Ryan v. Rand

| City of New York Municipal Court | May 15, 1887

McAdam, Ch. J.

The trial judge erred in holding that the defendant was not individually liable for the services rendered upon his accounting as receiver. The rule is that a person employed by a trustee, receiver, general assignee, executor or administrator in matters pertaining to the execution of the trust, must look to the person employing him, individually, for his compensation, as the contract does not bind the estate he represents. The title to the trust property vests in these different officials, and they must account for it to the persons ultimately entitled to distribution.

They are individually liable because they have no responsible principal behind them for whom they may contract and against whom the creditor may enforce his demand (Davis v. Stover, 16 Abb. Pr. N. S. 225; Ferrin v. Myrick, 41 N. Y. 315; Mygatt v. Wilcox, 45 Id. 306; Bowman v. Tallman, 2 Robt. 385; Willcox v. Smith, 26 Barb. 316; Schmittler v. Simon, 101 N. Y. 554; Moran v. Risley, 1 City Court R. 229; Singer & G. Co. v. Hardy, 2 Id. 223).

The defendant must pay the plaintiff’s bill and charge it against the estate he represents, and if found correct it will no doubt be allowed. It will not do for him to say that he has no estate to charge the account to, for then the policy of the rule holding him individually liable in the first instance has stronger reasons for its support. The receiver, as'a rule, cannot involve the estate in expense without the sanction of the court (.Edwards on Receivers, 4, 5, 98, 99 ; Kerr on Receivers, Bispham’s ed. 182,200, 201, 220 ; High on Receivers, § 175 ; 1 Parsons on Contr. 7th ed. p. 122). There was no authority from the court making the plaintiff’s demand a charge upon the estate, and the defendant has no power to make it a charge thereon except by payment, then charging it in his accounts and having them sanctioned by the court in the usual way.

The plaintiff evidently did not intend to render his services gratuitously and must have a claim against someone. Mr. Crosby, who retained the plaintiff, as the attorney and known agent of the defendant, was not personally liable for the bill, not having assumed its payment personally, and the remedy is against the defendant, for whose benefit the work was done (Bonynge v. Field, 81 N. Y. 159; Bonynge v. Waterbury, 12 Hun, 534; Sheridan v. Genet, Id. 660).

In People v. Universal Life Ins. Co. (30 Hun, 142), it appeared that the receiver of an insolvent life insurance company, after his appointment, occupied and used premises theretofore occupied and used by the company, and the court (at p. 143) said : The liability sought to be enforced “ is for the receiver’s own tenancy. It is against him as assignee of the lease and not for a debt owing by the company. . . . The liability of the receiver appears to be the ordinary common law liability of the assignee of a lessee.”

This decision is in keeping with the rule maintaining the individual liability of receivers for obligations voluntarily assumed.

The plaintiff made out a prima facie case. Indeed, the defendant (so far as the record discloses) found no fault with the plaintiff’s proofs, and based his motion for a non-suit on the ground of absence of individual liability on his part. If he intended to require the plaintiff to furnish more definite proofs of employment, the defendant should have been more specific in stating the grounds of his motion that the plaintiff might have supplied the proof (Devoe v. Brandt, 58 Barb. 493: Newton v. Harris, 6 N. Y. 345; Binsse v. Wood, 37 Id 526). As the defendant was liable individually, the trial judge erred in holding he was not; and for this error the judgment must be reversed and a new trial ordered, with costs to the appellant to abide the event.