#### In the Matter of the Assignment of Ferdinand Mayer *et al.*to Simon Danzig, for the Benefit of Creditors.

(Decided December, 1883.)

That an assignee for benefit of creditors has obtained an order of the court that he file a provisional bond, and has filed such bond, before the expiration of the time allowed for the filing of inventory and schedules by the assignor *;*and that he has proceeded thereupon to pay preferred claims, even before their maturitj’', and although unpreferred creditors are threatening proceedings to set aside the assignment as fraudulent, will not justify the removal of the assignee.

An assignee for benefit of creditors drew by check out of the funds of the assigned estate on deposit in a bank, sums of mone}', the amounts of which were entered in his cash book as charges against himself. After a demand, by parties interested in the estate, to see the checks and his official check book, had been refused, he added to the entries in the cash book the words “special deposit. ” Upon motion for his removal, the assignee stated that, for the purpose of obtaining interest on the money, it had been placed on deposit, at interest, and upon the security of United States bonds as collateral therefor, with a person whose affidavit to the fact, and whose receipts for the money bearing the same dates as the cashbook entries, were produced ; but the actual dates of making such deposits were not otherwise shown, and although counsel for the assignee promised to produce proof that the deposits were in fact made at the dates when the respective sums of money were drawn, he failed to do so. *Held,*that this was, within the meaning of the Assignment Act, “misconduct ” on the part of the assignee, for which he should be removed ; although it did not appear that he had taken the money for his own benefit, or that he had not replaced it, or that the estate would lose it.

Application for the removal of an assignee under a general assignment for the benefit of creditors.

The facts are stated in the opinion.

*144*Blumenstiel & Hirsch,*for the petitioning creditors.

*Richard S. Newcombe,*for the assignee.

Van Horsen, J.

Most of the grounds assigned for the removal of the assignee are unsubstantial. Whatever may be the true construction of section 5 of the Assignment Act, it would be absurd to hold the assignee responsible for the act of the court in prematurely ordering him to file a provisional bond. I do not say that the time for the filing of a provisional bond had not arrived when the order for the filing of it was made; but I do say that, conceding such to be the fact, the assignee would not be made the scapegoat for the errors of the court. Again, the charge that the assignee has paid some preferred debts before the attorneys for the moving parties have succeeded in obtaining any evidence to show the assignment to be fraudulent, is not entitled to serious notice. The assignee deserves praise instead of censure for having proceeded without delay to execute his trust and pay the preferred debts. I should not hesitate for a moment to remove, an assignee who, instead of performing his duty, delayed the execution of his trust and the payment of preferred creditors for the purpose of enabling non-preferred creditors to hunt for evidence that the assignment was fraudulent. Nor is any fault to be found with the assignee for taking the assignment for his chart and compass and paying the debts in the order therein set down. If some of the preferred debts are not matured, it is nevertheless his duty to pay them, making the necessary deduction of interest. It is his duty to cany the assignment into effect as well as to defend its validity. If any creditor believes that the assignment is fraudulent in fact, or fraudulent because it conflicts with the law, he must take proceedings to have it set aside ; and if he does not take such proceedings he has no right to ask that the assignee delay, even for an hour, the performance of what the assignment requires him to do.

Without discussing all the accusations made against the assignee, I shall proceed to consider one charge that seems to me to be very serious. I say here that I do not believe that the *145assignee intended to misappropriate a dollar of the estate. It is proved that ho is a merchant who bears an unblemished reputation and enjoys the confidence of many estimable men.

I think he has made a serious mistake, however, in one matter, and I regret that he has not thought it best to be frank with the court with respect to it.

It appears that on October 31st, the assignee drew out of the moneys of the estate deposited in the Central Hational Bank $8,000, and that on Eovcmber 5th he drew the further sum of $7,000. Both these drafts were entered on the cash book of the assignee on the last mentioned day. On November 9th one of the attorneys for the parties making this motion saw these entries and asked to see the assignee’s check book. The assignee refused to show the check book. This refusal was improper, for the rules of this court expressly provide (Rule 19) that “the assignee shall keep full, trae, exact and regular books of account of all receipts, payments and expenditures of money by him, which said books shall always during business hours be open to the inspection of any person interested in the trust estate.” The assignee said that Ms official check book was his private affair. In this he erred. lie had voluntarily assumed the position of a trastee for others, and Ms action respecting property in which they were interested was in no sense Ms private affair. But Ms attention was called to the fact 'that these entries had challenged inquiry, and then he thought it best, for some reason that does not appear, to cause the words “ special deposit ” to be added to the entries. Why those words were not written at the time the entries were made, and why they were inserted after inquiries had been made as to the purpose for wliich the money had been drawn from the bank, no explanation has been given.

The assignee does, however, give an explanation of the circumstances under which the money was taken by him. He says that the money was drawing no interest, and that for the purpose of getting interest upon it he placed it on deposit with Charles Minzesheimer *&*Co., who agreed to pay interest at the rate of four per cent., and who pledged with him three per cent. Government bonds as collateral security for the loan. As proof *146that such a transaction took place, he produces two receipts from Charles Minzesheimer, the dates of which correspond with the dates of the entries in the cash book to which I have referred. The presumption is, of course, that these receipts were given at the time at which they are dated, and perhaps it was because of this presumption that the assignee does not state in his affidavit that he made a special deposit of $8,000 with Minzesheimer on the 31st of October, or that he made a special deposit of $7,000 on the 5th of November. Mr. Minzesheirner, in his affidavit, is silent as to the times at which these *“*special deposits,” as they are called, were made. He says that the assignee placed in his hands $15,000 of the money of the assigned estate, but he does not say when this was done. This being the state of affairs appearing by the affidavits at the time, the motion for the removal of the assignee was argued. The counsel who appeared in support of the motion called attention to the fact that there was no distinct assertion that the special deposits had been made before notice of motion for the assignee’s removal was served, and that it was essential to the completeness of the assignee’s explanation that he should show that the so-called special deposits mere not an afterthought, but were actually made at the dates of the receipts. To this the counsel fortheass'gnee assented, and he said that he would produce Mr. Minzesheimor’s affidavit to prove that the deposits were made—the first on the 31st of October, and the second on the 5th of November. I have waited for several days in expectation of receiving an affidavit, if not from Minzesheimer, at least from the assignee, that the deposits were actually made at the times the receipts bore date. No such affidavit has been furnished, and the question for me now to determine is whether, in view of the fact that I do not believe the estate to be in danger of losing the $15,000, and in view of the fact that many of the largest creditors are desirous that the assignee should be retained, I should hold that as the charge is really one of misappropriating money, the burden of proof is on the moving party, and that (though the assignee’s explanation is not satisfactory) the evidence offered against him is insufficient to establish the charge, or whether I should hold that the circum*147stances proved by the petitioners created so strong a probability of the assignee’s misconduct as to require a full explanation of his use of the money, and that as he had it in his power to prove by his own oath that the deposits were made at the times of the dates of the receipts, his failure to produce such proof warrants the strongest inference against him, and justifies the conclusion that the receipts of Minzeslieimer are only fabricated evidence designed to conceal the truth as to the use made of the §15,000 2 Strong presumption arises from the suppression as well as from the fabrication of evidence.

What inference is fairly to be drawn from the fact that the assignee refused to show his check book, which must have contained entries relating to the withdrawal from the bank of these two sums, $8,000 and $7,000 2 Why was the cash book afterwards changed by the inserting of the words “ special deposit 2” Why is not the affidavit of the assignee produced when he is informed that it is of the highest importance that he should show that • the money was actually deposited with Minzeslieimer at the dates of the receipts 2 Why has he not explained his inability to procure the affidavit of Minzeslieimer 2 What inference is to be drawn from the fact that the assignee, when challenged to produce proof that the special deposits were made at the dates of the receipts, voluntarily undertakes to furnish such proof (which, if it exists, must necessarily be in his own hands), and then fails to produce it 2 The answer seems to be that the assignee has made such use of the money that he cannot disclose the purpose to which it was applied. I say again that I do not believe that he took it for his own benefit, or that he has not replaced it, or that the estate will lose it. An assignee, without criminal intent, may, from pure good nature, lend to a necessitous friend, without security, the money of the assigned estate : but if he does so he violates his duty, and becomes liable to removal. It may very well be that the assignee has not, but that others have, had the benefit of these two sums ; but the law will not tolerate any action, however benevolent may be the motive that prompted it, which turns the trust fund from the use to which the creator of the trust directed its application.

*148I think I am bound to decide that the conduct of the assignee, in concealing from the creditors the purpose for which the money was drawn, and in withholding from the court evidence that he undoubtedly possesses as to the times at which he deposited the money, though he promised to produce the evidence, amounts to misconduct within the meaning of the Assignment Act, and calls for his removal.

An order may be entered therefore for the removal of the assignee and for the appointment of a substituted assignee in his room.

Order accordingly.