Court Opinion

ID: 7317162
Source: CourtListenerOpinion
Date Created: 2022-07-25 21:08:17.844212+00
Date Added: 2024-06-11T16:19:40.539313
License: Public Domain

Magie., Ordinary.
The matter brought up for review in this case arises upon five exceptions, filed in the orphans court, to various items contained in the final account presented in that court by the New Jersey Trust and Safe Deposit Company (which will hereafter be called the “trust company”), as administrator of J. Alfred Bodine, deceased. Of these exceptions, the first one was sustained by the order of the court, and no appeal has been taken *634from that action. The remaining four exceptions were dismissed by that court, and this appeal is to test the correctness of that court’s conclusion.
Before dealing with these exceptions, it will be necessary, to make clear my conclusions, to state the facts which appear by the transcript to have been presented to the orphans court by proof. J. Alfred Bodine, in the latter part of his lifetime, had been interested in a corporation named the “Bodine Glass Manufacturing Company.” This company had become insolvent, and a receiver had been appointed by the court of chancery, upon a bill filed by said Bodine. The receiver was permitted, by the court of chancery, to issue receiver’s certificates and to carry on the business of the insolvent company.
After the lapse of considerable time, it would seem from the evidence, the receiver’s venture in continuing the business was found not to have been profitable. At all events, the receiver was permitted by the court to enter into an agreement with J. Alfred Bodine and Samuel Garwood for the sale of the whole property, for the price of $160,000. The agreement contemplated that the purchase price should be paid in installments, and that the purchasers might go into possession and run the plant upon paying the first installment of $50,000. Bodine and Garwood thereupon caused the incorporation of a new company, called the “Bodine Glass Works,” and each of them subscribed for nine hundred and ninety-nine shares of its capital stock. They assigned to that company (hereafter called the “glass works”) the agreement which they had obtained from the receiver of the manufacturing company, paying nothing for said shares except by the transfer of said agreement. Thereafter the said glass works made a mortgage to secure the issue of its bonds to the amount of $150,000. It is evident from the proofs that it was expected that the bonds could be readily sold, and from the proceeds of their sale the agreement.with the receiver could be performed and the whole purchase price be paid to him.
It also appears that, by the same agreement between Bodine and Garwood with the receiver, the receiver was to sell and dispose of some manufactured stock and apply the proceeds as a credit upon the purchase price of $160,000. Some amount *635was thus obtained and credited upon the price, but how much is not made to clearly appear.
While affairs were in this situation, J. Alfred Bodine died intestate. He left a number of children, all of whom were of age. What estate he left was evidently in a precarious condition, because he was bound by his agreement with the receiver to pay all the purchase price that had not been paid. No part of it had been paid except the amount the receiver had obtained from the sale of manufactured stock. The bonds of the glass works remained unsold. Bodine was, furthermore, liable to claims of creditors of the glass works if he had not paid for the capital stock in that corporation by the transfer of the agreement to sell, made by the receiver. As that agreement required a large expenditure to enable the glass works to enforce it, it seems evident that it was no equivalent for the par value of the nine hundred and ninety-nine shares of the capital stock which had been subscribed for by him. Thereupon the parties entered into negotiations with the trust company, which resulted in two agreements of even date, and evidently intended to be supplemental. The two agreements are set out in the prefatory statement.
Without repeating the provisions of the agreements, it is sufficient to say that they recognize the necessity of raising money to complete the purchase from the receiver, and the trust company agreed to furnish and provide sums of money, as they should be required, to buy up all of the claims and debts owed by the receiver, and release and discharge the receiver from all his said debts and liabilities, in order that the receiver should be enabled to convey title to the glass works under the agreement. Eor the moneys so to be advanced, the entire issue of $150,000 of the bonds of the glass works was to be held by the trust company as security. The trust company furthermore was to become the administrator of J. Alfred Bodine and settle his estate. All the children of Bodine joined in one of the agreements and thereby consented to such administration, and further agreed that the trust company should advance from the funds of the estate such sums of money, from time to time, to an amount not exceeding $20,000, as should *636be necessary to provide the glass works with funds to purchase materials and supplies and defray the expenses of continuing the business pending the final settlement between the glass works and the administrator, it being stipulated that loans and advances made out of the estate should be properly secured to the estate by notes of the glass works, with its bonds to be held .as collateral thereon.
The other agreement was between the glass works and the trust company, and provided for the advance of money by the trust company and recognized that the trust company held, as security for such advances, the total issue of $150,000 in the bonds of the glass works. It expressed the desire of the parties to sell said bonds for the purpose of raising funds — first, to reimburse the trust company; second, to pay the trust company the advancements of money made by the administrator out of the estate of Bodine; and third, fourth and fifth, to pay other obligations on which Bodine was liable.
The second exception sought to charge the administrator, the trust company, with certain items due to the Bodine estate from the glass works, upon the ground that those items were collectible, and should have been collected by the administrator. The evidence makes it clear that the glass works had property out of which these claims, if enforced by suit, could have been paid. Upon that circumstance alone, it is strenuously urged that the administrator should be charged with those amounts which, it is said, could have been, but were not, collected by it.
The situation of the estate and parties must, however, be taken into consideration in determining whether the administrator was derelict in duty by not proceeding to collect from the glass works these claims, and whether, if such dereliction existed and could be set up by creditors of the estate, it can be set up by two of the parties who joined- in the agreement with the trust company contained in the prefatory statement. The administrator owed such duties of vigilant care over the interests of the estate as were required by the exercise of a reasonable prudence in attempting to carry out the duties assumed by it as administrator, as modified and affected by the *637agreement into which all the persons interested in the estate had entered, among whom were thé two exceptants to this account. It is quite apparent from the proofs that if the' administrator had enforced these claims against the glass works, that corporation would have been obliged to cease manufacturing and go into insolvency. In such case, all hope of making sale of the $150,000 of its bonds would have been destroyed. That the contracts contemplated such a sale for the protection of the trust company in its advancements of money and the reimbursement of the estate of Bodine for moneys advanced by it, is perfectly plain. Conduct which would have destroyed all hope of such a sale would not have been prudent, and on the contrary would have left the estate in a worse position than before. I think, therefore, that the exception in question was properly dismissed by the orphans court.
The third exception relates to the failure of the administrator to include in the final account a note of the glass works for $1,200, given to J. Alfred Bodine in his lifetime. That note had been contained in the inventory, but in the first accounting of the administrator, allowance had been claimed for the amount of it, as being of no value. No exception was interposed at that time, and the account was settled. The settlement of an intermediate account presents a prima facie case which must be overcome in order to open it for correction of errors alleged therein. Baker’s Case, 61 N. J. Bq. (W Dick.)
It is not charged that this note was allowed in that accounting as of no value by any fraud or mistake, but if in fact there was mistake, it may now be corrected. To justify present correction, there should be something to show that this note was in fact an abiding obligation of the glass works. There is no such evidence, and I think therefore there has not been shown any mistake in the first account which claimed allowance for it as of no value.
It may be added that, if included as an asset of value, it would stand in the same position as other obligations of the glass works, which, for the reasons above given, I think the administrator properly declined to enforce.
The fourth exception claims that the administrator did not *638perform its duty in respect to the settlement of the receiver’s accounts in the court of chancery, and particularly with respect to the allowance to him and to his counsel for compensation; It is insisted that the administrator ought to have objected to the allowances because they were excessive.
It is impossible in this case to review the action of the court of chancery in determining what is a reasonable compensation to the receiver and his counsel. It is not to be assumed that that court, and the distinguished vice-chancellor who settled the case and advised the decree, made excessive and unwarranted allowances. The presumption is, and .must be, that the allowances were made after a consideration of the work done by the receiver and his counsel. The particular charge in this case is that not only did the administrator fail to object to such extravagant allowances, but that, appearing by its counsel, it consented thereto.
The evidence on that subject is somewhat contradictory. I think there is proof thereby that the administrator, after consulting with the receiver and his counsel, and also with counsel of the heirs of Bodine, and one of the heirs who represented the others, reached the conclusion that, although the claims were large, yet that it would be unwise to attempt to interfere by objection thereto, and the reason seems to be that it was feared that this might open some questions respecting the sale by the receiver to the glass works, which might prove detrimental to the sale of the $150,000 of bonds, which were not yet disposed of. There is nothing to indicate that the administrator acted in bad faith in forming that judgment, and there seems to have been some reason to support it.
It is urged that because the counsel for the (rust company appeared at the return of the rule to show cause in the court of chaneerjr, and made no objection to the allowances, that that court was compelled to make allowances which were unfair and extravagant. But this contention assumes that the court of chancery makes allowances of-this sort when consented to, while it is well known that, on the contrary, it examines such claims and is careful not to exhaust an estate by allowances that are greater than a fair compensation.
*639Tbe fifth, exception relates to the failure of the administrator to charge itself with $23,980.16 claimed to have been paid to it by the receiver under the order in the cause in the court of chancery. From the involved and not clear testimony, I have reached the conclusion that the facts, so far as discoverable, are that when the receiver prepared to apply to the court to permit the sale to the glass works to be consummated by conveyance, he had to exhibit to the court a receipt of $160,-000 as the purchase price, and his report shows that he did represent to that court that he had received that sum. In the amount thus represented as received, the whole, or a part, of a credit opened in his favor by the trust company to the amount of $135,000, must have been included. .This was placed to his credit by the trust company, but the whole of it was not used, and does not seem to have been required to be used to enable the receiver to obtain from the court of chancery an order upon him to make the conveyance. The sum above named was not required, and the trust company charged back the amount which was not needed or used, and claims that it was a mere matter of bookkeeping. The receiver, however, in his representation to the court of chancery, declares that he received an overpayment of that sum, and procured to be inserted in the order of sale a direction that he should repay that sum to the estate of Bodine and to Garwood. As, however, the repayment was due, not to them, but to the glass works to whom they had assigned their agreement, this, in my judgment, merely indicates that the receiver was misled. The sum not needed for the purposes of the receiver was not required to be paid by the trust company. This exception was also properly dismissed.
The appellants failing in all these contentions, the decree must be affirmed, with costs.