p. 128In the Matter of the Assignment of Samuel Rosenback et al. to Ferdinand Jung for the Benefit of Creditors: Moses May, Appellant, against Ferdinand Jung, Respondent.
(Decided May 15th, 1883.)Headnote
Where, on a final accounting by an assignee for the benefit of creditors, a decree is made which adjudges that the assignee has in his hands a certain sum of money out of which it directs him to pay specified sums to creditors, a creditor is not entitled thereupon, as a matter of course, to docket a judgment, for the amount thereby directed to be paid to him, against the assignee personally.Appeal from an order of this court vacating an order for the examination of an alleged judgment debtor in proceedings supplementary to execution.
A general assignment for the benefit of creditors having been made by Samuel Rosenback and Isaac Lauterbach to Ferdinand Jung, a citation to the latter to account, as assignee, was obtained by Moses May, one of the creditors of the assignors. The assignee then, upon petition, obtained a general citation to all persons interested to attend his final accounting, and on the proceedings thereon had, on June 17th, 1881, a decree was made and filed on application of the assignee, and with consent of May, by which the assignee was ordered to pay a dividend of ten per cent, to creditors out of the sum of $14,000.63 found to be in his hands as assignee; the sums ordered to be paid to May being $1,789.82 on one claim and $899.10 upon another. On December 21st, 1881, May procured a judgment for $2,688.92, the aggregate of said sums, to be docketed in his favor against Jung, the assignee, on the basis of said decree, and issued execution thereon to the sheriff of the city and county of New York, which execution was returned wholly unsatisfied. May then procured an order for the examination of Jung in supplementary proceedings, which order was vacated by the court on the grounds : First, that the judgment was entered against Jung, as assignee, not personally;
p. 129second, that May had signed a composition agreement with the assignors prior to the entry of the decree, and had accepted a cash payment thereunder.
It appeared that while the accounting proceedings above referred to were pending before the referee to whom the assignee’s accounts had been referred, May, with other creditors, agreed to a composition of twenty-five per cent., fifteen in cash and ten in notes, and received the cash on May 5th, 1881. The notes were tendered subsequently, but he refused to receive them. May alleged that he signed the composition agreement upon the representation that it was exclusive of the dividend he was to receive upon the accounting. The assignee alleged that the composition was based on. the accounts then in process of settlement.
It was also shown that a proceeding by motion had been instituted by Jung on December 22d, 1881, to have the execution set aside on the ground that the decree in favor of May had been paid and satisfied; that the court referred to a referee the question of fact, but that the proceeding was dismissed by consent before any determination was arrived at; and that the decree and judgment were still in force, and the execution had not been set aside.
From the order vacating the order for the examination of Jung in supplementary proceedings, May appealed.
Ira Leo Hamburger, for appellant.
Benjamin M. Stilwell, for respondent.
I entirely fail to see by what authority a party to a decree in equity upon an accounting by a trustee, which simply adjudges that the trustee has -in his hands, as trustee, a certain sum of money, out of which he is directed to pay certain sums, can docket a judgment personally against the trustee as a matter of course. It is true that the assignment law provides that the decree shall be entered, docketed and enforced the same as if made in an original action brought in the county court, but it certainly was not intended that any
p. 130different course should be pursued than if an action had been commenced in a court of equity against a trustee as such for an accounting. In such an action ho individual judgment against the trustee as such can be entered, unless provision was made therefor in the decree.
In the case at bar there is not the slightest hint in the decree but that the assignee has not the money to pay the amount directed to be paid, and, without any neglect or default upon his part being brought to the notice of the court, a judgment is docketed against him individually and execution issued against him individually.
If this is the practice under the Assignment Act, then the moment a decree is entered upon the accounting of an assignee, directing the assignee to pay out of his hands certain moneys to creditors, each creditor has the right to docket á judgment at once against the assignee individually, and issue execution against his individual property, no matter how willing the assignee may have been to pay the claims against the estate.
No trustee has ever been placed in this position before, and it does not seem to me that the Assignment Act was ever intended to work such an injustice. W hat the power of the court might be, upon its being shown that an assignee had not complied with its decree, it is not necessary to determine; but that an assignee was intended to occupy a relation so different from that of every other trustee in the method of enforcing decrees against them does not seem to be possible.
It is a familiar principle that a trustee is not liable individually unless he has been guilty of a breach of trust; but in the case at bar he is condemned and executed without ever having had an opportunity of being heard upon the subject as to whether or not he had been guilty of a breach of trust. A breach of trust in general creates only a single contract of debt, and must be enforced as such; but when the trustee has, under seal, covenanted to apply the trust fund according to the trusts declared, a breach of that engagement would create a special debt against him (Hill on Trustees, 519).
If this is the rule, it seems to be clear that a trustee can
p. 131not be charged individually as for a breach of trust without having an opportunity to be heard.
I am of the opinion that the judgment entered against Ferdinand Jung was void, the clerk having no authority to enter the same, and the order appealed from should be affirmed.
I concur with you that the order appealed from be affirmed.
J. F. Daly, J., dissented.
Order affirmed.