Case ID: ny-st-rep_58/html/0806-01.html
Source: Caselaw Access Project
Author: {"author": "McAdam, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Benjamin A. Norton et al., Pl’ffs, v. James W. Matthews et al., Def’ts.
    
      (New York Superior Court, Equity Term,
    
    
      Filed March, 1894.)
    
    Assignment fob cbeditobs—Void.
    An assignment for creditors is vitiated by a special provision as to attorney’s fees for services to be rendered after transfer.
    Bill filed by judgment creditors to set aside general assignment.
    
      Garter, Pinney & Kellogg, for pl’ffs ; B. P. Lee, for assignors ; G. A. Seixas, for assignee.
   McAdam, J.

The general assignment, after enumerating the trusts usually a to pay “ the just and reasonable expenses of executing the assignment” contains this special provision: “ Also, in trust, to pay Robert P. Lee, our attorney and counsel, the sum of one, hundred and fifty dollars, for counsel fee and services in preparing the assignment, and preparing bond, inventory and schedules, and legal advice connected therewith.” The instrument is attacked on the ground that this particular trust vitiates the transfer.

• A provision to pay all the just and reasonable costs and expenses attending the due execution of the assignment, and the carrying into effect the trust thereby created," is valid, Jacobs v. Remsen, 36 N. Y. 688; Iselin v. Dalrymple, 2 Robt. 142, s. c. 27 How. Pr. 137; Brett v. Peck, 1 Daly, 83. These decisions proceed on the ground that the expenses referred to were necessarily incurred prior to the assignment. But where, as in this case, there is a direction to pay counsel fees for services to be rendered after the transfer, the assignment is as a consequence made void. Hill v. Agnew, 12 Fed. R. 232 ; Matter of Gordon, 49 Hun, 370; 22 St. Rep. 402; Currie v. Hart, 2 Sandf. Ch. 353; Lansing v. Woodworth, 1 Id. 44; Brainerd v. Dunning, 30 N. Y. 211; Nichols v. McEwen, 17 Id. 23; Sheldon v. Dodge, 4 Den. 117 ; Barney v. Hempstead, 7 Paige, 570.

The special provision is open to the further objection that it requires the employment of a particular attorney, and fixes in advance his compensation without regard to the reasonableness of the charge, or whether the continued employment of the same counsel is advisable or not. In short, these considerations are, by the peremptory requirement of the instrument, taken from the control, discretion or supervision, both of the assignee and the court, and are dominated by the will of the assignor. This cannot be done. The rules which prevail in reference to allowances to trustees to reimburse themselves for expenses necessarily incurred in the execution of their trust apply to assignees for the benefit of creditors ; like other trustees, they are allowed reasonable fees paid for legal advice or assistance in the discharge of their duties, such allowance being always in the discretion of the court, and they will be reduced if, in its opinion, .they are excessive. In re Johnson, 10 Daly, 125 ; In re Levy, 1 Abb. N. C. 182. The fact that the assignor is at liberty to prepare his own schedules does not alter the legal result.

The provision in question being clearly void, the entire assignment falls with it. Burrill on Assignments, sec. 352; and cases cited.

Decree in favor of plaintiffs.