Court Opinion

ID: 7337214
Source: CourtListenerOpinion
Date Created: 2022-07-25 23:16:08.143766+00
Date Added: 2024-06-11T16:20:13.587274
License: Public Domain

BARRETT, J.
(concurring). The difference of opinion in this case is upon the single question whether the defendant is liable for the $10,-000 paid by the plaintiff receiver to the Livingston estate for past rents. The dispute on this head, as it seems to me,-results from the misapplication to custodian receivers (appointed pendente lite) of the rules relating to administrative receivers. The plaintiff here was not a receiver of the defendant corporation. He was the receiver pendente lite of the property which was the subject of the litigation. The title to that property remained in the corporation until it was devested by the sale in the foreclosure action; and the corporation continued liable throughout to its lessor upon the covenants of the lease. The existence of the corporation was not even attacked 'in the foreclosure action. It follows that the plaintiff, as receiver pendente lite in that action, acquired no title to the lease. He was a mere officer of the court, and possessed no authority as custodian save that which its order conferred upon him. How, then, could he be liable for these rents? There was no privity of contract on his part, nor was there privity of estate. A receiver of the corporation would have been vested with the corporate estate for administration, and he could have elected to accept the lease, thus establishing privity of estate. But a receiver pendente lite of the subject of the litigation could not elect to accept the lease without the express sanction of the court. He has -no such independent power or discretion. This distinction between the two classes of receivers is pointed out in an unvarying line of authorities in this state. Keeney v. Insurance Co., 71 N. Y. 401; U. S. Trust Co. v. New York, W. S. & B. R. Co., 101 N. Y. 483, 5 N. E. 316; Decker v. Gardner, 124 N. Y. 334, 26 N. E. 814, 11 L. R. A. 480. It was applied in the case of the committee of a lunatic in Re Otis, 101 N. Y. 585, 5 N. E. 571. The committee was there likened to a bailiff, whose possession is the possession of the court, and who consequently takes no title to the property of the lunatic. The court of appeals held that the occupation by the committee under a lease to the lunatic—as distinguished from a similar occupation by a receiver or an assignee for the benefit of creditors—creates no privity of estate between him and the lessor. The. receiver there spoken of was a receiver who, like an assignee in bankruptcy or for the benefit of creditors, is “vested with the title to the leasehold interest”; while a receiver pendente lite of the subject, of the litigation is simply an authorized custodian, with just such power as the court chooses to confer upon him, neither more nor less. The same distinction has been repeatedly made in the supreme court of the United States, and there is nothing in the report of Dushane v. Beall, 161 U. S. 513, 16 Sup. Ct. 637, 40 L. Ed. 791, to justify the observation made by justice RUMSEY that the rule with regard to election by statutory receivers and its results “is precisely the same with a chancery receiver, as is *831said by the supreme court” in that case. The supreme court in that case was not dealing with or speaking of chancery receivers at all, but of “receivers and official liquidators”; referring plainly to receivers who, like assignees in bankruptcy and official liquidators, are vested with an estate for administration. This misapprehension would seem to be the cause of our disagreement. While conceding that an ordinary chancery receiver is not liable from the mere fact of taking possession of the property, Justice BJJMSEY says that such a receiver is entitled to a reasonable time to elect whether to adopt or repudiate lease contracts. The mistake here, in my judgment, is in applying this rule to such a receiver. That is undoubtedly the rule in the case of a receiver who takes title to the party’s estate, and becomes vested with, it for administration. He can, by adopting the lease, bring it into and make it a part of his trust estate, or he can decline to take it into the trust estate, and leave the lessor to his rights as an ordinary contract creditor. The custodian receiver, however, who is a mere agent, like the committee in the Otis Case, supra, takes no estate, and has none to administer. He does not devest the legal owner of his title and estate, nor, in that sense, does he stand in Ms shoes. He is the agent of the court, and he can neither add to nor take from the' subject-matter placed in his possession. Having directed Mm to take possession of that subject-matter, the court may deem it equitable to instruct him to pay the rent while he remains in possession, but that is an equity for the court to consider, not the custodian. If a mere custodian, independently, and without the sanction of the court, is bound, like a statutory receiver, to adopt or repudiate the lease within a reasonable time, then, as Justice BUMHEY logically concludes from his premise, the plaintiff here became vested with the title to the leasehold interest, and a privity of estate was created between him and the lessor, whereby he became liable upon the covenant to pay rent. But this.proves altogether too much, for if the premise, with its necessary conclusion, be accurate, why was not the plaintiff liable for all the rent which accrued until he was devested of title, as well as for the $10,000? And, if so liable, it is difficult to perceive by what variation in the principle he escaped responsibility for the past rent, additional to the $10,000, which the present defendant was compelled to pay in order that it might retain possession of the leases purchased, and which is the subject of its counterclaim. Yet we all agree that unquestionably the counterclaim was properly disallowed. If it was properly disallowed, then what becomes of the election, theory, and its result with respect to, the $10,000 payment? Our divergence, then, relates back to the status' of a custodian receiver appointed pendente lite. If we are right in our estimate of his true status,— as I think we are, both upon principle and authority,—the conclusion is inevitable that the plaintiff was not liable for the rent which, at the defendant’s request, and to save it from being dispossessed, he paid out of the funds in his hands.
The only other question is, did the court direct the plaintiff, while in possession of the premises, to pay the current rent reserved-in *832the lease? It is conceded that there was ho such direction in ex-, press terms, and that concession, in my judgment, concludes the discussion. So important a direction cannot be injected into the order by implication. The receiver was directed to take possession of the leasehold property, and to carry on the business in the demised premises, pendente lite. He was to realize all he could from it for the benefit of the plaintiff in the action and those whom the plaintiff represented. How did this involve an implied direction or authority to accept the lease and pay the rent? Why, indeed, should the receiver have paid the rent? And why should the court have directed him to do so? The defendant in the action was liable for the rent to the lessor. Would it not have been time enough, when the latter expressed dissatisfaction with his lessee’s covenant, and asked the receiver to- pay the rent or leave the premises, to decide whether a direction or authority to pay should be given, or whether the receiver should then give up the business. The receiver was in the meantime directed to conduct the business, and for that purpose to do certain specifically enumerated things, —the payment of rent not being among them,—and such “other things as may be necessary or proper to be done in the general and ordinary conduct of similar places of business.” That plainly refers to the running administration of a hotel business. It meant no more. In a general sense, it is always necessary and proper to pay the rent of one’s place of business,—whether similar or dissimilar to that in question,—but that surely was not what the order imported or the court intended. It has been repeatedly held in this and other states and in England that receivers pendente lite, conducting business under provisions quite as broad, if not broader, than those under consideration, were not permitted even to make repairs, which they deemed essential, without first securing additional and express authority from the court. Wyckoff v. Scofield, 103 N. Y. 630, 9 N. E. 498; Booth v. Clark, 17 How. 331, 15 L. Ed. 164; Hooper v. Winston, 24 Ill. 366; Attorney General v. Vigor, 11 Ves. 563. It is entirely clear that an order which particularized such trivial matters as the employment of servants left nothing of serious importance to-implication.
For these reasons, as well as for those assigned by the Presiding Justice, with which I concur, the judgment should be affirmed.