Case ID: ny-st-rep_66/html/0433-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Van Brunt, P. J. Follett, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People v. St. Nicholas Bank of New York. In the Matter of the Application of Horace H. Chittenden, as Assignee, etc., App’lt, v. Hugh J. Grant, as Receiver, etc. Resp’t.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 15, 1895.)
    
    Assignment for creditors—Receiver.
    The receiver of an insolvent hank cannot refuse to pay over money to which an assignee for the benefit of creditors is entitled, on the ground that the latter does not say that he intends to distribute it among the creditors.
    Appeal from an order, denying an application by the assignee for creditors to compel the temporary receiver of an insolvent bank to pay certain dividends, etc., to petitioner.
    
      Thomas P. Wickes, for app’lt; L. G. Reed, for resp’t.
   Van Brunt, P. J.

I cannot concur in the conclusion of Mr. Justice Follett in the case at bar. The applicant is the assignee and the owner of the fund deposited. ■ He is not an officer of the court, and until he is removed from his office of assignee in the manner prescribed by statute he is entitled to the possession of the assigned estate; and although he may, as far as this semidefunct bank is concerned, have made propositions which were inconsistent with his duties as assignee, such fact certainly does not authorize a holder of the funds of the assigned estate to resist the payment of the amount due to the assignee. If the assignee has-misconducted, he should be removed. But to say that the receiver of this bank shall be entitled to hold the funds simply because the assignee and owner of the same does not say that lie intended to distribute it among the creditors, would seem to be appointing the receiver of this semidefunct bank the substituted assignee of the estate without going through any of the forms of law necessary to such substitution. Certainly, iftbisbankdid not happen to be in the hands of a receiver, and a suit was brought-by the assignee to recover the amount on deposit, no defense has-been disclosed; and the fact that the bank is in the hands of such receiver, and a suit cannot be brought, does not seem to be any reason for denying relief to which the petitioner is legally en titled. The order should be reversed, and the motion granted without costs.

O’Brien, J., concurs.

Follett, J.

(dissenting).—It is not contended that the receiver of the bank can set off the funds standing to the credit of the assignee against his individual indebtedness to the bank. The assignee is not personally the owner of five per cent, of this sum (his commission), or of any part or portion of it, and the receiver has no right to hold any part or portion of the fund for the purpose of applying it in payment of the individual debt of the assignee to the bank. The fund must ultimately be distributed pursuant to a final decree of the court making the order for distribution of the funds in the hands of the assignee. The learned judge at special term held nothing to the contrary of the propositions above stated, but refused to take the funds from the hands of one officer of the court and place them in the hands of a trustee, subject to the control of the court under the circumstances disclosed ; and in this we think he wisely exercised his discretion. The assignee did not state in his application that he desired to distribute the fund among the creditors of the assigned estate, or to make any use of it as assignee, or that he proposed to deposit it as a trust fund. In a letter written by the assignee to the cashier of the bank, June 11, 1893, he said :

“Referring to my matters with your bank, I have to say that the reason I did not fulfill my engagement to settle the interest and overdraft was that I was obliged to postpone for two weeks a sale of some of the property of A. S. Hatch & Co., which I had every reason to suppose would be consummated before June 1. This sale will come off about June 15, and will, by the lowest estímate, put me largely in funds, and I hope you will consider this in view of what follows.’'

Again, on June 27, 1893, the assignee wrote the cashier as follows:

“With reference to my note given for interest on previous notes, due at your bank within a few days, I ask you to give me a three months renewal, with the added interest. When I asked you to take this note instead of cash, I represented to you that I expected to realize on property in my hands as assignee of A. S. Hatch & Co. a sufficient sum to enable me to pay the whole of my indebtedness to your bank, and I told you that I was about to make a sale of such property. In accordance with the intention I thus expressed to you, I advertised for sale certain of the property of the estate, the sale to take place on the 25th of May last. I enclose you a copy of the advertisement (marked 1).”

In these letters the assignee stated that, as soon as a portion of the assets of the assigned estate was converted into money, he would pay his individual debt to the bank therefrom. Under such circumstances, we think the special term wisely refused to order the.funds of this assigned estate into the personal custody of the assignee. The order should be affirmed, with $10 costs and disbursements, payable by Horace H. Chittenden personally.