DAVIS against STOVER

DAVIS against STOVER. New York Superior Court; Special Term, April, 1874. Trustee—Receiver—Contract—Principal and Agent. As a general rr.le, an agent employed by a trustee, in the execution of the trust, must look to the one employing him, personally, for compensation, and an executory contract, therefore, does not bind the estate. Where a person indebted to an estate was employed by the receiver thereof to assist him in the duties of his trust, and to render services on behalf of the estate, and such services were rendered upon the faith of an express agreement by the referee that their value should be applied to the payment of the demand in favor of the estate against the employee, and it was conceded that the services were necessary for the estate,—held, that the reasonable value of the services constituted an equitable set-off in an action brought against the employee on the debt due from him to the estate. Henry D. Stover, appointed receiver of The Ocean National Bank, by the comptroller of the currency, under the act of congress of June 3rd, 1864, establish ing the national banks, and the acts amendatory thereof, received, as part of the assets of the bank, several promissory notes made by M. P. Wood, and indorsed by H. D. Stover, against both of whom this action was brought, on the notes, for the sum of nine hundred and ninety-two dollars and one cent. The defendant Stover set up in his separate answer, as an equitable defense, that the plaintiff, as receiver, had procured the defendant to assist him in the custody and care of, and to render his services as an expert, with those of an assistant employed at defendant’s own expense, in arranging, appraising, and supervising the sale of, a stock of printing materials, plates, types, presses, and machinery, of the value of more than one hundred thousand dollars, in the possession of the plaintiff as receiver,—upon the express agreement that the services of the defendant and his assistant in that behalf, should be in discharge of the claim which the receiver had against the defendant on the notes, and that the value of the services should be applied to the payment thereof. The defendant further alleged that such services were rendered upon the faith of that agreement; that they were of great pecuniary value to the estate and to the receiver, and enabled the receiver to realize his claim upon the property, being about the sum of one hundred and ten thousand dollars in full; that the services were necessar)r for the preparation for sale of said property, as the receiver was wholly ignorant of such matters, and that without such preparation and like services no sale of the property could have been effected. The defendant also claimed that the reasonable value of the services was the sum of three thousand dollars, but if it should be adjudged that they were of less value, then the same was interposed as an equitable off-set pro tanto. The plaintiff demurred to this defense, for insufficiency, as constituting no defense to the action. Sunderland D. Smith, for the plaintiff, to the effect that the receiver had no power to bind the estate by any agreement, cited: Kennedy v. Gibson, 8 Wall., 498, 500; Matter of Van Allen, 37 Barb., 225 ; Bowman ?x Tallman, 2 Robt., 385 ; affirmed, see 41 N. Y., 619 ; Ferrin v. Myrick, 41 N. Y., 315; Mygatt v. Wilcox, 45 N. Y., 306 ; Austin v. Munro. 47 N. Y., 360 ; Bloodgood v. Sears, 64 Barb. 71 ; 2 Williams on Executors, 1510 [marg. p.]; Act of Congress of June 3rd, 1864, entitled “An act to provide a national currency,” &c., §50, 13 U. S. Stat. at L., 99; Davis v. Stover, in the New York Common Pleas, General Term, March, 1874. Addison Brown, for the defendant, to the effect that the receiver, as a “ statutory assignee,” had power to employ necessary aid, and to pay out of the funds of the estate, or pledge the funds so far as necessary therefor, or to allow necessary services as a payment of a claim, so as to constitute an equitable set-off, cited: Kennedy v. Gibson, 8 Wall, 498, 506; Verplanck r. Mercantile Ins. Co., 2 Paige, 438, 452 ; Corey r. Long, 12 Abb. Pr. N. S., 427 ; Mann v. Witbeck, 17 Barb., 388, 391; Howes Davis, 4 Abb. Pr., 71; Hoyes v. Blakeman, 6 N. Y., 567, 580, S. C., below, 3 Sandf., 531; Chouteau v. Suydam, 21 N. Y., 179, 183 ; Columbian Ins. Co. v. Stevens, 37 N. Y. 539; Burrill on Assignments, 205, 442. In this case, similar services were set uj) as a counter-claim only, without any averment of their necessity, or any special agreement by the receiver. The referee before whom the action was tried, ruled out the evidence of the counter-claim, and on appeal to the general term, the decision was affirmed. [MAJORITY — Freedman, J.] Freedman, J. —Although, as a general rule, an agent employed by a trustee, receiver, executor,, or administrator, in the execution of the trust, must look to the person employing him, individually, for his payment, and an executory contract of this character does not bind the estate, yet the reasonable value of services actually rendered by such an agent, upon the faith . of an express agreement that the compensation is to be made out of the estate, may, the necessity for their rendition being conceded, constitute an equitable set off to any claim or demand which the estate may have against such agent.