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PATTERSON, J. This is an appeal from the report of a referee making a final distribution of the remnant of the assets of the American Loan & Trust Company, consisting of a fund in the hands of its receiver, and which, on May 1, 1902, amounted to $86,976.59. After deducting therefrom certain allowances, which are not objected to, the net amount remaining for distribution is $76,864.12, of which $59,987.95 is directed to be paid to three unpreferred creditors (in designated proportions), nanely, Louis Bauer, William L. Koester, and Louise B. O'Connor, as administratrix of the estate of James O'Connor, deceased, and Louise B. O'Connor, individually. What is left, namely, $16,876.17, is directed to be distributed among the unpreferred creditors as a whole, after charging those above named with the amounts specifically directed to be paid them. This report was confirmed at the Special Term, and it is from that order of confirmation this appeal is taken.
The order, as made and entered, conforms to the requirement of this court as contained in a prior order made by us dated April 11, 1902, and entered May 3, 1902. 75 N. Y. Supp. 563. By that order the distribution of the fund in the hands of the receiver was restricted to Bauer, Koester, and Louise B. O'Connor, individually and as administratrix. It was made on an appeal from an order of the Special Term, relating to the distribution of this same balance in the hands of the receiver. In the second report of the referee he decided that certain preferred creditors were entitled to the whole sum of $59,987.95, and that it should be distributed among them as interest to which they were entitled upon their respective preferred claims. On the motion to confirm that report, the court at Special Term (73 N. Y. Supp. 584) held that the preferred creditors were not entitled to that amount, but that it should be distributed among all the unpreferred creditors of the corporation. On appeal to this court it was held that the preferred creditors were not entitled to interest, but that the amount was distributable among the unpreferred creditors who had filed exceptions to the second report of the referee. On appeal to the Court of Appeals that decision was affirmed (65 N. E. 200), but with the statement in the opinion of the court that the right of one of the unpreferred creditors, namely, the executrix of the estate of Granville P. Hawes, who claimed to have filed exceptions, and therefore should be admitted into the distribution, was not before that court for consideration, and it was not passed upon. On the motion to confirm the report of the reseree now under review, many creditors of the corporation who had filed claims with the receiver, but who did not appear before the referee in the proceedings eventuating in the second report, and did not except thereto, have filed exceptions to the final report, and claim a general right to participate in the distribution of the fund, arising from the mere fact that they are creditors, while others, who tardily filed exceptions to the second report, claim that their exceptions were in due time.
We regard the rights of each of the claimants, respectiveiy, as being determinable by the status he occupied in the proceeding which resulted in the making of the second report. The order made by this court on the appeal from the order of confirmation of that second reand 118 New York State Reporter port finally settled the rights of the claimants, disposed of the whole fund, and directed it to be distributed among those who were represented before the court. That fund was created by the diligence and through the efforts of certain unpreferred creditors, who had put themselves in the proper attitude to attack the second report of the referee. The order made by this court settled the principle of distribution, and named the distributees. We held that only those creditors were entitled to share in the distribution who had filed exceptions to the report of the referee. That decision was made in conformity with the requirement of rule 30 of the general rules of practice of the Supreme Court.
The reference, so far as creditors' claims are concerned, was not one merely to take proof and report to the court. Had it been such, no exceptions would have been required. The original order of reference did require the referee to take proof and report with his opinion as to claims for costs, expenses, and counsel fees incurred in the administration of the receivership; but it also ordered and directed the referee and clothed him with power to admit and reject all proofs of creditors' claims presented pursuant to notice by the receiver, in accordance with the rules and practice of the court requiring such presentation by those claiming to be creditors of the corporation. That called for judicial action on the part of the referee. He was not to act merely in an advisory capacity. He was required to adjudge, and, that being so, the rules and practice of the court demanded that his judgment should be reviewed upon exceptions.
When the cause came before us on the appeal relating to the second report there were no exceptants, other than Bauer, Koester, and Mrs. O'Connor, individually and as administratrix, unless it be Mrs. Bauer, as executrix, and to that further reference will hereafter be made. No other parties were before the court. The claims now presented by the Fayerweather estate, the Hull estate, the Seacord estate, and the Manufacturers' & Traders' Bank were not before the court. Exceptions were filed by those parties, but not until long after the order of this court of the 11th of April, 1902, was entered. Their exceptions accomplished no purpose whatever, and they were altogether too late, and no right was acquired by filing them. It is claimed, however, that those exceptions were timely, for the reason that no notice was given such exceptants of the filing of the referee's report, and therefore that their time within which to file exceptions had not been limited. They were not entitled to notice. On an examination of the referee's second report, we find the statement of the names of the parties who appeared before him and took part in the proceedings. Neither of the exceptants is named in that statement, and there is nothing in the rules of procedure or in the law, as we understand it, which required notice of motion for the confirmation of that report to be given to every creditor who had merely filed a claim with the receiver. We are still of the opinion that the unpreferred creditors who are entitled to share in the distribution of the fund now remaining in the hands of the receiver are those unpreferred creditors who filed exceptions in due time to the second report of the referee and none other.
We are thus brought back to the consideration of the right of Mrs. Hawes, executrix, to participate, with the three other creditors named above, in this final distribution. We have heretofore held that she was not so entitled, and that determination was founded upon the construction we gave to certain exceptions she filed which we did not regard as sufficient, but which, if sufficient, were in time. On a reconsideration of this subject, we are led to the belief that too narrow a construction was given to her exceptions. It is true that the position taken by her was one of insistency upon her right as a preferred creditor, and that in the exceptions filed by her she did not claim to rank as an unpreferred creditor, and did not specifically assert her rights as such, but she did, in fact, file some exceptions. She excepted and objected as matter of fact, as well as matter of law, to the allowance of interest on the claims of preferred creditors, so far as that might prevent the payment in full of her two preferred claims, and until they should be first paid to her as executrix. That exception does not technically raise the objection that the preferred creditors were not entitled to interest at all, and hence we spoke generally of her not having filed exceptions; but it does indicate that the exceptant's view was that interest to such preferred creditors was to be postponed until after her superior preferred claims were allowed and paid, and yet, by a broader and more equitable construction, it may be regarded that it was open to her to argue that the preferred creditors were not entitled to interest, or, in other words, that the whole subject of interest was brought up for consideration. Mrs. Hawes was represented before the referee on all the hearings. She was contesting the right of other preferred creditors to rank either above or in equality with her, and, in that position of antagonism to them, on further reflection we think that her exception may be deemed sufficient. It is not too late to rectify the mistake which has operated to the prejudice of Mrs. Bauer as executrix. The denial of the motion made on her behalf to resettle the order of April 11, 1902, or for leave to go to the Court of Appeals, are not estoppels upon her.
The order appealed from should be modified by admitting Mrs. Hawes, as executrix, to participate with the other three unpreferred creditors in the distribution of $59,987.95, and as thus modified affirmed, without costs.
INGRAHAM, MCLAUGHLIN, and LAUGHLIN, JJ., concur. VAN BRUNT, P. J., concurs in result.
(41 Misc. Rep. 295.)
TOWNSEND V. ONEONTA, C. & R. S. RY. CO. (Supreme Court, Special Term, Otsego County. August, 1903.) 1. RECEIVER-APPOINTMENT-SERVICE ON ATTORNEY GENERAL.
Where a Deputy Attorney General has admitted, at his own private residence, due personal service of motion papers prior to an order appointing a temporary receiver of a railroad, jurisdiction is acquired as against the Attorney General, though the appearance of the attorney was not authorized by the Attorney General.
and 118 New York State Reporter 2. SAYE.
The only remedy of the Attorney General, if aggrieved by jurisdiction acquired over him by service of motion papers on a Deputy Attorney General, is by motion to vacate. Action by Lucius H. Townsend against the Oneonta, Cooperstown & Richfield Springs Railway Company. Motion by the Attorney General to vacate an order appointing a receiver in a judgment creditor's action. Original hearing reopened.
See 83 N. Y. Supp. 1034, and 84 N. Y. Supp. 119.
Among the papers filed was the following admission of service indorsed upon the order to show cause, and the papers upon which it was founded: "Due, timely, and personal service of the within is hereby admitted. Appearance waived. John Cunneen, Attorney General, by James E. Rafter, Deputy." Thereupon an order was made appointing a temporary receiver. July 17th the Second Deputy Attorney General applied for an order to show ca use why the order thus granted should not be vacated, upon the ground of irregular service of papers upon the Attorney General, and the unauthorized appearance of counsel for him. The moving papers consisted of the affidavit of the second deputy to the effect that no deputy, as such, had authority to sign the Attorney General's name to an admission of service of this nature outside of the Attorney General's office. It also appeared by the affidavit of the deputy who had admitted “due service" in the name of his principal that the papers were served upon him at his home, in Mohawk, and that he had not authorized any one to represent the Attorney General at the hearing, but he did not state that he had signed the Attorney General's name without permission or authority. On the hearing of the order to show cause why the order of July 4th should not be vacated, the court required counsel to file the affidavit of the Attorney General to the effect that the deputy had used his name without permission or authority. Thereafter the Attorney General filed an affidavit in which he stated that "I did not give Mr. Rafter authority to sign an admission of service of papers when absent from the office of the Attorney General in the capitol."
George F. Slocum, Dep. Atty. Gen., for the motion.
MATTICE, J. The appearance by a responsible attorney for the Attorney General, and the filing of a written admission of service in the name of the Attorney General by his deputy, conferred jurisdiction upon the court, although the appearance was unauthorized, and the deputy exceeded his authority in the use of his principal's name. This is so upon grounds of public policy; otherwise the court would never know when jurisdiction was obtained, unless the present practice of recognizing the authority of counsel, upon his appearance in court, should be superseded by a rule requiring all attorneys to furnish, under oath, satisfactory and sufficient evidence of authority.
The order thus made upon such unauthorized appearance could not be disregarded or attacked collaterally. The direct motion in the action made by the Attorney General for relief is therefore the only resort. Upon the hearing of this motion to vacate, it is shown to my satisfaction that the attorney appeared without authority, and I am satisfied that service upon the Deputy Attorney General at a place other than the Attorney General's office is irregular. The Attorney General would therefore be entitled to an order vacating the previous order, or to have the hearing opened, and he be given an opportunity to defend upon the merits, but for the fact that upon the record stands the admission in the name of the Attorney General of the "due, timely, and personal service” of the papers. The irregularity in the service of papers is thereby waived, and it is of no moment that an attorney without authority had his formal appearance noted upon the hearing. If the Attorney General shall choose to file and serve his affidavit to the effect that he disaffirms the act of his deputy in signing his name, and that such act was without his permission and authority, the hearing upon the motion for a receiver made July 4th may be opened, and the Attorney General permitted to be heard upon the merits of the application.
As the receiver has already qualified, giving the bond required, taken possession of the assets of the defendant, brought an important suit affecting the title to a large number of bonds, and is operating the road, I do not deem it wise to vacate the order appointing him, and require the plaintiff to bring proceedings de novo. I conclude that the rights of all parties can be protected by opening the original hearing.
(41 Misc. Rep. 298.)
TOWNSEND V. ONEONTA, C. & R. S. RY. CO. (Supreme Court, Special Term, Otsego County. August, 1903.) 1. RECEIVER-REMOVAL.
Where the appointment and subsequent conduct of a temporary receiver of a railroad corporation were satisfactory to all parties in interest, except one claiming to be a majority bondholder, he will not be removed, where title of the objecting party to the bonds was contested by the receiver, and the bonds were claimed to belong to the corporation itself. Action by Lucius H. Townsend against the Oneonta, Cooperstown & Richfield Springs Railway Company. Rehearing, and motion to appoint receiver. Order appointing receiver confirmed.
See 83 N. Y. Supp. 1034, and 84 N. Y. Supp. 117.
George F. Slocum, Dep. Atty. Gen., John L. Wilkie, and Albert Hotchkiss, opposed.
MATTICE, J. H. T. Jennings was appointed receiver by the order of July 4th. The hearing of that date has been opened at the instance of the Attorney General to enable him to defend. He now concedes the right of the judgment creditor to the appointment of a receiver, but insists that some person other than Jennings should be appointed. He is supported in that contention by the person holding a bare majority of the bonds. Practically all others financially interested in the road request the appointment and continuance of Mr. Jennings. This includes judgment creditors, stockholders, and the holders of nearly half of the bonds. Many of the business men and citizens of the principal places through which the road passes also request his appointment. Since his appointment, July 4th, he has commenced an action in equity against the holder of a bare majority of