People v. Commercial Alliance Life Ins. Co.(In re Buel)

• Decision Date: 25 February 1896
• Citation: 148 N.Y. 563,42 N.E. 1044
• Parties: PEOPLE v. COMMERCIAL ALLIANCE LIFE INS. CO. In re BUEL et al.
• Court: New York Court of Appeals Court of Appeals

148 N.Y. 563

42 N.E. 1044

PEOPLE

v.COMMERCIAL ALLIANCE LIFE INS. CO.

In re BUEL et al.

Court of Appeals of New York.

Feb. 25, 1896.

Appeal from supreme court, general term, First department.

Application by Buel, Toucey & Whiting for an allowance of their claim against the Commercial Alliance Life Insurance Company for services rendered by them as attorneys and counselors in proceedings to dissolve the corporation, and for the appointment of a receiver. From a judgment of the general term (36 N. Y. Supp. 248) reversing an order directing the receiver to pay petitioners $500 for such services, petitioners appeal. Affirmed.

Oliver P. Buel, for appellants.

Wm. S. Maddox, for respondent.

ANDREWS, C. J.

The case of Barnes v. Newcomb, 89 N. Y. 108, is an authority for the proposition that a court of primary jurisdiction, in the exercise of its discretion, may authorize the receiver of an insolvent corporation, appointed in an action brought for its dissolution, which was defended in good faith by the corporation, though unsuccessfully, to pay, as a preferred claim out of the fund in his hands, a reasonable sum for the compensation of counsel employed by the corporation in defending the action. The principle upon which an allowance in such case may be made is that counsel fees are in the nature of expenses incurred by the corporation and its trustees in the protection and preservation of the trust which they represent; and even if it turns out that a case is made for the interference of the state, so long as the defense was made in good faith and upon reasonable grounds, there is apparent justice in subjecting the property and fund involved in the litigation to expenses incurred in discharging a general duty cast upon the corporation and its trustees to take all reasonable means for its protection. Attorney General v. North American Life Ins. Co., 91 N. Y. 57. But in any such case it is in the discretion of the court, in view of all the circumstances, to determine whether any or what allowance shall be made. The application, when made, must ordinarily be made after the judgment dissolving the corporation and appointing a receiver, when the property has passed out of the control of the corporation, and may properly be made by or in behalf of the counsel employed, who are the persons beneficially interested in any allowance which may be made. But the compensation is due from the corporation upon whose employment the services were rendered, and,...