#### The People *v.*E. Remington & Sons. James A. Whitfield, Petitioner, App’lt, *v.*Albert N. Russell *et al.,*Receivers, Resp’ts.

*(Supreme Court, General Term, Fourth Department,*

*Filed May 8, 1891.)*

1. Receivers—Preferences.

The receivers of an insolvent corporation were directed by the court to pay a demand of a claimant in full as preferred. After such payment the claimant and others similarly situated took a proceeding to have similar claims declared preferred, in which the court of appeals finally decided against the claimants. Thereafter, the order declaring a preference in favor of this claimant was reversed. Upon a subsequent dividend to general creditors ordered paid, the receivers deducted from the dividend due this claimant the sum paid him upon said preferred claim in excess of the per centage payable to general creditors. *Held,*proper.

*2.*Same—Payment under an order subsequently reversed.

The original payment to the claimant could not be said to have been voluntary. The court had mistakenly directed a payment which the court of appeals had, in a proceeding to which the claimant was a party, thereafter declared improper. This amount paid by mistake could, therefore, have been recovered by the receivers of the claimant.

Appeal from an order denying motion for order directing the receiver to pay to petitioner the sum of $183.31, claimed to have been improperly deducted by the receivers from a payment made by them.

*Geo. O. Rasbach,*for app’lt; *Thomas Richardson,*for resp’ts.

Martin, J.

On April 21, 1886, this court duly appointed Albert H. Russell and Addison Brill as receivers in this action, which was to dissolve the defendant corporation. They subsequently qualified, entered upon their duties and are still such receivers.

*566The appellant had previously been engaged with men employed by him in working for the defendant in its shops doing job or contract work. It was indebted to him therefor in the sum of $292.78, when the receivers were appointed. There were other persons who had similar claims.

Soon after the receivers were appointed they applied to a special term of this court for instructions as to whether claims like the appellant’s were preferred under chapter 376 of the Laws of 1885, which was an act to provide for the payment of wages to employes, operatives and laborers of domestic corporations, other than insurance and moneyed corporations, of which a receiver should be appointed. The court held that such claims were preferred, "and directed them to be paid in full by the receivers. In pursuance of that direction, which was made in May, 1886, the receivers paid the appellant on his claim $256.50, but subsequently declined to pay the remainder, amounting to $36.28.

After the receivers’ refusal to make further payments on such claim, and in June, 1887, the appellant and others who had similar claims, instituted a proceeding in this court whereby they sought to have it adjudged that such claims were preferred under the statute and to procure an order requiring the receivers to pay them as such in full. In that proceeding the appellant and those who joined with him therein, were unsuccessful, as it was held by the special and general terms of this court and by_ the court of appeals, that their claims were not within the provisions of the statute of 1885, and not preferred claims under it.

During the pendency of that proceeding, and in March, 1889, the special term directed the receivers to pay to the general creditors of the defendant, who had proved their debts, a dividend of twenty-five per cent thereon, but also directed that the receivers should defer the payment of any dividend upon any claim of the appellant, or those who joined with him in such proceeding, until the final determination thereof.

The appellant also had an additional claim, as a general creditor, amounting to $2,930.62.

After that proceeding was finally determined by the court of appeals, the receivers paid the appellant on his claim of $2,930.02 the dividend of twenty-five per cent directed to be paid the general creditors by the order of March, 1889, less the sum of $183.31, being the excess above twenty-five per cent which had been paid by them upon the appellant’s claim of $292.78.

After the decision of the court of appeals, by which it was held that the appellant’s claim was not preferred, and before this proceeding was instituted, the order or instructions to the receivers made in May, 1886, directing such claims to be paid as claims preferred, by the statute of 1885, was, on the application of the receivers, vacated and set aside.

On the 9th day of December, 1890, the appellant made application to a special term of this court for an order directing ^ the receivers to pay him the sum of $183.31 so deducted, which was denied, and from that order this appeal was taken.

The appellant challenges the order of the special term upon the *567ground that as the payment made by the receivers upon his claim of §292.78 was in pursuance of an order of this court the subsequent decision in other cases did not open, annul or affect his right to the money thus paid, and that the payments by the receivers upon that claim were voluntary, and could not be recovered back or deducted from the amount of his dividend.

It will be observed that the order or direction to the receivers relied upon by the appellant has been vacated and set aside, and that the action of the court in thus setting it aside was based upon the determination in a proceeding instituted by the appellant upon his alleged preferred claim, in which proceeding it was in effect held that the order of May, 1886, was unwarranted and improper. That the court, under such circumstances, should award a restitution of the sum that was thus over-paid upon the appellant’s demand is quite obvious.

The question of voluntary payment is not, we think, involved in this proceeding. There was in this action a fund in the hands of the court for distribution by its receivers among the creditors of the defendant. The court mistakenly and erroneously instructed the receivers to pay one of the appellant’s claims in full. In a proceeding to which he was a party, it was decided by this court and by the court of appeals that he was entitled to receive upon his claim for $292.78 only the same proportionate amount as the other general creditors of the defendant Thus he had been paid $183.31 more than he was entitled to receive. The amount of such over-payment was then deducted from the sum which would otherwise have been his due. This excess having been paid by mistake, the receivers could have recovered of the appellant the amount thereof. *Matter of Accounting of Morgan,*99 N. Y., 145*; Matter of Underhill,*117 id., 471; 27 N. Y. State Rep., 720; *Scholey*v. *Halsey,*72 N. Y., 578 ; *Lott v. Swezey,*29 Barb., 87.

It is, therefore, manifest that the sum which the appellant sought to recover in this proceeding did not *ex aequo et bono*belong to him. It was a part of the fund in the hands of the court which belonged to the creditors of the defendant and which should be distributed among them.

Under these circumstances, we think the receivers were justified in withholding that amount and that the court properly refused to require them to pay it to the appellant.

It follows that the order appealed from should be affirmed.

Order affirmed, with ten dollars costs.

Merwin, J., concurs.