33 N.Y.S. 1098 | N.Y. Sup. Ct. | 1895
In September, 1891, a petition was filed by the Amasa Lyon & Company, a corporation, for its dissolution, and one Andrew J. Hutting was appointed temporary receiver. The plaintiff, who had been the legal adviser of the corporation, assumed that relation to the receiver and rendered professional services to him, for which he made a charge of $5,000. The receiver having brought the affairs of the corporation into some degree of order, and the creditors having extended the time for the payment of their claims, the court, considering that the corporation was again solvent, dismissed the petition for its dissolution and discharged the receiver. Before this could be done, however, it was necessary that some arrangement should be made with the latter in respect to his fees and certain liabilities, including the charges of the plaintiff, which he had incurred in the administration of his office. A few days before the final order was made, a conference' was held between the plaintiff, the receiver and the three persons who then constituted the entire board of trustees, looking to a settlement of the question. The amount of the plaintiff’s claim was stated, and the receiver expressed his willingness to turn over the assets of the corporation to the trustees, provided the latter would assume this and the other liabilities he had incurred. To this the plaintiff assented, with the qualification that he should also have a lien upon the
Prior to the discharge of Hutting, the first receiver, the plaintiff had received on account of his services the sum of $600, and subsequently the corporation at various times made further payments, aggregating $1,250, so that at the time when the last petition was filed there was due to him on' account of his claim the sum of $3,150. The defendant has realized upon all of the assets of the corporation, and now has in his hands the sum of $9,000 applicable to the payment of its debts, which amounted to about $100,000. Against this the plaintiff sets up his lien, and, claiming payment in full of the balance of the amount so due out of the fund, asks the judgment of this court declaring the charge and requiring the receiver to satisfy it out of the money in his hands.
The effect of the agreement made between the first receiver, the plaintiff and the trustees above mentioned, followed as it was by complete performance on the part of the two former, was sufficient to create an equitable lien in favor of the plaintiff in respect to the identical property which was turned over by the receiver to the corporation. Possession is not necessary to the existence of such a lien ; on the contrary, an essential distinction between common-law and equitable liens is
It is not necessary to follow the argument of the learned counsel for the defendant that the lien, so called, of the receiver for the payment of the indebtedness he had incurred tq the plaintiff was not assignable. The plaintiff’s right does not rest upon any such foundation. His claim to a lien upon
The case at bar seems to respond to this test. The property affected by the lien created in favor of the plaintiff was definite and capable of exact ascertainment, but it was over and in reference to this, and not future acquired property, that the lien extended. The agreement was that the assets transferred by Hutting to the company should be subject to the
Even in the case where equity will follow misappropriated trust funds through the transmutations following upon their absorption in other properties, the rule is well settled that the property finally impounded must be the specific product of the misappropriation. “ The right of following the trust property in the new form which has been given to it, or in the property substituted for it, ceases only when the means of ascertainment fail, which of course is the case when the subject-matter is turned into money and mixed and confounded in a general mass of property of the same description.” 2 Story Eq. Juris. § 1259 and note 4; Ferris v. Van Vechten, 73 N. Y. 113, 120; Matter of Cavin v. Gleason, 105 id. 256; Am. Sugar Ref. Co. v. Fancher, 145 id. 552.
The principle involved in these cases is equally applicable to such a one as this. In each case the thing sought to be impressed with the charge must be the identified representative of the property to which the right invaded or impaired had originally attached.
Some question has been made as to the lack of any action of the trustees in their corporate capacity in respect to the agreement upon which the plaintiff sues. The evidence shows that there were but three trustees, each of whom was actively engaged in promoting the business of the corporation at the same place; that meetings were held informally and irregularly, taking place from time to time whenever it might seem
It is not absolutely essential to the validity of a corporate act that the trustees of a corporation should proceed according to any particular form. If all are present, or have received due notice of the proposed meeting, action taken by them, intended to be a corporate act, although informally expressed, is -as valid as if it had been surrounded by all the formalities usual and, it may be said, desirable, in such cases. The law looks to the substance rather than to the form of things. Melledge v. Boston Iron Co., 5 Cush. 158; Sheridan Elect. L. Co. v. Chatham Nat. Bank, 52 Hun, 575. Here there can be no doubt about the fact that the trustees entered into the agreement in question, all meeting together, and that the agreement has been wholly executed by the plaintiff. The corporation has received the full benefit of it, and there should be no difficulty, as there is none, in finding the action of the trustees sufficient to charge the corporation with the obligations assumed on its behalf under the agreement in question.
It follows, therefore, that the plaintiff has established his claim to a preferential charge on the funds in the hands of the receiver to the extent of $1,442.16, and that he is entitled to judgment so declaring, and directing the receiver to pay that amount over to him on account of his claim.
Judgment accordingly.