Hynes v. McDermott — 3 N.Y. St. Rep. 582

Majority

p. 582

Mary E. Hynes et. al., App’lt, v. Kate McDermott et al., Resp’t. Same v. Napoleon J. Rigny et al. Same v. T. Goffinet et al.

(New York Common Pleas, General Term,

Filed December 20, 1886.)

Headnote

1. Receiver—Action for the possession of real estate—Commissions.

These actions were brought to recover the possession of real estate, the plaintiffs claiming to he entitled, to the possession of the said real estate as the heirs at law of their father, deceased, subject to the right of dower

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of their mother; final judgments were rendered and entered in favor of the plaintiffs. Sometime previous to the determinations of these actions, one II. M. was, by order of the court, granted upon consent of the parties, appointed receiver of the rents and profits of the said real property. On two occasions the receiver filed the accounts of his receivership, to which plaintiffs excepted. As to an item therein objected to. Held, that this might he allowed as receiver’s commissions upon the property, hut not otherwise; there cannot he an allowance for commissions and an extra sum for receiver’s, services.

2. Same—Pbopbiety of employment op counsel bob a pabty as coun-

sel BOB BECEIVEB.

The general rule that the receiver should not employ the counsel of either of the part'es to the litigation in which he is appointed is subject to certain limitations, it is only when the receiver is acting adversely to one of the parties that there is any impropriety in his employing the attorney of the other.

3. Same—Poweii op beceiveb to make bepaibs on the pbopebty in

SUIT WITHOUT OBDEB OP COUNT.

By the orders appointing the receiver, he being directed by the court, if necessary, to apply any moneys derived from any of the several pieces of property to the support of the other, and having made certain necessary repairs, Held, that the receiver was warranted in laying out what he thought necessary for repairs, subject to the allowance of such sums as he had spent for that purpose, provided it should appear to the court that they were reasonable and proper.

A. Same—Using his best judgment and dealing with the pbopebty

IN GOOD FAITH NOT LIABLE PBBSONALLY.

The receiver, in conjunction with another person, having used one of the pieces of property in suit as a hoarding-house, and making no profit therefrom, it was urged by the plaintiff that he was personally liable for the rental thereof. Held, that although this method of managing the property might not he the best, yet there being no doubt that the receiver exercised his best judgment and in good faith pursued the plan which seemed most likely to yield an income, he was not personally liable for the rental of the property.

5. Costs of accounting—When not changeable with.

Where, upon the examination of the accounts of a receiver and the vouchers relating thereto, no misconduct of the receiver is shown, he is not chargeable with the costs.

6. Liability op dependants.

The defendants in an action to recover possession of real property are not liable for the rental value thereof after a receiver has been appointed and entered into possession thereof.

J. L. Brown, for appl’t; J. A. Ballestier, for resp’t.

The three actions above entitled were brought in November, 1875, to recover possession of real estate; the first to recover possession of G3 Madison avenue, the second to recover possession of 187 South Fifth avenue, and the third 185 South Fifth avenue, in the city of New York.

Four other actions were brought at the same time in the supreme court, by the same plaintiffs, to recover possession of 201 West Thirteenth street, 230 West Forty-eighth street, 232 West Forty-eighth street and 234 West Forty-eighth street, in said city.

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The plaintiffs claimed to be entitled to, the possession of the said real estate, as the heirs at law; of their father, deceased, subject to a right of dower of their mother. At the time of the commencement of these. actions the property was in the possession of Mary J. McOreery and Lavinia Gay, sisters of William B. Hynes, deceased, the father of the infant plaintiffs. It was claimed by these sisters that the marriage between the father and the mother of the infants was void, and that said infants were not the heirs at law of the said Hynes. Final judgments in favor of the plaintiffs of these actions were entered in 1883. Homer Morgan was appointed receiver of the rents and profits of said real property in October, 1876, by consent of the parties,' by orders entered in this court and in the supreme court. Mr. Morgan had been the ágent of Mr. Hynes, in his life-time, in respect to these properties, and after his death he acted as agent for Mis. McOreery and Mrs. Gay, who went into possession of the property, claiming as heirs at law of the deceased Mr. Hynes. The receiver was permitted by orders of the court to apply any moneys derived from any of the several pieces of property to the support of any other. Two accounts' were filed by the receiver, embracing the .time from the date of the commencement of his receivership, October, 1876, to December 31, 1880, and the other embracing the period from December 31, 1880, to June 15, 1883.

Objections were filed to said accounts by the plaintiffs, and the accounts and objections were referred to Philo T. Buggies, Esq., as referee, who filed his report, and the plaintiffs filed exceptions thereto, which were overruled.

The following questions aré raised by the plaintiffs’ exceptions:

First. Had the receiver a right to deduct the sum of $2,886.56 for his commissions and expenses, from the amount collected %

Second. Had the receiver the right to retain the defendants’ attorney, as his attorney ?

Third. Had the receiver the right to maké the repairs charged for, without authority from the court, and in the manner they were made 2

Fourth. Had not the receiver rendered himself personally hable for the rental value of sixty-three Madison avenue, by reason of his carrying on a lodging and boarding house business there, in connection with Mrs. McDermott from October 17, 1876, to May 1, 1882, it appearing that the said property did not produce any net income to the said estate 2

Fifth. Should not the receiver have been charged with the expenses of this accounting ?

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The charge referred to in the first exception was originally called in the account “commissions,” but an amendment was afterwards made by which it was designated “expenses.”

It appears from the testimony taken before the referee, that it was not intended as a charge of commissions; and it so appears from the original account, which expressly reserves the matter of receiver’s fees.

We are in favor of allowing this charge, if it be allowed as receiver’s commissions upon the amount received from the property, but not otherwise. If he is entitled to commissions, it is for just such services, as he charges the above sum for; and there cannot be an allowance for commissions and an extra sum for receiver’s services.

The order should be modified, by providing that the said sum is in full of all claims for commissions.

The second exception, raises the question of the right of the receiver to employ or retain defendant’s attorney as his own attorney.

The general rule, that a receiver should not employ the counsel of either parties to a litigation in which he is appointed, is subject to certain limitations. “It is only when the receiver is acting adversely to one of the parties, that it has ever been supposed there was any impropriety in employing the counsel of the other.” Smith v. N. Y. Consolidated States Co., 28 How., 377 .

It does not appear here, that any objection was ever urged by the parties to these actions against the employment of Mr. Ballestier to aid him in the discharge of his trust; and the referee finds that Mr. Ballestier, while acting as attorney for the receiver, was directed or instructed by none of the parties to the actions, and was consulting with no one in regard thereto, except said receiver.

We think the charges of Mr. Ballestier for his services as attorney for the receiver, are reasonable and proper.

The third exception of the plaintiffs, has reference to the right of the receiver to make the repairs charged for.

• It does not seem to us that it was "necessary for the receiver to apply to the court for leave to make the repairs that were necessary to protect the property.

It appears to have been contemplated he should pursue the course he did, because he was directed by various orders of the court, if necessary, to apply any moneys derived from any of the several pieces of the property to the support of the other.

We think the receiver was warranted in laying out what he thought was necessary for repairs, subject to the allowance of such sums as he had spent for that purpose, pro

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vided it should appear to the court they were reasonable and proper.

We fail to find any evidence that shows that the repairs charged for were not made; that they were not necessary; or that- the prices charged therefor were not fair and reasonable.

We do not think the receiver has rendered himself personally liable for the rental of the premises 63 Madison avenue, by reason of his mode of managing that property.

The situation of the Madison avenue property was peculiarly unfavorable. The house itself had once been used as a house of assignation. It is opposite the Madison Square Garden; it is in a bad neighborhood, and it was undoubtedly difficult to find a good tenant who desired to use it for a proper purpose.

Mr. Morgan, after his appointment as receiver, pursued the same method in regard to that property which had been adopted before his appointment. We are not prepared to say it was the best method of managing tho property which he could have adopted, but we have no doubt that he exercised his best judgment, and pursued the plan which seemed to be the fittest for the purpose of producing revenue from the property.

Mr. Morgan’s experience in the management of real estate was large. There is nothing in the evidence which indicates bad faith on the part of the receiver in reference to this particular property, and we think that the plaintiff’s fourth exception was properly overruled by the court below.

It is our opinion that there is no reason presented for •charging the receiver with the expenses of this accounting.

As the rights of infants were involved, it was proper ihat a very thorough examination should be made of the receiver of his accounts, and the vouchers relating thereto. Such an examination has been had, and has failed, in our opinion, to show any misconduct on the part of the receiver. Hip accounts have been substantially sustained by the referee. The accounts of the receiver showed disbursements amounting to $58,175.50, and the amount of disbursements allowed by the referee and the court below is $57,511.60, the items disallowed amounting to $663.90.

The conclusion arrived at is, that the orders, confirming the report of the referee, modified as herein directed, in regard to receiver’s charges for expenses and commissions, should be affirmed, without costs.

We are quite clear that the allowance of $7,550 to the receiver’s attorney and counsel, in addition to the $2,450 previously allowed them, making $10,000, together, for services upon the accounting, was unwarranted.

If an extra allowance, in addition to costs, may be given

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in a special proceeding, as in an action, then the statutory limit was exceeded when the §2,450 was allowed.

The whole allowance should be reduced from $10,000 to $2,000, and the order appealed from modified accordingly.

It is our opinion that the order of October 18, 1885, as to the $2,500 verdict, should be reversed.

On the trial, the judge charged the jury as follows : “If the verdict is for the plaintiffs, you will give the rental value of the property during the time the defendants remained in possession.”

' The jury assessed the damages for detaining the property at §2,500, which was paid by the defendants.

The defendants were in possession from June 27, 1874, to October, 1876. At that time the receiver was appointed, and he entered into possession of the property.

We cannot understand upon what theory it can be claimed that the defendants have any interest in the rents which accrued subsequent to the possession of the receiver^

The damages assessed by the jury were for detaining the property during the time the defendants remained in possession. The possession of the defendants ceased in October, 1875, when the receiver was appointed, so that the defendants were not in possession of the property from October, 1876, to February, 1878, which was the date of the trial, and no damages could have been assessed by the jury for detention of the property between those dates.