Case Name: HEYWOOD v. KINGMAN
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1892
Citations: 29 Abb. N. Cas. 75
Docket Number: 
Parties: HEYWOOD v. KINGMAN.
Judges: 
Reporter: Abbott's New Cases
Volume: 29
Pages: 75–85

Head Matter:
HEYWOOD v. KINGMAN.
N. Y. Supreme Court, First Department; General Term,
1892.
1. Creditor’s suit; reference.] A general direction for an accounting, contained in a judgment in a creditor’s suit, is to be construed by the situation in which it was made; and if the suit be by specified creditors, for their own benefit only, and not on behalf of others also, the accounting should proceed no further than to ascertain and reach enough to pay plaintiff’s claims.
2. Reference; creditor’s suit.'] If the referee, in an individual creditor’s suit, proceeds to a general accounting, when not necessary in order to satisfy plaintiff’s claim, his report should be confirmed only as to plaintiff’s claim, and its payment, and set aside in other respects.
3. Case disii?guished.] The case of Mandeville v. Avery, 124 N. Y. 376, distinguished.
4. Reference; accounting.] It seems, that upon a general accounting, the referee, even if no specific objections are made, may disallow items which appear fraudulent or objectionable on their face, provided he points them out to the accounting party and gives him opportunity to show them to be just.
Appeal from an order of the Special Term of the Supreme Court confirming the report of a referee appointed to take the account of an assignee for the benefit of creditors by a judgment setting aside the assignment as fraudulent and appointing of a receiver.
The action was brought by Henry Heywood and others, against Richard S. Kingman and others, to set aside an assignment for the benefit óf creditors, made by the defendent Kingman to the defendant William M. Thacher, for alleged fraud on creditors, and to obtain satisfaction of a judgment which the plaintiffs had recovered against Kingman.
The plaintiffs obtained judgment setting aside the assignment appointing a receiver of the property assigned, and a referee to pass the accounts of the assignee, and also directing the receiver to first pay plaintiffs claim out of the proceeds of the property received by him.
The referee in his report, after finding that the assignee had paid the receiver a sum of money more than sufficient to satisfy plaintiffs’ claim, found that the assignee had made unauthorized credits in his account, and that the receiver was entitled to a .further amount.
The assignee excepted to the report on the ground that it was unnecessary to account generally, but the accounting was simply a special accounting so far as necessary in order to pay plaintiffs’ claim.
The Special Term confirmed the referee’s report. The defendant Thacher, the assignee, appealed to this court from the order of affirmance.
Abram Kling, for appellants.
Edwin C. Cloyd, for respondent.

Opinion:
Barrett, J.
The accounting which was directed by the judgment was not a general accounting with respect to the assigned estate, but an accounting for the purpose of satisfying the plaintiffs' claim. If the court had been informed, at the time the decree was made, that the assignee had in his hands, in money, more than sufficient to pay the plaintiffs' judgment, an accounting need not have been ordered. In that case the decree would simply have required the assignee to pay the plaintiffs' claim as adjudged.
This distinction between a special accounting for the purpose of satisfying a particular claim and a general accounting as assignee, becomes important in view of the fact that the referee in the present instance disallowed certain items of disbursement made by the assignee and charged him with the whole estate, less such items of credit as the referee deemed proper. -
It will not be necessary on this appeal to consider' the inherent propriety of the disposition thus made of the credits claimed by the assignees for two reasons: First, because the items in question were not properly objected to; and second, because prior to the somewhat summary investigation of the account generally the assignee duly accounted to an amount more than sufficient to pay the plaintiffs' claim and all costs and expenses.
The decree, it is true, is general in its items with regard to the accounting ; but it must be construed with reference to the precise situation at the time it was made. That situation was this : There was a judgment in favor of the plaintiffs for a sum of money, which judgment was a lien upon the assets in the assignee's hands, and which the court decreed should be paid out of such assets. There was also the fact that the court was not aware of the extent of these assets, and consequently could not then tell whether they were sufficient to pay all that was decreed. It certainly could not have been the intention to require the assignee to account for the estate generally, as this suit was brought by the plaintiffs for their own sole benefit and not on their own behalf and on behalf of other creditors. Consequently the assignment was áet aside solely as against these particular plaintiffs. As to all other creditors it remained in force, and as to all other creditors the assignee's duty under the assignment continued. Any other view would involve the proposition that on a bill filed by a particular creditor to set aside an assignment as against him the court might proceed to set aside the assignment as against all other creditors and wind up the estate generally.
It is clear, therefore, that even under the broad provisions of this decree the assignee was only bound to account so far as was necessary to satisfy the plaintiffs' claim in full. He so accounted when he paid over to the receiver, in the presence of the referee, an amount of money more than sufficient to fully satisfy the plaintiffs' claim. The accounting which proceeded thereafter was in reality an accounting with regard to the estate generally, an accounting which was unnecessary, and, on a fair construction of the decree, unauthorized.
But even if the decree could be construed to direct such unnecessary accounting, then it is quite clear that the items which were disallowed should have been distinctly and specially objected to, and the assignee thus apprised of the charges which he was required to meet. Instead of this, nothing whatever was done after the presentation of the assignee's accounts save to cross-examine him with regard thereto, and upon the close of such cross-examination to except generally.
It is probable that this course was adopted by the plaintiffs, because they had no real interest in any further accounting, after the receipt by the receiver of qiore than enough money to pay their claim. However that may be, the assignee could not be charged, as he has been, without specific and precise objection to each item of the account intended to be questioned and without evidence in support of such objections (Matter of Mather, 4 N. Y. State Rep. 882).
We do not mean, however, to suggest that upon a general accounting, it is not within the province of the referee, even where specific objections are not made, to scrutinize such account, and to disallow items seemingly fraudulent or objectionable on their face. That is undoubtedly his province. But even in such a case it would be the duty of the referee to point out to the assignee the particular items which seemed to be objectionable, and give him an opportunity to show that they were not amenable to just criticism. This was not done, either by the counsel or the referee ; and upon their face the disallowed items were not fraudulent nor necessarily objec tionable. For aught that appears there is no other .creditor who has any lien upon the assigned estate, or -who has any right to question the assignment or the conduct of the assignee thereunder. What he properly did in defending the assignment was certainly binding upon the -creditors benefited thereby, and indeed upon all creditors who do not seek to set the instrument aside. It may well be, therefore, that the assignee is entitled to the whole or the greater part of the very items of disbursement'which have been disallowed by the learned referee. As to these plaintiffs such items cannot be questioned unless they stand in the way of their obtaining what was awarded to them by the judgment.
As it appears that there is more than sufficient in the hands of the receiver to fully satisfy the plaintiffs' judgment, they can have no further interest in the accounting of this assignee.
The order appealed from should therefore be reversed and the report modified by confirming the first finding of the referee, which shows the payment to the receiver of the sum of $1,798.50; and setting aside the report in all other respects ; and adjudging that as against the plaintiffs in this action the' said assignee has sufficiently accounted under the true intent and meaning of the decree;—the expenses of the accounting before the referee and the costs of the motion to confirm the report and the appellant's costs and disbursements of this appeal to be paid by the receiver out of the sum in his hands after the payment of the plaintiffs' claims.
O'Brien, J.
The accounting was not ordered by the court of its own motion, but in aid of the plaintiffs' judgment. The plaintiff, however, has no practical interest in any further accounting by the assignee.
His claim is fully provided for by the cash paid over to the receiver, and he may take his money at any moment, as no substantial right either of the plaintiff or of any other party to this record or of any party who can come and claim the benefit of the decree can possible be affected by the conclusion arrived at by J ustice BARRETT. I concur in the result.