The opinion of the Court was delivered by
Watkins J.
The definitive syndic of the insolvents is appellant from an adverse judgment on his opposition to an account filed by the-[783]*783provisional syndic. Several of the creditors of the insolvents joined the definitive syndic in his opposition, and are likewise appellants-The grounds of the opposition are :
1st. That the provisional syndic is only entitled to take charge of the estate of the insolvent debtors, and keep the same until a definitive syndic is elected and qualified, and has not the right of administration, or to make any disbursements of moneys entrusted to his care ? and that, in violation of law, he has expended a large sum of .money, and has failed to surrender the same to petitioner, and for wlr'ch he is responsible.
2nd. That he has not accounted for the goods and property which were placed in his hands as provisional syndic, nor the rents he collected from the subtenants of the insolvents, nor other-assets he received-
The judgment of the court a qua in part sustained the first ground of objection, and ordered the provisional syndic to pay over to the definitive syndic the entire amount with which he had charged himself on his account, viz : $1926.00, less the sum of $400 paid in fees to his attorney; $50.00 paid to the attorney for absent creditors ; $77.50’ paid to the notary, and $300 paid for rents, and aggregating the sum of $827.50.
But the decree “reserved to the provisional syndic the right to prove contradictorily with the syndic and the creditors, that the (stricken) amounts were disbursed by him m the interest of, or that they inured to the benefit of the creditors, and to recover such of said amounts as may be satisfactorily shown to have been tJms disbursed.
In other respects the demands of the opponents appear to have been rejected, and they have appealed. The appellee has not joined in the appeal, and asks no amendment of the judgment appealed from.
I
The question presented at the threshold of this controversy is whether the provisional syndic was properly allowed credit on his account, with the items and amounts as have been enumerated aboye. We think not.
The duties and powers of a provisional syndic are distinctly set out in section 1793 of the Revised Statutes.
It says that “the duties of the provisional syndic shall consist in keeping, as a deposit, all the goods and other effects of the insolvent debtor j * * in performing all the conservatory acts which may be necessary, as well for the interest of the insolvent debtor as for that of the mass of the creditors ; in demanding and receiving the rents and [784]*784incomes of the property, as also all the claims of the insolvent debtor, which may become due during Lis administration ; of all of which he shall render an account to the syndic appointed by the creditors ; and when rendering the account, shall be entitled to demand for his trouble and services one per cent on the appraised value of the goods and effects confided to his care, and five per cent on the rents and income which he shall have recovered during his administration.”
. This is substantially the eleventh section of theinsolveutlaw of 1817.
In Barkley vs. His Creditors 11 R 30, the court construing its provisions, said : “He,” (the provisional syndic,) “has nothing to do with the sale of the estate. He is a mere depository, and lie takes the property as he finds it upon the schedule of the insolvent, according to the approximate value therein mentioned, which value is to serve as the basis of the amount of the. bond which he is bound to furnish. Thus it is clear, that when the provisional syndic renders his account to the syndic appointed by the creditors, no change has taken place in the property which came under his admioistration, and that the same is by him. delivered over to his successor under filie schedule, and in the same state in which it was at the time of the surrender, except whatever increase may have taken place from the rents and income by him received, or from the collections he may have made.” (The italics are •ours.)
Prom the foregoing.it is perfectly manifest that a provisional syndic has no power or authority to make disbursements of the funds that may come into Lis hands. Such was (he purport of our opinion in Wood vs. His Creditors 35 A 257.
The district judge granted an order authorizing the provisional syn-' die “to sell for cash such part of the stock of goods as may be called for,” doubtless considering this to be such a “conservatory act” as is contemplated in the section of statutes above quoted ; and it is argued therefrom that, in carrying out this order, certain expenses were necessarily incurred, and it be,came reasonably necessary that the provisional syndic should pay them in cash. But that part of the decreo •embracing these items is not before, us for review, and this order does not effect the remaining issue under jireseut consideration.
Concerning the four items, the payment of which the, court approved, it is said in argument that, while the payment should have properly awaited the distribution of funds by the definitive syndic, no good purpose with be subserved by requiring- the provisional syndic to reimburse the amount, merely for the purpose of enabling the syndic to place it on liis account and return it to the claimants again. [785]*785This is the doctrine db ineonvenienti, of which courts of justice can take-no notice.
The one under consideration is a question of grave and serious import, and it very nearly concerns the creditors of every insolvent •debtor.
We are requested to sanction the act of the provisional syndic in-distributing the funds of the insolvents, among those whom he deemed entitled to receive them, without an order of court, and prior to the election of a syndic, as one that is authorized by law.
We say “without an order of court” advisedly, because the district judge granted but one, authorizing the payment of money, and it embraced but a small portion of one of the items under discussion, and that is $75 of the claim for rent. This order is 8id generis and is in these words, viz:
“ Let petitioner be authorized to act as within prayed for and according to law.”
We feel constrained to decline this request and to refuse to sanction the act of the provisional syndic, because it was unwarranted by the law. To concede such authority to a provisional syndic would be to-open the door to fraud upon the insolvent debtor and his creditors.
A surrender is made by the insolvent debtor to his creditors and it is accepted by the judge for their benefit. In contemplation of law, all proceedings looking to a disposition of the property surrendered and the application of its proceeds to the payment of creditors, whether privileged or ordinary, are to he postponed until they have chosen a definitive syndic, and he shall have qualified and furnished bond.
In the interim the provisional syndic is required to keep the property “ as a deposit” and perform “all conservatory acts which maybe necessary ” for its preservation and safe keeping.
Free access — add to your briefcase to read the full text and ask questions with AI
The opinion of the Court was delivered by
Watkins J.
The definitive syndic of the insolvents is appellant from an adverse judgment on his opposition to an account filed by the-[783]*783provisional syndic. Several of the creditors of the insolvents joined the definitive syndic in his opposition, and are likewise appellants-The grounds of the opposition are :
1st. That the provisional syndic is only entitled to take charge of the estate of the insolvent debtors, and keep the same until a definitive syndic is elected and qualified, and has not the right of administration, or to make any disbursements of moneys entrusted to his care ? and that, in violation of law, he has expended a large sum of .money, and has failed to surrender the same to petitioner, and for wlr'ch he is responsible.
2nd. That he has not accounted for the goods and property which were placed in his hands as provisional syndic, nor the rents he collected from the subtenants of the insolvents, nor other-assets he received-
The judgment of the court a qua in part sustained the first ground of objection, and ordered the provisional syndic to pay over to the definitive syndic the entire amount with which he had charged himself on his account, viz : $1926.00, less the sum of $400 paid in fees to his attorney; $50.00 paid to the attorney for absent creditors ; $77.50’ paid to the notary, and $300 paid for rents, and aggregating the sum of $827.50.
But the decree “reserved to the provisional syndic the right to prove contradictorily with the syndic and the creditors, that the (stricken) amounts were disbursed by him m the interest of, or that they inured to the benefit of the creditors, and to recover such of said amounts as may be satisfactorily shown to have been tJms disbursed.
In other respects the demands of the opponents appear to have been rejected, and they have appealed. The appellee has not joined in the appeal, and asks no amendment of the judgment appealed from.
I
The question presented at the threshold of this controversy is whether the provisional syndic was properly allowed credit on his account, with the items and amounts as have been enumerated aboye. We think not.
The duties and powers of a provisional syndic are distinctly set out in section 1793 of the Revised Statutes.
It says that “the duties of the provisional syndic shall consist in keeping, as a deposit, all the goods and other effects of the insolvent debtor j * * in performing all the conservatory acts which may be necessary, as well for the interest of the insolvent debtor as for that of the mass of the creditors ; in demanding and receiving the rents and [784]*784incomes of the property, as also all the claims of the insolvent debtor, which may become due during Lis administration ; of all of which he shall render an account to the syndic appointed by the creditors ; and when rendering the account, shall be entitled to demand for his trouble and services one per cent on the appraised value of the goods and effects confided to his care, and five per cent on the rents and income which he shall have recovered during his administration.”
. This is substantially the eleventh section of theinsolveutlaw of 1817.
In Barkley vs. His Creditors 11 R 30, the court construing its provisions, said : “He,” (the provisional syndic,) “has nothing to do with the sale of the estate. He is a mere depository, and lie takes the property as he finds it upon the schedule of the insolvent, according to the approximate value therein mentioned, which value is to serve as the basis of the amount of the. bond which he is bound to furnish. Thus it is clear, that when the provisional syndic renders his account to the syndic appointed by the creditors, no change has taken place in the property which came under his admioistration, and that the same is by him. delivered over to his successor under filie schedule, and in the same state in which it was at the time of the surrender, except whatever increase may have taken place from the rents and income by him received, or from the collections he may have made.” (The italics are •ours.)
Prom the foregoing.it is perfectly manifest that a provisional syndic has no power or authority to make disbursements of the funds that may come into Lis hands. Such was (he purport of our opinion in Wood vs. His Creditors 35 A 257.
The district judge granted an order authorizing the provisional syn-' die “to sell for cash such part of the stock of goods as may be called for,” doubtless considering this to be such a “conservatory act” as is contemplated in the section of statutes above quoted ; and it is argued therefrom that, in carrying out this order, certain expenses were necessarily incurred, and it be,came reasonably necessary that the provisional syndic should pay them in cash. But that part of the decreo •embracing these items is not before, us for review, and this order does not effect the remaining issue under jireseut consideration.
Concerning the four items, the payment of which the, court approved, it is said in argument that, while the payment should have properly awaited the distribution of funds by the definitive syndic, no good purpose with be subserved by requiring- the provisional syndic to reimburse the amount, merely for the purpose of enabling the syndic to place it on liis account and return it to the claimants again. [785]*785This is the doctrine db ineonvenienti, of which courts of justice can take-no notice.
The one under consideration is a question of grave and serious import, and it very nearly concerns the creditors of every insolvent •debtor.
We are requested to sanction the act of the provisional syndic in-distributing the funds of the insolvents, among those whom he deemed entitled to receive them, without an order of court, and prior to the election of a syndic, as one that is authorized by law.
We say “without an order of court” advisedly, because the district judge granted but one, authorizing the payment of money, and it embraced but a small portion of one of the items under discussion, and that is $75 of the claim for rent. This order is 8id generis and is in these words, viz:
“ Let petitioner be authorized to act as within prayed for and according to law.”
We feel constrained to decline this request and to refuse to sanction the act of the provisional syndic, because it was unwarranted by the law. To concede such authority to a provisional syndic would be to-open the door to fraud upon the insolvent debtor and his creditors.
A surrender is made by the insolvent debtor to his creditors and it is accepted by the judge for their benefit. In contemplation of law, all proceedings looking to a disposition of the property surrendered and the application of its proceeds to the payment of creditors, whether privileged or ordinary, are to he postponed until they have chosen a definitive syndic, and he shall have qualified and furnished bond.
In the interim the provisional syndic is required to keep the property “ as a deposit” and perform “all conservatory acts which maybe necessary ” for its preservation and safe keeping.
In the interest of an orderly administration of justice we deem it necessary to rigidly enforce these provisions of the insolvent law.
The provisional syndic made these payments in error, and at his. own risk, and he must account to the definitive syndic for the full' amount thereof whenever he shall file his account and tableau of distribution among the creditors. Rodriguez vs. Dubertrand, 1 R. 538; Goodale vs. His Creditors, 8 La. 301.
But we are of opinion that the item of rent stands upon a different, footing. The instalments thereof seem to have been evidenced by-notes, and the ex parte order of the judge a quo specially authorized! the of one of them. In addition to this, his order-[786]*786■permitting the provisional syndic to make sales of the goods in the usual course of business, and without opposition by the creditors, would -seem to justify the payment of such pressing claims out of the proceeds. Doubtless the judge below viewed, this in the light of a conservatory act he was authorized to allow, and we will not disturb his ruling nnder the circumstances.
II,
The contention of the opponents’ counsel on the other branch of the opposition, that the provisional syndic has not accounted for the full ■amount of the merchandise that was placed in his custody, and which was estimated in the schedule of the insolvent at $14,769.50, is somewhat involved.
The facts brought out in the record are about as follows : No inventory was taken of the merchandise that was surrendered, the only mention of it in the schedule being “Merchandise, $14,769.50.”
The cession of the insolvents was made in November, 1886, and a definitive syndic was not chosen by the creditors and qualified until in March following.
He caused an inventory to be made of the stock of merchandise and the appraisement was only $5,431.93.
It appears that one of the insolvents was appointed by the judge, provisional syndic, and, under the authority of the judge’s order heretofore adverted to, he made sales of goods to customers “in the usual course of dealing” to the amount of about $750, of which he renders an .account; but it nowhere appears what hind, quality or quantity of goods he sold, the only items in Ills account that serve as a guide in ascertaining the amount of sales being “ mdse sales,” entered with the .amounts set opposite, and as of different dates. These daily sales ■appear to have been very small. In the month of November after the -surrender, there is no sale reported as made on any given date of an amount in excess of $6.65. During the month of December the total amount of sales was $38.35, and of this amount $4.20 were realized during the last fifteen days thereof; andón six consecutive days the -exact sum of thirty-five cents was daily reported as the total amount of merchandise sold. But in the month of February, just before the termination of this trust, we find the items swollen to the proportion of $39, $56, $62 and $260, respectively.
The consequence was that when the effects of the insolvent were surrendered to the definitive syndic, there was an apparent deficit of $9,337.57. Whether this was caused by the fault or misconduct of the provisional syndic, or was the result of an overestimate of the value [787]*787in the schedule, or that of natural causes of depreciation, it is difficult to determine from the evidence in the record, which is meagre indeed.
It may be accounted for in part by the increased price for which the goods were sold at public auction by the syndic, the amount of diminution in the value of winter goods disposed of in the spring, the fact that the merchandise was estimated at 20 or 80 per cent above their, prime cost, and the further'diminution occasioned by the daily sales made by the provisional syndic. We are not prepared to say that any fault is attributable to the latter, but it is manifest that the opportunity was not wanting', though it may not have been taken advantage'of. That opportunity consisted in the fact that the insolvents prepared •and filed no inventory of the merchandise which they surrendered, and consequently there was absolutely no restraint placed upon him in the disposition of the goods. The opponents have not questioned the authority of the judge to grant the provisional syndic permission to-make such sales, and hence it is not the proper subject of discussion now. Therefore we can only refer to it as demonstrating the impolicy of allowing such a trustee to dispose of an insolvent’s property and to pay charges at will. Under the facts detailed we are not prepared to say that the provisional syndic has not accounted for all the property that came into his hands. It maybe that the insolvents placed too. high an estimate on their merchandise, or a portion of it may have been withheld by them after making their surrender, hut these are questions to be determined between them and their creditors. We feel hound to concur with the district judge in the views he entertained in this particular.
It is therefore ordered and decieed that the judgment appealed from be amended by rejecting the credits allowed to the provisional syndic for the sum of $50, paid to the attorney of absent creditors; of $77.50 paid to Downing, notary, and of $400 paid to H. Heidenlieim, attorney for the insolvents and the provisional syndic, and amounting to $527.50, and requiring him to account therefor to the definitive syndic when he shall file his account and tableau of distribution, and that, as thus amended, same be affirmed at the cost of the appellee.