First National Bank of Canton v. Washburn

Merwin, J. : This action was commenced in: December, 1895, for the foreclosure of two mortgages bearing date August 1,1894, for the sum, in the aggregate, of $110,000 and interest. . The. full amount of the mortgages was claimed to be due.. James S. Smith, as receiver of. the property of the firm of Smith & Hanfield, was made a "party defendant,, it being alleged that he, among others,-had, or claimed, some interest in or lien on the premises subsequent to the lien of the mortgages. Smith, as receiver, was not served, and on the 3d of June, 1896, Monroe B. Washburn was substituted as receiver in the place of Smith. . Oil j the application of the plaintiff, • Washburn, -as [519] ■ receiver, was afterwards made a party defendant, "and on the 13th of November, 1896, he was served with the summons, complaint and notice of no personal claim. ' On December 3, 1896, he served an ■answer denying any knowledge or- information sufficient to form a belief as to the matters contained in the complaint. On the 17th of April, 1897, the plaintiffs attorney served on the attorneys for the' receiver a notice of trial for the St. Lawrence term to be held on the '3d of May, 1897, stating also that a motion would then and there be made for judgment, with costs. At the term on the third of May, the receiver did not appear, and as to him judgment was taken by .default. Findings were made by the court, in which, among others, ■there]was a finding of fact that the receiver “ having been, duly served herein with due notice of no personal claim against him, unreasonably defends this action.” The fourth finding of law was “that the plaintiff herein have judgment against the defendant,Monroe B. Washburn, personally, and as'such receiver,'for the costs of this action. ■ In case, however, the premises sell for more than sufficient to pay the amounts due ‘ on the" bonds and mortgages "and the expenses of sale only, the amount of deficiency to pay the. costs in full shall be collected of the "said Washburn.” On the 4th of May, 1897, judgment was entered in accordance with these findings. On the same day the costs of the plaintiff were taxed at the sum of $409.62, and notice of readjustment for the eighteenth of May served upon the attorneys for the receiver. Thereupon," on the twelfth of May the attorneys for the receiver served papers for a motion at Special Term to strike; out from the findings and judgment the provisions charging the said Washburn personally, and as receiver; with costs, or that his default at the trial be opened and the judgment set aside, and that he be permitted to show that he has not unreasonably defended the action and is not liable for the costs: This motion was denied, and Washburn, individually, and as receiver,' appeals. ■ The Special Term at which the motion'was made was held by the "same judge who tried the case. No notice was given to Washburn or his attorney that an application would be made to charge him personally with the costs. He was entitled to such a notice within the rule laid down in Slocum v. Barry (38 N. Y. 46). The notice, in fact, given", did not a]Dprise [520] him of any such intention. The findings and judgment were, we think, irregular so far as they assumed to pass upon the question of his personal liability. Upon his motion at the Special Term lie'was entitled to have the provisions on that subject stricken out, without prejudice, however,! to any proper application by the plaintiff on the subject. The .appellant also claims relief from the judgment against him as receiver for the entire costs of the action in case the premises do not bring enough to pay the entire debt and costs. This matter was, under the notice, properly before the court for consideration, and the receiver was bound to expect that he might, as such, be charged with costs, He put in a defense when he had none, and some delay was thereby occasioned. - Had the costs charged against the estate in his hands been limited to the costs incurred by reason of the answer being put in, he would liáye had no good reason to complain. It has been held in similar cases that the costs, chargeable upon a party who unreasonably defends, were those occasioned by such defense. (Bank of Plattsburgh v. Platt, 1 Paige, 464; Park v. Peck, Id. 477.) In the present case, instead of being charged with the additional costs made necessary by the answer, which, as appears by the bill of costs in the printed papers; are about the sum of $45, he is charged With the entire bill, which is $409.62. What the interest of the receiver,' or of the firm he represents, is in the mortgaged premises, is not made to appear; no affidavit is made by the receiver, but one is made by the attorney who seems to be familiar with the facts. The Special Term, in effect, held that no sufficient excuse was presented for opening the default. ' This would, we think,. be correct, provided the costs charged by the judgment against the receiver had been limited to those usually chargeable in such cases. No sufficient reason is. apparent in the papers before ns to punish the receiver to the extent of the large amount of costs that would have been incurred just the same had he not answered. H the plaintiff stipulates to limit the amount of costs chargeable to the appellant as receiver to the sum of forty-five dollars, then "the motion to open the default on that subject should be denied. Otherwise the default of the receiver as such, should be opened so far as Ms liability fpr costs is concerned, and he be permitted to have a hearing upon that .question as upon a question reserved. This, how [521] ever, should he on condition that the decision and judgment in other respects stand in full force. It follows that the order appealed from should be reversed, and relief granted as follows: 1. So much of the decision and judgment as directs the payment of the costs by the defendant Washburn, personally, 'should be stricken out as irregular, without prejudice to any proper application for such relief. 2. If the plaintiff within twenty days stipulates to limit the liability of Washburn as receiver for costs to the amount of forty-five dollars, the motion to open the default of the receiver in that regard should be denied, otherwise granted, and he be permitted to have a hearing upon that question as upon a question reserved, upon condition, however, that the decision and judgment, except as to the disputed costs, stand in full force. All concurred. Order reversed, with ten dollars costs and disbursements, and relief granted as stated in the opinion.