Johnson v. Emerson Phonograph Co., Inc.

• Citation: 296 F. 42
• Decision Date: 07 January 1924
• Docket Number: 149.
• Parties: JOHNSON v. EMERSON PHONOGRAPH CO., Inc. YELLIN v. SCHOLER et al.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

296 F. 42

JOHNSON v. EMERSON PHONOGRAPH CO., Inc.

YELLIN v. SCHOLER et al.

No. 149.

United States Court of Appeals, Second Circuit.

January 7, 1924

The receivers appeal from a decree of the District Court for the Southern District of New York adjudging that $9,541.74, with interest, shall be paid to one Yellin as an expense of administration of an estate in equity receivership. Yellin submitted to the District Court his petition, dated December 2, 1921, wherein he stated (1) that he was the owner of a building in Long Island City; (2) that he and Emerson Phonograph Company entered into an agreement whereby he let Emerson Company 50,750 square feet for 10 years, to commence June 1, 1920, at a rental of $35,000 per year; (3) that Emerson Company entered into possession and 'remains at least in partial possession' of the premises, the balance of the space being occupied by United State Record Manufacturing Company, a corporation associated with Emerson Company; (4) that on December 9, 1920, Scholer and Matters were appointed receivers in the above-entitled suit; (5) that the rent was paid until December 1, 1921, but certain amounts for live steam and water bills were unpaid; (6) that 'the tenant is therefore indebted to your petitioner accruing as of December 1, 1921, in the sum of $8,750, representing three months' rent, commencing with said December 1, 1921 balance of the power bill of $574.34 and the amount of the water bills of $217.40, making a total of $9,541.74, which is justly due and owing to your petitioner from the Emerson Phonograph Company, Inc., and from the United States Record Manufacturing Company, and from Jacob Scholer and Thomas H Matters as receivers of the Emerson Phonograph Company, Inc 'that your petitioner is desirous of taking such steps with respect to collecting the amount due to him from the persons and corporations responsible on the said lease, and is desirous of taking such further steps with a view to dispossessing the persons in possession of said premises, as he may justly be entitled to. Your petitioner therefore prays for an order of this court permitting your petitioner to institute such proceedings and such actions, as in said court or tribunals having jurisdiction of the said matter against the Emerson Phonograph Company, Inc., Jacob Scholer and Thomas H. Matters as receivers, and such other person, persons, or corporations as may be in possession of the said premises.'

Upon this petition, the District Court, on December 8, 1921, made the following order: 'Ordered, that the said Harry Yellin be and he is hereby permitted and empowered to bring such action or actions, institute such proceeding or proceedings as may be necessary or proper in order to enforce his rights as landlord of the premises heretofore leased by him to the Emerson Phonograph Company, Inc., whether the same be by bringing proceedings to dispossess the tenant and undertenants of the said building, and to include in such action or actions Jacob Scholer and Thomas H. Matters as receivers of the Emerson Phonograph Company, Inc., providing only, however, that any action or proceeding which Harry Yellin, the petitioner, may desire to institute in order to obtain a money judgment only against the said Jacob Scholer and Thomas H. Matters as receivers of the Emerson Phonograph Company, Inc., shall be commenced or instituted in this court only.'

Dispossess proceedings were then brought in a Municipal Court of the City of New York by Yellin against Emerson Company, Scholer and Matters as receivers, and United States Record Manufacturing Company. The receivers did not appear, and a final order was made by the Municipal Court justice awarding possession of the premises to Yellin and a warrant of dispossess was thereupon issued. Yellin then petitioned the District Court for an order directing the receivers to pay him $9,541.47 as an administration expense. The matter was referred to a special master. The report of the special master found as stated infra. Emerson Company let all the space which it had leased to one Colen, who, in turn, assigned this sublease to United States Record Manufacturing Company.

When the receivers were appointed on December 9, 1920, the last-named company was in possession of all the space. A part of this space, however, was occupied by a printing plant and other chattels belonging to Emerson Company. By correspondence beginning January 3, 1921, the receivers through their attorney notified Yellin's attorney that they did not adopt the lease. While no arrangement was made by Yellin with United States Record Manufacturing Company, it nevertheless paid direct to him and he accepted the rent reserved until December 1, 1921. The receivers never paid any rent. By arrangement with United States Record Manufacturing Company the property in custody of the receivers referred to supra was permitted to remain in the space in possession of United States Record Manufacturing Company, without rent or any agreement therefor. Prior to December 1, 1921, some of this property was moved out of the premises; none was ever moved in.

The special master, however, reported that the final order of judgment of the Municipal Court was res adjudicata against the receivers and concluded that the receivership estate was liable for the amount involved as an administration expense. He based his opinion on Prince v. Schlesinger, 116 A.D. 500, 101 N.Y.Supp. 1031, affirmed 190 N.Y. 546, 83 N.E. 1130. The District Court sustained this view.

David W. Kahn, of New York City, for appellants.

Kamen & Ostertag, of New York City (Bernard I. Kamen, of New York City, of counsel), for appellee.

Before HOUGH, MANTON, and MAYER, Circuit Judges.

MAYER Circuit Judge (after stating the facts as above).

The duty of receivers such as those in this case has been recently restated by this court as follows:

'It is the receiver's duty to accept as part of the estate to be administered for the creditors those assets which will prove of value to the estate. Those which are not of value are to be left outside the field of his receivership. As to those assets which are of problematical value, it is necessary that the receiver should be

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