Case Name: JACOBY'S APPEAL
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1879-03-29
Citations: 1 Walk. 346
Docket Number: No. 173½
Parties: JACOBY’S APPEAL.
Judges: 
Reporter: Reports of cases decided by the supreme court of pennsylvania which have been omitted from the regular reports
Volume: 1
Pages: 346–354

Head Matter:
JACOBY’S APPEAL.
The Act of 1872, does not give a preferred claim for wages, except to employees in mines and manufacturing establishments.
A party imprisoned for contempt of court, in disobeying its order to pay over money, which came into his hands as assignee for the benefit of creditors, is not entitled to his discharge, as an insolvent debtor, on filing his petition, and offering to give bond under, the insolvent laws
Appeal from the Court of Common Pleas of Schuylkill County, No. 173½ January Term, 1879.
In September 1875, G-. G-. Jacoby & Co. made an assignment for the benefit of their creditors to James F. Jacoby. J. F. Jacoby sold the personal property belonging to assigned estate and subsequently filed his account. Upon exceptions filed by creditors this account was referred to an auditor- from whose report the following extract is taken:
There is no balance in favor of the estate shown by the first ac* count, but the second account shows a balance in favor of the estate of $1211.27. If the exceptions are not sustained then the above sum will be the amount to be distributed amongst the creditors of the estate, whose claims have been proven.
The first question to be decided by the auditor is whether the auditor should surcharge the assignee with any amount other than that,which he is debited in his account.
The assignee in his first account takes credit in full for payments made to creditors of Jacoby & Co., who so far as the evidence before your auditor shows were not entitled to a preference, and should not have been preferred by the assignee. To the balance remaining in the hands of the assignee should be added the sums improperly paid, and a credit should then be allowed him for the pro rata that will be allowed on these claims. These claims are as follows :
Shoemaker & Son............................... $ 33 58
Susannah Klinetob............................. 25 00
James F. Jacoby................................. -320 00
Paul Billings............... 103 00
A. E. Munch..................................... 150 60
It is claimed that the assignee is entitled to a credit for the sum of four hundred and twenty dollars in full for wages due him as a clerk for Jacoby & Co. prior to the assignment of the estate. It has been decided by this court that the act of 1872 does not give a preference to clerks in stores, but applies only to persons employed in and about mines and manufactories.
Under the provisions of the Act of Assembly of 11 April, 1862, (see P. L. 479,) James F. Jacoby would be entitled to a preference of one hundred dollars ($100,) for his wages as a clerk, and to this amount only. The balance of his ciaim, to wit: Three hundred and twenty dollars ($320,) would come in for a pro rata distribution and is therefore added to the amount for distribution.
' The accountant claims credit for one hundred and fifty dollars claimed to have been paid to H. L. Freas on account of rent. In his examination the assignee says he recollects paying Freas one hundred and fifty dollars ($150) but that he has no receipt. He cannot positively say whether or not it was paid at the time stated in the account; on the other hand, Freas is just as positive that he received no money except two hundred and fifty dollars ($250,) for which the assignee has also taken credit, from any of the Jacoby’s after the assignment. Your auditor, therefore, finds that the assignee did not pay the sum of one hundred and fifty dollars ($150) to Freas and surcharges him with that amount.
The assignee takes credit also for the sum of two hundred and fifty dollars ($2o0) paid on account of rent to Freas. This money was realized upon the sale of two mules that were not charged against the assignee in this inventory and appraisement, and therefore not being taken out of the assets of the estate charged against the assignee, he is not entitled to credit for this amount and must be surcharged with it.
The water rent for which a credit is taken in this account by the assignee was for the dwelling part of the premises rented by the assignee, and was not necessary for the purposes of the trust, and should not have been paid by him. The assignee neither in his examination- nor in his account shows what proportion of this water rent should be paid by the estate, but on the contrary shows that the water was for the use of the dwelling part of the premises, and this part was not occupied by the assignee, but by one of the assignors of the estate. The auditor, .therefore, surcharges the assignee with the water rent paid by him while in the Freas property, to wit: eighteen dollars ($18.) The next question that arises in the course of this distribution is whether the rent due to Freas before and after the assignment should be paid out of the balance found to be due on this account.
The lease under which Jacoby & Co. held the premises was executed in March, 1875, and demises the premises for one year from 1st April, 1875. At the time of the assignment there was due Freas under the covenant of this lease one hundred and seventy-five dollars. The assignee, under his powers, assumed this lease and up to April, 1876, when the lease expired there was due Freas three hundred and eighty-five dollars ($385) including the amount due at the time of the assignment.
The lease under which Jacoby & Co. held, included beside the store room, a stable, dwelling part of the house and warehouse. All were useless for the purposes of this trust except the store room itself. Upon the expiration of the lease with Jacoby & Co. the assignee renewed the lease at the sum of four hundred and twenty-five dollars ($425) per year.
The assignee continued in possession of the premises under this lease until April 25, 1877, when he removed to the Grant building. Upon the 7th of September, 1876, he gave a note for the rent, due April 1st, 1876, at 60 days for $385. Upon this note there would be due interest $39.27. For the six months rent due October 1st, 1876, he gave a note, dated. September 8th, 1876, at 60 days for $250. The interest on this would be $21.97. The rent from October 1st, 1876, to the time he removed the goods from the premises amounted to two hundred and forty-seven dollars and fifty cents ($247.50.)
The interest on this amount would be $18.06. Besides the sums here given as rent, the assignee under the renewed lease, as Jacoby & Co. did under the old lease, agreed to pay all the taxes assessed against the premises demised to him.
The taxes paid by the assignee under the renewed lease amounted to the sum of eighty-one dollars and eighty-eight cents, ($81.88.) This must be added to the former amount to ascertain the aggregate rental of the premises, because if the assignee had not agreed to pay the taxes they could have been defalked from the amount of rent due. This lease included the store room, dwelling part and stable. The evidence shows, and your auditor so finds, that the sum of fifteen dollars per month would have been a sufficient rental for the store room used by the assignee.
The evidence of one party shows that the room would now be worth about eight dollars ($8) per month, but considering the rent paid for the whole house and the high rents recieved at the time of the assignment, your auditor is of the opinion that about fifteen dollars would be a fair rental for this room and he so finds.
Now the question arises, is Freas, the landlord, entitled to the rent for the premises at the rate of $425 per year, when the evidence shows that part of the premises useful for the purposes of this trust was worth only about one hundred and eighty dollars per year. At the time of the assignment the landlord could have distrained for the rent due, or at least for one-quarter ol it. The assignee assumed the lease held by Jacoby & Co. and the estate, for the rent arising afterward, was bound by the covenant. Pratt vs. Levan and Snyder, 1 Miles, 358.
For the rent arising before the assignment the estate was bound, because the landlord could exercise his immediate right of distress.
In Osborne’s Estate, 5 Wbarcon, 272, Chief Justice Gibson in his opinion says: “sure the power of a trustee to pay rent out of a fund liable to distress, or to contract for the payment of it, is as undoubted as would be in his power to apply to a part of it for the redemption of the rest.” The assignee had a legal right to contract in regard to the estate in his hands and bind it by such contract, therefore when he assumed the first lease to pay rental and placed the estate in a condition where the landlord could exercise his right of distress the estate is bound by his act as between the landlord and the estate.
Your auditor therefore decides that H. L. Freas, the landlord, is entitled to payment in full of his rent after deducting the credit of $250 and $45.50. Blackburne’s Appeal, 3 Wright, 160.
The auditor having decided that the estate is bound by the contract with Freas, and having also decided that the contract was an improvident one, the next question for the decision of the auditor is, can the assignee be held responsible by a surcharge for the amount above what the auditor has decided is a fair rental for the premises. An assignee is responsible for any loss occasioned by his negligence in administering the trust committed to him. Thus if through the neglect of the assignee in not taking steps to defend a claim against the estate, a loss is occasioned; he is liable to the estate.
If an assignee be liable for negligence in the administration of an estate committed to his care, he certainly should be held liable, when by positive acts of improvidence he binds the estate to pay more than it should pay, and places the goods in a position where they can he distrained and sold to satisfy such improvident contracts.
Your auditor, according to the above view, decides that the assignee should be surcharged with the rent due to Freas and the taxes paid from April 1st, 1877, until his removal, in excess of the sum of one hundred and eighty dollars ($180) per year.
J. F. Jacoby filed exceptions to the report of the auditor, but the court overruled the exceptions and confirmed the report on January 13th, 1879. Jacoby then took a writ of error complaining of the various surcharges made in the auditor’s report.
J. W. Ryon and James Ryon, Esqs., for appellant argued ;
under Act of 11 April, 1862, P. L., 479, the wages of the employees of a firm, are to be first paid out of the proceeds of the assigned estate, for the Act of 1862 is general in its terms ; and if the Act of 1872 does not refer to merchants, it does not operate to repeal the Act of 1862. If it does embrace more than the miners and manufacturers specified; then the appellant is entitled to his claim. He should not be held liable for the expenses of the sale, the same having been incurred in good faith. It is said to be the harshest demand that can be made in equity to compel a trustee to make a deficiency when the money has not come into his hands. In such case, equity will not charge him unless he has been guilty of such gross negligence as to amount to almost a fraud; Pim vs. Downing, 11 S. & R. 66; Johnson’s Appeal, 12 S. & R. 317; Konigmacher’s Appeal, 1 P. & W. 213; Nyce’s Estate, 5 W. & S. 254. A trustee is not to be surcharged except for gross negligence; Neff’s Appeal, 7 P. F. S. 96; Eyster’s Appeal, 4 Harris 376; Calhoun’s Estate, 6 Watts 185; Osborne’s Estate, 5 Wharton 267. The assignee having paid to Freas $250 for rent out of his own money was entitled to have been substituted in place of Freas; Harper’s Appeal, 5 Wright 45; McCurdy’s Appeal, 5 W. & S. 397; Greiner’s Estate, 2 Watts 414.
J. W. Roseberry, Esq., contra, argued that;
Jacoby had not acted in good faith, that he only filed his account in obedience to a citation from the court. The words “other business” in the act of 1872 do not extend the act to any other class than manufacturers and miners; Solm’s Estate, 1 Chester Co. 115; Pfaender vs. Hoffman, 4 W. N. C. 171. Under the act of 1862 the amount was limited to $100, and Jacoby received that amount. The assignee was properly charged with the amount of rent over $180, which was the value of the store room. On appeal the facts found by the auditor will not be disturbed; Landis vs. Scott, 8 Casey 495. The surcharge is proper, where injury results from negligence; Blackburne’s Appeal, 3 Wright 165. In the absence of a voucher, and with the landlord denying the payment of any rent, his claim was properly rejected; Mylin’s Estate, 7 Watts 64.

Opinion:
The Supreme Court affirmed the decision ol the court below, on March 29th, 1879, in the following opinion,
Per Curiam.
We find no error in the decree. The appellant was not entitled to any preference under the act of April 9th, 1872, P. Laws 47, upon the construction given to that act. "Other business" in the act evidently means other business of like character with those specified. The auditor was right in not allowing the appellant rent for the entire building, of which he only occupied a part. So also as to payment on account of rent, for which he produced no voucher, and which was denied by the landlord. As to the proceeds of the mules — paid on account of rent — the auditor found that they were the property, not of the assignee, but of the assign- or, and as they were not included in the inventory, if the appellant was credited with the payment, he should be surcharged with the proceeds, so that the result is the same.
Decree affimed, and appeal dismissed at the cost of the appellant.
After the record was returned, the court made an order to pay to the several parties entitled the several amounts due to them, as per the auditor's report. On the failure to pay these sums as ordered, the court granted an attachment, and J. P. Jacoby was sent to jail for contempt, in not obeying the order of the court. He then presented his petition for a discharge under the insolvent law, but the court refused his discharge in the following opinion, per
Pershing, P. J.
On the 15th of November, 1880, James P. Jacoby presented his petiton to the court, setting forth that he was in custody by virtue of an attachment for a contempt, issued on the 18th day of May, 1880, at the instance of several distributees of the assigned estate of G-. G. Jacoby & Oo., of which the said James P. Jacoby was the assignee. His prayer was that he might be permitted, in order to procure his discharge to give bond to the several distributees of the assigned estate of G. G. Jacoby & Co. in such amount and with such security as might be approved by the court, agreeably to the provisions of the insolvent laws of the Commonwealth. The bond accompanying the petition contained the usual condition that the petitioner would ap. pear at the next term of court, and there present his petition for the benefit of the insolvent laws, and if he failed to obtain his discharge, that he should surrender himself to the jail of the county, &c. On the filing of the petition the court granted aruleto show cause why its prayer should not be granted. The discharge of the petitioner is resisted by the creditors for whose benefit Jas. P. Jacoby was made assignee.
This application is in all respects similar to that in Posenbach's case, reported in 34 Leg. Int. 305. Posenbach, who was the guardian of several minors, was ordered by the court to pay over the moneys belonging to them to his successor in the guardianship . On his failing to comply an attachment was issued for contempt, and he went to prison. Posenbach then petitioned to be dis - charged from confinement upon his giving a bond with sufficient security, conditioned for his taking the benefit of the insolvent laws at the next term of court. A rule granted by the court to show cause was made returnable Oct. 30,1875, and discharged Sept. 26,1876, on the ground that the insolvent laws afforded no relief for an insolvent debtor in such a case. On appeal the Su - preme Court affirmed the proceedings in a per curiam opinion a s follows: "There is no case upon this record to raise the questi on argued before us. The application to give bond merely is not an application for a discharge from liability to imprisonment unde r the insolvent laws. It is but a provision for a temporary discharge while the proceedings are in progress."
In ex parte Blumer, 5 Norris, 371, relied on by counsel who resist the present application, there was a formal petition for discharge under the insolvent laws, with the statements of indebtedness, &c., as is required by Sec. 9 of the Act of 16 June, 1836, P. Laws 733; Pur. Dig. 895, pl. 17. Until James F. Jacoby sees proper to present a similar petition it is unnecessary to inquire how far Blumer's case will control in the disposition to be made of it by the court. Ilis position before us does not entitle him to any relief beyond what he has a right to demand under the letter of the law. Pule for his discharge on filing a bond discharged.