Case ID: abb-pr-ns_10/html/0416-01.html
Source: Caselaw Access Project
Author: {"author": "Grover, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MATTER OF DUFF.
    
      Court of Appeals,
    
    
      December, 1870.
    Appealable Order.
    To make an order appealable from the special to the general term, it must affect a substantial right. But the fact that it involves an exercise of discretion, does not necessarily prevent such an appeal. The general term cannot dismiss an appeal, simply because the order appealed from is discretionary.
    The general term may, if satisfied that injustice has been done, set aside an order made by it, and again hear the case.
    What is a “ substantial right,”—discussed. Per Grover, J.
    Appeal from an order.
    An application was made in the supreme court by John A. Duff, receiver, for permission to lease the Olympic theater, .the property placed under his control, at an annual rental of fifteen thousand dollars, to one James E. Hayes, his son-in-law. The peculiar circumstances attending Mr. Duff’s possession of the property are detailed in Bolles v. Duff, Ante.
    
    The application was opposed by Mr. Bolles, on the ground that the sum proposed was not a fair rent; various affidavits, from theatrical managers and professionals, were offered on both sides, a® to the rental value of the property, those on the applicant’s side varying from twelve to fifteen thousand dollars, and those on the side opposed, from twenty to twenty-five thousand. Some offers were made to take the theater, ranging from twenty to twenty-five thousand dollars per annum. After the motion was argued, the counsel for Mr. Bolles handed some further offers to Justice Barnard, who heard the cause, but he declined to consider them.
    The application was granted by Justice Barnard (see 4 Abb. Pr. N. S., 330), and an appeal was taken to the general term, where the order was reversed (see 54 Barb., 215 ; S. C., 37 How. Pr., 162), without prejudice to the possession or rights of Hayes under the lease executed to him, pursuant to the order of the special term, during the residue of the first year of his term.
    Mr. Bolles appealed from that part of the order, and Mr. Duff from the residue, to the court of appeals, where the appeals were both dismissed, the court holding (Lott, J., delivering the opinion) that the original order and the order reversing it were both made in the action of Bolles v. Duff, still pending and undetermined, since, notwithstanding the notice of appeal was entitled ‘1 In the matter of the application of John A. Duff, &c.,” the order appealed from was entitled “In the action of Bolles v. Duff ;" and also that the order was discretionary (See 42 N. Y., 256).
    Upon dismissal of the appeal, Duff moved the general term for a re-argument, which was granted, and upon re-argument the appeal was dismissed as involving a question of discretion.
    Mr. Bolles appealed to the court of appeals.
    
      B. C. Thayer, for the appellant.
    I. The order of the special term was appealable (Code, § 349; Laws of 1854, p. 593, § 1; People v. N. Y. Cent. R. R. Co., 39 N. Y., 418; Matter of Livingston, 34 Id., 555, 580; Sudlow v. Knox, 7 Abb. Pr. N. S., 411). Being made in a special proceeding, it was appealable by express language of statute, irrespective of any question as to its affecting a substantial right (Laws of 1854, supra). The order affects a substantial right, capable of estimation in money (39 N. Y., 418). The ruling in Bolles v. Duff, 42 N. Y., 256, that this order was made in this action because it was entitled therein, is contrary to the unanimous ruling in Sudlow v. Knox, supra. The order in which the present appeal is taken is not entitled in the action. It was made in a special proceeding like Matter of Livingston, supra. If made in the action at all, it was made in a summary application after judgment, and is, therefore, appealable (Code, § 11, subd. 3). In any event it is made appealable by the amendment of 1870, to section 11, subd. 4. Whatever discretion may have been involved was the discretion of the whole court, and not of the judge at special term merely (People v. N. Y. Cent. R. R. Co., supra), and the discretion in this case was clearly abused. The judge refused to consider offers that were made. This was not discretion, but error (See 54 Barb., 215 ; S. C., 37 How. Pr., 163).
    II. On this appeal it is proper to review the intermediate order granting a re-argument (Code, §11, subd. 3; Matter of Livingston, supra). The order was clearly wrong; it was in no just sense an order for a re-argument, but a mode adopted for reversing the decision of a general term composed of other judges.
    III. The court will not permit the leasing of the theater to Mr. Hayes at fifteen thousand dollars, when others offered twenty-five thousand dollars and upwards, and to give security for the rent in advance.
    IV. The only question of which the court will take cognizance is how the estate will yield the greatest revenue. Mr. Hayes is entitled to no special privileges because he incurred expenses, since he took the property with full notice that his claim would be contested.
    V. The order of special term does not provide for any security.
    VI. It being the duty of the court and receiver to make the estate yield the highest revenue' possible, all offers, up to the date of the order appealed from, should have been considered.
    VII. Duff failed to give notice that the theater would be leased to the highest bidder, and thus cut off the competition of other parties as against his son-in-law. His son-in-law thus acquires the lease for less than others are willing to pay, and this is a breach of trust.
    VIII. The affidavits submitted on the part of defendant show fraudulent collusion. They show the valuation of the theater alone, when it appears by counter affidavits, and is not denied, that the theater contained some twenty-eight thousand dollars’ worth of scenery and property belonging to the estate.
    IX. The justice at special term took upon himself the functions both of master in chancery and chancellor. Having determined that the property should be leased, a referee should have been appointed, to give notice, hear proposals, make the lease, and .report to the court for confirmation.
    X. Mr. Duff, as receiver, is an officer of the court, appointed for the benefit of all parties establishing rights in the action. He has no powers except those conferred by the court, and must apply for liberty to defend or bring actions. His attempt, in court, through counsel, to sustain his son-in-law, conflicts with his duty as receiver, and stamps the whole transaction with fraud and collusion (Code, § 369 ; 8 N. Y., 138 ; Com. 
      
      Dig., Pleader, 2, 3, B., 20 ; Lott v. Swezey, 29 Barb., 87; 9 How. Pr., 80 ; 3 Abb. Pr. N. S., 118).
    XI. Trustees cannot be permitted to hold a position hostile to the trust. The receiver should be removed and required personally to account for the difference between the actual rent received from his son-in-law, and that he could have received by due care, from the time Hayes took possession, to the final restitution of the premises.
    'XII. Being a proceeding in equity, the court may not only reverse the order, but make such final order as justice may require (Matter of Livingston, supra).
    
    A. J. Yanderpoel, for respondent.
   Grover, J.

The order off the general term from which the present appeal was taken, was one dismissing an appeal from an order of the special term, prescribing the terms upon which a lease of certain real and personal property, in the city of Hew York, was directed to be executed by the respondents to Mr. Hayes. The respondent was appointed receiver, in an action instituted against him by certain parties claiming the right to redeem the property from him, upon the ground that he was mortgagee in possession, but of which he claimed to be the absolute owner. The appointment of the respondent was made after judgment, in the action, declaring that the appellant was entitled to redeem the property from the respondent. The only ground upon which the appeal was dismissed by the general term was that the order of the special term was one resting in discretion, and, therefore, final in its character, and not appealable to, or reviewable by, the general term. Section 349 of the Code provides that an appeal may be taken to the general term from an order made at a special term by a single judge in the following, among other cases : 3, when it involves the merits of the action or some part thereof, or affects a substantial right; 5, when the order is made in a summary application in an action after judgment, and affects a substantial right. It will thus be seen that the question as to the appealability of the order is the same whether it is regarded as having been made in the action, or as made upon a summary application after judgment. In either view, to make it appealable to the general term, it must affect a substantial right. It was supposed by the general term that the definition given by this court of a substantial right in De Barante v. Deyermand, 41 N. Y., 855, and in Foote v. Lathrop, Id., 358, and in some other cases, was controlling upon that court, and that its meaning, as used in section 349, regulating appeals from the special to the general term was identical with its meaning, as used in section 11, regulating appeals from the general term to this court. If right in this conclusion, the order appealed from is correct and must be affirmed, as it cannot be denied that while it was the absolute right of the parties to have the property in question leased upon the most advantageous terms for those having interests therein, yet the determination of what would be most advantageous when the character of the property is taken into view, involves to some extent the exercise of discretion. In De Barante v. Deyermand and Foote v. Lathrop, supra, it was held that the term substantial right, as used in section 11 of the Code, must be one not only involving some material interest, but one existing absolutely by force of law. In other words, that an absolute right was one to which the party was legally entitled, ex debito justifies, one not at all dependent upon the favor or discretion of the court. It will be seen in thus defining it the court was speaking of it as used in section 11, regulating appeals from the general term to this court, and had in view its use in no other connection. The definition so given, applied as above stated, was correct, and was, in 1870, so recognized by the legislature in amending the Code. By that amendment, to make an order of this class appeal-able to this court, it must not only affect a substantial right, but must not involve the exercise of discretion. The latter quality is not requisite to the appealability of orders from the special to the general term of the supreme court. The difference arises from the different purposes for which the respective courts were organized. The court of appeals was designed for the redress of such legal errors as might happen in the course of judicature in other courts, to the end that uniformity in the administration of justice might prevail throughout the State, and that every litigant might have his case tried by the same legal rules. For this purpose no review upon the facts by this court is given, other than so far as the same is necessary to determine legal questions arising thereon,—such as exceptions to the granting or denying nonsuits,—except in one or two instances. The right to review and control.the exercise of the discretion of other courts has not been conferred upon this court unless by the clauses of section 11, previous to the amendment of 1870, making orders affecting a substantial right appealable to this court. In the construction of these clauses it was assumed by the court that the legislature did not intend to innovate upon the objects and designs for which the court was constituted, and thereby add to its functions the duty of reviewing the exercise of discretion by the other courts in all cases where the right of parties might be materially affected thereby. Had such been the legislative intention, and had the court undertaken that duty, it is obvious that so much of its time would have been occupied in its discharge as practically to render the court powerless for the discharge of its primary functions. For these reasons it was held that by the term “ substantial right,” as used in section 11 of the Code, was to be understood such rights only as the law absolutely conferred, and not such as were dependent npon the exercise of discretion or the favor of the court. This construction harmonized the clauses in which it occurred with the other parts of the Code giving an appeal to this court upon questions of law only.

But none of these reasons apply to appeals from the special to the general terms. The latter were designed not only for the redress of legal errors occurring at the special terms, circuits, and before referees, but those of fact likewise. Hence a review of the facts may be had before the general terms, upon an appeal taken from the judgment and orders of the former courts. They were also designed to redress wrongs arising from an erroneous, arbitrary, or otherwise improper exercise of discretion by the former. Hence the definition of substantial right, as used in section 349 of the Code, in providing for appeals from the special to the general term of the supreme court, in People v. New York Central R. R. Co. (29 N. Y., 418).

In this case the special term had allowed the modest sum of twenty thousand dollars as an extra allowance to indemnify a party for the expenses of trying- what was claimed to be a difficult and extraordinary case, pursuant to the statute authorizing the court to make such allowances in such cases. Upon appeal from the order to the general term the appeal was dismissed upon the ground that the extra allowance was, by the statute, placed in the discretion of the court, and, therefore, not a substantial right. Upon appeal therefrom to this court, it was rightly held that the right to twenty thousand dollars was a very substantial one within the meaning of the section under consideration, and that the people had the right to the exercise of the discretion of the general as well as of the special term before paying it; and, thereupon, reversed the order of the general term, and directed that court to proceed and hear the appeal and dispose of the case as in its judgment equity might require. In this case a just definition of a substantial right as used in that section is given by Judge Denio. This case has never been overruled in any respect, arid is undoubtéd law as to the appealability of orders from the special to the general term.

In the present case it appeared from the affidavits presented at the special term that it was at least possible that the property might have been leased upon terms much more advantageous than those directed by the special term. It was the duty of the general term to entertain and hear the appeal and make such order thereupon as it deemed just.

It is claimed by the counsel for the appellant that inasmuch as the general term had once heard the appeal and reversed the order of the special term, that the general term had no power to grant a rehearing of the case. This position cannot be sustained. It was competent for the general term in its discretion, if satisfied, injustice had been done by it, to set aside the order made, and again hear the case, and upon such further hearing make such order as it determined was just and proper.

The order appealed from must be reversed, with costs, and the case remanded to the supreme court to hear and determine the appeal.

My brethren concur in the result, but deeming it unnecessary to determine what is a substantial right as used in section 11 of the Code, do not pass upon that question.

Order reversed with costs.