Finch, J.
Sufficient reasons have been assigned for directing a reconsideration by the insurance deparment of its order
fixing tho compensation of the receiver in this action at five per cent, upon the amount of assets of the company which should come into his possession. ■ That order was premature. It was made before the services of the receiver had even approached completion; before commissions were earned or payable; when it was not certain that the officer would complete his duties; when the amount of care and labor required could only be estimated and could not be known ; and when any just ground of judgment was hidden in the uncertainties of the future. It was
esparte.
Nobody interested in the disposition of the assets had notice or an opportunity to be heard. The receiver wrote a letter requesting an allowance of five per cent, and the superintendent wrote an answer granting it, and although its consequence was to take from the fund, according to the receiver’s claim, about $68,000, nobody was allowed opportunity to object, or to influence the important and serious decision. It seems to have been made under a misapprehension. The receiver represented in his letter that the amount of assets likely to come into his possession would be about $600,000. He now claims commissions upon more than double that amount. It is probable that his estimate was made in good faith, possibly because at the time he did not consider the fund in the possession of the insurance department subject to commissions, but nevertheless we cannot be certain that the mistake was immaterial, and had no effect upon the judgment of the superintendent.. A decision thus made and producing a result so serious ought not to stand.
But. it is said that it must stand; that there is no remedy; that the action of the superintendent is conclusive; and the interference of the courts is arbitrary and without authority. The argument is that under the statute (Laws of 1869, chap. 902, § 13), the compensation of the receiver is to be fixed by the superintendent, and as no notice is expressly required to be given, and no time or occasion specified for the performance of the duty, the officer charged with it is the sole and only judge of the proper time, the suitable occasion, and the rate or amount to be awarded. We do not assent to that doctrine. The re
ceiver is the officer of the court. It made him and can unmake him. He has no independent authority or power. He is the mere agent or instrument through whom the law takes into its own custody the assets and property of the insolvent corporation, closes its business and makes final distribution. The receiver is under the control of the court. He can do nothing without its orders. When at the end of his duty he presents his accounts, his proper compensation is to be determined by the courts, unless some statute has fixed it or bestowed the authority elsewhere. In the present case he comes before the court to settle, and surrender his trust. Hpon the question of compensation he sets up the decision of the superintendent. He brings it into court and claims under it, and so it comes before the court. He subjects it to the scrutiny which that tribunal has a right to exercise and cannot justly withhold. He brings it there as controlling and conclusive, and claims the benefit of it, and that question is fairly presented and must be determined before the distribution can be made which it is the duty of the court to make. And so the jurisdiction of the superintendent and the regularity of its exercise are both before the court, and both involved in its legitimate inquiry.
The statute thus invoked does one of two things, and must be construed in one of two ways. It either authorized the superintendent to fix the rate of compensation in advance, or to determine the proper compensation when the service had been performed. We think the latter is its only true and just construction. A statute may fix a rate of compensation in advance, applicable to a given class of cases, and without reference to a particular individual or specific circumstances. But where an officer is authorized to fix the compensation for services of another officer to be thereafter rendered, and such services necessarily run over a long time and may be widely different in different cases, and deserving consequently a different treatment, we think the authority confers power to fix compensation for services rendered, and not a rate of compensation for services to be rendered in the future. The act of the superintendent is in its nature judicial. He is to act upon
existing facts, and estimate the value of services which have been rendered, and, therefore, can be known and measured. When it appeared that the judgment invoked by the receiver was not such as the statute contemplated, and in addition that it was obtained without the knowledge of parties interested, and upon a mistaken statement of assets naturally tending to affect the mind of the superintendent, the court had a right to deny to its officer the benefit of the decision he claimed, and say to him that if he desired the benefit of the statute and preferred the estimate of the superintendent to the valuation of the court he must go back and get it; obtain it upon the basis of services substantially completed and therefore capable of being accurately known ; obtain it fairly upon facts correctly stated and not tending to mislead; obtain it openly and with op- ■ portunity for parties interested to be heard. The power of the court would be very weak if it could not control, its officer so far as this. It does not by such direction disregard the statute, or the right of the receiver under it. It recognizes both. It simply requires of its own officer, for whose conduct it is largely responsible, that he shall avail himself of such a right fairly and justly before he asks the court to ratify, and recognize, and act upon it.
In the computation of commissions the special fund deposited with the superintendent as security for registered policies and annuity bonds was treated as assets in the hands of the receiver. The propriety of that decision is questioned on behalf of the policy-holders, mainly because of the provision (Laws of 1869, chap. 902, § 7) that the receiver is to take possession of all the assets and credits of the company,
“
except the securities deposited in the insurance department.” But the next section provides (§ 8) that these securities are to be sold and converted into money by the receiver, superintendent and State treasurer, and when so converted the proceeds are to be paid over to the receiver on his giving his receipt to the superintendent, and the former is thereupon to pay them out; satisfying first the registered policies outstanding, and applying any surplus together with other assets of the company to the payment of its
just debts. We decided, under this provision, that the receiver became the rightful custodian of the proceeds realized, that they were held by him in his official capacity and their safety secured by his bond, and that the superintendent could not delay their transfer until the receiver was ready to make distribution. (Att'
y-Gen'l
v.
North America Life Ins. Co.,
80 N. Y.
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Finch, J.
Sufficient reasons have been assigned for directing a reconsideration by the insurance deparment of its order
fixing tho compensation of the receiver in this action at five per cent, upon the amount of assets of the company which should come into his possession. ■ That order was premature. It was made before the services of the receiver had even approached completion; before commissions were earned or payable; when it was not certain that the officer would complete his duties; when the amount of care and labor required could only be estimated and could not be known ; and when any just ground of judgment was hidden in the uncertainties of the future. It was
esparte.
Nobody interested in the disposition of the assets had notice or an opportunity to be heard. The receiver wrote a letter requesting an allowance of five per cent, and the superintendent wrote an answer granting it, and although its consequence was to take from the fund, according to the receiver’s claim, about $68,000, nobody was allowed opportunity to object, or to influence the important and serious decision. It seems to have been made under a misapprehension. The receiver represented in his letter that the amount of assets likely to come into his possession would be about $600,000. He now claims commissions upon more than double that amount. It is probable that his estimate was made in good faith, possibly because at the time he did not consider the fund in the possession of the insurance department subject to commissions, but nevertheless we cannot be certain that the mistake was immaterial, and had no effect upon the judgment of the superintendent.. A decision thus made and producing a result so serious ought not to stand.
But. it is said that it must stand; that there is no remedy; that the action of the superintendent is conclusive; and the interference of the courts is arbitrary and without authority. The argument is that under the statute (Laws of 1869, chap. 902, § 13), the compensation of the receiver is to be fixed by the superintendent, and as no notice is expressly required to be given, and no time or occasion specified for the performance of the duty, the officer charged with it is the sole and only judge of the proper time, the suitable occasion, and the rate or amount to be awarded. We do not assent to that doctrine. The re
ceiver is the officer of the court. It made him and can unmake him. He has no independent authority or power. He is the mere agent or instrument through whom the law takes into its own custody the assets and property of the insolvent corporation, closes its business and makes final distribution. The receiver is under the control of the court. He can do nothing without its orders. When at the end of his duty he presents his accounts, his proper compensation is to be determined by the courts, unless some statute has fixed it or bestowed the authority elsewhere. In the present case he comes before the court to settle, and surrender his trust. Hpon the question of compensation he sets up the decision of the superintendent. He brings it into court and claims under it, and so it comes before the court. He subjects it to the scrutiny which that tribunal has a right to exercise and cannot justly withhold. He brings it there as controlling and conclusive, and claims the benefit of it, and that question is fairly presented and must be determined before the distribution can be made which it is the duty of the court to make. And so the jurisdiction of the superintendent and the regularity of its exercise are both before the court, and both involved in its legitimate inquiry.
The statute thus invoked does one of two things, and must be construed in one of two ways. It either authorized the superintendent to fix the rate of compensation in advance, or to determine the proper compensation when the service had been performed. We think the latter is its only true and just construction. A statute may fix a rate of compensation in advance, applicable to a given class of cases, and without reference to a particular individual or specific circumstances. But where an officer is authorized to fix the compensation for services of another officer to be thereafter rendered, and such services necessarily run over a long time and may be widely different in different cases, and deserving consequently a different treatment, we think the authority confers power to fix compensation for services rendered, and not a rate of compensation for services to be rendered in the future. The act of the superintendent is in its nature judicial. He is to act upon
existing facts, and estimate the value of services which have been rendered, and, therefore, can be known and measured. When it appeared that the judgment invoked by the receiver was not such as the statute contemplated, and in addition that it was obtained without the knowledge of parties interested, and upon a mistaken statement of assets naturally tending to affect the mind of the superintendent, the court had a right to deny to its officer the benefit of the decision he claimed, and say to him that if he desired the benefit of the statute and preferred the estimate of the superintendent to the valuation of the court he must go back and get it; obtain it upon the basis of services substantially completed and therefore capable of being accurately known ; obtain it fairly upon facts correctly stated and not tending to mislead; obtain it openly and with op- ■ portunity for parties interested to be heard. The power of the court would be very weak if it could not control, its officer so far as this. It does not by such direction disregard the statute, or the right of the receiver under it. It recognizes both. It simply requires of its own officer, for whose conduct it is largely responsible, that he shall avail himself of such a right fairly and justly before he asks the court to ratify, and recognize, and act upon it.
In the computation of commissions the special fund deposited with the superintendent as security for registered policies and annuity bonds was treated as assets in the hands of the receiver. The propriety of that decision is questioned on behalf of the policy-holders, mainly because of the provision (Laws of 1869, chap. 902, § 7) that the receiver is to take possession of all the assets and credits of the company,
“
except the securities deposited in the insurance department.” But the next section provides (§ 8) that these securities are to be sold and converted into money by the receiver, superintendent and State treasurer, and when so converted the proceeds are to be paid over to the receiver on his giving his receipt to the superintendent, and the former is thereupon to pay them out; satisfying first the registered policies outstanding, and applying any surplus together with other assets of the company to the payment of its
just debts. We decided, under this provision, that the receiver became the rightful custodian of the proceeds realized, that they were held by him in his official capacity and their safety secured by his bond, and that the superintendent could not delay their transfer until the receiver was ready to make distribution. (Att'
y-Gen'l
v.
North America Life Ins. Co.,
80 N. Y. 155.) These proceeds were thus assets in the possession of the receiver, and by him received and disbursed, and were properly considered such for the purpose of calculating commissions.
Certain other items in the receiver’s account, claimed by him to be assets, were denied to be such for the purposes of the computation. The premium notes and loans on policies, amounting to nearly §400,000, were thus rejected upon the ground that they constituted merely offsets against the liability of the company, and were, as it was tersely expressed by the learned judge at Special Term, “ figures, not assets.” It is now contended that this ruling was erroneous, that the notes in the hands of the receiver were property, and the company could have sued upon them and recovered. We may grant that they were property without necessarily being conducted to the conclusion that they were assets in the possession of the receiver, for the purpose of estimating his commissions. The policy-holder who had given such a note to the company was a creditor only for the balance, and the dividend payable to him was to be made upon such balance.
(People
v.
Security Co.,
78 N. Y. 127; 34 Am. Rep. 522.) As matter of fact it follows that the proceeds of such notes were neither actually received by the officer nor disbursed by him. What happened was a computation and payment of a balance, and the process was one of account rather than the receipt and payment of money. To allow commissions upon this class of items would be to give them upon receipts and disbursements having only a constructive and not an actual existence.
It was proper also to deduct from the total of assets the $22,000, representing taxes paid upon lands sold on foreclosure of mortgages held by the superintendent. Otherwise the re
ceiver would get a double commission upon the sum. Practically it amounted only to a loan by him from general assets to the special fund which the latter returned to him.
That part of the order which apportioned the expenses of the trust
pro rata
between the general and the special fund is resisted on behalf of the registered policy-holders, who claim that the whole of the fund provided for their security should be preserved for them without diminution or abatement. Section 13 of the act of 1869, after providing for the manner in which the compensation of the receiver shall be fixed, authorizes him to employ necessary clerks and actuaries who shall be paid such reasonable compensation as he shall determine, subject to the approval of the superintendent; and then adds “ all of which compensation to said receiver, clerks and actuaries shall be a charge on the funds of such company and paid out of said funds.” No distinction is here drawn between the general and special funds of the company, but the expenses are imposed upon its funds without exception or discrimination. The argument to release the registered fund, because by section 8 it is to be paid over to the registered policy-holders, does not impress us. It is justly suggested that upon such construction, in a case where all the policies were registered and the fund was just sufficient to meet them, there would be no provision for the payment of expenses. It is said in such case there would be no insolvency and nothing for the receiver to receive. But the provisions of section 8 indicate that, although not technically insolvent in such case, its business would be closed and its assets distributed, because it is only where the actuary’s report shows that there are funds sufficient not only to pay the policies and obligations, but also “ the legal costs and expenses of the receivership,” that the business of the company can be continued. Of course it is difficult, if not impossible, to reach absolute justice in the proper apportionment of expenses to the two funds, but the mode adopted of a
pro rata
distribution sefems to us just and the best attainable.
The remaining questions raised relate to the conduct of the receiver in the care and investment of the funds committed to
his charge, and which has been criticized with the effect of inducing the General Term to impose upon him a charge for interest beyond that which he admits to have been received. The case shows that he invested the funds in his hands without the direction or consent of the court. He should have sought its authority and acted in obedience to its orders. He loaned the money through the agency of a firm of brokers, trusting them with its possession and control without security of any kind, and relying solely upon their responsibility and business honor and integrity. While he had a right so to use his own money, it was wrong to subject trust funds to such possibilities of danger and the risk of loss involved. He directed these moneys to be loaned on call, and upon the security of sound collaterals, but kept no detailed account of such loans; produced none kept by his agents; cannot name a single borrower; cannot specify a single loan; furnished no facts by the aid of which the investments could be traced and their character ascertained, or his agent’s statement of the amount of interest earned be verified. The court has nothing to depend upon but his own assertion of the amount of interest received, and that is stated in bis account, as nearly as we can ascertain, in seven items admitting its receipt generally and in gross, and aggregating nearly $30,000, and leaving unexplained the sources from which it came, or the particular sums which produced it. These things were wrong and a violation of duty.
The statute only authorizes the receiver to collect and pay. It gives no command to invest. Where no directions are given by the court it is his duty simply to keep and protect the trust fund and hold it ready for distribution. If parties interested desire it to be invested, they may apply to the court for such an order, and although they neglect to do so, a loan by the receiver, even temporarily, is a breach of trust.
'(Utica Ins. Co.
v.
Lynch,
11 Paige, 522.) He takes the fund strictly subject to the orders of the court and to be disposed of by its direction. (High on Receivers, §§ 177, 178.) He is held to great strictness in rendering his accounts and must keep them so that the fund can be traced (id., § 803), and they must be
clear, accurate and distinct.
(Bourne
v. Maybin, 3 Wood, 724.) The court, therefore, would have been justified in charging against the receiver the interest complained of, if there was just occasion for so doing. With serious doubt and hesitation on the part of some of us, we have in the end concurred in the opinion that such just occasion does not here exist. The receiver appears to have acted in entire good faith and without trace of any wrong intention. We have no reason to suspect him of any personal benefit in the transaction. No part of the fund has been lost. It is all safe and ready for distribution. No injury has resulted to the parties interested, but on the contrary, it is quite probable that a larger interest has been obtained than would have resulted from the direction of the court. Although disapproving what has been done, we do not think the case is one for punishment, because entire good faith and honesty of intention is manifest, and the fund has been benefited and not harmed.
We, therefore, reverse so much of the order of the General Term as charges the receiver with interest beyond that received by him, and affirm it in all other respects, but without costs.
All concur.
Ordered accordingly.