text:
    THE TOWN OF KIRKWOOD, Appellant, v. DAVID NEWBURG and Others, Respondents.

      Boards of supervisors — power of, to compel towns to build a bridge — 1875, chap. 482, sec. 1, sub. 6, as amended by chapters 257 of 1876 and 451 of 1885.
    Subdivision 6 of section 1 of chapter 482 of 1875, as amended by chapter 257 of 1876 and chapter 451 of 1885, authorizes hoards of supervisors, upon the application of one town, to legally enact a law requiring a stream forming the boundary between two towns to be bridged at the joint expense of said towns, and compeling each town to raise money to pay its share of the expense by an issue of bonds. , ■ . . ■
    Appeal from a judgment dismissing the complaint, entered in Broome county upon the trial of this action by the court without a jul7-

      Alexander Gumming, for the appellant.

      A. D. Wales, for the respondents.
   Follett, J.:

Appeal from a judgment dismissing the complaint, with costs, entered upon the decision of a Special Term. There is no dispute about facts, wliicli were agreed upon as they are stated in the decision, which contains but a single conclusion of law' — -that the defendants are entitled to a judgment dismissing the complaint upon the merits, with costs — which was duly excepted to by the plaintiff.

Subdivision 6 of section 1 of chapter 482, Laws of 1875, as amended by chapter 257, Laws of 1876, and chapter 451, Laws of 1885, empowers boards of supervisors “ to authorize any town or towns liable or to be made liable to taxation for the erection, care repair and maintenance, in whole or in part, of any bridge, * * * to erect, repair and maintain the same, and to borrow such sums of money, in the manner provided in subdivision twenty-nine of this section, as may be necessary for the purposes of such erection, repair and maintenance, and to pay any debt incurred in good faith by or in behalf of such town or towns for such purpose before or after the passage of this act. But no authority shall be exercised under this subdivision, except upon the application of a town liable to be taxed for such purpose, to be made by vote of a majority of the electors thereof voting at a regular town meeting, or at a special town meeting mailed for the purpose, or upon the application of the supeiwisor, by and with the consent of the commissioner of highways, town clerk and justices of the peace of such town. If any town, at a regular town meeting held between the first day of February, eighteen hundred and seventy-five, and the passage of this act, shall have elected commissioners for the purpose of building a bridge and providing money to pay for the same by the issuing of bonds or otherwise, such bonds, not exceeding the amount authorized at such town meeting, are hereby authorized and declared valid; but such bonds shall not be sold or otherwise disposed of for less than par. And the board of supervisors shall levy a tax on such town for the payment of such indebtedness at such times and in such amounts as may he necessary to meet the obligations incurred by said commissioners in pursuance of instructions given by such town at the time of electing said commissioners.”

Subdivision 29 of this section empowers boards of supervisors to authorize any town to issue bonds and borrow money thereon for the purpose of erecting, repairing and maintaining a bridge pursuant to subdivision 6, above quoted. (2 R. S. [7th ed.], 947.) The towns of Kirkwood and Conklin are divided by the Susquehanna river. December 24, 1884, at a special town meeting duly held in the town of Kirkwood, it was determined by a majority of the electors voting thereat not to apply to the board of supervisors of the county of Broome for authority to construct the iron bridge in question; and said town has not, by its officers or in any manner, applied to said board for authority to construct said bridge, or for authority to issue bonds to raise money wherewith to pay any part of the expense of building it.

August 25, 1885, at a special town meeting duly held in the town of Conklin, the following resolution was duly adopted by a majority of the electors voting thereat:

Resolved, That the town of Conklin hereby decides and declares that application shall be made at the earliest possible moment to the board of supervisors of the county of Broome for authority to construct an iron bridge across the Susquehanna river at or near the south line of Tracy R. Morgan’s farm in town of Kirkwood, between the towns of Kirkwood and Conklin, at a cost not to exceed $15,000 at the joint expense of the towns of Kirkwood and Conklin, and to borrow money and issue bonds therefor in accordance with the provisions of chapter 482 of the Laws of 1875, and the several acts amendatory thereof, as the board of supervisors may prescribe.”

December 19, 1885, the board of supervisors acted upon said application, and by bill No. 35 authorized the towns of Conklin and Kirkwood to construct said bridge at their joint expense, not exceeding $15,000, and to issue bonds and borrow money thereon to defray the expense thereof. No action was taken, under this bill, by either town. Prior to March 18, 1886, there was no bridge across said river at or near the site of the bridge in question, and no highway in either town approaching the river at or very near to the site of said bridge. March 18, 1886, the board of supervisors of Broome county, by bill No. 3-7 (tenth finding) appointed, pursuant to chapter 314 Laws of 1838, as amended by chapter 164, Law's of 1848 (2 R. S. [7th ed.], 928, 929), commissioners to lay a highway in the town of Kirkwood; beginning at the Binghamton highway and extending along, or near the south line of Tracy R. Morgan’s farm to the boundary line between said towns in the center of said river, there to connect with a highway laid out, or to be laid out, in the town of Conklin. March 19, 1886, said board of supervisors repealed said bill No. 36 by bill No. 38 (eighth finding), and thereafter, but on the same day, passed bill No. 39, authorizing said towns to construct said bridge at their joint expense, but not to cost more than $15,000. For the purpose of carrying said act into effect, the defendants were appointed commissioners for the town of Kirkwood, and three other persons were appointed commissioners for the town of Conklin and authorized to build said bridge; and the commissioners of each town were authorized to issue and raise money upon bonds for the purpose of paying the share of . each town of the expense of building said bridge. Between March 18 and March 26,1886, the commissioners appointed by bill No. 37' laid a highway in the town of Kirkwood as authorized by said bill, connecting with a highway then laid from the center of said river into the town of Conklin. (Eleventh finding) March 26, 1886, the defendants, as commissioners of Kirkwood and the commissioners of Conklin contracted with the King Iron Bridge and Manufacturing Company to erect an iron bridge upon said site before September 1, 1886, for $13,780. March 29, 1886, this action Was begun to restrain, defendants from issuing bonds or borrowing money on the credit of the town wherewith to build the bridge, and a temporary injunction was issued restraining the defendants from issuing bonds, or creating an obligation for that purpose; which remained in force until August 2, 1886, when it was vacated.

Chapter 419 Laws of 1886, passed May 19, 1886, assumes to, and by its language does validate and confirm the aforesaid bills numbers thirty-eight and thirty-nine, passed by said board of supervisors March 19, 1886; which bills are, by said act, declared to be legal and valid. At the time of the trial of this action (January 18,1887), the bridge had been nearly completed, but whether bonds were issued by the defendants after the injunction was vacated and before the trial of the action, does not appear. The amended Constitution forbids the enacting of local bills laying out highways, or providing for the building of bridges, and commands that such cases shall be provided for by general laws. (Art. 3, § 18.) The Constitution also commands that: “ The legislature shall, by general laws, confer upon the boards of supervisors of the several counties of the State such further powers of local legislation and administration as the legislature may from time to time deem expedient.” (Art. 3, § 23.) Pursuant to this provision, chapter 451, Laws 1885’,, and the acts amendatory thereof were passed. The plaintiff' does not claim that the statute is unconstitutional, but that it does not confer power upon boards of supervisors to appoint commissioners for a town and compel it to unite with an adjoining town in building a new bridge, where none had previously existed,, and issue bonds for the expense thereof, upon the application of the adjoining" town.

The legislature may compel a town to open- a new highway, construct the necessary bridges therefor and borrow the money on its bonds to pay the expense. (People ex rel. McLean v. Flagg, 46 N.Y., 401; People v. Meach, 14 Abb. N. S., 429,) Bill No. 39 is not invalid because at the date' of its passage the highway, of which the bridge was to form a part, had not then been laid. (People v. Flagg and People v. Meach, supra.) It is elementary law, that when a legislative' body has power to direct the’ performance of an act, it may, unless forbidden, select the agents by which the act shall be performed. The commissioners appointed to build the bridge and issue the bonds, are not officers of the town of Kirkwood, and within the second section of the tenth article of the Constitution, and it does not require that they be elected by the electors, or appointed by the authorities of the town. (People ex rel. Kilmer v. McDonald, 69 N. Y., 362.) The minor questions having been disposed of, there remains for consideration the principal question, and upon which the decision of this case turns : Whether subdivision 6, above quoted, authorizes boards of supervisors, upon the application of one town, to legally enact a law requiring a stream forming the boundary between two towns to be bridged at the joint expense of said towns, and that each town shall raise money to pay its share of the expense by an issue of bonds.

Chapter 314, Laws of 1838, as amended by chapter 164 of the Laws of 1848 (2 R. S. [7th ed.], 928, 929), authorizes boards of supervisors to require the construction of a highway extending into, or through adjoining towns. It is found (10th finding), and is undisputed, that the conditions existed which authorized the board of supervisors to pass the bill (No. 37), requiring the construction of the highway of which this bridge is a part, and that said bill was Dassed in the mode prescribed by the statutes. By this bill, Kirk-wood was, “to be made liable to taxation for the erection, care, repair and maintenance * * * in part of any (tbis), bridge,” and when tbe highway had been laid by the commissioners pursuant to said bill, Kirkwood was liable to taxation for the construction of said bridge, and thus was brought within the class of towns specified in the first paragraph of subdivision 6.

The clause of subdivision 6, limiting the powers of boards of supervisors to legislate in respect to this subject, read in 1875: “ But no authority shall be exercised under this subdivision, except upon the application of the town or towns liable to be taxed for such purpose to be made by ” the electors or certain specified officers “of such town or towns respectively.” In 1876 this clause was amended by striking out the words “the town or towns” (above italicised), and inserting in lieu thereof a town,” and by striking out the words “ or towns respectively ” (above italicised), so that the clause read: “ But no authority shall be exercised under this subdivision except upon the application of a town liable to be taxed for such purpose to be made by” the electors or certain specified officers of such iovm. This clause was not changed by chapter 451, Laws of 1885, and it stands as enacted by chapter 257, Laws of 1876.

Before the amendment of 1876 boards of supervisors could not, under this subdivision, authorize or compel adjoining towns to unite in building and paying for a bridge over a stream separating the towns without an “ application of the * * * towns (both towns) liable to be taxed for such purpose.” The change made in 1876 was for some purpose, either to restrict or enlarge the powers of supervisors. It is evident that their powers are not restricted by the amendment, and we think the substitution of the phrase “ except upon the application of a town liable to be taxed for such purpose ” for the phrase “ except upon the application of the town or towns liable to be taxed for such purpose,” and striking from the end of ihe restriction clause the words “ or towns, respectively,” evince an intention to enlarge, and does enlarge the powers of the supervisors so they may authorize the construction of such a bridge and provide the means to pay the expense, upon the application of either of the interested towns.

It is urged that if upon the application of one town the board of supervisors may authorize, it cannot compel the town not applying to unite in building and paying for a bridge; that the board may permit but cannot compel a town to act. When a body with legislative power lias authority to authorize the performance of a public act or duty it may, unless restricted, compel the performance of the act or duty. (Mayor v. Furze, 3 Hill, 612; People ex rel. Otsego Co. Bank v. Supervisors, 51 N. Y., 401.) Many cases sustaining this proposition are cited in the opinion of Justice Maimin (delivered when this case was before him op. demurrer), which contains a satisfactory discussion of the two principal questions involved in this action.

The framers of the Constitution intended that the power theretofore residing in and frequently exercised by the legislature, to compel towns to construct and pay for necessary highways and bridges, should be delegated by the legislature to and exercised by boards of supervisors, which the legislature intended to do by passing the statute under consideration. When a power, remedial in its nature, is conferred it is to be liberally construed, and all of the ordinary and appropriate means to execute it are to be deemed to be a part of the power itself. (Story’s Const., §§ 429, 430.)

The judgment is affirmed, with costs.

Hardin, P. J., and Boardman, J., concurred.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Follett, J.: Merwin, J.

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF NEW YORK v. E. REMINGTON & SONS.

      Insolvent corporations — preference given to employees and laborers, for wages, by chapter 376 of 1885 — not applicable to wages earned before its passage — the preference is not assignable prior to the appointment of a receiver — not transferred by orders of laborer — it is lost by accepting the note or check of the company in place of such orders — a superintendent, attorney, or agent selling on a commission is not preferred by the statute.

    A judgment having been entered in this action adjudging that the defendant corporation (organized under chapter 40 of 1848) was insolvent, and directing that its property be converted'into money and distributed among its creditors, various persons presented claims to the receiver claiming that they were to he paid in preference to every other debt or claim, under the provisions of chapter 376 of 1885, which took effect on May, 1885, and reads as follows: “Whore a receiver of a corporation, created or organized under the laws of this State, and doing business therein, other than insurance and moneyed corporations, shall be appointed, the wages of ihe employees, operatives and laborers thereof shall be preferred to every other debt or claim against such corporation, and shall be paid by the receiver from the moneys of such corporation which shall first come to his hands.”
    Upon an appeal from an order made at a Special Term allowing certain of these alleged preferred claims and disallowing others:

      Ileld, that as this statute confers upon a class of persons, having a specified contractual relation with corporations, new and unusual privileges and securities which diminish the rights and securities of all persons having claims, not within the favored class, it is in derogation of the common law and it should not be extended to cases not within the reason as well as within the words of the statute, nor should it be given a retroactive effect.
    That wages earned by and due to laborers prior to the passage of the act were not entitled to a preference.
    That orders drawn on the defendant by laborers, to whom the corporation was justly indebted for wages earned since the passage of the act of 1885, request, ing- the defendant to pay to a person therein named a certain sum of money and charge the same to the account of the drawer, did not effect an assignment of the wages due to the drawer, and that the payees therein named were not assignees of the wages of the laborers or entitled to be preferred under the act.
    That the preference secured by this statute is not a lien upon the property of the corporation, and does not become a vested, potential or expectant legal right until a receiver is appointed.
    That before the appointment of a receiver laborers have no right or interest capable of assignment, but that after or at the very moment of his appointment the preference springs into existence and becomes a legal right, which is assignable.
    Upon the surrender of orders, drawn by laborers for wages due to them, by the payees therein named, the defendant charged them to the accounts of the drawers, and, at the request of the payees, credited the payees with the amounts of the orders upon open accounts with them, or gave to them its promissory notes for the aggregate amount of several such orders, due three months after date, or its checks therefor drawn on its banker. The said accounts, notes and checks being unpaid at the time of the appointment of the receiver, the owners thereof claimed a preference under the act.

      Held, that when the payees surrendered these orders to the defendant, and received in lieu thereof its promise to pay the sums, three things were accomplished:

      First. The laborers’ debts were wholly or partly paid.

      Second. The laborers’ wages were, to the amount ropresented by the surrendered orders, paid and discharged.

      Third. The defendant, by its new promises, became indebted to third persons. That the preference was extinguished.
    Laborers to whom the defendant was indebted for wages, accruing subsequent to the passage of the act, received from it its promissory notes, on time, which notes were by the laborers duly transferred to third parties, who now hold the same for value.

      Held, that the preferences created by the statute were not thus assignable, and these claimants were not entitled to a preference. (Merwin, J., dissenting.)
    Laborers in payment for merchandise then sold and delivered to them by a merchant, drew and delivered to the merchant an order on the defendant for a portion of the wages then due and earned after the passage of the act, which the merchant never presented but still continues to hold, the amount thereof appearing on the book of the defendant to the credit of the laborer.

      Held, that the orders did not amount to an assignment of the whole or any portion of the sums due from the defendant to the drawers; and further as the preference given by the statute was not assignable, prior to the appointment of the receivers, these claimants were not entitled to a preference. (Merwin J., dissenting.)
    Persons who had received orders from defendant’s superintendent, who was employed at an annual salary, and from an attorney, to whom the defendant was indebted for professional services, surrendered such orders to the defendant, and received in exchange its promissory notes due three months from date, which remained unpaid when the receiver was appointed.

      Held, that the holders were not preferred, under the statute, because:

      First. The superintendent and attorney were not “ employees, operators or laborers,” nor were their earnings “ wages,” within the meaning of the statute.

      Second. Their earnings were not assigned to the holders of such orders but were, by the surrender of the orders, paid by the defendant.

      Third. Prior to the appointment of the receivers the superintendent and attorney could have had no preference which was assignable.
    Claims were presented by persons to whom the defendant furnished stock from which, rooms in which, and power and machinery with which to manufacture parts of machines and implements, for which manufactured articles defendant agreed to pay a fixed price, said persons employing, discharging and paying their own laborers.

      Held, that such persons were not entitled to a preference under the statute.
    The cases bearing upon this question collated and considered.
    A claim was presented by a person who had been employed upon an annual salary of $2,000, with a commission of two per cent, to 'sell goods in China, the defendant paying all necessary traveling- expenses.

      Held, that neither the salary nor the commissions were wages within the meaning of the statute.
    Appeals from an order made at the Jefferson county Special Term and entered in Iierlcimer county, allowing and disallowing claims presented to the receivers of the defendant corporation, by creditors wbo claimed to be entitled to a preference over all other creditors under the provisions of chapter 376 of 1885.
    April 20, 1886, this action was brought under sections 1785 and 1786 of the Code of Civil Procedure, by the attorney-general, to procure a judgment dissolving the defendant (a corporation organized under chapter 40, Laws of 1848, and the laws amendatory thereof and supplementary thereto), and distributing the avails of its property among its creditors, because it then was, and for at least one year had been, insolvent, and during that time had neglected to pay and discharge its notes and other evidences of debt. By an order dated April 21,1886, Addison Brill and Albert N. Bussell were appointed temporary receivers of defendant’s property pursuant to section 1788. At the same date a temporary injunction was issued in the action restraining defendant’s officers and creditors pursuant to sections 1787 and 1806. The defendant made default in the action, and June 5, 1886, a judgment was entered adjudging that defendant then was, and had been for at least one year, insolvent, that it had forfeited its corporate rights, and directing that its property be converted into money and distributed among its creditors. By this judgment, said temporary receivers were continued as permanent receivers, pursuant to section 1788, and the temporary injunction of April 21, 1886, was continued. Various persons claimed to be preferred, under chapter 376 of the Laws of 1885, which took effect May 29, 1885. A reference was ordered to ascertain the facts; and upon the coming in of the referee’s "eport, the Special Term, by an order granted March 12, and entered March 19, 1887, disallowed the claims of all persons except those embraced within classes 11, 12 and 13, which were allowed.
    No appeal has been taken from the allowance of the claims embraced within classes 11 and 12, which embraces the eases of employees or laborers to whom the defendant was indebted for wages due for services rendered subsequent to the passage of the act for which the corporation had executed and delivered its promissory notes on time, which notes have not been paid. The notes in one case not bearing interest, and being issued purely for the accommodation of the defendant and in the other bearing interest and issued at the request of the employee or laborer. The people and the receivers appeal from the allowance of the claims embraced within class 13 ; and the claimants embraced within the rejected classes appeal from the parts of the order rejecting their claims.

      Edwin H. Risley and Mead & Stranahan, for claimants, appellants.

      The Attorney-General, for the plaintiff, respondent.

      Francis Eerncm and Thomas Richardson, for receivers, respondent.
   Follett, J.:

Chapter 376 of the laws of 1885, provides : “ Where a receiver of a corporation created or organized under the laws of this State, and doing business therein, other than insurance and moneyed corporations, shall be appointed, the wages of the employees, operatives and laborers thereof shall be preferred to every other debt or claim against such corporation, and shall be paid by the receiver from the moneys of such corporation which shall first come to his hands.”

The defendant, from time to time became indebted to its laborers in divers sums for wages earned after the passage of said act, and before, the appointment of said receivers; against which sums so due to the laborers they were accustomed to draw orders on defendant due on demand, payable to the order of merchants and dealers for small sums, which orders were delivered to the payees by the laborers in payment for goods then or previously purchased. Upon the presentation of such orders the defendant charged them to the accounts of the drawers, and in the cases embraced within class number 1, credited the payees with the amounts of their orders upon open accounts; upon which accounts the defendant was indebted to the claimants embraced in this class when the receivers were appointed.

In the cases embraced within class 2, the orders so drawn by the laborers and charged to them by the defendant, were aggregated from time to time by the payees and the defendant; and thereupon the payees received the defendant’s promissory notes due three months after date, for the amounts so aggregated; which notes were unpaid when the receivers were appointed.

In the cases embraced within class 3, the orders so drawn by the laborers and charged to them by the defendant, were credited by the defendant to the payees; who from time to time drew their orders on defendant to the order of other persons, by whom such second orders were presented to the defendant, the amounts aggregated from time to time, and thereupon the payees received the defendant’s promissory notes due three months after date, for the amounts aggregated; -which notes were unpaid when the receivers were appointed.

In the cases embraced within class 5, the payees of defendant’s notes taken in exchange for the orders of laborers, received from defendant part payment of said notes, and defendant’s new notes for the remainder, due three months after date; which new notes were unpaid when the receivers were appointed.

In the cases embraced within class 6, the payees of notes which were received in exchange for the orders of laborers, accepted, at the maturity of the notes, defendant’s checks on its banker for the amounts of the notes, which checks, wei’e dishonored and unpaid when the receivers were appointed.

In the cases embraced within class 7, the payees of defendant’s promissory notes given in exchange for the orders of laborers, drawn in favor of said payees, had indorsed and negotiated said notes before due, to indorsees for value received, who purchased the same in good faith; which notes were unpaid when the receivers were appointed, have been dishonored, duly protested and are now held by said indorsees.

In the cases embraced within class 8, the indorsees of notes which were received in exchange for the orders of laborers, at the maturity of said notes, accepted of defendant new notes, on time, in lieu of the original notes, and thereby releasing the indorsers upon the original notes which new or substituted notes were unpaid when the receivers were appointed, have been dishonored, duly protested and are now held by said payees.

■In the cases embraced within class 16, the defendant’s promissory notes drawn on time, partly in payment for good.? sold by the payees to the defendant, and partly in exchange for the orders of laborers, drawn to the order of said payees on said defendant, were unpaid when the receivers were appointed and have been dishonored.

Class 17 embraces claims which arose by payees of laborers orders surrendering them to defendant and receiving credit therefor in an open account containing credits for goods sold to defendant by said payees; against ."which said creditors, under said account, so created, drew orders on said defendant to the order of various drawees; who afterwards surrendered their orders to defendant and received credit therefor on defendants’ books, upon which accounts so last created, the defendant was indebted when the receivers were appointed.

Class 18 embraces claims which arose by the payees of laborers’ orders surrendering them to defendant and receiving credit therefor in an open account, against which said creditors, under said accounts so created, drew orders on defendant to the order of various drawees, who afterwards surrendered their orders to defendant and received credit therefor on defendant’s books; upon which accounts so last created, the defendant was indebted when the receivers were appointed.

These orders are payable generally, and not out of a particular fund. Orders for the payment of money on demand do not effect an assignment of funds in the drawee’s hands sufficient to pay them unless the orders are, by their terms, payable out of a particular fund specified in the orders. (Kelley v. Mayor, etc., 4 Hill, 263; Marine and Fire Ins. Bank v. Jauncey, 3 Sandf., 257; Hutter v. Ellwanger, 4 Lans., 8, 13; Munger v. Shannon, 61 N. Y., 251, 255; Shaver v. Western Union Telegraph Co., 57 id., 459, 464; Attorney-General v. Continental Life Ins. Co., 71 id., 325, 328; Brill v. Tuttle, 81 id., 454, 457; Pom. Eq. Juris., § 1280.) If the defendant had accepted of these orders in writing, it would have been liable for their full amount, even though the drawers had not sufficient funds to their credit to pay them. The drawee of an order, payable out of a particular fund, which operates by way of an assignment, is not liable for more than the amount of the particular fund. This difference is said to be a sure test for determining whether an instrument is an assignment or a bill of exchange. (Munger v. Shannon, supra; Pom. Eq. Juris., § 1280.) These orders being, in legal effect, bills of exchange, the payees could not have maintained actions on them against the defendant, though in funds, until it had accepted them. (1 R. S., 768, § 6; Ætna Nat'l B'k v. The Fourth Nat'l B’k, 46 N. Y., 82; Duncan v. Berlin, 60 id., 151.) When a bill of exchange, or an order, payable generally, is accepted, the holder’s right of action is on the acceptor’s new promise, and not as assignee of, and upon the acceptor’s old promise or liability to the drawer. (Cowperthwaite v. Sheffield, 3 N. Y., 243, 251; Pom. Eq. Juris., § 1284.) The claimants within these classes are not assignees of the wages of the laborers; nor did these claimants acquire a right of action on the orders against the defendant.

So far as these claimants are concerned, it is unnecessary to determine whether the preference given by this statute is assignable before receivers are appointed; but all of the claims cannot be determined without meeting this question. The preference secured by this statute is not a lien upon the property of the corporation, and does not become a vested, potential or expectant legal right until a receiver is appointed. (Beaston v. Farmers Bank, 12 Pet., 102; Brent v. The Bank of Washington, 10 id., 596; Anderson v. The State, 23 Miss., 459.) Before the appointment of a receiver, laborers have no right or interest capable of assignment. The cases arising under the manufacturers’ act are not authorities for the position that the preference under consideration is assignable before a receiver is appointed. The tenth, twelfth, fifteenth and eighteenth sections qf the manufacturers’ act impose liabilities upon stockholders and trustees in favor of creditors and laborers. Under the tenth and eighteenth sections, the liability arises with the debt, and is attendant upon it. Under the twelfth and fifteenth sections, the liability is for existing debts, without reference to whether they are held by original creditors or assignees; it arises when the default occurs, attaches to the then existing debts and attends upon them. The preference given by this statute is, undoubtedly, assignable after a receiver is appointed, or at the very moment the preference springs into existence, and becomes a legal right. The cases in the federal courts holding that the preference given to the United States by statute, belongs to the surety who pays the debt of his principal, are not in point, because the statutes give the surety the same priority that is secured to the United States. (U. S. R. S., § 3468; 1 U. S. Stat. at Large, 676; Laws of 1799, § 65, chap. 22.) Had the laborers made formal assignments of their wages before the receivers were appointed, the assignees would not have acquired a preference,

Did the transaction amount to a payment of the wages of the laborers % "When the payees surrendered these orders to the defendant and received in lieu thereof its promise to pay the sums (which promises were evidenced by its promissory notes, or by credits upon its boohs), three things were accomplished: (1.) The laborers’ debts were wholly or partly paid. (2.) The laborers’ wages were, to the amount represented by the surrendered orders, paid and discharged. (3.) The defendant, by its new promises, became indebted to third persons. This is payment by delegation, which is a hind of novation. (2 Pars, on Con., 129 ; 2 Chitty on Con. [11th Am. ed.], 1376; Dom. Civ. Law, book 4, tit. 4, art. 1, 7 [1 Cush. ed., 919, 921].) Domat and Parsons treat of delegation and novation under thejhead of payment. "When a debt is paid, no matter how, all collateral obligations held by the creditor for the security of the debt, whether imposed by law or given by the obligor, are released, or cease to exist. (Dom. Civ. Law, book 4, tit. 1, § 1, art. 8 ; Book 4, tit. 3, § 1, art. 5 [1 Cush, ed., 894, 916].) The preference given by chapter 376, Laws 1885, is impressed by the statute upon the avails of the property of the corporation in the receiver’s hands for the payment of the debts due for wages; and whenever the wages are paid the preference is extinguished. These principles are elementary, and their statement seems to be a sufficient discussion of whether the claims embraced within classes 1, 2, 3, 5, 6, 7, 8, 16, 17 and 18 are paid.

Class 4 embraces the claims of persons who received orders from defendant’s superintendent (employed at an annual salary), and afterwards surrendered such orders to defendant and received in exchange its promissory notes due three months after date, which notes were unpaid when the receivers were appointed

Class 9 embraces the claims of persons who received orders from an attorney to whom defendant was indebted for professional services, and afterwards surrendered such orders to defendant and received in exchange its promissory notes due three months after date, which notes were unpaid when the receivers were appointed.

These claimants are not preferred under the statute, because •- (1.) The superintendant and attorney were not “ employees, operatives or laborers,” or their earnings, “ wages,” within the meaning of the statute. (See discussion of classes 10, 19 and 20.) (2.) Their earnings were not assigned to tbe claimants, but paid by the defendant, as before shown. (.3.) Prior to the appointment of the receivers, the superintendent and attorney had no preference which was assignable.

Class 10 embraces the claims of attorneys for professional services rendered, some of which have been liquidated, and others unliqui-dated. The liquidated claims are evidenced by defendant’s promissory notes, or by credits on its books. The burden is upon persons claiming preferences to bring themselves, by evidence, within the statute. It does not appear that the attorneys were employed for any particular period, or at a price agreed upon, and the sums due them for professional services rendered upon occasional retainers, are not wages ” within the meaning of this statute. The word wages ” has a less extensive meaning, and embraces a smaller class of credits than “ earnings.” (Jenks v. Dyer, 102 Mass., 236; Somers v. Keliher, 115 id., 167.)

By a statute of the State of Alabama “ the wages of laborers and employees” are not subject to garnishment or attachment, except for public dues. It was held (S. & N. A. R. R. Co. v. Falkner, 49 Ala., 115), that the salary of the president of a railroad company was not exempt from garnishment. It was said the president of a railroad company cannot be said to be a laborer or employee within the meaning of this law. The term 'wages’ indicates inconsiderable pay, without excluding " salary,’ which is suggestive of larger compensation for personal services. But its application to laborers and employees certainly conveys the idea of a subordinate occupation which is not very remunerative; one of not much independent responsibility, but rather subject to immediate supervision.” The difference between salaries and wages is discussed in Codwin v. Huff (10 Ind., 83) and McLellan v. Young (54 Ga., 399).

Class 13 embraces the claims of laborers for wages earned and due prior to the passage of this act (May 29, 1885), and are evidenced by credits upon defendant’s books. This statute confers upon a class of persons having a specified contractual relation with corporations, new and unusual privileges and securities which diminish the rights and securities of all persons having claims, and not within the favored class, is in derogation of the common law and it should not be extended to cases not within the reason, as well as within the words of the statute, nor should it be giren a retroactive effect. Statutes favoring one class at the expense of others will not be construed to have a retroactive effect unless the statute provides that it shall have such effect. (McCahill v. Hamilton, 20 Hun, 388; People ex rel. Newcomb v. McCall, 94 N. Y., 587; United States v. Bryan, 9 Cranch, 374; Potter’s Dwarris Stat., 162, note). Wages earned by and due to laborers prior to the passage of the act are not entitled to a preference.

Class 14 embraces the claims of creditors holding the orders of laborers drawn in their favor which have never been presented to defendant. These orders not amounting to an assignment of the whole, or of any part of the sums due from defendant to the drawers (laborers), and the preference given by the statute not being assignable, these creditors are not entitled to a preference under the statute.

Class 15 embraces the claims of the holders of promissory notes given by defendant to its laborers for wages and afterwards indorsed by the laborers to the claimants. The preference created by the statute not being, assignable, these claimants are not entitled to a preference under the act.

Class 19 embraces the claims of persons to whom defendant furnished stock from which, rooms m which, and power and machinery with which, to manufacture parts of machines and implements, for which manufactured articles defendant agreed to pay a fixed prioe. Said persons, employed, discharged and paid their own laborers. On such contracts considerable sums were due when the receivers were appointed.

A person who contracts to do a specific portion of work in constructing a railroad, and employs others to do, or aid in doing, the work, is not a laborer' or servant within the tenth section of chapter 140, Laws 1850 (the railroad act). (Aikin v. Wasson, 24 N. Y., 482.)

Section 12 of the railroad act provides that if contractors fail'to pay their laborers, the corporation shall be liable to pay for thirty day’s labor. A laborer working with his team and his hired man, at an agreed price per day, cannot recover under this section for the labor of the team or hired man. (Atcherson v. Troy and Boston R. R. Co., 1 Abb. Ct. App. Dec., 13; S. C., 6 Abb. [N. S.] 329; Cummings v. The N. Y. and O. M. R. R. Co., 1 Lans., 68; Balch v. The N. Y. and O. M. R. R. Co., 46 N. Y., 521.)

Chapter 37, 1 and 2 Will., 4 (the truck act), made it unlawful for employers engaged in certain trades to pay the wages of artificers ” in anything except the current coin of the realm. By the twenty-fifth section of the act, “ all workmen, laborers and other persons in any manner engaged in the performance of any work, employment or operation of what nature soever, in or about the several trades or occupations aforesaid, shall be and be deemed artificers.” Miners of coal and clay, iron-workers, knitters and weavers were within the act. A person contracted to take clay out of a cut for a certain sum per cubic yard, and employed eight or nine men to work with him. After being partly paid in coin and partly in goods, the plaintiff sought to recover in coin the part of his wages paid in goods; but it was held (Riley v. Warden, 2 Exch., 59) that he was not an artificer, or at work for wages, within the act.

Pake:, B., said: “Now it appears to me that, upon the true construction of this act, it is to be taken as applicable to those persons only who strictly contract as laborers; that is, to such as enter into a contract to employ their personal services, and to receive payment for that service in wages. * * * It seems to me that this act was intended to be applied to those who engage to do a work by their own personal labor, and that the object of it is to protect such men as earn their bread by the sweat of their brow, and who are, for the most part, an improvident class, and that it was not intended to have any application whatever to persons who take work upon a great scale.”

Rolfb, B., said: “ It appears to me to be clear, upon looking at this act of parliament, that it applies only to those persons who are to receive wages as the price of their labor, and that the term, ‘wages’ is to be understood in its popular sense, and does not include wages which are the price of a contract. The plaintiff here employed several persons under him, and in that respect differs from what is popularly understood by a laborer. This act was intended to protect persons who earn their bread by their daily labor from receiving goods as a payment for their wages, instead of money. It would be difficult to know where to draw the line, if we were to hold that the plaintiff falls within the meaning of the act; for it would be difficult to say that it did not apply in a case where a party had undertaken a contract to complete twenty miles of railway. The nineteenth section seems to me to have reference to workmen and laborers who earn wages by their own personal labor, and not to those who, although they join in the work, derive a profit from the exertions of others.”

In Sharman v. Sanders (13 C. B., 166), the plaintiff sought to recover wages earned in iron works. The plaintiff was employed to load, unload and burn iron stone at a certain price per ton, payable at the end of each month, the defendant finding carts and horses. The plaintiff worked personally and employed assistants, paying them weekly. The plaintiff received four-fifths of his pay in goods, and afterwards sued for coin. It was held that the plaintiff was not an artificer and not at work for wages. Maulé, J., said : “ The persons the act was meant to benefit are those who hire themselves to labor with their hands for daily or weekly wages. More people, no doubt, are comprehended within it than that; but' it is that sort of people to whom the act was intended to apply. I do not think it was at all designed for the protection of persons taking contracts for labor to be done by others — persons who speculate upon the state of the labor market. The letter of the act also, in my opinion, falls short of comprehending persons of that description. I do not think the plaintiff falls within the definition of an artificer given by the interpretation clause; he not being a workman, laborer or other person engaged in the performance of any work, employment, or operation contemplated by the statute; for the whole context shows that it was only intended to apply to those who are actually and personally engaged or employed to do the work. And when the procuring work to be done by the hands of others comprehends the whole of what a man contracts for, the circumstance of his doing some portion of the work himself does not bring him within the statute.”

In Bowers v. Lovekin, (6 E. & B., 584), a contrary rule was held; but this case was expressly overruled in Sleeman v. Barrett (2 H. & C., 934), where the rule laid down in Riley v. Warden, and in Sharman v. Sanders (supra), was followed, and the language of those judgments quoted with approbation. In Ingram v. Barnes (7 E. & B., 115), affirmed in the Exchequer Chamber, 132, Riley v. Warden and Sharman v. Sanders were followed, and Bowers v. Lovekin, was distinguished.

Class 20 embraces the claim of Mr. Comstock, who was employed upon an annual salary of $2,000, with a commission of two per cent to sell goods in China, the defendant paying all necessary traveling expenses. There is due Comstock for commissions, earned prior to the passage of the act, $12,160, and for commissions earned since the passage of the act, $1,410, for which defendant had given him two promissory notes dated December 15, 1885, one payable in one year, the other In three months, both with interest, and indorsed by P. Remington as an accommodation endorser. There is credited to Comstock, on defendant’s books, $500 for salary earned since the act was passed. As before said, the law is not retroactive, and the commissions earned prior to its passage are not preferred by it; nor is ifis claim for $1,440, commissions, and $500 salary, earned since the passage of the act. Neither salary nor commissions are wages within the meaning of this act. Upon this question (see authorities cited under class 10.) Nor was Mr. Comstock an employee within the act.

A superintendent, general manager, or a general manager and bookkeeper, is not a laborer, servant or apprentice,” within the eighteenth section of the manufacturing act. (Hill v. Spencer, 61 N. Y., 274; Dean v. De Wolfe, 16 Hun, 186; affirmed, 82 N. Y., 626; Krauser v. Ruckel, 17 Hun, 463; Wakefield v. Fargo, 90 N. Y., 213.)

In considering whether a general manager fell within the term “ servant,” Lott, Ch. C., said: “ The context in which it is used, in the section referred to, being associated with laborers ’ and apprentices,’ indicates that it was intended to apply to a person employed to devote his time, and render his services in the performance of work, similar in its general character to that done by those employees.” (Hill v. Spencer, 61 N. Y., 279.)

Chapter 755, Laws 1873, conferred upon the board of police the power to fix the salaries of all clerks and employees whom they were authorized to appoint. The question arose whether the board had power to fix the salary of a police surgeon. Miller, J., in defining the word “ employee ” said (People ex rel. Satterlee v. Board of Police, 75 N. Y., 44): “ Certainly they (surgeons), are not ‘ clerks,’ and as "employees ’ are usually considered as embracing laborers and servants, and those occupying inferior positions, they can scarcely be included in that class of persons.”

In Wakefield v. Fargo (supra), the question was whether a general manager and clerk was within the term “ laborers, servants and apprentices,” as used in the eighteenth section of the manufacturing act. It was said by Danforth, J. (90 N. Y., 218): “ He (Blackstone), also speaks of stewards, factors and bailiffs, as, perhaps, constituting a fourth class (of servants). But this doubtingly, because they serve in a superior, ministerial capacity, and in view of the declarations already made by this court as to the object of the statute (Coffin v. Reynolds, 37 N. Y., 640; Gurney et al. v. Atlantic & Great Western Railway Co. et al, 58 id., 367; Aiken, Admr. v. Wasson, 24 id., 482; Stryker v. Cassidy, 76 id., 53; 32 Am. Rep., 262), it may be added that as such individuals occupy positions, and are usually of such capacity as enable them to look out for themselves, they are not within the privilege of the statute. To the language of the act must be applied the rule common in the construction of statutes, that when two or more words of analogous meaning are coupled together, they are understood to be used in their cognate sense, express the same relations, and give color and expression to each other. Therefore, although the word c servant ’ is general, it must be limited by the more specific ones, laborer and apprentice ’ with which it is associated, and be held to comprehend only persons performing the same kind of service that is due from the others. It would violate this rule to hold that the intermediate, or second-class, represented a higher grade than the class first named.”

Applying the rule declared in the last three cases to the phrase, “the wages of employees, operatives and laborers,” it is not broad enough to prefer the sum due Mr. Comstock for salary and commissions. This, like many similar statutes in this and other countries, was designed to secure the prompt payment of the wages of persons who, as a class, are dependent upon their earnings for the support of themselves and their families, and it was not designed to give a preference to the salaries and compensation due to the officers and employees of corporations occupying superior positions of trust and profit. The construction contended for in this case would give a preference to all employees, without regard to rank, compensation, mode of employment, mode of payment or the length of time during which they had allowed their compensation to remain in arrear. The assignees, transferees and indorsees of all employees, no matter how remote or how great the accumulation, if it could be shown that the original consideration of the claim was “ wages,” “ salary,” “ commissions ” or “ earnings ” of persons employed would be preferred. In this way, as illustrated by this case, the wages and compensation due employees might become a large and constantly increasing debt, to be preferred, m case of failure, equally with the class of laborers who must, from necessity, rely upon the prompt payment of their earnings. This might defeat the beneficial object of the statute, by depriving the laborers of their hire for the benefit of those who had purchased, from time to time, their wages. This would work a wrong to the laborers and would endanger the claims of all the other creditors of the corporation.

The order should be modified by reversing that part of it holding that the claimants embraced within class 13 are entitled to a preference, but in all other respects, the order should be affirmed, with costs.

Boardman, J., concurred.

Merwin, J.

(dissenting):

I differ from brother Follett as to classes 14 and 15. In the case, class 15 is described as follows: “That the corporation was indebted to employees and laborers for wages accruing subsequent to the passage of the act before mentioned, for which wages the corporation had executed and delivered to such employees or laborers its promissory notes on time, which employees or laborers duly transferred said notes to third parties, who now hold the notes for value and which have not been paid.”

The giving of the note did not operate as payment of the debt for wages. (Jagger Iron Co. v. Walker, 76 N. Y., 521.) The transfer of the note operated to transfer the debt (The Oneida Bank v. The Ontario Bank, 21 N. Y., 490), so that the debt for wages is still-in existence and is owned by the claimant, and if the statute under consideration operates to prefer the debt as such, then the present holder is entitled to the benefit of the preference. The statute provides that where a receiver of certain corporations shall be appointed “the wages of the employees, operators and laborers thereof shall be preferred to every other debt or claim against such corporation.” By this form of expression it is the wages that is preferred; it is one kind of debt over every other debt. It is not one kind of debtor over every other debtor ; it is not personal. The case of Rollin v. Cross (45 N. Y., 766) is not applicable. That case was under the mechanics’ lien law (chap. 513 of 1851), which gave a personal privilege and required certain acts to be done by the person himself before his lien was perfected. The cases of Pilcher v. Brayton (17 Hun, 429); Bolen v. Crosby (49 N. Y., 183), and several other kindred cases, are more analogous, but they do not, I think, reach the present question. I find no authority exactly in point. The test, it seems to me, is, whether the debt or the person is preferred. I think it is the debt; that is the fair construction of the statute, and is consonant with the object of the statute, which is to benefit the laborer. It adds value to the claim, for anything that detracts from the assignability of a claim lessens its value. It is to be presumed that credit was given for the wages n reliance on this provision of law, so that the benefit of the' law to a certain extent attached before the appointment of a recéiver. It is on this principle that the debts incurred before the passage of the law are excluded from its benefits. The title of the act is not inconsistent with this construction, for it is to be presumed that the legislature preferred the debt as the best means to accomplish the payment of the wages. Besides the act itself, if reasonably certain, must control. This case is very different from the case where the assignee voluntarily surrenders the order of the laborer and takes a new obligation from the corporation directly to himself. It may be said then, with much force, that the debt for wages is extinguished and the preference gone.

Class 14 is illustrated as a case where the laborer, in payment for merchandise then sold and delivered to him by a merchant, draws and delivers to the merchant a written order on the corporation for a portion of the wages then due him and earned after the passage of the act, but the merchant, the payee in the instrument, has never presented the same to the corporation, but has continued to hold, and now holds and owns, the same, the amount thereof appearing on the books of the corporation to the credit of the employee or laborer.” The order, after specifying the amount, says, “and charge to my account.”

If this order operated to assign to the merchant so much of the debt for wages, then the case is similar to class 15. So that the question is whether, under the circumstances, this order operated as an assignment. Dealing in orders in this way had prevailed for a number of years, and it may fairly be inferred from the case as presented that the corporation was accustomed to treat such orders as transfers pro tanto. (Story, J., in Mandeville v. Welch, 5 Wheat., 286.) It was undoubtedly so designed by the drawer or laborer, and so understood by the merchant. In effect it was drawn on a particular fund; that was the effect of the transaction, though not put in so many words. (Coates v. First Nat. Bank, etc., 91 N. Y., 20.) It was delivered to the merchant for full value. Concededly the corporation is indebted to some one for the amount, and it so appears on its books. By the statute, if my construction of it is correct, the debt is preferred, whether owned by the laborer or the merchant. As between these two, the latter is certainly entitled to it. In Risley v. Phenix Bank (83 N. Y., 318) it was held that there may be an oral assignment for a valid consideration, of a portion of a debt. Under the Coates and Bisley cases I think it should be held in the present case that there was an equitable assignment from the laborer to the merchant of so much of tñe debt for wages as was represented by the order, and that, therefore, the merchant is entitled to the preference. I am, therefore, of the opinion that classes 14 and 15 are entitled to be preferred.

The order, so far as it holds that class 13 is entitled to a preference under the statute, is reversed, but in all other respects the order is affirmed.


author: Follett, J.: Mekwin, J.: BoaedmaN, J. :

text:
    THE PEOPLE OF THE STATE OF NEW YORK, Plaintiffs, v. E. REMINGTON & SONS, Defendants. Ex parte IMPORTERS AND TRADERS’ BANK and Others, Appellants.

      Receiver of an insolvent corporation — power of the court to ascertain the validity and amount of claims made against the estate.

    After the commencement of this action, brought to procure a judgment dissolving the defendant corporation, and on April SI, 1886, temporary receivers were appointed and an injunction order issued restraining creditors from suing the defendant, and all persons from interfering with its property. Three hanks which held the defendant's notes, amounting to $17,000, guaranteed by Dean. & Co. and secured by the pledge of certain chattels belonging to the defendant, asked the receivers to pay the notes and take the property, or to consent to a modification of the injunction, so that the chattels pledged might be sold to pay the notes. The receivers having declined to do either a motion was made for an order permitting the chattels to be sold, which was granted, though opposed by the receivers. One of the notes having been paid by a sale of a portion of the chattels, the guarantors claimed to hold the remaining chattels as security for their liability upon the other two notes, which claim was resisted by the receivers, who obtained a second injunction restraining the banks and the guarantors from selling the chattels, which injunction was thereafter vacated, the court holding that the chattels were pledged as security for the three notes. Thereupon the banks and the guarantors asked for an order directing the receivers to pay such a sum as would indemnify them for their counsel fees and expenses in the litigation, which was denied by the Special Term on the ground that it had “no power or jurisdiction to grant such an allowance in this proceeding.”
    Reid, that the Special Term erred in so holding as it clearly had the power to ascertain by a reference whether these claimants, or either of them, had a valid claim against this estate, and if they had to fix the amount thereof. (Boardman, J., dissenting.)
    Appeal from part of an order, made at tbe Jefferson county Special Term, and entered in Herkimer county.
    Tbe part of tbe order appealed from is as follows : “ Tbat tbe claim of R. J. Dean & Co. for counsel fees incurred by tbe three banks and tbe said R. J. Dean & Co., growing out of and connected with the motion made on tbe 29th day of May, 1886, before bis Honor Justice Williams, at WatertowD Special Term, for a modification of tbe general injunction order issued by tbe court, and the order to show cause returnable before his Honor Justice Williams, at a Special Term, held at Watertown, on the 10th day of July, 1886, and in the matter of reference herein and the motion this day heard and decided, be and the same is hereby refused and disallowed, on the ground that the court has no power or jurisdiction to grant such allowance in this proceeding.”
    April 20, 1886, this action was brought by the attorney-general to procure a judgment dissolving the defendant (a corporation created under the laws of this State), because of its insolvency, and April 21, 1886, Addison Brill and Albert N. Russell were appointed temporary receivers, pursuant to section 1788 of the Code of Civil Procedure, and at the same time an injunction order was issued pursuant to section 1806, restraining creditors from suing defendant and all persons from interfering with its property. At this time, three banks held defendant’s notes, amounting to $17,000, which were guaranteed by R. J. Dean & Co., as security for which certain chattels were pledged by defendant to the banks and said guaran--tors. The banks and the guarantors asked the receivers to pay the notes and take the property, or consent to a modification of the injunction so that the chattels pledged might be - sold to pay the notes, but the receivers declined to do either. A motion was made for an order permitting the property pledged to be sold, which was resisted, by the receivers, but was granted. After the payment of one of the notes, five hundred rifles, which were pledged as security for it, were unsold, and the guarantors claimed to hold them as security for their liability upon the two other notes, which claim was resisted by the receivers and a second injunction was obtained restraining the banks and the guarantors from selling the rifles, but after a reference it was held that the rifles were pledged as security for the three notes and the injunction was vacated. Thereupon the banks and the guarantors asked for an order directing the receivers to pay such a sum as would indemnify them for their counsel fees and expenses in the litigation, which was denied at Special Term “ on the ground that the court has no power or jurisdiction to grant such allowance in this proceeding.”
    From this order the banks and the guarantors appealed.

      Blancly & Hatch, for the banks and guarantors, appellants.

      Thomas Richardson, for the receivers, respondent.
   Follett, J.:

It is conceded that the receivers, by denying and resisting, by injunctions, the rights of the banks and guarantors, caused them considerable expense. A principal is liable to indemnify his surety or guarantor for such damages as directly flow from the principal’s conduct. Under this rule the estate represented by the receivers is liable to the guarantors for such damages as were caused by the action of the receivers. Whether the estate is liable to the banks for damages is not, from the facts now before the court, entirely clear. (Lawton v. Green, 64 N. Y., 326; High on Inj., § 962.) The appeal book does not show whether the injunctions were issued with or without security; as the first, at least, might have been under sections 1806 and 1990 of the Code of Civil Procedure. The damages caused by an injunction should be determined by the court or by reference. (Code Civil Pro., § 623 ; High on Inj., § 962.)

The Special Term did not deny the application of the banks and guarantors for indemnity upon the ground that the estate was not liable, but upon the ground that the court had not power, in this proceeding or upon a motion, to award the claimants their damages. The court seems to have been led to this conclusion by the mistaken assumption of counsel that the sums claimed were by way of “costs” in the proceeding or motion. The claimant’s right to indemnity does not rest upon nor is it controlled by the sections of the Code regulating the allowance of costs. The motion for indemnity seems to have been denied solely upon the ground that it must be sought by action. Section 1807 of the Code requires creditors of the corporation to prove their claims before a referee. The validity and amount of claims against an estate in the hands of receivers, which arise from the acts of the receivers, are not usually determined by action, but by reference. When leave is sought to sue receivers for such claims it is the usual practice to deny the application and order a reference, as the cheapest and most expeditious mode of determining the controversy. No imported exception to this practice has been found when the claimant has been willing to refer, unless the facts out of which the claim arose were so intricate, the law supposed to be applicable so uncertain, and the claim so large as to render this summary mode of trial uusuitable. But this is not such a case. The Special Term clearly bad the power to ascertain by a reference whether these claimants, or either of them, had a valid claim against this estate, and if they had, to fix the amount. (De Groat v. Jay, 30 Barb., 483; S. C., 9 Abb., 364; In the Matter of the Receivers of the Globe Ins. Co., 6 Paige, 103; Holbrook v. Receivers, Id., 220, 226; The Guardian Savings Institution v. The Bowling Green Savings Bank, 65 Barb., 275; 1 Wait’s Pr., 199, 200; 2 id., 255.)

That part of the order denying the application of the claimants to have their damages determined and paid is reversed, with ten dollars costs and disbursements.

Mekwin, J.:

If the claim of Dean & Co. was simply for an extra allowance of costs, then I can see how the order at Special Term would be perfectly proper; but if it be deemed, as it may be, a claim for expenses, that would be a lien on the collaterals, or a claim for indemnity as between surety and principal, or a claim for damages by reason of the injunction, then, it seems to me, there would be no doubt about the jurisdiction of the Special Term. The question is not whether a separate proceeding would be more appropriate, for the order was not placed on that ground; nor is the question here as to what provision shall be made for the payment of the claim, if allowed. That is a matter for the Special Term in the first instance to determine. Both proceedings as to the injunction against Dean & Co. were before the Special Term. The existence of the claim was set up in answer to the last order to show cause, and either party could have given evidence about it before the referee. It seems to me that the court there had jurisdiction over it.

As the only question here is as to the jurisdiction and power of the Special Term, I .think I must agree with Judge Follett to the reversal of the order.

BoaedmaN, J. :

The defendant, a corporation, failed in April, 1886, and went into the hands of receivers. At the time of such failure the defendant was indebted to the three banks named as appellants, severally, on notes in the sums of $10,000, $3,000 and $4,000 payable to said banks, respectively none of which notes were then due. These notes were secured by property in the bands of R. J. Dean & Co., warehousemen, and also by the guaranty of payment indorsed thereon by R. J. Dean & Co., who also became entitled to the collateral security upon their payment of the notes. The form of the note for $10,000, the nature of the collateral security and the form of the guaranty and the rights of R. J. Dean & Co. under the same may be found on pages 10 and 11 of the papers on appeal and are the same in effect for the other two notes. At the date of the failure each of said banks held one of said notes, so made, guaranteed and secured. Dean & Co. were also negotiators of loans. We infer from the papers that the defendant furnished them with the notes, schedules of collaterals and guaranty, and that Dean & Co. upon such papers duly signed either procured the notes to be discounted for the defendant by the banks, or advanced to. defendant by their own check the amount to be realized from the discount and after-wards had the notes discounted and the proceeds placed to their own credit. In either event the defendant procured money on the collateral security held by Dean & Co. and by the aid of their guaranty based upon such security.

When the receivers of the property of the defendant were appointed an injunction was obtained and served upon each of the appellants enjoining and restraining them from interfering with the property and effects of the defendant or bringing actions against it. At that time the notes were not due, the collateral securities were held by the banks, and when the notes became due, Dean & Co. would become liable to pay the same by reason of their guaranty, but the banks were forbidden to dispose of or transfer the property to purchasers on sale or to Dean & Co. on their payment of the notes. To obviate this difficulty it was necessary to modify the injunction and have the banks and Dean & Co. released from its effect. Messrs. Blandy and Hatch, therefore, on behalf of these parties, on an order to show cause, obtained an order permitting the sale of the collaterals, unless the receivers should redeem them by payment of the notes by a certain day. The collaterals to the $3,000 and $4,000 notes were not so redeemed, but were sold, and failed by some hundreds of dollars to satisfy those notes. In the meantime the $10,000 note had been reduced by payment to $3,300, and 1,000 of the 1,500 Lee riñes (which constituted the collateral security for the $10,000 note) had been withdrawn. The receivers then tendered to the bank the balance due upon the 10,000 and demanded the 500 rifles, which tender and demand were refused. Dean & Co. then paid the bank the amount due on the note and the warehouse receipts for the rifles were given to them. The receivers then procured another injunction against the bank and Dean & Co., restraining them from selling the 500 rifles, claiming that they were not collateral to the other two notes of $3,000 and $4,000. When the motion to continue this injunction came on to be heard the court ordered a reference to ascertain whether the 500 rifles were a collateral security for all of the notes or only for the $10,000 note. The conclusion of the referee against the receivers’ claim was by the order of the court confirmed and ah parties have submitted to such order.

That order also contained a further clause, viz: That the claim of R. J. Dean & Co. for counsel fees incurred by the three banks and the said R. J. Dean & Co., growing out of and connected” with said motions and orders “and in the matter of reference herein and the motion this day heard and decided, be, and the same is hereby refused and disallowed, on the ground that the court has no power or jurisdiction to grant such allowance in this proceeding.” From this portion of the order the appeal is taken. If the court has jurisdiction to make such allowance, the order, so far as appealed from, may be reversed and the claim be sent back to the Special Term for allowance on the affidavit of Mr. Blandy, or upon such other evidence as may be permitted by the court to be given. The only question then for decision is the power of the court to grant the appellants’ counsel fees and expenses in the proceedings had and taken by them.

These proceedings consist of an application by appellants to set aside or modify the original'general injunction and an opposition by them to the order to show cause why the second injunction should not be continued. These were both, in legal effect, motions. In the first case, no costs were asked or granted. In the last, the court gave appellants ten dollars costs, and the referee’s charges were ordered paid by the receivers. This seems to us in strict accordance with the provisions of the Code of Civil Procedure (§§ 3236, 3251). (3.) We find no other provisions giving costs in such cases. The right to costs is purely statutory, and unless given by the statute no court has power to award them. (3 Wait Pr., 453, etc.; Supervisors of Onondaga v. Briggs, 3 Denio, 173.)

What the appellants seek to obtain by way of allowance in costs is, in fact, the damage which they have suffered by the interference of the principal debtor, through its receivers, with their use and disposition of the collateral security according to the contract. Such damages are, in no sense, costs or expenses to be recognized or allowed upon motions or in the orders made upon motions. They constitute damages which Dean & Co. may, as sureties, be entitled to recover by action against and out of the assets in the hands of the receivers. It is the contract of defendant to indemnify Dean & Co. against loss, costs, charges and expenses which they, as sureties for defendant, may suffer, which constitutes the basis of a claim, if any exists. (Laws of 1858, chap. 314, § 3, as modified by section 1916 of the Code of Civil Pro.) Thompson v. Taylor (72 N. Y., 32), was, in effect, an action to marshal assets, and, out of them, pay creditors, and, among others, Mattison, who, as surety, had incurred certain reasonable and necessary costs and expenses in excess of costs included in his judgments. It was held that the action was proper, and such costs and expenses were properly allowed to him. It is not an authority for allowing such costs or expenses as a part of the costs, of a motion. Undoubtedly, if Dean & Co., if sureties of the defendant, were entitled to full indemnity against the consequences of the failure of the defendant,or its receivers to pay these notes, they were also entitled to be repaid such costs and expenses as they necessarily incurred in securing the property pledged for the debt so that it might be applied to the payment of such notes. (Thompson v. Taylor, supra.) But such costs and expenses, like notary’s fees, charges for storage of the rifles, etc., were damages to be deducted from the proceeds of the sale- of the collaterals or recovered in an action. (Griggs v. Howe, 2 Abb. Ct. of App. Dec., 291; Sheldon v. Raveret, 49 Barb., 203.) We apprehend the rule would be still stronger than the cases cited in favor of a surety. Such damages arose by virtue of the contract setting apart the property as collateral, which provided for deducting all expenses of collection and sale from the proceeds and applying the balance -only upon 'the debts. The obligation, therefore, arises upon an express contract, as well as upon the implied contract of indemnity, in favor of the guarantors. Such an obligation cannot be enforced by an arbitrary allowance of costs upon a motion, however just and equitable in itself. The appellants, or Dean & Co., must resort to their action if the assets in their hands have proved insufficient for their protection.

We concur with the learned justice at Special Term that the court had no power or jurisdiction to grant the allowances of counsel fees and expenses as claimed by the appellants.

The order must be affirmed, with ten dollars costs and printing disbursements.

That part of the order appealed from is reversed, with ten dollars (Costs and printing disbursements.