In re the Assignment of Manahan — 10 Daly (N.Y.) 39

Majority

p. 39

In the Matter of the Assignment of Thomas Manahan to Alexander C. Robertson for the Benefit of Creditors.

[Special Term.]

(Decided December 19th, 1879.)

Headnote

Upon an accounting by an assignee for the benefit of creditors, the necessity for and the reasonableness of charges for expenses must he shown.

An attorney for petitioning creditors who has been successful in obtaining the removal of an assignee is not therefore entitled to an allowance out of the assigned estate, although such removal may be for the advantage of all the creditors.

Application to confirm the report of a referee upon an accounting by an assignee under a general assignment for the benefit of creditors, after his removal.

The facts are stated in the opinion.

The referee reports in favor of disallowing two items in the account rendered by Robertson, the assignee, who was removed, and in favor of allowing every other item in the account.

The two rejected items are charges for lunches and other personal expenses of the assignee. It was proper to disallow these items, hut it seems to me the referee did not go far enough.

The testimony shows that the assignor kept a paper warehouse in Duane Street, that Robertson was in possession of the place about a month, and that in the period of four weeks, he paid out in wages a large amount of money. Manaban, the assignor, received for his wages at least $105, and other persons received as wages $261.35, and in addition to all this Robertson says he expended $112 in removing the stock to the adj'oining house.

It is difficult to understand why such a large expenditure for wages was necessary or excusable. Robertson gave no explanation of the matter, and in the absence of all evidence of the necessity for the outlay his charge for wages must be re

p. 40

jected. It is possible that a portion of the charge may be sustained if Robertson be given a further opportunity to show that the outlay was advantageous to the estate. I will send the matter back to the same referee, that he may take such further evidence as may be offered as to the propriety of the expenditure for wages.

Robertson is not entitled to any allowance for counsel fees.

I think that the referee decided properly in rejecting Mr. Lockwood’s claim for an allowance. Lockwood must look to the creditors who employed him. It is probable that the proceeding he instituted inured to the advantage of all the creditors. That alone is not sufficient to entitle him to an allowance out of the estate. He was acting throughout not for the estate but for liis employers. And the benefit which the others received was merely incidental to the relief he obtained for his clients. We have never applied to proceedings under the Assignment Act, the rule which prevails in equity as to the payment of costs out of the fund in suits brought for the administration of assets (Hamilton v. Hamilton, 1 Malloy, 535).

Under section 25 of the Assignment Act the only costs that could be allowed to Lockwood would be costs against Robertson. It gives no authority for charging the fund with allowances to the counsel for some of the creditors for proceedings taken by them against an assignee.

The report as to Lockwood’s allowance is confirmed.

Order accordingly.