topic was that the doctrine as to payment under mistake of law was laid down by the counsel for the'defendant in much broader terms than the decisions warranted, and later in the opinion it is said that “ an error of calculation, no matter from what cause it arises, may in all cases reasonably be considered as a mistake in fact and not in law.”
The weight of authority seems to be in favor of the proposition that a valid accord and satisfaction may be founded upon an untenable claim (Union Bank of Georgetown v. Geary, 5 Pet. 99" court="SCOTUS" date_filed="1831-02-18" href="https://app.midpage.ai/document/union-bank-of-georgetown-v-geary-85718?utm_source=webapp" opinion_id="85718">5 Pet. 99, 114; Pitkin v. Noyes, 48 N. H. 294; Fisher v. May's Heirs, 2 Bibb [Ky.J,. 449), though not upon an illegal claim, such as a note founded upon a transaction forbidden by statute (Kidder v. Blake, 45 N. H. 530),. or one utterly without foundation and known to be so. (Pitkin v. Noyes, 48 N. H. 294, cited above.)
The answer pleads in substance as a defense that an account was
There was a provision of the sublease (materially different from that in the principal lease) for a suspension of rent under certain circumstances, which provision was ambiguous as to whether a deduction should be made in case of injury of any kind rendering the premises or a part thereof untenantable, or only in case such injury was caused by fire or other elements.
The settlement of this doubt would, I suppose, depend upon the determination of the question whether the maxim noscitur a sooiis applied to the construction of the clause in question or not, a question which I do not think it necessary to decide. It is enough to say that there is sufficient plausibility in the arguments in favor of the construction contended for by the defendants to make the question one which furnished lawful subject-matter for an accord and satisfaction.
Again, it is hardly to be supposed that the superior landlords, would have incurred the expense of rebuilding, unless they had discovered some injury rendering the premises untenantable or unfit for use, and this injury may have been by one of the elements. Water is an element in the same sense that fire is, and it is not unlikely that the damage to pier No. 2, which made rebuilding necessary, was caused by water.
There was, therefore, at least plausibility, and very possibly justice, in the position that the subtenants were entitled, by the terms of their lease, to a suspension of rent during the rebuilding.
Further than this, they seem to have relied, to some extent, on an arrangement with E. B. Bartlett. It does not seem to be by any means impossible, that Bartlett had bound the Union Warehouse Company to some arrangement with the Sandersons, which was binding upon the receiver of that company.
I do not consider it incumbent upon the defendant to show the relation of Bartlett & Go. to the warehouse company, or otherwise to prove the validity of the claims which were settled. Otherwise there would rarely be any use in relying upon an accord and satisfaction. (Union Bank of Georgetown v. Geary, supra; Fisher v. May's Heirs, supra.)
The topic which remains for consideration is whether the receiver had power, under the order appointing him, to make an accord and satisfaction.
The Revised Statutes (2 R. S. 468, § 68; Birdseye’s 1st ed., vol. 1, ■696, § 116) confer upon the receiver of a corporation, appointed upon its voluntary dissolution, the powers of trustees of insolvent debtors.
Section 1788 of the Code defines and limits the powers of a temporary receiver, but section 1789 confers power upon the court to .grant such a receiver the additional powers specifically provided in that section. Section 1788, which took effect in 1880, contains the first statutory distinction which I have been able to find between temporary and permanent receivers of corporations. The Code does not define the powers of permanent receivers. The provisions of the Revised Statutes on that topic were intentionally allowed to ■stand. (See Throop’s note to § 1789.)
These sections of the Code apply only to actions for the sequestration of property of a domestic corporation or for its dissolution. Prior to the enactment of the Code, the powers of receivers in sequestration proceedings, even before final judgment, were, under the Laws of 1852, chapter 71, the same as those of a receiver appointed in case of the voluntary dissolution of a corporation.
The exact language of the order appointing the plaintiff receiver is “ with the usual powers and duties of receivers according to the laws of this State, and the practice of this court, including,” etc.
The expression, “ laws of this State,” seems to me to include any statutes defining the powers of receivers of corporations, although, in this instance, the corporation was a foreign one, and the appointment was ancillary to a receivership in New Jersey, and was, there
Until the passage of the act of 1852, above cited, the only statute of this State, defining the powers of receivers of corporations, conferred upon them the same powers as those of trustees of insolvent, debtors, so that, for many years, the usual statutory powers of receivers of corporations were the same as those of such trustees. By the act of 1852, above referred to, these powers were expressly conferred upon receivers appointed before judgment in actions for sequestration, so that at least from 1852 until the passage in 1880’ of section 1788 of the Code, there was no statutory distinction between the powers of receivers of corporations appointed before and after judgment.
Section 1788 of the Code by its terms applies only to a limited class of actions, and leaves the law in regard to the powers of receivers unchanged in all other respects. The provisions of the Revised Statutes, on the contrary, apply not only to permanent receivers appointed in the class of actions mentioned in section 1788 (Laws 1880, chap. 245, § 1, T 3 [5], p. 368), but to receivers appointed in proceedings for the voluntary dissolution of corporations. (See Throop’s note to § 2429.) It seems to me, therefore, that the phrase “ usual powers and duties of receivers according to the laws of this State ” is better satisfied by reference to the older and more general statute than to the later and more limited one.
There is also, I think, evidence in the language of the order that the court intended to confer upon the receiver all the powers defined in any statute of this State generally applicable to receivers of corporations. I think that if it had been intended to limit his powers to those of a temporary receiver under section 1788, there would have been some appropriate reference to that section.
My general conclusion on the topic of the extent of the receiver’s powers is, therefore, that except so far as they were limited by the very fact that his appointment was ancillary, the order conferred upon him the powers of trustees of insolvent debtors as defined in 2 Revised Statutes, 41, section 7; Birdseye’s 1st Edition (Yol. 3, p. 3190, § 77).
The 9th subdivision is in the following words:
“ 9. Under the order of the officer appointing them, to compound with any person indebted to such debtor and thereupon to discharge all demands against such person.”
I am satisfied that what was done amounted to a settlement rather than a composition, and that it was not necessary to its validity that it should receive the express sanction of the court. It seems to me that the act distinguishes between a settlement of accounts or other matters needing adjustment, and a composition, i. e., the acceptance of less than an amount known to be due. (Haskins v. Newcomb, 2 Johns. 405.)
The plaintiff cites cases in which the courts have held it proper to grant special power to receivers to compromise. It is perhaps implied in some of them that a receiver ought not to compromise without submitting the matter to the court, but I find no expression that a receiver is without power to compromise disputed matters if he will take the responsibility of doing so. I do not suppose that Hr. Justice Gayhob, in saying that “the receiver could not allow a deduction,” intended to be understood as passing upon the powers of the receiver as distinguished from his legal rights. The question before him for decision was not strictly whether the receiver might properly make a deduction in favor of the Sandersons under the terms of their lease, but whether he could do so on any such ground as would give him a claim against the superior landlords.
In Matter of Empire City Bank (18 N.Y. 199" court="NY" date_filed="1858-12-05" href="https://app.midpage.ai/document/united-states-tr-co-of-new-york-v--us-fire-ins-co-3629224?utm_source=webapp" opinion_id="3629224">18 N. Y. 199, at p. 213), Judge Denio, citing the provisions of the Revised Statutes above referred to, says : “ The receiver is authorized to adjust and settle the claims of creditors by mutual agreement. * * * ” It seems to me that the sanction for this statement must be found in the 8th subdivision above quoted, and, therefore, that he has the same power to settle by agreement with debtors to the corporation. The remark which follows, that “ he has no judicial authority,” does not, I think, imply that he cannot close with a debtor to the estate so as to complete the settlement. He must do so in order to get in the assets. He cannot pay a creditor until authorized to make dividends, but it
A number of cases have been cited from which the plaintiff reasons by analogy that the action of the receiver was ultra vires. Sncli cases are: Wisconsin Central R. R. v. U. S. (164 U.S. 190" court="SCOTUS" date_filed="1896-11-16" href="https://app.midpage.ai/document/wisconsin-central-railroad-v-united-states-94530?utm_source=webapp" opinion_id="94530">164 U. S. 190); Loqan County v. U. S. (169 id. 255); Village of Ft. Fdward v. Fish (156 N.Y. 363" court="NY" date_filed="1898-06-07" href="https://app.midpage.ai/document/village-of-fort-edward-v--fish-3630071?utm_source=webapp" opinion_id="3630071">156 N. Y. 363).
The rule laid down by these cases is that a public officer cannot exceed the powers conferred upon him by statute. What I hold pi this case is that the receiver acted within the authority conferred upon him by the order of appointment.
. I think, therefore, that the accord and satisfaction should be sustained as a settlement of an “ account or other matter ” between the Union Warehouse Company and its debtors. Although the rent accrued after the appointment of the receiver, I suppose that, from a strictly technical point of view, the tenant’s indebtedness was to 'the company, although the receiver might sue for it.
Section 6Y of the act (2 R. S. 469) vesting in a receiver the title to property applies only to domestic corporations, and there is no reference to its provisions in the order of appointment.
But, in any case, the receiver was, I think, under the power conferred upon him to carry on the business of the company, authorized to make such a settlement as he deemed proper of the matters in suit. The principal lease covered certain warehouses, in addition to the piers sublet to the Sandersons. The exercise of the authority to continue the business of storing goods obviously required that the receiver retain the warehouses. To keep possession, he must pay the superior landlords their rent in full, and I think that, by the necessity of the situation, the business which he was to carry on included any necessary dealings with the subtenants. He could, of course, have applied to the court for instructions, but I think he had power to settle with them without such an application, if he chose to take the responsibility of doing so. His authority to transact business included by necessary implication power to make bargains in the course of business in like manner as the company might, had he not been appointed.
It may be proper, although unnecessary to the decision of this case, to add that I think it probable from the evidence that the
I think that it is my duty to consider the matters in controversy in the light of the circumstances as they existed on or before July 18, 1891, and that I ought not to ignore any doubt which then existed as to the legal rights of the parties even if since then the courts had authoritatively settled all such doubt. ( Union Bank v. Geary, 5 Pet. 114.)
But in fact what has been authoritatively held is at most that the Sandersons had no right to a deduction such as to give the receiver a valid counterclaim against the superior landlords.
I do not think that it necessarily follows that the receiver erred in allowing deductions. A comparison of the leases shows such differences in their provisions as might entitle the subtenants to
Upon the whole, I am of opinion that the receiver had power to settle with the subtenants as he did, and that the settlement was and is valid.