
    George W. Jack, App’lt, v. John E. Robie, as Assignee for the Benefit of the Creditors of Thomas S. Wand, Resp’t.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed April 14, 1888.)
    
    ■Costs—Code Civil procedure, § 3246 — When assignee ob trustee IS CHARGED PEBSONALLY — MISMANAGEMENT OF THE ESTATE — No GROUND.
    The costs awarded in an action specified in section 3246, Code Civil Procedure, are exclusively chargeable upon and collectible from the estate fund or person represented unless the court directs them to be paid by the party personally for mismanagement or bad faith in the prosecution or defense of the action. In an action the mismanagement of the estate furnishes no ground for liability for costs. On the accounting the persons interested in the fund will have notice and be entitled to a hearing. Criticising Butler v. The Boston and Albany B. B. Go., 24 Hun, 99; following Hone as executor v. Be Peyster, 11 N. Y. State Rep., 309.
    Appeal from an order of the Erie special term, denying plaintiff’s motion to charge the defendant personally with the costs of" the action.
    
      W. H. Cuddeback, for app’lt; Samuel M. Welch, Jr., for resp’t.
   Haight, J.

—This action was originally brought against the New York, Lake Erie and Western Railroad Company to recover the wages of the plaintiff and twenty-nine others, employees of that company for the month of September, 1886. The defendant having given notice to the company that he claimed the same as the assignee for the benefit of creditors of Wand, an order of interpleader was entered and the amount of the wages, $1,753.08, was paid into court. The case was referred to a referee who found as facts, that the plaintiff was the assignee of the claims of the twenty-nine employees; that their wages for the month of September amounted in the aggregate to the amount paid into court; that Wand had loaned money to each of the employees of the company and had taken an assignment of their claims for wages for that month; that in doing so he had exacted an usurious rate of interest, and for that reason the assignments to him were void; and that the plaintiff was entitled to the fund. Judgment was consequently ordered against the defendant, Robie, as assignee for the benefit of creditors, for the costs of the action, on which report the plaintiff entered judgment. An execution was subsequently issued upon the judgment to the sheriff of Erie county, which was returned unsatisfied. The plaintiff then moved at special term for an order charging the defendant personally with the costs, and from the order denying such motion this appeal was taken.

The motion is based upon the provisions of section 3246 of the Code of Civil Procedure, which, among other things, provides that the costs awarded in such an action are exclusively chargeable upon and collectible from the estate, fund or person represented, unless ■ the court directs them to be paid by the party personally for mismanagement or bad faith in the prosecution or defense of the action.

It is not contended that the defendant was a party to or knew of the usurious charges made by Wand, the defendant’s assignor, upon the loan of money to the plaintiff and his assignors. It does appear from the papers read upon the motion that a statement had been made to him by a number of the plaintiff’s assignors that Wand had charged them a usurious rate of interest. But it further appears that he consulted Wand upon the subject, and that Wand denied that any such thing had taken place, and asserted that the assignments to him were legal and valid. Under these circumstances we are of the opinion that the defendant was not chargeable with bad faith in defending the action or in asserting a claim to the fund. He was a trustee representing the creditors of Wand, and it was his duty to protect and defend the assigned estate.

It is further claimed that he was guilty of. mismanagement for the reason that after the determination of the action he paid out to his own attorney and the creditors of the assigned estate, the balance remaining in his hands as assignee. Whether the payments were made after or before the final determination of the action does not clearly appear nor do we think it makes any difference. If he has improperly paid out any of the funds of the assigned estate he may be called to account therefor in another proceeding. He is not now before the court to render a general account of his trust and all parties interested in the distribution of the fund are not before us. When such an accounting takes place the creditors interested in the fund will have notice and be entitled to a hearing. Devendorf v. Dickinson, 21 Howard, 275.

We are aware that a different conclusion was reached in the case of Butler v. The Boston and Albany R. Co. (24 Hun, 99), in which case the action was brought by the trustee who then had money sufficient in his hands as such to pay any judgment for costs that should be awarded against him. It was, in that case, held that he, having the means in hand, should have anticipated the possible result of the suit and kept a sufficient amount in order to be able to meet the costs which might be awarded against him, and thus relieve himself from personal liability; that by neglecting to do so he should not be allowed to cast a burden of his own mistake upon his adversary. The court, however in this case has apparently overlooked the fact that the provisions of the Code to which we have alluded permit the court to charge the party personally only in -case of mismanagement or bad faith in the prosecution or defense of the action and not of the estate.

These conclusions are independent of the case of Hone, as Executor, etc. v. De Peyster (106 N. Y., 645; 11 N. Y. State Rep., 309), which case, it appears to us, is conclusive, and settles the disposition of this appeal. In that case it was held to be the disposition of the trial court to deter-the question whether the executor was hable personally for the costs of the action or not; and the court, having charged him in his representative capacity alone, impliedly determined that he was not liable individually; that a collateral attack upon such an adjudication is unauthorized; and, when the liability for costs depends upon the conduct of the party to the litigation during its prosecution, the determination of the court in the action upon such a question is final, unless it is subsequently reversed or set aside by a direct proceeding for that purpose.

The counsel for the appellant boldly contends that this case was not well decided, and should not be followed by this court. We, however, feel differently. It is the decision of our highest court, and is binding upon us; and, furthermore, we are not satisfied that the case was not well decided. The appellant cites numerous authorities to the effect that application must be made to the court for costs. He, however, did not follow that practice in entering the judgment herein, for he appears to have entered it upon the report of the referee without application to the court. But the cases that he relies upon on examination, turn out to be cases of actions brought against executors and administrators, upon claims against the estate of deceased persons; In such cases he is perfectly correct in the view he takes, for an executor or administrator may relieve his estate from costs by consenting to a reference under the statute, and the cases prescribed by sections 1835 and 1836 of the Code of Civil Procedure, are expressly excepted from the provisions of the section under which the motion herein was made. In such cases, a certificate from the judge or referee may be required. But those cases are claims made against the estate of a deceased person. No such provisions exist in reference to actions by or against trustees or assignees; and in the case of Hone v. De Peyster (supra), the action was brought hy an executor. The cases referred to consequently have no application to the one under consideration.

The only case to which our attention has been called, which is in apparent conflict with the views expressed in Hone v. De Peyster, is the case of Slocum v. Perry (38 N. Y., 46). In that case the plaintiffs brought the action as trustees, and on the trial failed to appear. The defendant took the usual order dismissing the complaint with costs, upon which he entered judgment against the plaintiffs personally for the costs of the action. It was held that this could not be done; that no costs could be enforced against them personally without an express order of the court to that effect; that there should be a specific application for such an order founded upon a notice to the other party, in order that he might have an opportunity to repel the .charge of mismanagement or the imputation of bad faith. But this case does not hold that it was not the duty of the trial court to determine the question of costs in awarding judgment. It consequently is not in conflict with the case of Hone v. De Peyster, in this regard. It is distinguishable from that case for the reason that judgment was entered on default without a trial, hearing, or investigation, as to the merits of the action. The court consequently was not and could not be possessed of the facts upon which the claim of mismanagement or bad faith was founded, and under these circumstances the court was of the opinion that a motion was necessary. This is not disputed in the case of Hone v. De Peyster. That case merely holds that it was the duty of the trial court to determine the question.

We are consequently of the opinion that the order should be affirmed, with ten dollars costs and disbursements.

Barker, P. J., Bradley and Dwight, JJ., concur.  