Opinion
05-12-1891
KRAUSE et al. v. MALIGA GLASS & MANUF'G CO. et al.
Allen H. Gangewer, for petitioner. Potter & Nixon, for receiver. Edward B. Learning, for creditors.
On petition to open order distributing an estate in the hands of a receiver.
Allen H. Gangewer, for petitioner.
Potter & Nixon, for receiver.
Edward B. Learning, for creditors.
BIRD, V. C. In August, 1889, the complainant filed his bill asking that the defendant be declared insolvent, and that a receiver be appointed. Edward R. Wood, who had become chiefly interested in the company, filed an answer, resisting thereby some of the allegations in the bill. On the 29th day of October, 1889, several of the creditors, together with the complainant, entered into a stipulation by which the judgment of said Wood and the execution issued thereon were to be relinquished as prior liens upon any of the assets of the company. That stipulation was signed by Wood, the solicitors of the creditors agreeing thereto, and filed with the clerk of this court, but without the court directing it to be filed. The petitioner was aware of the negotiation which led to this stipulation, and objected to the making thereof. It had the approval of the receiver. After this, and on or about the 4th day of January, 1890, the receiver commenced an examination of the said Wood with respect to his claims against the said company, amounting to over $100,000. The petitioner was present at this examination. After the examination had been conducted to the satisfaction of the receiver, or until, as I have every reason to believe, he was satisfied nothing more could be learned from Wood by protracting the examination, he abandoned any further inquiry. The petitioner, being dissatisfied with the result of the examination, applied in person to the court for an order asking the receiver to continue the examination not only of Wood, but several other persons who were associated or in some way connected with the affairs of said company, and praying that he might be permitted to attend such examination, and suggest questions to the receiver to be put to the said parties so to be examined. The petition shows that the order which he prayed for was allowed, and that such examination was had afterwards. From the close of such examination until the present petition was offered there is nothing to show that the petitioner has taken any steps in the cause. That petition last referred to was filed on on the 24th day of May. 1890. In July, 1890, an order was made referring the accounts of the said receiver to John R. Hoagland, who made his report on the 1st day of December, 1890, and filed on the 9th day of January, 1891, on which day an order was made approving and confirming the report, and directing the receiver to make distribution among the several creditor of the funds in his hands, after giving 10 days' notice of his intention so to do to each of the said creditors. Under the stipulation above referred to it became necessary for the receiver to have an accounting with Edward R. Wood before he could ascertain the exact amountwhich each creditor was entitled to. He had such settlement and accounting. On the 18th day of February, 1891, he made a further report to the court, showing the exact amount which he would be able to distribute, upon which report the court made an order directing the distribution among the several creditors of .0585 per cent. of each one's claim. By this settlement referred to, Wood was to be allowed the sum of $121,505.79, upon which he was entitled to his percentage under the stipulation. On the 28th day of April last the petitioner came to the court with his petition, and, among other things, asked "that the case might be opened in order that he might file exceptions to the report heretofore made and filed by said master, and of testing or inquiring into the legality of the aforesaid stipulation, and the power of the receiver to make or enter into the same, and to inquire especially into the account of said Edward R. Wood as a creditor of said company, and of furnishing to the said receiver evidence of its fraudulency and illegality and incorrectness, and of making divers other objections to the illegality and injustice of the said proceedings." The petitioner presents two reasons for his delay in asking for relief as against the claim of Wood. I not only speak of the delay since the filing of the master's report, and the order of the court confirming that report, but the delay intervening between the allowance of Wood's claim by the receiver and the filing of the present petition. The petitioner knew early in the year 1890 that the receiver allowed Wood's claim under the stipulation, and he complained to the court of the action of the receiver, and obtained the permission which he craved to further examine "Wood. From thence until now he has taken no steps to set aside the action of the receiver in that behalf. Considering the attitude which he then assumed, it was his duty to prosecute his objections, and, failing to do this, the fair presumption was that he abandoned his objections. One of the reasons for asking to open the account, that he may file his exceptions to the allowance of Wood's claim, is that he had no notice of the account. It is very clear that, if he had no notice of the actual filing of the account, he had known for along time that Wood's claim had been allowed by the receiver, so that there was no necessity for halting to make resistance thereto until a formal account by the receiver should be filed. And this was really in his mind, as the second reason given for delay makes apparent. He says he had employed counsel to attend to this matter in his behalf, and that he neglected to do it. In this particular the court cannot give him any relief; he must look to his solicitor to whom he had intrusted his affairs. It would be manifestly very wrong to impose the further delay, the vexation, and the cost of further litigation upon the other creditors, who are entirely innocent, and who did not join with the petitioner in his motion, especially when not the slightest foundation has been laid, as will appear. Again, at this late day the court will not entertain a motion by the petitioner looking to his right to assail the stipulation referred to, and the power of the receiver to enter into it. For more than 18 months before the presentation of his petition he knew of such stipulation, and that the receiver, and all of the parties interested therein, were acting and relying upon its validity. Nothing could be more inequitable than to allow the petitioner to stand by with full knowledge of all of the facts and circumstances, seeing the different parties interested acting in compliance with its stipulation, and each one performing his part of the obligations thereunder, and, when nothing more remained to be done by any or either of them, to then permit the petitioner to attack such stipulation. He further asks that the account may be opened, and that he may be permitted to file exceptions thereto as to the amount allowed to said Wood because of fraud in his claim, without in the slightest manner intimating what the fraud consists of. Without any such delay, courts never open accounts, even upon a charge of fraud, unless there be some allegation of fraud which, if proved, would establish the fraud. In this case not a single fact is alleged showing wherein there is fraud in the claim of Wood which had been allowed by the receiver. When to this is added the consideration that the petitioner was present at the examination of Wood by the receiver, and afterwards had special permission from this court, on his own application, to continue such examination, and also to examine other persons respecting the claim of Wood, which he admits in his petition that he embraced and acted upon, to grant the prayer of the petitioner would be, it seems to me, trifling with the administration of justice. I will advise that the petition be dismissed, with costs.