Indep. Steel & Wire Co. v. N.M. Cent. R. Co.Appeal of Ely.

• Decision Date: 27 December 1918
• Docket Number: No. 2205.,2205.
• Citation: 178 P. 842,25 N.M. 160
• Court: New Mexico Supreme Court
• Parties: INDEPENDENT STEEL & WIRE CO. et al.v.NEW MEXICO CENT. R. CO.Appeal of ELY.

25 N.M. 160

178 P. 842

INDEPENDENT STEEL & WIRE CO. et al.

v.NEW MEXICO CENT. R. CO.Appeal of ELY.

No. 2205.

Supreme Court of New Mexico.

Dec. 27, 1918.Rehearing Denied Feb. 13, 1919.

Syllabus by the Court.

In the absence of statute, amount of compensation of receiver of railroad rests in discretion of court appointing him.

The controlling considerations in fixing the amount of compensation of a receiver of a railway stated.

The word “discretion” defined (citing Words and Phrases, First and Second Series, Discretion).

The action of the trial court in fixing the amount of compensation of its receiver will be set aside on appeal, only where the facts and circumstances disclose that the court abused its discretion.

An abuse of judicial discretion occurs when the court exceeds the bounds of reason, all the circumstances before it being considered. Evidence examined, and held that court did not abuse its discretion.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Abuse of Discretion.]

The actual disbursements of a receiver outside the scope of the duties incumbent upon him are properly disallowed. Certain items of account of the receiver held properly disallowed.

Appeal from District Court, Santa Fé County; Holloman, Judge.

Action by the Independent Steel & Wire Company and Pittsburg Trust Company against the New Mexico Central Railroad Company. Appeal by Ralph C. Ely, receiver of the New Mexico Central Railroad Company, from an order fixing his compensation as receiver, and disallowing certain items of expenses incurred by him. Affirmed.

The actual disbursements of a receiver outside the scope of the duties incumbent upon him are properly disallowed. Certain items of account of the receiver held properly disallowed.

Frank W. Clancy, of Santa Fé, for appellant.

Francis C. Wilson, of Santa Fé, for appellees.

PARKER, J.

This is an appeal by Ralph C. Ely from an order of the district court for Santa Fé county in the consolidated cause entitled Independent Steel & Wire Co. and Pittsburg Trust Co. v. New Mexico Central Railroad Company. By the terms of the order the compensation of the appellant, as receiver of the New Mexico Central Railroad Company, was fixed, and certain items of expense incurred by him allowed and other items disallowed.

The appellant was appointed receiver of the New Mexico Central Railroad Company on December 29, 1914, and continued to occupy that office until September 15, 1917. In the order appointing him it was provided, among divers other things, that he should immediately take possession of all the property of said railroad; run, manage, and operate the same, and use, manage, and conduct such business, in his discretion, in such manner as will in his judgment produce the best results, and to employ and discharge employés of said railroad, “and to make such payments and disbursements as may be needful and proper in so doing.” The order further provided for the payment by the receiver of certain specified items of expense, including “all other charges, expenses, and liabilities that may be incurred by the receiver in managing and conducting said business and operating such railways, or in the discharge of his duties hereunder.” The order concluded with the reservation that any party in interest may apply to the court for further directions with reference to the property and business, the court reserving the right to modify the order, and in all respects to regulate and control the conduct of the receiver.

From the time of his appointment to the date of the entry of the order herein from which he appeals, no order was made in the premises touching the amount of compensation, final or temporary, of the receiver. On August 17, 1917, the appellant filed with the court a statement of his expenses, amounting to $5,963.07, the same covering the period between the date of his appointment and August 14, 1917. On the same day he also filed a memorandum, the purpose of which was to explain his version of the amount of time he had spent on matters pertaining strictly to the management and operation of the road, and the time he has spent on matters pertaining to the promotion of the sale of the bonds of the railroad, the same including an apportionment of his expenses properly chargeable against either project. The court, after several hearings were had in the premises, in substance and effect found that the appellant had drawn as expenses from the funds of the receiver the total sum of $15,851.43; that he attempted to account for $5,963.07, admitting the expenditure of $9,888.35, without accounting therefor; that $2,753.85 of the account stated by the receiver, and no more, was a proper charge against the funds of the receiver, the latter having no right or authority to expend the balance of $3,014.72 in matters concerning the promotion of the sale of the bonds and the obtaining of information and instruction calculated to place the appellant in a position to properly carry on the management of the affairs of the receivership. The court, further, fixed the reasonable compensation of the appellant as receiver at the total sum of $6,770. In consequence of the order of the court in the premises the appellant was allowed an offset of $9,523.85 against the total amount of his disbursements, viz. $15,851.43, which left him indebted in the sum of $6,327.58.

The appellant urges upon the court three primary propositions. They are (1) that the court erred in fixing the compensation of the appellant at the figure mentioned, it being contended that the amount thereof was shockingly inadequate and unjust under the facts and circumstances of the case; (2) that the court should have allowed the entire account of expenses as the same was presented to it by the appellant, the items aggregating $3,014.72, heretofore referred to, being properly chargeable against the funds of the receiver; and (3) the court erred in making certain findings and in refusing to make additional findings requested by the appellant.

There is no controversy between the parties hereto as to the principles of law applicable to the case. The controversy only arises when the principles are attempted to be applied to the facts of the case.

[1] 1. As the receiver is the officer of the court, created by the court for the administration of the estate in the hands of the court, the amount of compensation to which he is entitled, in the absence of statute fixing the same, is a matter for the determination of the court appointing him, in the exercise of its discretion. High on Receivers (4th Ed.) § 781; 5 Thompson on Corps. (2d Ed.) § 6458; 34 Cyc. 472.

[2] 2. There are numerous considerations to be taken into account in fixing the amount of his compensation. The controlling considerations are laid down in 34 Cyc. 472, as follows:

“The considerations that should be controlling with the court in fixing compensation are the nature of the matters administered, the amount involved, the complications attending it, the amount of the bond required, the time spent, the labor and skill needed or expended, the degree of success attained under all the circumstances, the fidelity to details, the appreciation evidenced as to the responsibilities of the position, the character of such responsibilities, the expedition with which the trust has been administered in view of results reached, and the method, character, and promptness of the accounting, having regard, as a standard, to what is paid for somewhat similar services in the performance of official duties, not the standard in private business transactions. *** The value of the services rendered should not be considered generally, but only with reference to the trust administered.”

The compensation to be allowed receivers cannot be determined or fixed by an inelastic rule, however, the amount usually depending upon the circumstances of each particular case. High on Receivers (4th Ed.) § 783. Because it is assumed that a railway receiver is charged with greater responsibilities than other receivers generally, or because he is an active receiver as distinguished from a passive one, it is said that railway receivers are entitled to a more liberal rate of compensation than passive receivers, and such compensation will be graduated according to the peculiar duties and responsibilities resting upon them in the control and management of the road. High on Receivers (4th Ed.) § 787. In 4 Cook on Corps. (7th Ed.) § 879, it is said:

“A receiver will be allowed a reasonable compensation for his services. In the case of a railway receiver more than ordinary ability and responsibility are involved, and the court recognizes this fact in fixing the compensation. Each case, however, turns on its own facts. The former tendency of the courts to allow very high compensation has been rebuked by the Supreme Court of the United States, but this does not limit the power of the court to pay sufficient compensation to enable it to obtain a competent receiver. ***”

[3] 3. To repeat, it has been said that the court appointing the receiver determines the amount of his compensation in its discretion. The word “discretion” has been variously defined. See 2 Words & Phrases (2d Series) 64. In State v. Foren, 78 Kan. 654, 97 Pac. 791, it was defined as freedom to act according to one's judgment; liberty to act as a judge should act, applying the rules and analogies of the law to the facts found after weighing and examining the evidence; to act upon a fair judicial consideration, and not arbitrarily. It was defined in Gaar-Scott & Co. v. Nelson, 166 Mo. App. 51, 148 S. W. 417, citing Black's Law Dict. (2d Ed.) 375, substantially as follows:

“A liberty or privilege allowed to a judge, within the confines of right and justice, but independent of narrow and unbending rules of positive law, to decide and to act in accordance with what is fair, equitable, and wholesome, as determined upon the...