Case Name: MATTER OF HORSFALL
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1879-02
Citations: 5 Abb. N. Cas. 289
Docket Number: 
Parties: MATTER OF HORSFALL.
Judges: 
Reporter: Abbott's New Cases
Volume: 5
Pages: 289–307

Head Matter:
MATTER OF HORSFALL.
N. Y. Common Pleas;
General Term, February, 1879.
General Assignment. — Discharge on Assignee. — Accounting.— Waiver. — Composition.—Release oe Sureties.
An assignee for the benefit of creditors under the general assignment act (L. 1877, c. 466, § 20), cannot be discharged without an accounting, even where there has been a composition between the assignor and his creditors, unless the creditors distinctly waive the accounting.
A composition deed providing that after the payment therein stated had been made, the assignee might apply to the court for his discharge without notice to the compounding creditors, does not justify the court in granting his discharge without any accounting.
Before an assignee can be discharged under the provisions of a composition deed, he must perform every condition precedent.
Hence, where such a deed provided that the assignee, after paying all claims which he was liable to pay as assignee, and deducting his fees, might reassign to the assignor the property which might be in his possession under the assignment, and then apply ex parte to the court for his discharge, but with the consent of the assignor he obtained the order for his discharge before making the reassignment: — Feld, that the assignor could not waive the reassignment, and that the order was irregular.
The provision in such a deed ratifying and confirming all the acts, transactions, payments, and proceedings of the assignee, means when he shall have complied with the conditions of the deed by reassigning the property, and is in a position to procure his discharge in the mode provided by the statute.
It is the duty of the court to see that the rights of all the creditors are protected before discharging the assignee.
Appeal by an assignee from an order vacating an order discharging him and his sureties from liability by reason of the assigneeship.
On January 15, 1878, John H. Horsfall made an assignment to John W. Hesse, who qualified and entered upon his duties as assignee, and who was also a creditor of Horsfall for more than $10,000.
The assignee continued the business of the assignor, which was that of manufacturer of cabinet furniture, in the’ city of New York, from January 15, 1878, to May 10, 1878.
In the month of March negotiations were begun on the part of Horsfali to compromise his debts.
The assignee, being next to the largest creditor, was first approached, and his consent sought to a settlement at twenty-five per cent. cash.
The negotiations for a settlement with the assignee were conducted by Horsfall and one Thomas W. Harris, who was engaged by Horsfall to perfect the settlement. Mr. Harris also represented one Samuel Ellis Briggs, the largest creditor and a personal friend of Horsfall.
These negotiations consumed several weeks, the assignee at first refusing to entertain the proposition to settle at twenty five per cent. Various propositions were discussed and forms of composition deeds submitted, but finally the assignee agreed to sign the composition on condition that Horsfall would waive a public accounting. This condition was acceded to, and Harris, Horsfall and Briggs, of the one part, and Hesse of the other, verbally agreed that there should be no public accounting. Thereupon, on or about April 8, 1878, Hesse signed the composition deed, which, executed by the assignor, party of the first part, and assignee, party of the second part, and the creditors of the assignor, parties of the third part, after the formal recitals proceeded as follows: ‘ ‘ The parties of the second and third parts do each hereby agree to accept from the party of the first part a sum equal to twenty-five cents for each and every dollar of their respective claims against said party of the first part, in full settlement of said claims, the said sum to be paid on or before the 10th day of May, 1878. And the parties of the second and third parts do, and each and every of said parties does hereby agree to and with the party of the first part and with each other, that on making such payment the party of the first part shall thereupon be forever released and discharged from any and all liability whatsoever to the party of the second part, the said parties of the third part or any of them. And it is further mutually agreed by and between all the parties to this agreement, that upon the signing and sealing of this agreement and its delivery duly acknowledged to said party of the second part, he may re-assign to the party of the first part all property of whatsoever nature or description which may be in his possession by virtue of said assignment, but before making such re-assignment said party of the second part shall, out of said assigned estate, pay all claims or demands against said assigned estate, which he, as such assignee, shall have become liable to pay, and said assignee shall retain out of said estate to his own use the sum of $200, as and for his fees as such assignee.
“And the parties of the first and third part do hereby ratify and confirm all, each and every, the acts, transactions, payment and proceedings of the said party of the second part as such assignee, and do hereby mutually consent and agree that said party of the second part be relieved and discharged from his trust as such assignee, and from all liability as such, that the bond given by him as such assignee be canceled and annulled, and that the sureties upon said bond be relieved from all liability thereupon, and that an order discharging said assignee, canceling said bond and relieving said sureties may be made by any judge of the court of common pleas for the City and County of New York, sitting as County Judge, upon application of the said party of the second part, without notice to any party to this agreement.”
This deed was then circulated among the creditors, and was signed by them, on or before May 10, 1878.
Shortly before that date, Horsfall was anxious to get back his estate in order to meet his settlement with the funds in the hands of the assignee, but the latter insisted upon the entry of an order of discharge before he would reassign the property. This was finally acceded to by Horsfall, and an order was, upon the petition of the assignee, obtained ex parte, from Mr. Justice Van Brunt on May 10, 1878, “That said John W. Hesse, and Herman Colell, and William Baltes, the sureties of the said bond of the said assignee be, and they hereby are relieved and discharged from all liability incurred by virtue of their said suretyship to said creditors and each of them, and that said bond be canceled, and that the clerk of this court be, and he hereby is directed to make such suitable entry of such order in the book or books which he may have, in which the filing of the said bond is recorded', and upon the said bond, as will fully carry out the provisions of this order.”
This order was filed the next day before the creditors were paid.
On the morning of the latter day, Hesse gave up possession as assignee to the assignor, and paid over to him the sum of $641.
By borrowing $1,600 of his creditor Briggs, Horsfall was enabled to carry through his composition as to the bulk of his smaller business creditors, but was unable to pay Briggs and another creditor, one John T. Camp.
In the latter part of the same month, Horsfall made a motion to vacate the aforesaid order of discharge as irregular and void, on the ground that it directed the discharge and release of the assignee and his sureties absolutely, and not upon condition of the assignment of the assets, and that it directed such discharge and release before an accounting was had, and before the assets were reassigned to the assignor. He also asked that the assignee account and pay over whatever should be found due.
Judge Vaw Hoesen wrote an opinion, holding the order irregular and contrary to the statute and the practice, bat as it only released the assignee from liability to creditors, and as Horsfall was not injured thereby, refusing to vacate it.
Thereupon, and on or about July 16,1878, the creditor Briggs made an application to vacate the order complained of and to remove the assignee: This appli cation was also heard before Judge Vah Hoesen, who rendered an opinion denying the petition of Briggs, holding that he had waived all his rights by being a party to the verbal agreement to waive an accounting, and procuring through Harris the entry of the order in question.
;Thereafter, and on or about October 15, 1878, the above-mentioned creditor, John T. Camp, made a motion to vacate said order of release as irregular and void, and for the removal of the assignee and for an accounting. After argument, Judge Larremore vacated the order on or about November 23, 1878.
From this order of Judge Larremore, the assignee and Herman Colell, one of his sureties, appealed.
Louis C. Waehner (Lawrence & Waehner, attorneys), for the assignor, appellant.
One of full age, acting sui juris, can waive a statutory or even a constitutional provision in his own favor, affecting simply his own property or alienable rights, and not involving considerations of public policy (Phyfe v. Eimer, 45 N. Y. 104; Broom's Maxims, 310, 547; Conkling v. King, 10 N. Y. 446; Goit v. National Protection Ins. Co., 25 Barb. 191). The petitioner is estopped, by his consent to the entry of the order of May 10, from questioning its provisions, and from claiming an accounting as a condition of its entry (L. 1878, c. 318, § 6 ; Boerum v. Schenck, 41 N. Y. 182; French v. Shotwell, 5 Johns. Ch. 555; Lansing v. Eddy, 1 Id. 49; De Long v. Stanton, 9 Johns. 37; Hamel v. Grimm, 10 Abb. Pr. 150). A rehearing will not be granted after a decree has been entered by consent (Coster v. Clark, 2 Chan. Sent. 38; affi’g 3 Edw. 405; 2 Ves. Sen. 488; Ambl. 229; Monell v. Lawrence, 12 Johns. 521). The petitioner has no claim whatever, either in law or equity, against the assignee.
George C. Lay, Jr., for John T. Camp, respondent.
The assignee should not be discharged without an accounting. See following cases recently decided in this court: Matter of Cottlow, June 12, 1878; Matter of Yeager, June 25, 1878; Matter of Dryer, June 30, 1878; Matter of Horsfall, July 9, 1878; Matter of Lowenthal, October 10, 1878; Matter of Groencke, Dec. 23, 1878. The court at special term lias power to vacate and set aside an order made out of court (West Side Bank v. Pugsley, 47 N. Y. 368, 372; also opinions of Vah Hoesen, J, in this matter). The order of release was premature and has not the force of a decree entered upon consent. An agreement extra curiam containing a consent cannot be made the authority for a decree in a court of justice, except in accordance with some statute upon the subject. The only two cases in this State where judgments are recorded in the courts without suit and upon written agreement are, judgment upon forfeited recognizances and statements for confession of judgment (3 R. S. [6th Ed.] 774; Code of Civ. Pro. § 1273, et seq.).
See Ludington’s Petition, p. 307 of this vol.
The opinion referred to in the text was as follows:
Van Hoesen, J. — Any proceeding under the Assignment Act of 1877 may be reviewed in the same manner as any proceeding in a court of law or in equity (§ 25, General Assignment Act of 1877). In an ordinary action the court may, upon motion, set aside-any order made by a judge out of court (West Side Bank v. Pugsley, 12 Abb. Pr. N. S. 28; S. C., 47 N. Y. 368). The order which Horsfall moves to set aside was made by a judge out of court, and the only question before me is whether or not it is erroneous. The order provides that the assignee and his sureties be relieved and discharged from all liability to the creditors of Horsfall, and that the bond of the assignee be canceled. The order was founded upon the consent of the creditors, there not having been any accounting by the assignee. It does not purport to discharge the assignee and his sureties from their responsibility to Horsfall, the assignor, and it would not, therefore, be an impediment to his demanding and obtaining a complete account.
Ho creditor now comes forward to ask the assignee to account. The call for an accounting comes from the assignor, and it is he who petitions the court to set aside the order which discharged the assignee and his sureties from their liability to the assignor’s creditors. As the assignor is not aggrieved by the order, I shall deny this application, but I should not hesitate for a moment to set it aside, if the application were made by any creditor. There can be no discharge without an accounting, whilst any part of the trust remains unexecuted. Speaking solely for myself, I am prepared to go still further and to say that under no circumstances whatsoever should an assignee be discharged without first having rendered his account.
In this case there was a composition effected between the assignor and his creditors, but the composition agreement has never been fully carried out. Not all the creditors have been paid, and until they are fully paid, their right of action upon their original claims is merely suspended (Matter of Backer, 2 Abb. New Cas. 379; Edwards v. Hancher, 1 Common Pleas Division, 111; 16 Moak, 458).
It is impossible to say whether or not the assets of the assignor in the hands of the assignee have been or will be properly applied to the carrying out of the composition agreement. The performance of so much of that agreement as the assignee took upon himself to perform is a necessary part of the assignee’s duty, and, as a matter of course, he is not entitled to a discharge till his duty has been done. The discharge was entirely premature. The assignee in this case assumes the privilege of deciding for himself that ho has done his whole duty, and says, in effect, that he has used up all the assignor’s assets in a lawful and proper manner, and that that assertion should put an end to all inquiry.
But the assignor says, on the other hand, that the assignee has either spent unlawfully or he now retains in his hands assets that are requisite and necessary for the carrying out of the composition agreement, as well as other assets which ought to be returned to him after the creditors have been fully satisfied. The very existence of this dispute shows that there can be but one safe course to pursue, and that is to require an accounting. If all the creditors have not been paid, is it the fault of the assignee ? Has the assignor made an agreement of composition which he had not the means of performing, or has the assignee wasted the assets, so that he is to blame for the lack of money to carry the composition through ? Nothing but an accounting will afford a satisfactory answer. But, as I have said before, no creditor has asked for an accounting, or to set aside the order discharging the assignee and his sureties from liability to Horsfall’s creditors, and, therefore, I shall not now set aside that order, erroneous though it be, and contrary to the practice as it unquestionably is. Though upon the papers presented I do not feel justified in setting aside the order, yet the assignee cannot escape accounting. The very excuse he offers for not accounting seems to me to be a conclusive reason why he should account. The assignee was a creditor of Horsfall. His assent was essential to the making of the composition agreement. His claim was a large one, and without his joining in the composition, it could not have been made. He swears and proves by others that he would not consent to the composition until Horsfall agreed that he should not be called to account as assignee. His own version of the transaction puts him in the position of a trustee, who, being also a creditor, uses his power as such to extort from his cestui que trust the surrender of the invaluable right of knowing the way in which the trust estate is spent. No court will tolerate such conduct on the part of a trustee. Such a trustee ought to be removed and forthwith compelled to account.
Under the assignment act of 1877, it is questionable if the court has the power to remove the assignee on the application of the assignor. Section 6 provides for the assignee’s removal on his own petition, or upon the petition of a creditor. But independently of the assignment act, there is no doubt of the power of the court to remove the assignee for good cause shown, at any time, by judgment rendered in an action brought by the assignor or any other person interested in the assigned estate. Without expressing myself positively upon the point, I incline strongly to the opinion that the assignee may also be removed upon the petition of the assignor (1 Barb. Ch. 578; Quackenboss v. Southwick, 41 N. Y. 117; In re Van Wyck, 1 Barb. Ch. 565; 1 R. S. 730, §§ 70, 71, 72; 1 Id. 735, § 103; § 25 General Assignment Act of 1877).
But the creditors, as they are interested in the trust estate, ought to be brought into the court, that they may be heard on the question of the assignee’s removal.
As they are not now before the court I cannot remove the assignee, and without removing him I cannot now order an accounting. It seems to me to be another cause for his removal, that, though he professes to have entirely settled the estate, he attempts to put off the day of reckoning by insisting that he cannot be called to account in less than a year.
If his duty is done, what reason is there for prolonging a merely nominal trusteeship for eight months more ?
1 See also Livingston’s Petition, 2 Abb. Pr., N. S. 1; S. C., 34 N. Y. 553.
The opinion above referred to is as follows :
Van Hoesen, J. — It is true that under section 6 of the general assignment act of 1877, a creditor may, upon petition, obtain the removal of an assignee, but it does not follow that the creditor may not, by his own voluntary act, preclude himself from that form of relief. Briggs, the petitioner, has, in my opinion, done so. He was not acting under compulsion, as Horsfall was in Ms dealings with Hesse. Hesse used no coercion upon him to compel him to agree not to demand an accounting. His share as a creditor of Horsfall would not have been diminished by Hesse’s refusal to sign the composition agreement. Briggs desired the composition agreement signed, because he was anxious to forward the wishes of Ms friend Horsfall, but he had nothing to lose if it were not signed.
He was entitled to an accounting, but was at liberty to surrender that right. That right he did surrender, knowingly and deliberately, and not only did he do that, ho oven went to the extent of procuring from Judge Van Brunt the order for Hesse’s discharge without an accounting. Under these circumstances, aud in the absence of fraud, mistake or coercion, I think he ought not to be permitted to ask for the vacating of the order which he himself obtained, and to ask for an accounting which he deliberately waived. Horsfall’s position is very different. Hesse was his creditor, and at the same time his assignee. All the other creditors agreed to accept twenty-five cents on the dollar and release Horsfall from his debts. Hesse’s consent was all that was needed to make the composition valid and effectual. If he signed the composition Horsfall could obtain a release from all his debts. If he did not sign Horsfall could not effect a composition. Under these circumstances Hesse said: “I will not sign the composition agreement unless you agree not to ask any questions as to what I have done with the assigned estate, and unless you also agree to ratify and confirm everything I have done since I have been assignee.’-’ Nothing more scandalous than this could be proposed by an assignee. Horsfall consented to Hesse’s terms. An agreement so extorted cannot stand. A trustee cannot be permitted to save himself from accounting by using his power as a creditor of his cestui que trust to coerce the latter to consent not to inquire what disposition has been made of the trust estate. Horsfall has his remedy, whether by bill in equity or by a petition it is not now necessary to decide (Peoples. Norton, 9 N. Y. 170). The order of May 10, 1878, having been made by a judge out of court, may be vacated by the court upon notice (West Side Bank v. Pugsley, 12 Abb. Pr. N. S. 28; S. C., 47 N. Y. 368, 372). There is absolutely no force in the argument of Hesse’s counsel that Hesse became entitled to a discharge as soon as the composition agreement was signed. If that were so, then Hesse might have been discharged, even though he should have misappropriated the whole assigned estate. It was his duty to turn over that estate to the person entitled by that agreement to receive it, and he is bound to show that he did so. The effect of the counsel’s argument is that that agreement would cover a breach of trust all over like a cloak.
That view of the law I am not yet prepared to ■ adopt. When Horsfall makes the proper application to the court the composition agreement may prove to be a very poor shield for Mr. Hesse.
Compare Shipman’s Petition, 1 Abb. New Cas. 406; Matter of Le Blanc, 4 Id. 221, and see note at the end of this case.
The following opinion was delivered by the learned judge on vaeating the order.
Larremore, J. — The question of the validity of the order of May 10, 1878, has already been decided by Judge Van Hoesen, who held that he should not hesitate for a moment to sot it aside if an application to that effect was made by any creditor.
Camp, the petitioner in this application, is a creditor within the ruling above referred to, which, while it stands unreversed, should not be disregarded.
Motion granted.
The Matter of Groencke, N. Y. Common Pleas, Special Term, December 23, 1878, was a motion for the discharge of an assignee for the benefit of creditors, made by George Groencke, the assignor, and Richard L. Plahn, the assignee, for the discharge of the latter as assignee and that he should restore any assets remaining in his hands to the assignor, and also for the discharge of his sureties.
It appeared from the affidavits of the applicants, that the assignment had been made August 20, 1878, and thereupon all creditors were notified to meet, which they did, and all executed a composition deed under seal, but not witnessed or acknowledged, by which they agreed to discharge the assignor from all their claims, against him upon the payment of twenty-five per cent, thereof.
This percentage having been duly paid, this application was made upon personal notice to the creditors.
Judge Van IIoesen, in denying the motion, delivered the following opinion, December 23, 1878.
Van I-Ioesen, J.' — Motion for a discharge of the assignee denied. The assignee must advertise for claims. We never discharge without such an advertisement. Besides, there can be no discharge without an accounting. These ex parte proceedings for a composition may be right ; no one can tell ; but no discharge can be obtained upon them.
See opinion of Van Hoesen, J., on p. 295, ante, note.

Opinion:
Daly, Ch. J.
The order vacating the order discharging the assignee should, in my opinion, be affirmed. The statute has provided for the mode in which an assignee in an assignment for the benefit of creditors under the statute, where there has been a composition between the assignor and his creditors, may be discharged, which is on a proceeding for an accounting under the act (Laws of 1877, c. 466, § 20). It was, undoubtedly, as the appellant claims, within the power of the creditors to waive the accounting, for a party may waive any provision of law, or statutory or constitutional enactment designed for his benefit or protection.
But the creditors in this case have not by the composition deed waived an accounting. The assignor and the creditors, Briggs & Harris, who, together, brought about the composition, did so with the assignee, and the application of the assignor Horsfall, and of Briggs, to vacate the order discharging the assignee, was denied by Judge Yah Hoeseh, in the case of Briggs, upon the ground that he had, by the verbal agreement, waived his right to an accounting.* But the petitioner Camp was no party to this verbal agreement, and is in no way concluded by it. He is simply one of the credi tors who signed the composition deed; and all that they agreed to was that an order might be made by any judge of this court, discharging the assignee without notice to them.
The assignee was entitled, under this agreement, to apply to any judge of this court for his discharge without notice to the creditors who signed the composition deed ; but the only mode in which the court had power to discharge him, was upon proof of the composition in a proceeding for*an accounting. When the creditors consent that an order may be made by any judge of the court discharging the assignee, they necessarily mean, discharging him without any notice to them, in the manner prescribed by law, there being no other way in which a judge could discharge him.
To constitute a waiver the consent should have been without any accounting.
The ex parte order, therefore, discharging him, was irregular and was properly vacated.
It was provided by the composition deed, that after the execution and delivery of it, the assignee might, after paying all claims and demands against the assigned estate which, as assignee, he was liable to pay, and after deducting $200 for his fees, reassign to Horsfall, the assignor, the property, of whatever nature or description, which might be in his possession under the assignment.
It is very clear from the instrument, that he was to do this before he had the right to apply to a judge of the court to be released and discharged from his trust.
The composition creditors had agreed to release and discharge the assignor from all liability upon the payment by him of twenty-five per cent, of the amount of their respective claims, and the reassignment of the assigned estate to him by the assignee, as provided for in the instrument, was clearly necessary to enable the assignor to carryout the composition; for it is to be assumed, as this was a general assignment of all the debtor's property for the benefit of creditors, that he had nothing to enable him to pay the compounding creditors until the property was restored to him by a reassignment; and this is sworn to have been the fact, by the assignor and by Briggs, who was one of the principal creditors.
But the ex parte order discharging the assignee was made with the consent of the assignor before a reassignment of the property, and was for that reason alone irregular. This was not a provision which the assignee could waive, except so far as his rights were concerned. The composition creditors had rights also. It was for their interest that the assignor should be enabled, as speedily as possible, to carry out the composition, as the payments were to be made in about a month after the execution of the composition deed; and the assignor could not, without their consent, agree so as to bind them that the assignee might be discharged before reassigning the property. The provision in the composition deed ratifying and confirming all the acts, transactions, payments and proceedings of the assignee means, when he had complied with the conditions of the deed by reassigning the property, and is in a position to procure his discharge in the mode provided by the statute. From the facts disclosed, an accounting in this case was necessary, as the assignee, if he has done what is alleged, has impaired the estate and lessened the ability of the assignor to comply with the terms of the composition. The opinions delivered by Judges Vah Hoesen and J. F. Daly, in the assignment cases of Cottlow, Yeager, Dryer, Lowenthal, and by Judge Yah Hoeseh, in the application of Horsfall and Briggs, in the present case, show how essential and indispensable it is that there should be an accounting in every case, and that it cannot be dispensed with unless there has been a clear, distinct and undoubted waiver of it by every creditor who could in any way be affected by the assignee's discharge, which was not the case here.
I do not think that it affects the question whether the petitioner may have been tendered the amount of the composition or not, if the discharge was irregular. He was not, as Briggs was, concluded by any agreement on his part to waive an accounting, and had the right to bring the matter before the court, it being the duty of the court to see that the rights of all the creditors are protected before discharging the assignee.
The order, therefore, should be affirmed.
The eases here referred to are as follows:
In the Matter of Cottlow (N. Y. Common Pleas, Special Term, June, 1878), above referred to, it was held that the court will not order a reference to pass on objections filed by a petitioning creditor to an account filed by the assignee, without bringing in the other creditors. In that case an ex parte application was made to the court for a refer ence to take proof of all matters relating to the account of Morris Leon, assignee for the benefit of creditors of Louis Cottlow.
The aflidavit on which the application was based was made by the attorney for one of the creditors of the assignor, and stated that the said creditor, Emanuel Schwerin, had obtained an order directing the assignee to file his account, and that the said assignee had complied therewith, and the petitioner had filed his objections to said account. That this accounting was not final, but ordered only on the petition of said Schwerin, and that no other creditor had appeared therein.
The attorney for the assignee consented to the entry of the order of reference.
Tile following is the opinion of the judge, denying the application for the order, June 12, 1878.
Van Hoesen, J. — I deny this application. Ho such proceeding will ever receive any sanction from this court. Mr. Schwerin and Mr. Leon may propose, but they will not be permitted to dispose.
Let Mr. Leon do what he ought to do — apply for a general citation. The only effect of such an application as this is to arouse suspicions — • suspicions which may be unjust and unfounded — as to the good faith of the parties to it.
Mr. Leon cannot hold his accounting secretly and slyly, with my consent.
In the Matter of Yeager (N,T. Common Pleas, Special Term, Jhne, 1878), above referred to, it was held that the court will not discharge the assignor and his sureties after a composition by all the creditors, unless there has been an accounting. A petition was presented to the court by Henry Eisner, assignee of Israel Yeager and Seligman Bauer, asking leave to reconvey to said assignors the assigned property, and that he and his sureties be discharged. The application was founded upon a compromise agreement signed by all the creditors, and containing their respective receipts for their dividends, and their written consent that the assignee reconvey to the assignors the assigned property. It appeared that no notice to creditors to present their claims to said assignee had been published.
Judge Van Hoesen, in denying the application, delivered the following opinion, June 25, 1878.
Van Hoesen, J. — On this application the release can only be from liability to the compounding creditors, who appear and who have been cited to appear on this application. If the bond is to be canceled and the sureties discharged there must be an accounting. It will be merely formal, perhaps, but it must be had. The court will not discharge the bond, except after an accounting.
In the Matter of Dryer (N. Y. Common Pleas, Special Term, June, 1878), above referred to, it was held that the court will not even order a discharge pro tanto without an accounting. The case was an ex parte application by John D. Wienholz, an assignee, for benefit of creditors of William Dryer, for an order relieving him on account of a general release.
The creditors of the insolvent had agreed by an instrument in writing, signed and sealed by each one in the presence of a subscribing witness, who duly acknowledged the same, to accept a sum equal to twenty-five per cent, of their claims in full satisfaction thereof.
The assignor having complied with the terms of the agreement, the creditors also signed and sealed a general release, dated February 20, 1878, in the presence of a subscribing witness, who duly acknowledged the same.
On June 5, 1878, the assignee obtained an order for a citation to issue for the creditors to attend a final accounting on June 15, 1878, and all the creditors were duly cited accordingly.
Pending this proceeding for an accounting, the assignor applied for an order relieving him from any further liability on account of his trust as assignee, in so far as the same might be affected by the claims of any creditors whose names appeared upon the general release, and also for the release of his sureties.
Judge Van Hoesen, in denying the application, delivered the following opinion, June 30, 1878.
Van Hoesen, J. — There can be no discharge without an accounting. Experience has shown the absolute necessity for the giving, by the assignee, of an account of his stewardship. I have now before me a case apparently like this, in which an assignor joined with the assignee in petitioning for the discharge of the assignee's sureties, and where after such discharge the assignee retained and refused to surrender to the assignor the surplus remaining in his hands.
I will not sign any order for a discharge pro tanto: Let the assignee make his account, show that his duty has been done, and that nothing remains to be done, and then, upon turning over to the assignor the balance in his hands, a discharge will be granted.
In the Matter of Lewenthal (N. Y. Common Pleas, Special Term, October, 1878), it was held that on the final accounting required under these rules, all creditors, even though they have signed releases must have notice, and advertisement for claims must have been made. A petition was made by M. Petshaw, assignee of Raphael Lewenthal and Max Gabriel, for his discharge as assignee.
The petition of the assignee stated the making of the assignment, filing of inventoiy and bond, and that all the creditors had proved their claims. Also that a compromise by deed had been effected between the assignors and their creditors, and that all the latter had executed releases to the former.
Affidavits of the assignors confirming the statements of the assignee accompanied the petition.
The assignee asked to have his accounts referred to an auditor to examine the same and to take proof of the several matters referred to in his petition and to report thereon to the court, together with his opinion as to the amount to be paid to counsel, and the amount due to the petitioner for commissions, and that thereupon he should be discharged and his sureties released.
Judge J. F. Daly, in denying the application, delivered the following opinion, October 10, 1878.
J. F. Daly, J. — No discharge will be granted the assignee except upon a proceeding for an accounting to be instituted by citation. The statute is clear upon this point. The assignee must apply by petition for a citation to all persons interested in the estate, to attend the settlement of his accounts, and all parties, whether they have signed releases or not, must be notified.
Advertisement for claims must be made where the assignee seeks relief by reason of a compromise between the assignor and the creditors.
As to necessity of advertising for claims, see note at the end of the principal case.