Opinion
Argued March 2, 1886
Decided March 16, 1886
John L. Cadwalader for appellants. Francis Lynde Stetson for respondent.
The jurisdiction confided to the court over the persons and estates of lunatics, carries with it as a necessary incident, after inquisition found and the appointment of a committee, the power to direct the application of the estate of the lunatic to the payment of demands existing against it, and this relief may be granted on the petition of the claimant. ( Exrs. of Brasher v. Van Cortland, 2 Johns. Ch. 244; In re Heller, 3 Paige, 199, 200; People v. Nat. Trust Co., 82 N.Y. 283.) This jurisdiction in its origin was equitable, and is exercised upon equitable principles, and in accordance with the maxim that "equality is equity." This equitable rule has been embodied in the statute in respect to the distribution of money arising from the sale of the land of the lunatic, for the payment of debts, which declares that the proceeds shall be distributed ratably among all the creditors. (2 Rev. Stat. 54, § 15; Code of Civ. Pro., § 2364.) There is no express statutory provision regulating the mode of distribution of the personal assets, but it cannot be doubted that when the assets are insufficient to pay all the debts in full, the same rule of equality should be applied. In view of this principle the relief sought by the petitioner was properly denied.
The lunacy of Strasburger did not discharge or affect his covenants in the lease. The rent accruing after the appointment of the committee became a charge upon his estate, and was a demand which the petitioners could present and have adjusted in the ordinary course of administration. A claim for rent under a lease, whether accruing before or after the appointment of a committee, has no intrinsic preference over other debts of the lunatic. The lessor has his remedy by re-entry in case of default in payment of the rent, or he may forego his right to terminate the term, and come in as a general creditor of the estate for the rent unpaid. There may be equitable reasons upon which the court in a particular case ought to give a preference for rent accruing after the appointment of the committee. If the leased premises are occupied by the committee, and such occupation is to the advantage of the estate, as where it was necessary in order to carry on or close up the business of the lunatic, the rent accruing during such occupation would justly be regarded as a reasonable expense incurred by the committee to be paid before the claims of general creditors. But we perceive no equitable principle upon which a demand for rent takes preference of other debts, in the absence of a special equity growing out of the circumstances of a particular case. It is claimed that the occupation of the premises for a time by the first committee was an acceptance of the lease by him, and that he thereby became liable as assignee of the term, and that the present committee succeeded to his situation and responsibility. If this claim was well founded, it would be material only as bearing upon the general equity of the committee, to be protected against liability, by charging the fund in his hands with the rent before paying the general creditors. But we are referred to no authority which sustains the proposition that the committee of a lunatic becomes chargeable as assignee of a lease held by the lunatic, by reason of his occupation of the premises after his appointment. It is well settled that a receiver, or an assignee in bankruptcy, or an assignee for the benefit of creditors, if he elects to accept a lease belonging to the debtor, or assignor, becomes by such election assignee of the lease and personally liable on the covenant to pay rent, of which liability he can only discharge himself by an assignment or surrender. ( Copeland v. Stephens, 1 Barn. Ald. 594; Thomas v. Pemberton, 7 Taunt. 206; Clark v. Hume, 1 Ryan M. 207; Carter v. Warne, 4 Carr. P. 191; Martin v. Black, 9 Paige, 641; Journeay v. Brackley, 1 Hilt. 447; Lewis v. Burr, 8 Bosw. 140.) This doctrine proceeds on the ground that on the election being made, the receiver or assignee becomes vested with the title to the leasehold interest, and a privity of estate is thereby created between the lessor and the receiver or assignee, by virtue of which the latter becomes liable on the covenants running with the land. But the committee of a lunatic takes no title to the real or personal estate of a lunatic. He is a mere bailiff to take charge of the property of the lunatic, and to administer it subject to the direction of the court. His possession is the possession of the court. ( In re Heller, supra; Noe v. Gibson, 7 Paige, 513; Petrie v. Shoemaker, 24 Wend. 84, 85; Lane v. Schermerhorn, 1 Hill, 97.) It follows as a necessary consequence from the nature of his office and the fact that the title to the lunatic's property is not divested by the appointment of the committee, that the occupation by the latter under a lease to the lunatic, is in the character of servant, agent or bailiff, and creates no privity of estate between him and the lessor. The facts in this case did not call upon the court to intervene for the protection of the committee, nor do they furnish any ground for equitable preference of the claim of the petitioner. The lunatic's estate is largely insolvent; the committee has not, in fact, occupied the premises during any portion of the quarter for which rent is claimed; the petitioner was notified by the present committee on his appointment, that he would not occupy the premises; the continuance of the lease was a disadvantage to the estate, and the remedy of the petitioner to oust the sub-tenant and to regain possession of the premises, was complete. The lessor has a claim against the lunatic's estate, upon which he can come in with the other creditors. It would be inequitable, under the circumstances, to give him a preference.
The order of the General Term should be affirmed.
All concur.
Order affirmed.