1 N.Y.S. 680 | N.Y. Sup. Ct. | 1888
The reference which resulted in the report affirmed by the order from which the appeal has been taken was ordered to settle and pass the accounts of the defendant Walter P. Hess as general assignee of the other defendant for the benefit of her creditors. The assignment had been set aside by a judgment of this court, affirmed on appeal, when it was held to have been made with intent to hinder, delay, or defraud her creditors, and the assignee was required to account for the assigned property which had been received by him, and to deliver it over to a receiver appointed in the action. He made out and stated an account which was mostly acceptable to the judgment creditors, and to that part of it no objection was taken upon the accounting. What the creditors did object to was the expenditures made by the assignee for legal services and disbursements, performed and expended in resisting the creditors’ actions to set aside the assignment. The first of the two suits successful for that object was commenced in August, 1882, and the creditors objected to all the expenditures made in and about the litigation, for or on account of the assignee, after the 1st of July, 1882; and the controversy accordingly, as well as the evidence, was directed on the hearing before the referee to these objections, and included only these expenditures. Previous litigations had been prosecuted to set aside the assignment as fraudulent, which had terminated in favor of the assignee, and for the expenditures in the course of the defense to those suits no objection was presented to the assignee’s account, but they were conceded to have been incurred in good faith, and for the benefit of the assigned estate. But those tq which objection was taken, being the expenditures incurred and made in the defense of the suits successfully prosecuted to set aside the assignment, were not for the benefit of the assigned estate. It secured and received no advantage whatever from the services which were so bestowed, and if the expenditures made on account of these services could be allowed, they would not only deplete, but absorb, the entire amount of the estate in the hands of the assignee. It has been urged in his behalf that the indebtedness incurred by him in the preceding litigation was not wholly extinguished by the payments to which objection has not been taken, but in any view of the evidence that a balance of $298.21 still remained due and unpaid. But upon a careful consideration of the evidence by the referee, he concluded that claim to be destitute of foundation. That which was given on the part of the assignee, it is true, places awalue upon the preceding services greatly exceeding the amounts which had been paid, so great as to betray the suspicion, at least, that the object and design of the assignee was in this manner to absorb the entire residue of the estate, and prevent the creditors from receiving any more than $403.58, which had been paid over to the receiver. This suspicion tended very materially to
The case accordingly is narrowed, so far as the main feature of the controversy extends, to the expenditures which were made by way of defending the two suits successfully brought to set aside tlie assignment. By the judgments recovered in those suits the conclusion was reached by the court, and sustained on appeal, that the assignment was unlawful and fraudulent; and the defenses made by the assignee were of no service or benefit whatever to the assigned estate. And where services may be performed by an assignee or trustee of that description, the authorities have never proceeded so far as to sanction a claim made by him for reimbursement on acpount of such service, out of the assigned property. On the contrary, the expenditures allowed to him have been limited to those which are incurred and made on behalf of the assigned or trust-estate, and also for its benefit. Where they result otherwise, and prove to be disastrous, instead of beneficial, there the rule which is sanctioned by the authorities by implication decidedly exclude their allowance. This rule has been supported by the fact that when the successful creditor commences his action to set aside the assignment as fraudulent he acquires a lien upon the debts, property, and equitable interests of the debtor; and the effect of acquiring that lien, in judgment of law, is, where the action proves successful, to entitle him to the benefit of the assigned property for the payment of his indebtedness as of the time when the action itself to set aside the assignment was commenced. This rule has the sanction of Waheman v. Grover, 4 Paige, 23; Ames v. Blunt, 5 Paige, 13; Colburn v. Morton, 1 Abb. Dec. 378, 386, 387. And the authorities which have been cited and relied upon in behalf of the assignee to support the appeal sustain no other legal or equitable rule. But it is stated to be, as it has already been mentioned, that for the acts of the assignee or persons employed by him for the benefit of the assigned estate, he is entitled to be allowed his expenditures. No other rule was mentioned, either in Levy's Accounting, 1 Abb. N. C. 177; Davis v. Stover, 58 N. Y. 473; Sullivan v. Miller, 106 N. Y. 635, 13 N. E. Rep. 772: Youngg v. Brush, 28 N. Y. 667, or Noyes v. Blakeman, 3 Sandf. 531, in which all the litigation proved to be for the benefit of the trust-estate. Neither of these authorities, nor any other that has been found, sanction the position taken in behalf of the assignee: that he is entitled to be allowed the expenses of unsuccessfully resisting the actions brought by the creditors to set aside the assignment. The fact has not been overlooked that in Meyers v. Beeker, 29 Hun, 567, affirmed 95 N. Y. 486, the assignee was allowed such expenditures in the hearing before the- referee for a settlement of his accounts. But that allowance was in no manner brought in question on either of the appeals in the ac
The order directed the assignee to pay the fees of the referee and stenographer and such other disbursements as were necessarily incurred on the accounting to be taxed by the clerk. These fees and disbursements have been wholly incurred in taking the evidence and following the proceedings which became necessary to determine the right of the assignee to the charges made by him for the unsuccessful defenses. That was the sole objection interposed to his account. In other respects it was not questioned; and as the litigation was all caused by these charges and the efforts made to sustain and resist their allowance, it follows that the assignee himself, being the unsuccessful party in the proceeding, should pay these expenses.
A charge of #100 was made by the assignee for making out his account, which was the subject of consideration before the referee. This charge was made to reimburse his attorneys for their services in drawing the account, but there was no propriety in employing an attorney to make out and state the account. It was in all respects simple, and easily stated, including only the charges to the assignee for property received, concerning which there was no controversy, and the items of expenditure made by him, and the amounts paid under the assignment to preferred creditors. There was not the slightest intricacy about it, and the assignee himself could have readily made it as
The decision made by the special term in overruling the exceptions and affirming the report of the referee appears to be well sustained, and it should be affirmed, with $10 costs, and also disbursements.
Brady, P. J., and Bartlett, J., concurred.