In re the Settlement of the Account of Jones — 64 N.Y. St. Rep. 656

Majority

p. 656

In the Matter of the Settlement of the Account of Hadley Jones, as Assignee for the Benefit of Creditors of William Sutcliff.

(Supreme Court, General Term, Fifth Department,

Filed December 27, 1894.)

Headnote

Assignment fob creditors—Accounting.

Where the assignee, with the consent and advice of the creditors, forms a stock company for the purpose of carrying on the business of the assignor he is properly charged, on an accounting, with the value of the assigned estate, and credited with the amount of incumbrances, payments, • costs, expenses and disbursements.

Appeal from a decree, settling the assignee’s accounts.

James B. Backenstose, for app’lt; E. C. Aiken, for resp't.

On the 5th day of January, 1892, William Sut- " cliff, a resident of the city of Auburn, made a general assignment of all his property to Hadley Jones in trust for the benefit of his creditors. The assignee made and filed an inventory of the estate, from which it appears that the only property that went to the assignee under the assignment was two parcels of land, described in the inventory as parcels No. 1 and No. 2. No. 1 was a lot with a brewery on it; No. 2 .was a vacant lot,—both situate in the city of Auburn. All the personal property in the brewery was, at the time of the assignment, in the hands of the sheriff, and was subsequently sold by him at execution sale. The book accounts and evidences of debt that had accrued in the brewery business had been, prior to the assignment transferred to the assign- or’s wife in part payment of a debt he owed her. The assigned property was largely incumbered, at the time of the assignment, by mortgages, judgments, and mechanics’ liens. Its actual value, inclusive of incumbrances, was §81,500. There were outstanding, besides the debts secured by mortgages, judgments, and liens, claims against the assignor amounting to some $30,000, including the claim of the appellant, Nestor, of $6,344.08. The assignor, at the time of making the assignment, was engaged in operating the brewery, and it was important to all interested that the business should be continued. The personal property with which the brewery had been operated was, as stated, in the hands of the sheriff, and was soon sold. The assignor’s wife, Mrs. Sutcliff, became the owner of this personal property, and the business was continued. The assignee made diligent efforts to sell the brewery property, and, being unable to find a purchaser, he attempted to . borrow money by mortgaging the property. He was not able to raise any money in that manner The holders of incumbrances were pressing for payment of their claims ; foreclosure of one of the mortgages had been commenced, and the assignee consulted with the creditors, including the appellant, as to the best course to be pursued with the property. It was determined that it was for the interests of all concerned that the brewery should be put into a stock company. The creditors, including the appellant, so advised, and the assignee proceeded to form a stock company for the purpose of operating the brewery. Bonds of the corporation were

p. 657

issued, and with them the assignee arranged with the creditors, the most of them taking bonds in payment of their claims. Bonds were tendered to the appellant in payment of his claim. Mr. Nestor declined to receive them, and commenced this proceeding before the special county judge to compel the assignee to render an account of his proceedings. The assignee filed an account, and the proceeding came on for hearing before the special county judge of Cayuga county, and, after hearing the evidence, the court found and decided-that the assignee should be charged with the value of the assigned property, which was found to be the sum of $81,500. The assignee was credited with the amount of the incumbrances upon the property, and the amount that he had paid to the holders of the incumbrances; the amount of a preferred claim held by a Mr. Wildner for wages; the costs of an appeal allowed the creditor, Nestor, in a former proceeding; his expenses, disbursements, and commissions as assignee,—which sums deducted from the value of the estate, left a balance to be distributed among-the unsecured and unpreferred creditors of $14,-742.60. The court further found that the pro rata share to which the appellant was entitled to be paid to apply upon his claim was the sum of $3,084.55, with interest from the 13th day of July, 1892 ; and the assignee was adjudged liable to pay said sum, and in addition thereto the sum of $119.03 costs allowed upon - a former appeal to the general term, together with $150 costs of the proceeding. We are satisfied, from an examination of the case, that the findings and conclusions of the trial court are fully sustained by the evidence. The neglect of the assignee to dispose of the property in the usual manner was satisfactorily explained. What he did, as stated, was by the advice and consent of the parties interested in the estate, and the manner in which the property was disposed of was manifestly for the best interests of the unsecured and unpreferred creditors. Such being the case, charging the assignee with the full market value of the assigned property, and crediting him as stated, was a proper disposition of the matter. Adair v. Brimmer, 74 N. Y. 539 . The assignee having arranged and paid the claims against the estate in the manner stated, he was entitled to be subrogated to the rights of the creditors therein, and he was entitled to have them reckoned in ascertaining Úíq pro rata share to which the appellant, Nestor, was entitled. 24 Am. & Eng. Enc. Law, p. 290. The demands of the creditors against the estate contained in the schedules filed by the assignee were shown upon the trial to have been valid claims. There was' sufficient evidence, we think, to justify the trial court in allowing Mrs. Sutcliff’s claim of $1,623.11, which was presented during the trial of the" proceeding. Our attention is called by the appellant’s counsel to the omission of the trial court to allow the appellant interest upon the item of $119.03 costs. If the court fell into an error in that regard, the amount involved is so small as not to justify a modification of the decree for that reason, for, if allowed, it would not increase the amount awarded to the appellant by more than from one to two dollars. We do not find

p. 658

any cause for disturbing the decree appealed from; it should be affirmed, with posts.

All concur.

Cases cited

Adair v. Brimmer 74 N. Y. 539 N.Y. 1878-11-12 p. 657