#### French v. Dauchy *et al.*

*(Supreme Court, General Term, First Department.*

June 6, 1890.)

Receivers—Accounting—Action on Bond.

An action cannot be maintained against the sureties on the bond of the receiver of a firm without a settlement of the accounts of the receiver having first been had; it appearing that obligations have been incurred in the business of the receivership, and it not appearing that debts of the firm have been paid.

Exceptions from circuit court, New York county.

Action by James C. French against Samuel T. Dauchy and others. Judgment was given for plaintiff, and defendants move for a new trial on exceptions taken at the trial, and ordered to be heard at the general term in the first instance.

Argued before Yah Brunt, P. J., and Brady and Daniels, JJ.

*Edward*D. *McCarthy,*for plaintiff. *Frederick G. Dow*and *Wm. G. Lathrop, Jr., (8. G. Brownell,*of counsel,) for defendants.

Van Brunt, P. J.

This action was brought upon a receiver’s bond given by one A. Dewitt Baldwin upon his appointment as receiver, in the year 1876, in an action for the dissolution and liquidation of the copartnership existing between the plaintiff and one Dauchy; and the only question necessary to consider upon this motion is whether an action can be brought against the sureties upon a receiver’s bond without first having the accounts of the receiver duly settled. The evidence in this case showed that the receiver had received some money in 1876; that he had incurred obligations in the business of the receivership; that there were debts of the firm of which he was appointed receiver; that he had died, and that an administratrix had been appointed; and that no proceedings had ever been taken to compel an accounting either by the receiver or his administratrix. We do not think that this action can be maintained without an accounting. There were no insuperable obstacles to an accounting. There was an administratrix of the receiver, who could be called upon to account in proceedings to establish a claim against his estate. The plaintiff claims to treat this bond as though made to himself and his partner, whereas it runs to the people of the state,—is a bond not only for the benefit of the partners, but also their creditors.

It appears that imNovember, 1884, there were debts unpaid of the firm, and there is no evidence that they have been paid. It also appears that the receiver had incurred liabilities in the performance of his trust; and, although it may be true that these claims are not liens upon the funds in the receiver’s hands, and are personal claims, yet they are claims which, if properly incurred, the receiver upon an accounting would be allowed to pay out of the funds in his hands. The claims of creditors, and the disbursements of the receiver, and the claims against him in the administration of the trust, cannot be determined in an action upon the bond. There must be an accounting to settle the amount of the liability of the receiver, and to whom such liability exists, before an action upon the bond will lie. In the case of *Cuddeback*v. *Kent,*5 Paige, 96, no such question was involved, and the later case, *Salisbury*v. *Van Hoesen,*3 Hill, 77, entirely coincides with the view above taken; and it seems to be absolutely necessary, for the protection of all the parties whom the obligee in the'bonds represents, that such a course should be pursued. The motion for a new trial must be granted, with costs to the defendants, to abide the Anal event.

*469Brady, J., concurs.

Daniels, J.

The rule that there should be an accounting settling the receiver’s accounts before an action upon his bond can be maintained, is sustained by *State*v. *Gibson,*21 Ark. 140; *Bank of Washington*v. *Creditors,*86 N. C. 323; and *Atkinson*v. *Smith,*89 N. C. 72,—and also by the authorities referred to in the opinions; and the result from it is that this judgment must be reversed, as that is directed in the opinion of the presiding justice.