In re the General Assignment of Wolf & Kahn — 1 N.Y. St. Rep. 273

Majority

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Matter of the general assignment of Wolf & Kahn.^[1]

(New York Common Pleas,

General Term,

Filed March, 1886.)

Headnote

1. Assignment—Assignee chargeable on accounting with actual value

AS STATED EN SCHEDULE—BURDEN OF PROOF TO CHANGE SUCH VALUE WITH WHOM.

The actual value of property assigned under a general assignment fertile benefit of creditors, as stated in the schedules filed, is presumptively the amount with which the assignee is chargeable upon his accounting. The burden is upon the assignee to show that the actual value is less, or upon attacking creditors to show that it is greater than the amount so-stated, and the character and sufficiency of evidence to shift such presumption is a question of fact depending upon the circumstances and to be determined in each case.

■ 2. Same—When assignee not entitled to commissions.

When an assignee is removed for misconduct actually committed, he is not entitled to commissions.

8. Same—When assignee to be allowed counsel fees.

The assignee may be allowed counsel fees in matters growing out of the administration of his trust, in which the employment of a lawyer is absolutely necessary, but he is not authorized to employ counsel in the ordinary management of the estate.

On January 7th, 1884, Moras Wolff and Martin Kahn, copartners, under the firm name of M. Wolff & Go., made an assignment for the benefit of their creditors to Gustave Gomprecht, a brother-in-law of said Morris Wolff. The assignment contained preferences aggregating $83,469.05; one of the preferred claims was that of L. Schoolherr, who-was the father-in-law of said Martin Wolff and of said Gustave Gomprecht and a partner in business of the latter, for $22,621.39. The claim of Mr. Schoolherr was based upon promissory notes, $20,517.07 of which were dated in the month preceding the assignment, and were given at four months. Another of said preferred claims was that of Mrs. Sarah Wolff, the wife of said Moras Wolff, for $11,921.68, which was also based on promissory notes, all dated within the four months immediately preceding the assignment. The assignee took possession of the stock and fixtures on hand immediately upon the execution of the assignment. The assignors, with the assistance of one Van Duzer, who had previously been in their service as buyer, prepared an

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inventory and schedules of the assigned estate and verified :and filed them on the 23d day of January, 1884. In such •inventory the stock on hand at the time of the assignment was placed at a nominal value of $44,563.16, and at an •actual value of $28,755.99. The assignee filed his bond on •January 24th, 1884, his father-in-law, a partner and preferred creditor (Schoolherr), being one of his sureties. Shortly before the filing of the bond, at the request or on suggestion of the assignee, three gentlemen engaged in the ■same line of business as the assignors made some examination of the stock, and one of them offered to purchase the ■same at 33 1-3 per cent, of the cost price, and each of the other two offered 40 per cent, of the cost price therefor. The cost price was the amount given in the inventory as the nominal value. The day after the bond was filed the assignee, without any notice to creditors and without any publication or advertisement inviting proposals of any kind, sold and delivered the stock in bulk to said Schoolherr for fifty per cent, of the cost price in cash, being $22,326.58, or, as appears by the assignee’s account, $17.12 less than the amount due Mr. Schoolherr or his preferred claim, and $6,429.41 less than the actual value of such stock stated in the inventory. On the same day the assignee paid -Mr. Schoolherr the amount of his preferred claim, and out of moneys collected by him on outstanding accounts he subsequently paid Mrs. Wolff’s preferred claim and a part of the claim which was third in order of preference. Soon after the transfer of the stock to Mr. Schoolherr, that gentleman formed a copartnership, with his daughter, the preferred creditor, Mrs. Wolff, turned over to it the stock so bought by him, and the new firm under the name of Wolff & Co. carried on business at the old stand, the old sign “ M. Wolff & Go.” being retained over the door.

Upon the facts above stated the assignee was removed and a successor appointed and said removed assignee was directed to account before a referee. Such accounting has been had; the referee has presented his report, and from the order confirming such report this appeal is taken.

1. In regard to the question what valuation of the goods the assignee is chargeable with, I think it is well settled that the actual value given in the inventory is prima facie the amount. The burden is on the assignee to show that the actual value is less, or upon attacking creditors to show that it is greater. The character and amount of evidence to shift this presumption is a question of fact depending upon circumstances and to be determined in each case. On general principles I should say that the presumption of the correctness of the inventory is not so great

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in insolvent assignments as in proceedings for administration in the surrogate’s court, because in. the latter the inventory is prepared with prescribed formalities by sworn officials. Still the presumption does exist here and the "burden is upon the party questioning it.

I think the referee has rightly held, that the assignee has not in this case produced proper or sufficient evidence to relieve him from being charged with inventoried value of the merchandise. The assignee employed the person (Mr. Van .Duzer) who prepared the inventory and fixed the valuation, and such assignee knew of the estimates therein put upon the goods. Mr. Van Duzer seems to have been the most competent man who could have been selected for this task, as he was familiar with the stock in all the minutiae, and had been the buyer for the assignors before the assignment. "When it was sought to question the correctness of the valuations, the motive of the assignors for changing their minds is obvious, and their testimony under the circumstances is entitled to little weight. But, as the referee very pertinently inquires, why was Mr. Van Duzer not placed upon the stand to ascertain whether Ms views had been modified or changed?

Under the peculiar circumstances the failure to call Mr. Van Duzer was very significant. The testimony of the three outside witnesses is intrinsically of little importance. They give no absolute valuations, but off-hand estimates upon the cost prices, whatever these may have been, and not knowing what they were, Moreover, their examination of the stock was very cursory and occupied but little time in proportion to the quantity of goods. It would be extremely inequitable to allow the loose statements of these men to shift the presumption in favor of the creditors, because the stock was transferred in bulk secretly and possession thereof delivered to Schoolherr, the assignee’s partner, father-in-law and bondsinan, the day after the filing of the bond, and, therefore, the creditors had no opportunity to contradict such testimony by that of experts of equal or greater experience. Considering the admitted facts and the family relationsMp of all the parties, the testimony of these witnesses has the appearance of having been introduced as a cover for a voluntary transfer of all tangible property of the firm in fraud of its creditors.

The referee did not err in charging the assignee with the inventoried value of the stock.

2. The refusal to allow commissions was correct. TMs assignee was guilty of grave misconduct.

There is no analogy between this case of Matter of Rauth ( 10 Daly, 52 ). In the latter proceeding the assignee was removed, not for anything he had done, but because on ac

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count of his peculiar relationship it was feared he might be-unfaithful to his trust. The ground of Gomprecht’s removal was misconduct actually committed.

3. The referee in his original and supplemental reports correctly disposes of the question of counsel fees under the well established practice of this court (Levy's Account, 1 Abb. N. C., 182 ; In re. Johnson, 10 Daly, 127 ). He has-allowed the assignee counsel fees in two collection suits-in which, if they were to be brought, the services of an attorney were of course necessary, and has disallowed the claim for preparing schedules and other instruments and general advice and consultations.

The claims of the removed assignee for an allowance upon this accounting, and for the expense of printing papers upon the appeal from the order removing him, were properly denied, for the reason stated in the referee’s-opinion.

The order confirming the referee’s report should be-affirmed.

Note.—The order entered upon this decision was affirmed by the court of appeals, without opinion.—[Ed,