Trufant v. Merrill — 31 N.Y. Super. Ct. 462

Majority

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JAMES R. TRUFANT, Plaintiff and Appellant, v. JOHN E. MERRILL and Another, Defendants and Respondents.

Headnote

A referee who has made and filed his report becomes functus officio, and in a proper case a new referee may be appointed.

In an action for the dissolution of a partnership, where a bond is given by one of the parties to account for the partnership property, it is proper, upon a judgment dissolving the partnership, to appoint a receiver to dispose of the assets, and upon the filing of his account to send it to a referee to state the accounts between the. parties. ,

Before Monell, Jones, and Freedman, JJ.

[Decided July 2, 1869.]

This is an appeal from an order made at Special Term by Mr. Justice McCunn.

The action was to obtain a dissolution of the copartnership of the plaintiff and defendants, and a distribution of the partnership assets. Pending the action, the defendants, on an application for the appointment of a receiver, were allowed, in lieu thereof, to give a bond conditioned that they should manage and take care of the property of the firm during the action, and render a true and faithful account thereof whenever required by the Court, and should pay and deliver to the parties who might be adjudged to be entitled thereto all such property as the Court might order to be paid and delivered. A referee was appointed to hear and determine all the issues. In his report and decision he found that the plaintiff was entitled to judgment dissolving the partnership, but that he could not state the accounts between the parties, for the reason that there was no evidence as to what proportion of the debts would prove good and collectable, or of the value of the lease or of the good-will of the business; and he directed that a receiver be appointed to take possession of the assets of the firm and dispose of the same; and after paying the debts to retain the remainder, subject to the further order of the Court.

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On the 4th of May, 1869, an order was made to show cause why judgment should not be entered on the referee’s report and a receiver appointed. On the 10th of May another order was made to show cause why the referee’s report should not be sent back to the referee, with directions to determine all the issues.

On the hearing upon such last-mentioned order, it was ordered that it be sent to a different referee to take and state the accounts.

From that- order the plaintiff appealed.

Mr. T. B. Eldridge for appellant.

The report of the first referee is full and definite upon all the issues made by the pleadings herein, and appellants were entitled to the judgment of the Court thereon.

There was no notice of motion for the appointment of a referee, and the Court clearly erred in appointing a new referee.

If, in the judgment of the Court, the report of the first referee was insufficient, the Court should have referred back the case to him.

The remedy was by appeal, and not by substitution of referee.

Mr. R. H. Channing for respondents.

The portions of the order appealed from are not reviewable. If the Court has the power to order a reference, no appeal lies from such order (Whittaker v. De Fosse, 7 Bos., 678; Harms v. Mead, 16 Abb., 257 ; The People, &c., v. Haws, 12 Abb., 204 ; Dean v. Empire State Mut. Ins. Co., 9 How., 69 ; Code, sec. 271, subd. 2.)

By the Court:

The motion was merely that the report be sent back to the referee who made it, with directions to decide all the issues. , It was probably supposed that he was bound to state the accounts between the parties, and that until he did so he had

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not determined, all the issues. If that view was correct, the order substituting or appointing a new referee should not be reversed, merely on the ground that no reason was assigned for the change, or that it was giving more than the moving party asked for. The referee first appointed, having made his decision, became functus officio, and could not again act without being set in motion by the Court; and it was not, therefore, incompetent for the Court to appoint a new referee.

But I am of opinion that it was not necessary, and, therefore, not proper to either send the report back or to appoint a referee, in the present state of the action, to take the account between the parties.

The assets of the firm, consisting of debts due, the lease of Washington Hotel, and the good-will of the business, were in the possession or under the control of the defendants, and, until they were- accounted for or disposed of, could not be made available to the plaintiff; nor could the referee ascertain their value, or give any direction for their distribution. The bond given by the defendants, in lieu of a receiver, authorized a retention of the partnership property only during the pendency of the action. Hpon adjudging the partnership dissolved, the assets must go to pay debts, and the surplus, if any, to the respective parties. Therefore, it is necessary to convert the assets into money, and the usual mode is to do that through a receiver. Upon his appointment the assets must go into his possession, and the conditions of the defendants’ bond will be satisfied.

In the condition of this action, therefore, the referee could not state the accounts; and it was proper to leave that to be done on the coming in of the receiver’s account, showing the amount to be distributed.

Had the action been tried by a justice of the Court, he would, after adjudging the partnership dissolved, have appointed a receiver, with directions to dispose of the assets and report the surplus to the Court, to the end that a referee might then state the accounts between the parties, and the Court direct the

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distribution. Such a course of proceeding would be regular. The referee, in this case, has not done otherwise, and the order appealed from was premature, and should not have been made.

The order should be reversed, with costs to the appellant to abide the final disposition of the subject of costs in the action. Order reversed.