Van Slyck v. Bush — 33 N.Y. St. Rep. 65

Majority

p. 65

George W. Van Slyck, App’lt, v. John S. Bush et al., Resp’ts.^[1]

(Court of Appeals,

Filed October 7, 1890.)

Headnote

1. Assignment fob cbeditobs—Liabilities of bondsmen of assignee.

The liability of sureties upon the bond of, an assignee for the benefit of creditors, that he shall “duly account” for all moneys received by him as assignee, extends not merely to his rendering an account of the moneys in his hands, but also to the making of distribution according to the terms of any lawful decree made on the final accounting.

2. Same.

The liability covers a fund remaining in a assignee’s hands, which has been directed by the court on the accounting to be paid to plaintiff as attorney for the assignee.

8. Same.

The provisions of § 9 of the assignment act of 1871 are not to be construed as limiting the right to the benefit of the bond exclusively to the original creditors of the assignor, but are intended primarily to prevent one creditor gaining an undue priority over another from the mere fact that he first procured the bond to be prosecuted.

Appeal from judgment of the New York superior court, general term, affirming judgment for defendant entered upon a demurrer to the complaint.

W. B. Peckham, for appl’t; Jno. H. Corwin and B. C. Pearson, for resp’ts.

The sureties by the terms of the contract undertook that the assignee Campbell “ should faithfully execute and discharge the duties of such assignee and duly account for all" moneys received by him as such assignee.” It is alleged in the complaint and admitted by the demurrer that the sum of $2,769.-

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45, which by the decree on the accounting the assignee was directed to pay to the plaintiff, was in his hands as assignee at the time of the accounting, being part of the proceeds of the assigned estate. The decree appropriated this fund to discharge the claim of the plaintiff for services rendered as attorney for the assignee “in the care, protection and preservation of the assigned estate.” The-obligation of the sureties plainly extended to this fund and rendered them liable for its proper administration by the assignee. The .performance of the decree would have relieved the sureties from their obligation. The claim that they are not liable for the-default of the assignee in omitting to pay over to the plaintiff the sum adjudged, is founded we think upon a too narrow interpretation of the language of the bond and a misconception of the term “ jurisdiction" as applied to the part of the decree in question.

The undertaking of the sureties, that their principal should “duly account" for all moneys received by him as assignee,, extended not merely to his rendering an account of the moneys in his hands, but also to the making of distribution according to the terms of any lawful decree made on the final accounting. The court no doubt must have had jurisdiction to make the decree before there could "be a legal default of the assignee in its non-performance. The claim here is that the court had no jurisdiction to adjudge payment out of the estate for services rendered by the plaintiff as attorney for the assignee, as if it were a claim against the estate, and not merely a claim against the assignee. The sureties, together with the creditors, and the assignor, and theassignee, were parties to the accounting.

ITo appeal was taken from the part of the decree in question.

The circumstances which induced the court to create a charge against the trust estate in favor of the plaintiff for his services do not appear. It is sufficient that circumstances might have existed which in equity would justify a court in decreeing compensation to an attorney out of the trust estate for services rendered upon the employment of a trustee in its care and preservation. Randall v. Dusenbury, 39 Supr. Ct., 174; aff’d, 63 N. Y., 645 ; Noyes v. Blakeman, 6 id., 567; New v. Nicoll, 73 id., 131. It is sufficient that there was jurisdiction in a proper case to make a decree like the one in question. If improperly made in this case, because not justified by the circumstances, the remedy was by appeal. The decree was not void for want of jurisdiction, in the sense that it was utterly null, and of no force, whether, reversed or not, and bound nobody. By the operation of the decree, the portion of the proceeds of the assigned estate appropriated to pay the plaintiff is discharged from the claims of the general creditors, and the assignee and the sureties are released from liability to them therefor. As between the assignee and the plaintiff, the latter is clearly entitled to it The sureties, if they are compelled to pay the plaintiff, will have simply performed their original obligation that the assignee should duly account for the trust fund.

It is, we think, immaterial that the decree was not conclusive upon the plaintiff as to the amount of his compensation, or did not prevent him -from resorting to the personal liability of the

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assignee. He accepts the provisions of the decree by bringing the action, and thereby becomes a party in interest, and entitled to prosecute the bond for his benefit. See Casoni v. Jerome, 58 N. Y, 321 ; Marsh v. Avery, 81 id., 29.

We concur in the view of the counsel for the appellant that the provisions of § 9 of the assignment act of 1871 are not to be construed as limiting the right to the benefit of the bond exclusively to the original creditors of the assignor, but are intended primarily to prevent one creditor gaining an undue priority over another from the mere fact that he first procured the bond to be prosecuted.

The judgments of the special and general terms should be reversed, and judgment rendered for the plaintiff on the demurrer, with costs in all courts.

All concur.