Iselin v. Dalrymple — 25 N.Y. Super. Ct. 142

Majority

p. 142

Adrian Iselin et al. plaintiffs and appellants, vs. Silas H Dalrymple et al. defendants and respondents.

Headnote

An assignment in trust for the benefit of creditors, made to an attorney, is not rendered void by the insertion of a clause directing the assignee to pay and disburse, first out of the proceeds of the assigned property, “all the just and reasonable expenses, attorney fees, costs, charges and commissions of making, executing,” &c. the assignment.,

(Before Robertson, Ch. J., and Garvin, J.)

Heard December 18, 1863;

decided March 10, 1864.

This action was brought by the plaintiffs, as judgment creditors of William Habirshaw, to set aside an assignment made by him, of all his property, to the defendant Silas H. Dalrymple, in trust for the benefit of creditors. The assignment was upon the trust that the assignee should take possession of the assigned property, sell and convert the same into money, collect the debts, &c. and with and out of the proceeds should “ first pay and disburse all the just and reasonable expenses, attorney’s fees, costs, charges and commissions of making, executing -and carrying into effect this assignment, and the trusts thereby created,” &c.

The plaintiffs, in their complaint, alleged and insisted that the assignment was fraudulent and void, as against the creditors of Habirshaw, and in particular- they claimed that it was so fraudulent, “ inasmuch as the said assignee is an attorney and counsellor at law, and, by the terms of the said assignment, a preference in payment out of the assigned property is given to all the expenses, attorney’s fees, costs, charges and commissions of making and carrying into effect the said assignment and the trusts thereby created ; which said expenses, attorney’s fees and commissions, are to. be paid before any other debts of the said William Habirshaw-.”-

The defendant, Dalrymple, by his answer, averred that he was not, before or at the time of execution and delivery of said assignment, and has not since been, either the attorney or counsellor bf said William Habirshaw; that he never coun

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selled or advised him. about the making of the said assignment; that he did not draw said assignment, nor take any part in the preparation thereof, further than to accept the trust thereby created, and execute the bond required by law; and said assignment was not made to him because' he was an attorney or counsellor, but of his supposed capability for executing the same for the best interest of the several creditors of the defendant, William Habirshaw; and that he accepted said assignment and entered upon the duties thereof in good faith, and has continued to collect, manage, and husband said assigned estate, solely with a view to the best advantage of the creditors of said assignor. And that he had not performed any work or labor of any professional character or kind whatever, either as attorney or counsellor, in relation to the execution or carry-into effect the said assignment, or the trusts thereby created, and that he has no claim for any attorney’s fees, costs, charges or commissions as attorney or counsel in relation to said execution, or carrying into effect the said assignment or the trusts thereby created. And he denied that' the words expenses, attorney’s fees, costs, charges, and commissions, of making and carrying into effect the said assignment, and the trusts thereby created, contained in the said assignment, do, or were intended to give, either directly ar indirectly to him, any power or right, fee, emolument or reward, on account thereof, other or greater than is provided by law as compensation of assignees in like cases. And he denied that any. other or greater fee, or benefit, or reward, is, or was thereby directed to be paid to him, other than allowed by law ; and alleged that he had no other or greater interest therein than such commissions.

The justice before whom the action was tried at special term, found the facts stated in the opinion; and directed a reference, to take an account of the amount received by the defendant as assignee, which he had not distributed before the commencement of the action, and to ascertain what the plaintiff’s share should be, &c.

The plaintiffs appealed from the judgment.

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William Watson, for the appellants.

C. Lawton, for the respondents.

By the Court,

The particular objection urged against this assignment is the preference given to the “ attorney’s fees” by the terms of the assignment itself; and it is claimed that this provision renders the assignment absolutely void. As to matters of fact, the justice who heard this case at special term has found that the said assignee was not the attorney or counsel for the assignor before executing the assignment or in relation to drawing the same; and did not draw the same; and has not since the execution of said assignment acted as attorney or counsel in collecting of claims due said Habirshaw, and so assigned,- and that there are no fees due to him, or claims by him, for making and executing the assignment—that no compensation to the said assignee is provided for in said assignment,, beyond charges and commissions allowed him by law ; and that such assignment was not made to hinder, delay, or defraud the plaintiffs or any other of the creditors of the defendant, William Habirshaw. Upon all these questions of fact the finding of the justice is conclusive.

The insertion of a clause in an assignment providing for the payment of “all reasonable charges and commissions attending the execution thereof” has been held not to invalidate the assignment. ( 34 Barb. 422 .) So it has been held that a provision. in an assignment for the benefit of creditors (giving preferences) that the assignees shall first be paid all expenses necessarily incurred in the execution of the trust, including the charges of drawing the assignment, together with a just and reasonable compensation for the labor, time, services and attention of the assignees about the trust, does not avoid the assignment. And that what is just and reasonable will be determined by the court on an accounting. ( 33 Barb. 425 .)

It is further held in Campbell et al. v. Woodworth et al. ( 24 N. Y. Rep. 304 ,) that the insertion of the clause giving

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to assignees (one of them being a lawyer) “a just and reasonable compensation for labor, time, services and attention” in the business of the trust, means no more than a provision for the commissions fixed by law. There can be no doubt that an assignee has the power, independent of any provision in the assignment to enforce and defend rights connected with and growing out of the trust, and to pay the expenses of so doing. Conferring this power in terms in the assignment upon the assignee, does not render the instrument itself void.

The compensation allowed ah assignee for labor, time,, services and such expenses as- are necessarily incurred in the execution of the trust, this compensation is called a commission or commissions, and it has been frequently adjudged that such rate of compensation is just and reasonable in all cases. This is all the assignee can receive, however onerous his duties, and he is entitled to the same rate of compensation, though his duties may be ever so light.

The Court of Appeals says in regard to the case of Nichols v. McEwen, ( 17 N. Y. Rep. 22 ,) “ this court- pronounced an assignment void which contained a provision providing for compensating an assignee, who was a lawyer, for all his expenses, costs, charges and commissions, together with a reasonable counsel fee. It was only the provision for the counsel fee which received the condemnation of this court, and the allowance to the assignee for all his expenses, costs, charges and commissions was deemed unobjectionable.” (Campbell v. Woodworth, 24 N. Y. Rep. 306 .)

The case of Campbell v. Woodworth settles the question, that the words, “ expenses, costs, charges and commissions,” are unobjectionable in an assignment. “Attorney's fees,” added thereto would not, in the light of this case, be objectionable, because the words “a just and reasonable compensation, for time, labor, services and attention ” are unobjectionable— certainly costs and charges:, time, labor and services cover all that is or can be included in “attorney's fees "—so that whether these words are in or out of the assignment it can make no difference.

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Again : This assignment only authorizes the assignee to pay and .disburse all just and reasonable expenses, &c. It therefore is not apparent on the face of the assignment, that the assignee was to have any compensation beyond such as he is legally entitled to, for no provision is in terms - made for him. In 34 Barb. 422 , the clause allowing the assignee “ all reasonable charges and commissions ” attending the execution of the trust, was construed as referring to the compensation of other persons lawfully employed by the assignee. The words in this case rather exclude the idea of compensation to the assignee.

The language used in this assignment does not authorize any other or different compensation than such as is legal and just.

The judgment in this case should be affirmed, with costs.

Cases cited

Halstead v. Gordon 34 Barb. 422 N.Y. Sup. Ct. 1861-06-21 p. 144, p. 146
Campbell v. Woodworth 33 Barb. 425 N.Y. Sup. Ct. 1860-06-25 p. 144