Woerz v. Schumacher
| Citation | 56 N.E. 72,161 N.Y. 530 |
| Parties | WOERZ v. SCHUMACHER et al. |
| Decision Date | 06 February 1900 |
| Court | New York Court of Appeals Court of Appeals |
Appeal from supreme court, appellate division, First department.
Bill by Ernst G. W. Woerz against Charles A. Schumacher and others for an accounting. From a judgment of the appellate division (56 N. Y. Supp. 8) reversing a judgment in defendant's favor, he appeals. Affirmed.
Charles F. Brown, for appellant.
Samuel Untermyer, for respondent.
The controversy in this case is between the plaintiff, who represents the trustees of an insolvent savings bank, and one of the defendants, who is the receiver of the same bank. About the year 1876 the institution failed, and was put into the hands of a receiver, who distributed the assets, and was subsequently discharged. The present receiver is his successor, appointed apparently for the purposes of this action to administer assets of the bank which have been realized since the discharge of the first receiver. The action is one in equity for an accounting between the plaintiff, as the representative of the trustees, and the receiver, and the only question involved is with respect to the allowance of interest on certain sums of money advanced by the trustees to the first receiver in a transaction which will be presently referred to. The whole dispute arises upon the terms of a written instrument between the trustees and the receiver bearing date December 12, 1877. At that time the receiver had brought actions against the trustees to recover damages for alleged waste of the assets of the bank and for mismanagement of its affairs. By the provisions of the instrumentthese suits were compromised and settled, and the trustees stipulated to pay to the receiver 35 per cent. of the debts owing by the insolvent bank, and the receiver stipulated to turn over to them certain real estate, assets of the bank, then supposed to be of the value of about $11,000. The trustees agreed to take and administer this property, and they had the right to sell the same at any time when, it their judgment, it was best. It would be impossible, within any reasonable space, to give an intelligent idea of the various and somewhat conflicting provisions of this writing. It covers 15 closely-printed pages in the record, and the real meaning is obscured by the use of a multitude of words, and by the repetition in many instances of the same thing in a slightly different form. Fortunately, however, we are now concerned with only a single provision of the instrument, and that may be stated in very few words. The writing, upon its face, shows that it was made on the part of the receiver by the authority and direction of the supreme court. The trustees on their part agreed to pay 35 per cent. of the debts, as already stated, which percentage, it seems, amounted to something over $30,000. The receiver turned over to them the property referred to, and the trustees on their part stipulated that, when the property was sold, in case the amount received exceeded the whole outlay of the trustees, they should pay to him any surplus in their hands after reimbursing themselves for the outlay thus made. This outlay, as specified in the contract, was the 35 per cent. advanced on the bank debts and the proper expenses incurred by them in and about the management and sale of the property. Between the years 1882 and 1893 the trustees succeeded in disposing of the property. In the meantime they had paid the taxes, and had made some repairs upon it, and had received the rents. The total amount received by them, including rents, was about $87,000. In their accounting in this action they have charged to this property the 35 per cent. advanced by them, and the interest thereon from the time it was paid, and also all sums expended for repairs and taxes, with interest, and they have given credit for the rents with interest thereon. The single question now in dispute is whether they are entitled to charge any interest on the sums advanced by them representing the 35 per cent. and the expenses. The objection to allowing that charge is based solely upon the circumstance that the writing in question does not expressly state that they should be reimbursed with interest. All the issues in the case were determined by a referee, who decided that the plaintiff, under the provisions of this writing, was not entitled to interest, either upon the 35 per cent. advanced or upon the expenses incurred in the care and management of the property. The appellate division, however, has reversed this judgment, and has held unanimously that interest should be allowed to the plaintiff upon both items.
I think the view taken of the question by the appellate division is correct, and it is very difficult to add anything in support of the argument contained in the very able opinion of that court. I do not think that the right to interest in a case of this kind arising upon such a peculiar transaction can be determined upon the strict rules of the common law. The instrument in question is not to be construed without reference to the nature of the transaction and all the surrounding circumstances. The law of interest, as applicable to a bond, a promissory note, or a covenant, is not necessarily applicable to a transaction of this character. It is quite true that the general rule with respect to interest is that it can be allowed only by virtue of some contract, express or implied, or by virtue of some statute, or on account of the default of a party liable to pay when it is allowed as damages for the default. This, no doubt, is the general rule, both in law and equity. But this rule, like almost every other general rule, is not without some exceptions; and, even within the limits of the rule, who can outline with perfect accuracy the various contracts and obligations not providing for interest in express terms, but where the right to interest is to be implied? We have before us an instrument which is perfectly clear, in one particular at least, and that is that the trustees were to be reimbursed our of the proceeds of the sale of the property before accounting to the receiver for anything. Now, who can say that a provision to reimburse under such circumstances does not include the right to interest? But it is said the right to interest in this case rests upon a contract, which is entirely silent upon that subject. It is not claimed that there is anything in the contract which, in terms, excludes the right of the trustees in making an accounting to charge interest on the sums advanced. But the argument is based entirely upon the proposition that interest is not nominated in the bond. I think this argument is faulty, since it assumes that the question is to be governed by the rules applicable to ordinary written contracts. The instrument is not, in any just sense, a common-law agreement or contract, where individual minds have met with respect to mutual stipulations. In a certain sence it is not a contract at all. The receiver, of his own will, had no power or capacity to execute it, or to bind any one by it. He was a mere instrument to execute the will of the supreme court, and hence one of the real parties to the instrument is the court itself. If, instead of formulating this obscure and voluminous document, the trustees had appeared in open court, and the presiding justice had directed the clerk...
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