Court Opinion

ID: 5186971
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:30:07.315972+00
Date Added: 2024-06-11T08:26:47.092252
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 $i.0,000 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 a custodian receiver (appointed pendente lite) of the *133rules relating to administrative receivers. The plaintiff here was not a receiver of the defendant corporation. He was ilie 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 divested 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. Home Insurance Co., 71 N. Y. 401; The U. S. Trust Co. v. The N. Y., West Shore & Buffalo R. Co., 101 id. 483; Decker v. Gardner, 124 id. 334.) It was applied in the case of the committee of a lunatic, in Hatter of Otis (101 N. Y. 585). 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) to justify *134the 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 said by the Supreme Oom't ” 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 Rumsey 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 Gase (supra), takes no estate and has none to administer. He does not divest the legal owner, of his title, and estate nor in that sense does he stand in his' 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 him 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 a1 statutory receiver to adopt or repudiate the lease within a .reasonable time then, as Justice Rumsey 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 divested of title — as well as for the $10,0001 *135And 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 the lease ?
It is conceded that there was no such direction in express 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 “ othey things which may be necessary or proper to be done in the general and ordinary conduct of similar places of business.”
*136. That plainly refers to the running administration of an 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 mot. 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; Booth v. Clark, 17 How. [U. S.] 322 Hooper v. Winston, 24 I11. 353, 366; Atty.-Gen. 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."
Van Brunt, P. J., Patterson and O’Brien, JJ., concurred