Case Name: In re Dorr
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1889-03-16
Citations: 4 N.Y.S. 754
Docket Number: 
Parties: In re Dorr.
Judges: 
Reporter: West's New York Supplement
Volume: 4
Pages: 754–757

Head Matter:
In re Dorr.
(Supreme Court, General Term, Third Department.
March 16, 1889.)
1. Assignment foe Benefit of Creditors—Accounting bt Assignee.
Where an assignee for the benefit of creditors defends suits pending_ at the time of the assignment against the assignors, and judgment is rendered against defendants with costs against the estate, on an accounting by the assignee the court can, if it finds the assignee guilty of misconduct in conducting the defense, charge him personally with the costs.
2. Same.
Such assignee cannot charge the estate for the use of his horse in the business of the estate.
3. Same—Attorney's Fees.
Where counsel fees are incurred by the assignee in litigations concerning the estate for which the assignee is personally liable, the court can in its discretion refuse to allow them to the assignee on his accounting, where the litigation was unnecessary and the assignee negligent.
4. Same.
Where the accounts of the assignee were carelessly kept, with false and erroneous entries, he is not entitled to any allowance for attorney’s fees in settling the accounts.
5. Same—Overpayments.
Nor is he entitled to money overpaid to workmen employed in the business of the estate.
6. Same—Discounting Notes.
Where the assignee unnecessarily discounts notes due the estate for less than their face value, he is properly chargeable with the face value of the notes.
Appeal from St. Lawrence county court; J. M. Kellogg, Judge.
Accounting of G-. H. Dorr, assignee for the benefit of creditors of Felt & Bell. Appeal by Dorr from the decree of the county court.
Argued before Learned, P. J., and Ingalls and Landon, JJ.
W F. Ford, for appellant. H. E. Morse, C. E. Emerson, &. R. Malby, and R. E. Waterman, for sundry creditors, respondents.

Opinion:
Learned, P. J.
This is an appeal from an accounting before the county judge of George H. Dorr, assignee for the benefit of creditors. Several objections are taken by the assignee, appellant.
1. At the time of the assignment two actions were pending against the assignors. The assignee caused himself to be made a party, and finally judgment went against the defendants, including the assignee, for the amount demanded, with costs. These costs were not by those judgments made payable by the assignee personally. Code, § 3246. The county judge held that, though as between the plaintiffs in those actions and the assigned estate, the costs were payable from the estate, yet that on this accounting the assignee should be charged with the same, to be deducted from the amount allowed for commissions and expenses. The reason for this was that the defense was unnecessary, and that the assignee had been guilty of great negligence therein. The appellant insists that the judgments were conclusive in favor of the assignee; that, as he was not personally charged in the judgments, he cannot be charged in his accounting. He relies on Hone v. De Peyster, 106 N. Y. 648, 13 N. E. Rep. 778. But in that case the defendants, who had recovered a judgment against a plaintiff as executor for costs, made a motion to compel the plaintiff to pay personally. The court held that the judgment was conclusive. The language of the court in that case must be understood as applicable to the facts. The question arose simply between the parties to the judgment. Between them the judgment was conclusive, and, as the judgment had not made the plaintiff personally liable, he could not be made so on defendant's motion. But that principle decided nothing in regard to this assignee's liability to those for whom he is trustee. They were not parties to the judgment against him, and are not bound by its terms. A single consideration will show this. It was the assignee's interest to have the judgment rendered against the estate; and, if the estate was solvent, the plaintiffs would not desire a judgment against him personally,—so that there would be no one to urge that he had been guilty of negligence. But now the persons interested in the estate are heard for the first time. They have a right to charge that the assignee was guilty of misconduct. Ho error was made by the county judge in this respect.
2. We think the county judge was right in disallowing the assignee's charges for the use of his own horse in the business of tile estate. The general rule as to trustees dealing with themselves is familiar. It should be adhered to as a most valuable protection to cestuis que trustent. We see nothing in the authorities cited by the appellant which sustains this charge of the appellant.
3. The assignee claimed for counsel fees incurred amounting to $786.25, on which $155 had been paid. The county judge allowed only $150. To a large extent (about $400) these counsel fees had been incurred in the litigations above referred to. If the assignee had acted so improperly that he should not be allowed the costs recovered agaiiist the estate, but should be required to pay them, then it would follow that the same rule should be applied to this part of the counsel fees. He may be personally liable for them, but they should not be allowed him in his accounting. Of course, the assignee is entitled to his reasonable expenses. Among them may be reasonable counsel fees. But they must be reasonable. This does not mean that the counsel given must, necessarily be such as is proved to be correct by the result of an action. Ho one is infallible. Advice may turn out to have been injudicious. On the other hand, the assignee must not unreasonably enter into litigation and employ counsel therein at the expense of the estate. On this question the county judge exercised his discretion. We think that there is not shown any such abuse of discretion as to require us to reverse his decision. So in regard to the allowance to counsel on the accounting. The county judge, after speaking of the careless manner in which accounts had been kept, with sometimes false and erroneous entries, would not allow the assignee, for these reasons, anything for counsel; saying he must bear this expense personally. An examination of the accounts leads us to agree with the county judge.
4. For a similar reason the county judge would not allow certain overtime of workmen, on the ground that it was more than was due them, and more than was paid. If it was more than was due, then the assignee should be charged with it. We are not shown that the county judge was in error in tills finding of fact that it was more than was due. We have examined the testimony on this point. Unless it plainly appears that there was a mistake by the county judge, his finding must stand.
5. There are several small amounts which the county judge charged against the assignee. It appears that the assignee continued the business in which the assignors had been engaged. He manufactured articles and made sales. In many instances notes were taken, and were then sold by the assignee at less than their face; and he charged himself only with the amount received. The county judge has surcharged him with the difference between the note and the cash for which it was sold. In these instances the county judge states that the discount was not justified. If an assignee carries on business, there may be a necessity for discounting notes for cash. The county judge justifies the assignee, under the circumstances, in proceeding with the manufacture, and no question on that point is made before us. Whether in each instance it was necessary and proper to discount the notes for less than their face would seem to be a matter of sound judgment, under the circumstances; and we understand the county judge to find that the circumstances did not justify these discounts. We have examined the evidence in .regard to these surcharges, but we think it not necessary to state it. It presents another question of fact, or rather several questions of fact, viz., whether the assignee was justified in thus disposing of these several notes. We cannot say the findings were incorrect. Similar to this is a surcharge for services of the foreman, Bell, for 18 days, when, as the county judge finds, there was no work done by him. This is a question of fact, viz., whether he was really needed at that time. The county judge h,eld not.
The appellant objects to a surcharge of $33 for commissions paid Eldridge on the Lewis order. But Eldridge testifies that the order was countermanded, and was afterwards filled by the Cutler Marble Company. It does not appear, so far as we can see, that'this company paid this amount to the assignee for commissions. They paid some amount, it is true. Again, the appellant objects to a surcharge of $13 on the Griswold order. This si m was received by the assignee. But it is said that he did not keep it. The proof of this we are not referred to. It appears to us on an examination of this whole case that the assignee has nothing of which to complain in the decision of the county judge, and that he was fortunate in not having been held to a more strict accountability. The order is affirmed, with costs. All concur.