Case Name: Charles A. Dorney et al., Resp'ts, v. William M. Thacher, Impleaded, etc., App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-02
Citations: 58 N.Y. St. Rep. 466
Docket Number: 
Parties: Charles A. Dorney et al., Resp’ts, v. William M. Thacher, Impleaded, etc., App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 58
Pages: 466–472

Head Matter:
Charles A. Dorney et al., Resp’ts, v. William M. Thacher, Impleaded, etc., App’lt.
(Supreme Court, General Term, First Department,
Filed February, 1894.)
1. Assignment bob cbeditoes—Accounting.
Upon an assignee’s accounting, charges for commissions, counsel fees and other disbursements may be disputed and disallowed under a general objection.
2. Same—Commissions.
Where such assignment is set aside, commissions are not allowed, except upon such property as was administered and distributed by the assignee prior to the commencement of the creditor’s suit.
3. Same—Counsel bees.
If he acts in good faith, reasonable counsel fees for the defense of actions to set aside the assignment will be allowed.
Appeal from an order confirming report of referee appointed by an interlocutory judgment.
K. p. Oloyd, for app’lt; Abram Kling, for resp’ts.

Opinion:
Yah Brunt, P. J.
It is true that this court, in the case of Heywood v. Kingman and Thacher, 29 Abb. N. C., 75 ; in which action an interlocutory judgment had been entered similar in form to the one in the case at bar, decided that upon appeal from an order confirming the report of a referee appointed by such interlocutory judgment, this court could reverse such judgment without having before it a scintilla of the record upon which such judgment was founded. But the conclusion then arrived at, it. seems to me, should not be extended beyond the case which was then before the court.
The question presented by this appeal is whether the referee erred in his disallowance of disbursements made by the assignee and of commissions charged by him. In the consideration of these questions it will not be necessary to state in detail the facts under which they arose. It is urged that the referee erred in disallowing certain disbursements and commissions of the assignee because no proper objections to the assignee's accounts were taken. And it is claimed that such objections must be specific and must sufficiently appraise him of the charge which he has to meet. In support of this proposition we are referred to the Matter of Mather, 61 Hun, 214; 40 St. Rep. 882, and to the case of Heywood v. Thacher, above cited. It is to be observed that the opinion in Heywood v. Thacher is based upon the case of the Matter of Mather ; and the distinction between the nature of the items objected to in these two cases seems to have escaped the attention of the court. In the Meywood case the objection was a general one to the whole account. In the case at bar the objection is to specific items of expenditure by the assignee in respect to the management of the estaté itself. In the Matter of Mather it was sought to charge the assignee for culpable negligence in failing to bring actions to set aside judgments under executions upon which goods of the assignors were sold after the assignment, but which executions were levied prior to the same; and the court held that a simple general objection against such an item was insufficient, because it did not call the assignee's attention to the fact that he was charged with culpable neglect in failing to bring actions to set aside judgments.
In the case at bar the items objected to are not of this character. They are to the commissions which the assignee charges, his counsel fees, and the disbursements which he claims to have made in the administration of the estate, and when these items were objected to he knew perfectly the ground of the objection.
It is further urged that if it should be held that sufficient objections were duly filed to the account of such assignee, the plaintiffs did not assume or discharge the burden of establishing the validity of the objection. And the astounding proposition is advanced that the affirmative of establishing the validity of objections rests with the party making the same, and it must be made to appear beyond peradventure, the assignee having the right to demand that his accounts be declared correct, until the contrary is fairly and clearly established, citing Kelly on Insolvent Assignments (119). With such a rule an assignee has a protection which is denied to any other person, without any exception, before our courts. The guilt of a person charged with a capital crime it is not necessary to establish beyond peradventure. The degree of proof to establish such guilt must simply be beyond reasonable doubt, and no further. It is not necessary to combat so remarkable a proposition.
Attention is also called in support of the claim of the appellant to the Matter of Frazer, 92 N. Y. 239, which was an accounting of an executor, where it was held that where the executor had paid a claim based upon an,alleged contract with the deceased, which was presented and sworn to in the ordinary manner, the burden was upon the contestant to show that it was not a just debt, and in the absence of such evidence it was properly allowed —a case entirely different from the one at bar. Another question would have been presented if the objection had been to disbursements made by the executor for counsel fees and expenses in the management of the estate.
We think, therefore, that the objections were sufficiently specific to call upon the assignee to show the propriety of the disbursements made by him in reference to the management of the estate, and that the conclusions of the referee upon this point were correct without further discussion.
As to the commissions of the assignee, it seems to be impossible to imagine upon what ground such commissions could be claimed. The assignee having become wrongfully in possession of property which should have been applied to the payment of the debts of the assignors instead of being placed in his hands, even though it may be without any wrong of his own, certainly cannot be allowed to deplete the estate by the charging of commissions which are the compensation for the performance of the trust, and which he has not performed or earned, to the prejudice of the creditors who have successfully assailed the assignment. It is not a question as to whether the assignor has acted prudently and in good faith and according to the best light a man of ordinary prudence could obtain under the circumstances. ,But he is denied the right to deplete this fund, because he has been fraudulently placed in possession thereof, to the detriment of the creditors who have unearthed and disclosed the fraud. It may be unfortunate that an assignee is, under the circumstances, deprived of the compensation he expected to receive. But when-he accepts a trust of this kind, he takes it cum onere. He must run the risk of the good faith of his assignors in transferring the property to him. The creditors certainly cannot be called upon to pay the assignor's commissions on a fund which actually belongs to them, but where an assignee has in good faith executed his trust or has partially distributed the funds received by him according to the directions of the assignment, before the commencement of the creditors' action, a different question may arise.
In respect to the counsel fees and the necessary disbursements-in protecting the fund, although there is a contrariety of decisions as to whether, in the case of an assignment being set aside, they should be allowed, it seems to us that where the assignee is not a party to the fraud and is not cognizant of the facts which make it reasonably certain that such assignment cannot stand against the attacks of creditors, his duty requires that he should resist such attacks ; and in order that he may successfully do so it is necessary that he should employ counsel. And disbursements of this class come within the class allowed to an assignee who is even cognizant of the fraud, for the preservation of the estate. The rules governing the disbursements of an assignee in an assignment for the benefit of creditors differ in no respect from those of any other trustee. The trustee, in defense of the trust committed to his care, has always been allowed out of the fund the reasonable counsel fees in protecting the estate, although he may have been unsuccessful, provided he acts in good faith, andas a reasonable and prudent man would do under the circumstances. We think, therefore, that there being no evidence that the assignee was a party to or cognizant of the frauds for which the assignment was set aside, he was entitled to recover, as part of his disbursements for the preservation of the estate, the reasonable fees which it was necessary for him to pay in order to protect the estate and the trust, and also such incidental disbursements in connection therewith as he could show to have been necessary.
The order appealed from should therefore, be so far reversed, and the question as to the allowance to be made to the assignee for his reasonable and necessary disbursements, including counsel fees, in the protection of the assignment, referred to the same referee, with costs of appeal to the appellant, and costs of a new reference to be paid out of the estate. •
Parker, J., concurs.