
    Matter of the Application of the New Paltz and Wallkill Valley Railroad Company, for Dissolution.
    (Supreme Court, New York Special Term,
    May, 1899.)
    Corporations — Expenses of voluntary dissolution and appointment of receiver made a first charge on fund.
    Where the directors of a corporation, which has issued first mortgage bonds, apply for a voluntary dissolution and for the appointment of a receiver in order to protect the corporate property, the expenses of the application may properly be made a charge to be first paid by the receiver out of the funds in his hands, although he was not appointed in an action brought by the bondholders or their trustee.
    This was a . motion by the • first mortgage bondholders of The Mew Paltz & Wallkill Valley Bailroad Company, to modify a portion of an order made in the. proceedings for voluntary dissolution. That portion of the order referred was as follows: “ Ordered that the expenses of the Dissolution Proceedings herein, consisting of printing, advertising, attorneys’ fees, referee and stenographers’ fees and disbursements, amounting to the sum of $1,919.09, be paid out of the funds in the hands of James Q-. Graham, Esq., Temporary Beceiver, and in case such funds should prove insufficient, the. same to constitute a first charge upon the property coming into the possession of said Edward Browne, Esq., as Permanent Beceiver.”
    Hyde & Leonard, for motion.
    James Harold Warner, opposed.
   Truax, J.

In instituting these proceedings the defendants were acting as trustees and the expenses they incurred while so acting, were incurred in preserving the "property, and should, be paid out of the funds in the hands of the receiver before all other liens, although the -receiver was not appointed in an action brought • by'the bondholders or their trustee. Union Trust Co. v. Illinois Midland R. Co., 117 U. S. 434.

It was held .in Barnes v. Newcomb, 89 N. Y. 108, that where the officers óf an insolvent corporation believe it to.be solvent, and have reasonable grounds for such belief,' it is their duty to oppose an application for the dissolution of the corporation and their reasonable expenses in so doing should be allowed to them to be paid' out of the funds in the hands of the receiver.. It seems to me that if such expenses' should he allowed, it is right to allow the. expenses, incurred in protecting the property by procuring the appointment of a receiver, especially in view of the fact that the directors of the corporation who apply for the appointment of the receiver, and the dissohitipn .of the’ corporation, are not personally liable to the attorney for his services in the matter. Drew v. Longwell, 81 Hun, 144.

The referee.has consented that his fee be reduced to the sum; of $200, 'and the moving party hereto acquiesces. To that extent the order heretofore made will be modified. In other respects the" motion is denied, without costs.'

Order modified, and motion denied, without costs.  