Summary
In Ward v. Roy (69 N.Y. 96) it was held that "if a creditor at whose instance a receiver has been appointed, and especially if he is solely interested, instigates and conducts a prosecution for his own benefit through the receiver, the obligation to pay costs created by the statute is equitably as binding on him as if the legal machinery was not employed."
Summary of this case from Droege v. BaxterOpinion
Argued February 20, 1877
Decided March 20, 1877
Samuel Hand, for the appellant.
J. McGuire, for the respondents.
This is an application to compel the Florence Sewing Machine Company to pay the costs of the defence in this action.
The point is made that the court below had no jurisdiction of the company, it being a foreign corporation. The answer to this is, that the company appeared generally at the Special Term upon the first hearing, by an attorney, without taking the objection and consented to a reference to take evidence. The objection afterwards before the referee, and at the final hearing was too late. The statute provides that when an action shall be brought in the name of another by an assignee of any right of action, or by any person beneficially interested in the recovery in such action, such assignee or person shall be liable for costs, etc. (2 R.S., 619, § 44.)
It has been held, under this statute, that a creditor is not liable in an action brought by a receiver, appointed in proceedings supplementary to execution, even when such creditor is solely interested in any recovery which may be had by the receiver, unless such action was commenced at the instance of such creditor, and substantially conducted under his direction. (23 How., 228; 5 Robt., 637; 27 Barb., 100.) But when the action has been virtually carried on by the creditor, he has been held liable. (48 How., 477.) We think the rule adopted is reasonable and just.
If a creditor at whose instance a receiver has been appointed, and especially if he is solely interested, instigates and conducts a prosecution for his own benefit through the receiver, the obligation to pay costs created by the statute is equitably as binding on him as if the legal machinery was not employed.
It is insisted however that the evidence does not establish a case within this rule. Upon appeals from orders made upon special motions, this court will, as a general rule, adopt the conclusions of fact of the court below, unless they are clearly wrong.
We think that sufficient was shown to justify the inference that Bird had power to authorize the prosecution of the action under the circumstances. The company was a foreign corporation, having a general office in the city of New York, in charge of Bird as agent. He had possession of the note upon which the judgment was obtained against the debtor, and employed the attorney to collect the same; and these facts, and the correspondence in respect to negotiations for a settlement, and legal proceedings, including the action in which this motion is made, show that he had charge for the company of this collection, and also others in this State, and are sufficient to establish an agency so as to bind the company in respect to the collection of the debt. There was no express direction to the attorney shown by competent evidence to institute this action. The attorney testified that he thought he had authority from Bird, but he failed to state how or where it was given; and the letter of May 12, 1874, written by the attorney to Mr. Bird, bears on its face evidence that the attorney was then communicating for the first time the appointment of a receiver and the commencement of this action. The statements of Bird to the witness Reynolds are scarcely competent within the rule as to admitting the declarations of an agent. These statements related to a past transaction, and were not a part of any act then being done.
But the attorney had authority to institute the supplementary proceedings and procure the appointment of a receiver. They were a proceeding in the suit ( 41 N.Y., 163), and although he had no authority to commence this action under his original retainer, and had no specific direction to commence it, yet it was in fact commenced at his instance, acting as the attorney and on behalf of and for the sewing machine company. He was not retained by the receiver, but, on the contrary, the receiver acted under his directions. As early, at least, as May 12, 1874, when the letter above referred to was written, Mr. Bird, the agent, was informed of precisely what had been done by the attorney for the company; that a receiver had been appointed and the action commenced but not tried. Bird did not object, but in the subsequent correspondence recognized the action of the attorney as being for the company. There were some letters not produced. Mr. Bird, under date of July 13, 1874, acknowledges the receipt of a letter from the attorney of the eighth instant, and says it is "too late for me to think of being at your office at the adjourned trial. It has been rather a long winded affair thus far, and I trust you will close it to our advantage as soon as practicable."
The attorney wrote to Bird, March 17, 1875: "Your case against Post Ray, I understand the referee has decided against us, etc." In answer to which, under date of March 26, 1875, Mr. Bird writes: "I can hardly understand the situation of our affairs there; don't see how your courts could render verdict against us." From these facts, and the evidence of the attorney, the court below was justified in drawing the inference that the company, through Bird, with a knowledge of all that their attorney had done in their behalf and for their benefit, ratified his acts in these respects, and intended to adopt and approve them. If so, such ratification was equal to an original authority, and the acts of the attorney are to be deemed the acts of the company.
It is unnecessary to pass upon the facts as an original question. There was evidence to justify the conclusion of the court below, and although far from conclusive, and not the most satisfactory, we do not deem it proper to disturb it. It is not so clearly erroneous as to justify a reversal on the facts.
The order must be affirmed.
All concur, except ALLEN, J., not voting.
Order affirmed.