Case Name: In the Matter of the Assignment of Orlo Atwood & Sons to Hector M. Hitchings for the Benefit of their Creditors. Hector M. Hitchings, as Assignee, etc., Respondent; James Talcott, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896
Citations: 3 A.D. 578
Docket Number: 
Parties: In the Matter of the Assignment of Orlo Atwood & Sons to Hector M. Hitchings for the Benefit of their Creditors. Hector M. Hitchings, as Assignee, etc., Respondent; James Talcott, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 3
Pages: 578–582

Head Matter:
In the Matter of the Assignment of Orlo Atwood & Sons to Hector M. Hitchings for the Benefit of their Creditors. Hector M. Hitchings, as Assignee, etc., Respondent; James Talcott, Appellant.
General assignment — a consignee must first resort to the fund or goods for payment of advances made to the consignor—when the consignee becomes a creditor of the assigned estate— costs and counsel fees against the claimant.
Upon an appeal from a decree disallowing a claim presented by one James Talcott to the assignee for the benefit of creditors of the firm of Orlo Atwood & Sons it appeared that in December, 1892, an arrangement was made between the claimant and Atwood & Sons, under which goods manufactured by Atwood ifc Sons were to be consigned to the claimant and sold by him upon an agreed commission; that the claimant received large quantities of manufactured' goods and made advances upon them and made sales of the goods and applied the proceeds in reduction of the advances made until August, 1893, when an assignment was made by Atwood & Sons for the benefit of creditors, at which time there was a large amount due him from Atwood & Sons. Since the assignment the claimant continued to make sales of the consigned goods, but a considerable portion thereof still remained unsold and in his possession. The claim presented to the assignee represented the whole balance due to the claimant at the time of the assignment, making no allowance for'the goods on hand or the proceeds of the goods sold after the assignment.
Seld, that the claim was untenable;
That, where such an arrangement existed between a consignor and consignee resort must first be had to the fund or to the consigned property for any advances made by him before the consignor could be held liable;
That the factor must show that the fund is insufficient to repay his advances before he can recover anything against the consignor personally;
That the claimant was not entitled to have his claim for advances established at the full amount remaining unpaid at the time of the assignment, take his dividend thereon from the estate and apply the proceeds of further sales upon any balance remaining unpaid;
That no debt or claim existed at the time of the trial of which the claimant could make proof;
That such a debt could only come into existence after the claimant had sold the property and applied the proceeds;
That the court had power under the statute to award costs and counsel fees against the claimant.
Appeal by the claimant, Jaines Talcott, from a decree of the Court of Common Pleas for the city and county.of New York in favor of the assignee for the benefit of creditors of Orlo Atwood & Sons, entered in the office of the' cleric of said court on the 26th day of September, 1895, upon the report of a referee, disallowing the claim presented by the claimant against the estate in the hands of the assignee, and granting an allowance against him of $500, in addition to the taxable costs.
The claim was presented to the assignee who refused to allow it. Thereupon' the claimant applied to the court by petition, for an order of reference to adjudicate as to his claim. The assignee made answer to the petition and thereupon a reference was ordered to hear, try and determine the issue made as to the allowance of the claim.
The referee reported that the assignors in 1892 and 1893 were manufacturers of ribbons and that the claimant was a commission merchant in the city of New York; that in. December, 1892, an arrangement was made between the assignors and the claimant under which goods manufactured by the assignors were consigned to the claimant who received them for sale on an agreed commission; that between December 1, 1892, and. August 3, 1893, when the assignment was made, the claimant received large quantities of manufactured goods for sale on commission pursuant to such arrangement, upon which claimant made large advances of money to the assignors ; that during the same time the claimant made large sales of such goods for the account of the assignors and applied the proceeds, exceeding $60,000, in reduction of his advances to the assignors and his charges for interest and commissions; that after the assignment the claimant presented to the assignee a claim in due form against the assigned estate for the sum of $90,599.29, being the sum claimed by him to be due from the assignors on account of advances, interest and commissions at the date of the assignment, which claim the assignee refused to allow, but rejected; that- since the assignment the claimant has continued to make sales of the consigned goods, but that a considerable portion thereof remained unsold and in the possession of the claimant.
Upon these facts the referee decided that the claimant was not at the time entitled to prove such claim against the estate, and that his claim should be disallowed, with costs against the claimant. Upon this report the judgment appealed from was ordered by the court, confirming the report disallowing. the claim and charging claimant with the costs of the,proceeding, $227.50 and counsel fees, $500. From that judgment this appeal is taken.
Lyman B. Bunnell and Theron G. Strong, for the appellant.
George W. Stephens, for the respondent,

Opinion:
Williams, J.:
This was a proceeding to determine the validity of a claim against an assigned estate under section 26, chapter 466, Laws of 1877, which provides that the court or judge may in its or his discretion order a trial by a jury or before a referee of any disputed claim or matter arising under the provisions of the act, and may award reasonable costs and counsel fees and determine which party shall pay the same. The claim made by the claimant, as appears by his petition, was for an indebtedness owing and due by the assignors to him at the time of the assignment.
The assignee denied that there was any such indebtedness, and that was the issue tried before the referee, There was no suggestion in the petition, as there seems to be on this appeal, that the claimant desired a reference to ascertain the amount of his lien upon the property in his hands for advances to the end that the property subject to the lien might be applied to pay the same. What he asked for was, that the claim against the estate might be adjudicated and determined to the end that he might have his distributive share of the estate, and the order of reference directed the issue raised by the petition and answer to be só referred and heard and determined. The trial, as it took place, was. of the issues so made and the report was upon such issues alone. It is too late now upon appeal for the claimant to allege that while he may have been properly beaten upon the issue- made and tried,- still he should havte had relief by way of an accounting- as to the amount of his lien upon the property to the end that the property might be applied in payment of the same.
The decision of the referee as to. the issue raised and tried before him was correct. The authorities-cited by both parties hold that, under such an arrangement as existed between these partiés, resort' must first be had to the fund or the consigned property, for the payment of' any advances made before the principal can be made liable, and that it is incumbent upon the factor to show the fund to be insufla cient to repay the advances before a recovery can be had against the consignor personally. (Corlies v. Cumming, 6 Cow. 184; Gihon v. Stanton, 9 N. Y. 477; Blackmar v. Irwin, 28 id. 67.) In the case of Gihon v. Stanton (above) it was said by Judge Selden " an advance is something which precedes. As applied to the payment of money the term implies that the parties look forward to a time when the money will be due to the recipient. An advancement by a factor is a pre-payment, a mere anticipation of the avails of the goods consigned, and no more creates a debt in the first instance than an advancement of a father to his son in anticipation of his expected inheritance, creates a debt."
The real contention of the claimant at the trial was, as it is on appeal, that he was entitled to have his claim for advances established at the full amount remaining unpaid at the time of the assignment, and to take his dividend thereon from the estate, and then apply the proceeds of the further sales of the property to the payment of any balance that might remain unpaid after such dividend was so applied. He, therefore, made no attempt to account for any sales of property made after the date of the assignment, though it appeared that many such sales had been made. He furnished. the referee with no means of ascertaining the amount unpaid upon his advances at the time of the trial, so that the amount of his lien upon the property at that time could be established and a decree made with reference thereto. It is hardly necessary to suggest that the case of The People v. Remington (121 N. Y. 328), cited by counsel for the claimant, is no authority for the position taken by him at the trial and still maintained, .that the claimant might prove the full amount of the balance of his advances at the time of the assignment, and take his dividend thereon, and apply the proceeds of subsequent sales of property to the payment of the balance remaining after applying the dividend so received. In that case there was a debt owing for which the property was. pledged as collateral. Here there is no debt primarily. A debt only comes into existence after the sale of the property and the application of the proceeds, and then the debt is for the deficiency, and that alone can be proved. Ho debt or claim existed at the time of the trial of which this claimant could make proof, and upon which he could take a dividend from the estate.
When the property consigned shall have been disposed of, he may make proof of any balance of his demands remaining unpaid. The judgment ordered by the Special Term, as far as it dismissed the claim, was correct.. The court had power under the statute to award costs and counsel fees, and there was a sufficient basis 'in the affidavits and the certificate of the referee for awarding such counsel fees,
The trial, however, was not a lengthy one, and we think $250 was sufficient in amount for counsel fees.
The judgment should be modified accordingly, and, as modified, affirmed, with costs of appeal to the respondent.
Yah Brunt, P. J., Patterson, O'Brien and Ingraham,. Jj., concurred.
Judgment modified as directed in opinion, and affirmed as modified, with costs of the appeal to the respondent.