Interior Conduit & Insulation Co. v. Alexander, Barney & Chapin, Inc.

Scott, J. This is a motion to charge the plaintiff with the costs and expenses of a reference incident to a motion made by it to compel one Weed, the treasurer of the defendant company, to deliver .to a receiver, certain books and papers belonging to the company, alleged to be in his possession. In-1893 a receiver of defendant was appointed in judgment-creditors’ actions. He proceeded to take possession of the assets of defendant and turn them into cash, wherewith \he paid the expenses of his administration and certain debts of the defendant. In fact, he substantially wound up the affairs of the corporation. His accounts .were duly passed, and he was discharged upon turning over to Weed all the books, papérs and. documents in his possession, and paying to the attorneys for defendant some $1,100, the balance of nash remaining in his hands. Later, ah action was commenced for .the dissolution of defendant [599] and the sequestration, of Its property, and in that action, a second receiver was appointed, and Weed turned over to him all the hooks and papers then in his possession belonging to the defendant. The second receivership was afterwards duly extended to this action. In October, 1898, the present receiver made a motion in this action to compel Weed to turn over to him the minute-book of the stockholders and directors of defendant, its stock-book and certain invoices. • In answer to this- mlotion, Weed declared that he had searched for the books and papers demanded of him, and had been unable to find them. He swore that he had considered the books and papers received from the first receiver, as practically worthless, except the debtors’ ledger account, which he carefully preserved. That as- to. the. remainder, he carted them to his place of business and stored them, some in the outer office, and some in-the-basement, and paid no further attention to them, regarding them as entirely worthless, and practically junk, and that when called upon by the present receiver he turned over to him all of the books and papers of the defendant then in his possession. Later on, at the request of the receiver, he made, a thorough search for the missing books and papers, but was unable to find them. The justice before whom this motion came on to be heard, deeming that the question of the whereabouts and control of the books and papers should be further probed, sent the matter to a referee to take and report such evidence and testimony as the parties might offer on the subject.. The evidence taken before the referee did not show that Weed had the possession or control of the missing books and papers, and on the coming in of the referee’s report an order was made denying the motion to compel Weed to turn over the books and papers, with costs, including the expenses of the reference. The. receiver, however, has no funds-in his hands, wherewith to pay-these-costs and expenses. There are now pending actions by this plaintiff and other creditors against directors' of the defendant corporation to recover their respective claims, because of the alleged failure of the corporation to file annual reports. The relations between the attorney for the receiver and the attorney for the creditors, including the plaintiff, leaves no doubt that in moving for the delivery to him of the missing books and papers, the receiver was acting at the instigation of the creditors and for their benefit; indeed, there can, I think, be no reasonable doubt that the real object of the motion was not to discover assets of the company, but to find-evidence that might be of service to the creditors in their actions against the [600] directors. Under these circumstances, the authorities justify the imposition upon, the plaintiff of the' expenses of the unsuccessful" attempt to procure the books and papers. Ward v. Roy, 69 N. Y. 96; Bourdon v. Martin, 84 Hun, 119. It is true that these cases differ from the presenf, in that in each of them the creditor against whom costs were charged is stated to have been the only person to be benefited by the action of proceeding, if successful, whereas here it ■ appears that there are other creditors- besides the plaintiff who would have shared the benefit, if any had resulted,, of the success for the motion for hooks and papers. I do not, however, con-' sider this difference to he important. All of the creditors who have brought actions against the directors are represented by" the same attorney, and to.the extent,..at least, of obtaining evidence of the directors’ liability, are doubtless acting in unison. ’So far- as the motion for a delivery of the books and papers is concerned, the plaintiff unquestionably represents all of them. . At all events, the motion was' made in its name, and-it has -assumed responsibility for it. Motion granted, with $10 costs.