In re Accounting of Betts — 33 A.D. 257

Majority

p. 257

In the Matter of the Final Accounting of Henry Betts, as Assignee of the Goods and Property of Gilbert L. Foote for the Benefit of Creditors. William E. Jones and Frank Haley, Petitioners, Appellants; Horace D. Ellsworth and Others, Creditors, Respondents.

Headnote

Practice—judicial settlement of the accounts of an assignee — his sureties must he served with tlw citation.

Under section 13 of chapter 466 of the Laws of 1877, a citation issued upon an application of an assignee for the benefit of creditors, for the judicial settlement of his accounts, must be served on the sureties of such assignee, as well as on all creditors and other parties in interest.

Such sureties are prejudiced by the omission to bring them in as parties to the proceeding, although the decree is only prima facie evidence against them; and, where they are not made parties, they are entitled to have a decree, which has been entered therein, opened and to be made parties to the proceeding.

Appeal by.the petitioners, William 'E. Jones and Frank Haley, from an order of the County Court of St. Lawrence county, entered in the office of the clerk of the county of St. Lawrence on the 25th day of May, 1897, denying their motion to open the accounting of Henry Betts, as assignee, etc., of Gilbert L. Fdote, and to make the petitioners, who are sureties on the bond of the said assignee, parties thereto.

This proceeding was instituted by the assignee, before the County Court, for a final settlement of his accounts. Creditors and other persons interested in the assigned estate were cited to attend, but no citation or notice of the proceeding was served upon the sureties who executed such assignee’s bond. The proceedings resulted in a decree surcharging the assignee’s accounts with a considerable sum arising out of his mismanagement. There are not funds enough in his hands to pay the amount charged against him, and, owing to his insolvency, his sureties are now balled upon by the creditors to pay the same.

Hpop learning that such proceedings had been had, and such deei'ee rendered, the sureties applied to the County Court to open such decree, and allow them to come in as parties and be heard upon such accounting. An order was made denying such application, and from such order this appeal is taken. .

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John M. Kellogg, for the appellants.

Horace D. Ellsworth, for the respondents.

Section 11 of the General Assignment Act (laws of 1877, chap. 466) requires that .a citation must be issued to all parties interested whenever a judicial settlement of the assignee’s accounts is had. In any question affecting the assignee and a creditor only it is sufficient to cite the assignee alone; but if, in such a case, the assignee' chooses to go into a final settlement of- his accounts the citation to “ all persons interested,” required by section 11 and referred to in section 13, must then be issued. And section 13 plainly directs that such a citation must-be served on the sureties of the assignee as well as on all creditors and other parties interested.

The proceeding before us was one inaugurated by. the assignee for a final settlement of his accounts, and, hence, very clearly, under section 13, the sureties were entitled to be cited.

It is claimed by both parties upon this motion that the decree rendered against the assignee in such proceeding is prima facie binding against the sureties. Assuming that to be so, we are. of the opinion that the clear right given by such statute to the sureties to be made parties, and so to be heard upon the question of what and how much should be charged against their principal, is a right of which they should not be deprived.

. It is urged by the respondent that the sureties are not prejudiced by the omission to bring them in as such parties, because the decree so rendered against the principal is only prima facie evidence against them; that, not .being a -conclusive -adjudication as to them, they are still at liberty, when called upon to pay in accordance with' its requirements, to contest the same and show wherein its provisions and requirements are erroneous. But evidently this puts them in a false position with reference to the claim made against them. They are confronted with an. apparent adjudication in favor of that claim and the burden is thrown upon them of overcoming it. Every item charged upon such accounting against their principal is presumed to have been properly charged, and this presumption the sureties are required to overcome by proof. Such -presumption has been obtained by the claimants in violation of the - statute :and is one to

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which they are not entitled. It gives them an undue advantage over the sureties and operates to their prejudice.

The order appealed from should be reversed, and the application of the sureties should be granted. .

All concurred.

Order reversed, with ten dollars costs and disbursements and the motion of the sureties granted.