
    ADAMS vs. HASKELL.
    
      Fourth District Court for San Francisco Co.,
    
    
      December, 1857.
    Receivers—Accounts, Powers, and Liabilities of.
    Receivers' accounts should show the amount of property and funds received, as well as disbursements made; and when presented should be verified under oath, as should also the accounts of assignees appointed under the insolvent law of this State.
    If a receiver has made a disbursement without the order of the court, the onus is upon him to prove that it was necessary, or resulted beneficially to the estate, before it will be allowed.
    If a receiver prosecutes suits for debts without an order of court, and fails to recover» as a general rule he will not be allowed his costs and expenditures out of the fund in court. .
    A receiver should not employ as his counsel the attorney of either of the parties to the suit.
    On report of G. A. Grant, Fsq., in the matter of the petition and claim of Cohen, Roman f Jones, assignees appointed in insolvency, of the assets of Adams g Co. for services and disbursements.
    
      Shaffers, Park f Heydenfeldt, for plaintiff.
    
      S. H Dwinelle, for defendants.
    
      Hoge Sf Wilson, for Cohen, Roman & Jones.
   Hager, J.

At or about the time this action was instituted, one of the petitioners, A. A. Cohen, was appointed the receiver therein, and entered upon the performance of the duties of his office. Subsequently Woods, on behalf of himself and his co-partners, Adams Haskell, filed in this court a petition in insolvency, and the petitioners herein, said Cohen, Roman f Jones, were appointed assignees, and as such succeeded Cohen the receiver. Both appointments were made in and under the authority of this court: afterwards, the supreme court held that this court had no jurisdiction in the matter of the proceedings in insolvency, inasmuch as it appeared by the insolvents’ petition, that a portion of the indebtedness sought to be discharged, had been incurred as bankers. (Cohen vs. Barrett, 5 Cal., 195.) The proceedings in insolvency were consequently void ab initio.

Cohen having been regularly appointed receiver, continued as such notwithstanding the proceedings in insolvency, until his removal from office/ Montan §■ Jones, inasmuch as they entered upon ■ the. performance of the duties under the authority of the court, received the, feels in fee custody of .the court, must, in conjunction with ira regarded as quasi receivers, until the decision of the supreme court, July term, 1855, to which I h^ve just- referred. It then, follows that Cohen as receiver, and Homan Jones as quad receivers, became custodians of the property, íce., in the custody... of the law in this action, and are bound, to account to tM& ®wt, and at® entitled to its protection so far as-they-have ectsd/under its authority, or within the powers ordinarily exercised by receivers, of specially conferred upon them by order, or by operation of law. ThefeRecounts either as assignees or receivers, containing a fell account of receipts.and disbursements, should be filed and passed upon ia-Ske manner W if their appointment had been regular.

Receivers’ accounts should show the amount of funds and property received, as well as disbursements made, and when presented should t$8 Verified under oath. This is the chancery rule, and our insolvent law has the same provisions in regard to the accounts of assignees under that act. 3 Dan. Ch, Pr. 1996.

The accounts in this case as reported by the referee, contain no statement of funds, fee., that came to the hands of the petitioners, nor are they verified. It only-contains items of disbursements and claims for services; these are all, with one or two exceptions,- allowed as claimed,, and amount to the sum of $43*492.80 ; of this $15,000 is for t& services of the -petitioners, $5000 being allowed to each, and' the batanee for expenses and disbursements.

ti has heretofore appeared in the proceedings in this action, that the petitioners after their appointment, with the consent of the court, took charge of fee fends and property in its- custody belonging to this suit, feM" after being adjudged guilty of contempt, delivered a portion of the game, upon the order'of the court, to the present receiver, Ufaghe. It higo appears by tW report" that 1Yaglee reeéívsá from petitioners a certificate of depoát for §100,000, as Security for the payment of that sum¿. "Mm® petitioners accounted for those fends? - They went into their possession as quasi receivers, and they should account for them upon a settlement and discharge.' If they have delivered them over to the new receiver, that fact should appear by the accounts and the report of the referee; but they contain no laformation on the subject.

The report of the referee allows to petitioners the sum of i§48,493,80, but is silent as to the amount of money received by them. The. question then arises, how is the sum allowed to be paid ? Erom .out of iho funds still remaining in court, or have petitioaeKS appropriated fas that purpose, a portion of the moneys that cam© iato their possess», ? Have petitioners reserved this sum to cover their disbursements? These are questions that I am unable from anything that appasis ef record, to determine. It seems to me, however, that should I eenSrm this report, the amount allowed would necessarily become a charge upon the fond in court, and y@t the com* would b© without isfomsaitoa as to the trae state of petitioners’ accounts. I ,hsys heretofore m* Bounced that the charges as made or reported upoa, agsinsfc H&3 faad, exceed the amount in court, and until the sum m head to be' dfctrilmted is ascertained, a distribution cannot well be made. I heretofore set aside a portion of the fund, supposing that thefe was soEdent remaining to pay all claims against it, and ordered that, it should &3 distributed among the creditors, which order was removed to the supreme court, and at the last duly tern reversed, all proceedings in this court in the mean time having been stayed by the order of that court.

The charges reported and those claimed against the fend, may fee □Med as follows:

1. Report of Mr, Cleary on claim of Mr. Stanley, for' fee, set aside but undisposed '©£, $20,000 00
2. Report of Mr. Grant in favor" of Cohen, heretofore passed upon, 28,704 $3
8. Report of Mr. Grant in favor of Cohen, Somam, $ Jones, how under consideration, 43,403 80
Total amount, 082,198 18
How by account of receiver Waglee, and report thereon by Mr. Yale, the entire sum in court, after deducting the disbursements allowed the receiver, exclusive of allowance for his services, amounts to" only, 58,385 50
Showing a balance against the fend of •

The two reports of Mf* (Mant:, and' these- by Messrs, JBaifiht Talé, have ¿órne in .recently, wwithin a few weeks past. They are long and voluminous, and. I have disposed of them as soon as-the Other business of the court allowed me time to give them the consideration which their importance demanded. ’When ! ascertain the amount of funde in- court to be distributed? I ató prepared to make a decree. In the-meantime, if any party thinks the fond unsafe,.I will make an order that-it- ' be specially deposited: until it is required for distribution.

By:to -former report .Mr, ‘(hant allowed Mr.- Gohert #10,000 for service8,and $18,704.33 for expenses, &e.;"by this one, he allows him $6600 more for his services, and to ¡Roman and Jones each $5000, and for their expenses $28,493.80, inaking altogether an aUowance to the .thpee fdr .about five months’ services, of- #25,000 00

Andfortbeir expenses, foe., 47,198.13

Showing a gross expenditure of . $72,198 13

The amount to be allowed for services, npt having been-referred, it is not,necessary to- consider it, and . it . only remains to consider the disbursement and expense account. When I set aside the report in ■favor,of Mr. Stanley, I referred tO;iind announced some general principias-of law by which this court would be governed in making allowances for -the expenses,v&c.,-of, receivers. That matter having been carried to the supreme court arid sustained, I have seen no reason to change the views tbep expressed. ; Receivers may at all times protect .themselves by an order-of the court, in making any expenditure. If they proceed without it, the onus is uppri them to show that the expenditure was necessary or has resulted beneficially to the estate, before it should be allowed. If p receiver prosecutes suits for debts without an order from court, and fails to recover, he willnot he allowed , his costs and expenditures out of the funds in court. Tdivards on receivers, pp. - 4,117,159, 530. Smith on receivers, 166. . ,.

The referee'has neglected to report-the testimony as. was required by the order of reference, and I -have no legal evidence before me to determine the validity of the allowances made by the- referee. By the minutes of the referee, it seems -the items of disbursement were generally supported by the testimony of those who received the money, and it does not appear that the larger portion of those allowed were made by order of court, or were neceasaiy ór beneficial £o 'the estate. A great proportion appears to have been paid to various lawyers, among them the attorneys of the plamtiffándof the defendants in the action, for all of which I am unable to find any reason for charging them, against or paying them out of the fund. Heretofore I held that a receiver should not employ as. his counsel the attorney of either of the parties y this,-for-obvious reasons, is a salutary rule, and -yet the petitioners .employed the attorneys of plaintiff and defendants, as appears by the report, and’ paid them large fees. I think that about $¡13,000 is claimed and allowed as. paid to lawyers, yet It does not appear that any of the suits resulted favorably to the estate es _wMi became of them. ■

It also appears that petitioners have"- charged sad had slowed t© them, for which I can find no sufficient authority, a large amorafiaK® clerks, porters; agente,-fee. They had three regular clerks, ®he; Mv. RoMe^Sit a monthly salary of ©400,- and the others, Messrs. IF. JL Géívzri and Bomm, at 6S6ÍL To SoMe alone appears to,haw lees® slowed for satoy cad exgem», ©2435,-of which sum ©50© x:a for extea cervices while fit the same fee it seems he vaa an ei^í&yó/ of the Pacific Express Company.

But I deers it unnecessary to review the report in detail. - Bh'fea. it-is defective, ysad even oh'cuM this he waived, its sabotease SoK&efo that I feel anwiiling to give it nay approval. BhoiiM I contim' end adopt it, it right entitle petitioners to a claim upon the Sind in. court, which 'would nearly absorb the balance as reported by Mr. 2M¿S ■without iaforiw ife ix-hag TJefero the court of the amount of funds justly fergeaMe against petitioners, or any satisfactory. evhiea,e® of the ferns mount petitioners sirs entitled tsyfe expenses and dlcfe'semenfe

The report is set aside.  