Case Name: William B. Curtis, as Trustee in Bankruptcy of Joseph Kuhn, a Bankrupt, Respondent, Appellant, v. Dunkirk Savings and Loan Association and Others, Appellants, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-07-07
Citations: 163 A.D. 469
Docket Number: 
Parties: William B. Curtis, as Trustee in Bankruptcy of Joseph Kuhn, a Bankrupt, Respondent, Appellant, v. Dunkirk Savings and Loan Association and Others, Appellants, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 163
Pages: 469–475

Head Matter:
William B. Curtis, as Trustee in Bankruptcy of Joseph Kuhn, a Bankrupt, Respondent, Appellant, v. Dunkirk Savings and Loan Association and Others, Appellants, Respondents.
Fourth Department,
July 7, 1914.
Mortgage — foreclosure — disqualification of referee—recovery of costs and fees in new action — collateral attack on judgment — affirmance of sale.
Where the real estate of a bankrupt has been sold under mortgage foreclosure in an action in the County Court, and his trustee later learns that the referee to sell was disqualified to act, the trustee, while the judgment of the County Court is in full force, and while retaining the surplus arising from the sale, cannot maintain an action in the Supreme Court to recover of the mortgagee, the referee and others the amount of the costs and fees awarded them by the judgment of the County Court. This is especially so where the bankrupt estate suffered no loss from any act of the referee, and he received none other than the statutory fees with no extra allowance.
It seems, that if the County Court judgment had been set aside for the disqualification of the referee, or for the misconduct of plaintiff’s attorney, that court could have summarily compelled the restoration of the costs and fees.
Plaintiff’s only remedy under the circumstances is to apply to the County Court to exercise its disciplinary power over the attorney and the referee, for under ordinary circumstances parties aggrieved by misconduct of attorneys and referees should present their ease to the court in which the misconduct occurred.
While the judgment of the County Court may be voidable because of the referee’s disqualification, it is not void, and as long as it is in force cannot be attacked collaterally.
The fact that plaintiff recovered against the purchaser and his associate on the foreclosure sale the amount of the profit they made on a resale of the property, on the ground that they had conspired to prevent competition in the bidding, and that the judgment in his favor was affirmed in the Appellate Division, does not determine that the judgment was open to collateral attack in view of the fact that the parties had stipulated in that action that if plaintiff recovered a money judgment should be rendered, instead of setting aside the sale.
■ Cross-appeals by the plaintiff, William B., Curtis, as trustee, etc., and by the defendants, Dunkirk Savings and Loan Association and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Chautauqua on the 8th day of December, 1913, upon the decision of the court after a trial before the court without a jury.
The plaintiff appeals only from so much of said judgment as limits his recovery of costs to the sum of ten dollars.
Warner & Woodin [Glenn W. Woodin of counsel], for the plaintiff.
John L. Hurlbert [Arthur C. Wade of counsel], for the defendants.

Opinion:
Foote, J.:
Plaintiff's appeal is from the award in his favor of only ten dollars costs. He claims to be entitled to a full bill of costs. Otherwise plaintiff is satisfied with the judgment. The damages awarded to plaintiff are one hundred and thirty-three dollars and eighty-two cents and interest thereon. This sum is made up of ten dollars referee's fees paid to the defendant Hurlbert as his fee for acting as referee to compute the amount due the plaintiff in a mortgage foreclosure action, and fifty-nine dollars and seventy-five cents paid to the same defendant as his fee of fifty dollars and nine dollars and seventy-five cents his expenses as referee under the judgment in said foreclosure action for selling the mortgaged premises. The remainder of the recovery represents the taxable costs and disbursements paid to the defendant Bookstaver, plaintiff's attorney in said foreclosure action, being the costs accruing subsequent to the order of reference to compute the amount due. The total of the plaintiff's costs as taxed paid to said Bookstaver was one hundred and thirty dollars and fourteen cents. Said mortgage foreclosure action was brought in the County Court of Chautauqua county against plaintiff's predecessor as trustee in bankruptcy of Joseph Kuhn and other defendants by the defendant the Dunkirk Savings and Loan Association to foreclose a mortgage of two thousand five hundred dollars made by said Kuhn to said loan association. All the defendants made default in pleading and the action proceeded to judgment and the mortgaged premises were sold thereunder, realizing a surplus above the mortgage debt. Plaintiff has recovered against all the defendants for the amount of the referee's fees and taxable costs stated on the ground that the relations between the referee and the plaintiff's attorney were of such a character that the referee was disqualified to act as such. This disqualification arises out of the fact that the referee had before his appointment as such to compute the amount due, at the request of plaintiff's attorney, prepared the complaint and other papers in the action, and served the summons and complaint upon some of the defendants.
The costs and referee's fees which plaintiff has here recovered against all the defendants were awarded and directed to be paid to the plaintiff and the referee, respectively, by the judgment of the County Court. That judgment still remains in full force as between the parties in that action and as to these defendants, and no application has been made to the County Court to modify the same or to compel the defendants here to restore said costs and referee's fees. Plaintiff was not aware of the facts disqualifying said referee until after the complete execution of said foreclosure judgment and the payment to plaintiff of the surplus moneys arising therefrom or plaintiff's share thereof.
Thus, we have the question as to whether under the circumstances stated plaintiff, representing the estate of the bankrupt mortgagor, may maintain an independent action in this court to recover the costs and fees awarded by the judgment of the County Court.
It is not alleged or found that the estate which plaintiff represents suffered any pecuniary loss because of any act of the attorney or referee in said foreclosure action, nor is it claimed that the costs and referee's fees paid were any greater than would have been paid from the proceeds of the sale of the mortgaged lands if another referee had acted, or the referee had not been so disqualified. The expense incurred of costs and referee's fees was the usual and ordinary expense in such cases. The costs and disbursements were the amounts fixed by law where costs are allowed, and no discretionary extra allowance was included, and the fees of the referee were those fixed by statute, and were not discretionary with the court. It is not claimed that the referee did not discharge his duty properly and correctly in computing the amount due or in conducting the sale. Plaintiff has no cause of action on account of any actual loss sustained because of the misconduct of the defendants or any of them.
Had the judgment of the County Court and the sale thereunder been set aside on account of the misconduct of plaintiff's attorney and the disqualification of the referee, no doubt the attorney, or his client, if the client had received the money, could be compelled to restore the costs awarded by that judgment, and the referee the fees which he had received, and resort to an action in another court would not be necessary or proper, for the power could be exercised in a summary way by the court which rendered the judgment and subsequently vacated it. But where, as here, plaintiff does not complain of being injured by the judgment or sale and does not seek to have either set aside and retains the benefit of the sale in the form of the surplus money, it would seem that plaintiff has no other remedy than to apply to the court which rendered the judgment to exercise its disciplinary power over the attorney and the referee, who were officers of that court. If that court should determine, under the circumstances, that neither the attorney nor the referee should be allowed to retain these costs and fees, it can compel them to refund the same, or it may take such other action as may be considered proper under the circumstances, and upon the money being refunded, it may order the money to be paid to the plaintiff as having a better right to it than any one else. We need not deny the power of one court to discipline attorneys and referees for misconduct while acting as such in another court, where they are officers of both courts. Under ordinary circumstances parties who feel aggrieved by misconduct of attorneys and referees calling for disciplinary action should present the case to the court in which the misconduct is alleged to have occurred.
We are also of opinion that so long as the judgment of the County Court stands and remains in force plaintiff may not recover these costs and fees because of the misconduct of the attorney and referee, or the disqualification of the referee. That judgment may be voidable because of the disqualification of the referee, but it is' not void. So long as it remains in force it cannot be attacked collaterally, as is attempted here. (Crouse v. McVickar, 207 N. Y. 213.)
After the foreclosure sale plaintiff brought an action against the purchaser and another, to whom the purchaser had assigned a one-half interest, to set aside the sale and the deed thereunder on account of the fraudulent conduct of the purchaser and his associate at the sale in conniving and conspiring with other intending bidders to prevent competition in bidding. The relief demanded was that the sale be set aside and that plaintiff recover the sum of $1,213.99, being the amount for which these purchasers had resold the property in excess of the amount they bid for it at the sale. In the course of the trial of that case a stipulation was entered into between the parties to the effect that if the case was decided in favor of the plain tiff on the merits, the court should not direct the sale to he set aside, but that the sale should stand and judgment should be directed in favor of the plaintiff for the $1,213.99, the profits which the defendants had made on resale of the property, and that plaintiff should execute to the purchasers or their assigns a quitclaim deed of the property. Plaintiff did recover in that case a money judgment in accordance with the stipulation, and in addition it was adjudged that the' sale was illegal, fraudulent and void; that the resale by the purchaser was also invalid; that a money judgment be had in lieu of a rescission of the sale in accordance with the stipulations of the parties; and that on satisfaction of the judgment plaintiff execute a quitclaim deed. Findings of fact were made in that case as to the misconduct of plaintiff's attorney and the referee and the disqualification of the referee, such as have been found in the present case, though there were no allegations of such misconduct in the complaint. From the judgment in that case an appeal was taken to this court by the defendants there, and the judgment was affirmed here. (See Curtis v. Reuckert, 151 App. Div. 894.) It is now urged that by affirming that judgment this court has, in effect, held that the judgment of the County Court may be attacked collaterally as in this action and that that judgment is void. The defendants here were not parties to that action, and the judgment there determines nothing as to them. The fraudulent conduct of the defendants in that case which prevented competition in bidding entitled the plaintiff to have the sale set aside on that ground alone, and the stipulation of the parties required the court, in place of setting aside the sale, to render the money judgment which it did. The judgment was affirmed here because there was no error in it which prejudiced the defendants in that case.
Here, again, the plaintiff has elected to take the benefit of the services of the referee in making that sale and the attorney who foreclosed the mortgage. He has not only ratified the sale, but has recovered, on account thereof, over $1,200. We see no reason in equity and good conscience why plaintiff should have the benefit of this foreclosure sale liquidating the asset for the estate he represents without the usual and ordinary expense thereof. Hence, as it seems to us, if these attorneys should be disciplined for misconduct, such discipline should not he administered for the purpose of paying money to the plaintiff to which the plaintiff would not otherwise be entitled.
Our conclusion is that the judgment appealed from should be reversed, with costs,, and the plaintiff's complaint dismissed, with costs.
All concurred.
Judgment reversed and complaint dismissed, with costs, including the costs of this appeal.