Shipman's Petition — 1 Abb. N. Cas. 406

Majority

p. 406

SHIPMAN'S PETITION.

N. Y. Common Pleas; Chambers,

February, 1877.

Headnote

Assignee foe Benefit of Cbeditobs.—Powebs of Judges.

The powers of a c'ounty judge,—exercised in the city of New York by the judges of the court of common pleas,—under the act of 1860 and its amendments, relating to assignments for benefit of creditors,—do not extend to directing'the assignee in the general administration of the assigned estate, upon his petition presented for that purpose.

An authority to perform acts not authorized by the terms of the

p. 407

assignment must be obtained from a court of equity upon suit brought for that purpose.^[1]

Petition by an assignee for the benefit of creditors for the consent of the court or its judges to his uniting in the re-organization of an insolvent railroad company, bonds of which were among the assets of the assigned estate.

William D. Shipman, the assignee under the act of 1860 of the firm of Duncan, Sherman & Co., presented a petition to the court of common pleas of the city and county of New York, and to the several judges thereof, setting forth the possession and ownership by him as such assignee of various bonds of the Mobile and Ohio Railroad Company,- a company at the time insolvent, and in the hands of the receivers in certain foreclosure suits of mortgages, by which such bonds were secured; that to avoid such a-foreclosure, a plan of re-organization of the company had been prepared, at the instance of various of such bond-holders by whom a committee had been appointed with concurrence of the company, which had been assented to by a majority of the bond-holders; that believing it to be for the best interest' of his cestui que trust, the petitioner asked the consent of the court or its judges to unite in such plan of reconstruction, and in the interest of the parties he represented, to accept the benefit thereby offered, by submitting or subjecting the bonds he held, to the terms and provisions of such agreement or plan of re-organization. The application was ex-parte.

Shipman, Barlow, Larocque & Macfarland, for the petition.

In my opinion, the officers to whom the petition is addressed are not authorized to grant the prayer.

p. 408

The act of 1860, chap. 348, and its amendments, relating to insolvent assignments, vest in the judges, but not in the court, certain limited powers; and they relate to the assignee (except in respect to the approval of the securities), and to his accounting, rather than to any control over his administration of the estate. As such judges, except in the matter of such accounting, they possess no judicial powers, except such as exist in the court or a court of equity.

The only power the court possessed upon petition without suit duly instituted is, as a court of equity, under the provisions of the Revised Statutes (1 R. S. 730, §§ 69, 70, 71), to substitute another trustee in place of the assignee.

A receiver, being an officer of the court, may, on petition, at any time apply for advice and direction as to his conduct, and the order of the court would be his justification; but no authority is conferred by any of these acts, either upon a judge of this court acting as county judge (In re Morgan, 56 N. Y. 629 ), or upon the court to exercise said judicial powers in advising or directing such assignees from time to time in the general administration of the estate upon petition presented for that purpose, which would afford the assignee any indemnity in a departure from the immediate obligation of his trust to sell the assigned property, or enforce collection of debts without any unnecessary delay, so as to convert it into cash for the purpose of distribution (In re Levy’s Accounting, 1 Abb. N. C. 177 ).

•The assignee can only find protection for acts not immediately authorized by the terms of the assignment by a resort to the powers of a court of equity, upon suit brought for that purpose.

I am without power to grant the prayer of the petition.

Cases cited

In re Morgan 56 N. Y. 629 N.Y. 1874-03-24 p. 408