In re Machwirth — 15 A.D. 65

Majority

p. 65

In the Matter of the Petition of Adolph Machwirth and James Smith, Composing the Firm of Machwirth & Smith, Appellants, for Leave to Sue James Matthews, as Receiver, etc., of the Firm of Thorp & Bond, Respondent.

Headnote

Receiver — leave to sue an uncontested claim—payment thereof, where ordered— lien on a fund waived.

Where a claim has "been admitted "by a receiver, the court will not authorize the claimants to bring an action against the receiver to establish it, nor will the court direct the receiver to pay the claim, unless it be shown that he has sufficient assets to pay all other creditors in full.

Where creditors of a firm, which is entitled to a fund held by the general government, who might, by filing notice of their claim with the public authorities,

. have had their claim protected, acquiesce in its being received by their debtor and by his receiver, they have no lien upon the fund, but stand upon the same footing as other general, creditors.

Appeal by the petitioners, Adolph Machwirth and another, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 24th day of July, 1896, denying their application for leave to bring an action against James Matthews, as receiver, etc.

p. 66

M. Owen Roberts, for the appellants.

Edward M. Grout, for the respondent.

The papers disclose that the petitioners’ claim has never been formally presented to the receiver and a demand made upon him for payment. Indeed, the claim of the petitioners is that the receiver has admitted the claim and promised to pay it without any formal presentation and demand. Consequently no action seems to be necessary for the purpose of having the claim established, as its amount is not contested. If, upon a formal presentation of the petitioners’ account, the amount should be disputed and the claim rejected, upon a proper application by the petitioners the court would doubtless allow an action to be brought for the purpose of having the claim established. But until it appears that such step is necessary, a useless expense would be incurred to accomplish what the receiver is undoubtedly prepared to admit.

The petitioners have no lien upon the fund which was paid over by the general government, even though it be conceded that if they had filed notice of their claim with the public authorities it would have been protected. They were willing that the money should be received by their debtors and by the receiver, in consequence of which they now stand upon the same footing as the other general, creditors of the firm represented by the receiver.

It appears from the papers submitted by the receiver that he is presently engaged in collecting the assets of the firm, and that he is now unable to state whether such assets will be sufficient to pay the debts of the firm in full or not. The receiver would not be justified in paying the petitioners’ claim in full, unless it appeared that he was possessed of sufficient assets to pay all of the other creditors in full. And the court will make no order directing such payment except such facts appear. There is no reason to suppose that the receiver will not promptly discharge his duties in connection with his receivership, and pay the claims of creditors in due and orderly course. If he does not do so the petitioners can make application to the court to compel him to properly discharge his duty in this respect. At present we see no ground for granting the application, either to pay over or for leave to sue.

p. 67

The order should, therefore, be affirmed, but without costs and without prejudice to the right to renew the motion.

All concurred.

Order affirmed, without costs and without prejudice to the right to renew motion.