U.S. Supreme Court
Cake v. Mohun, 164 U.S. 311 (1896)
Cake v. Mohun
Argued November 2, 1896
Decided November 30, 1896
164 U.S. 311
After the death of the receiver, this case was properly revived in the name of his executrix.
While, as a general rule, a receiver has no authority, as such, to continue and carry on the business of which he is appointed receiver, there is a discretion on the part of the court to permit this to be done when the interests of the parties seem to require it, and in such case, his power to incur obligations for supplies and materials incidental to the business follows as a necessary incident to the office.
A purchaser of property at a receiver's sale who, under order of court, in order to get possession of the property, gives an undertaking, with surety, conditioned for the payment to the receiver of such amounts as should be found due him on account of expenditures or indebtedness as well as compensation thereby becomes liable for such expenditures and indebtedness.
In determining what allowances shall be made to a receiver and to his counsel, this Court gives great consideration to the concurring views of the auditor or master and the courts below, and it is not disposed to disturb the allowance in this case, although, if the question were an original one, it might have fixed the receiver's compensation at a less amount.
This was an appeal taken by Horace M. Cake and the administrators of William B. Moses, surety upon a certain undertaking of his pay to Francis B. Mohun, appellee's intestate, such sums as the court should find to be due the latter as receiver of the furniture, equipments, and other personal property of the hotel known as "La Normandie," in the City of Washington.
The original bill was filed April 23, 1891, by the appellant Cake to foreclose a chattel mortgage or deed of trust executed chanroblesvirtualawlibrary
by one Woodbury to William B. Moses and John C. Heald to secure an indebtedness of $75,000 to Cake, and covering the furniture and other personal property in the hotel, a part of which property was also subject to a prior mortgage or deed of trust to secure the payment of the rent of the hotel. As it was manifestly for the interest of all parties that the hotel should not be closed, shortly after the bill was filed, and on May 5, 1891, Francis B. Mohun was appointed receiver, with instructions to take possession of the property, "and to carry on and manage the business of keeping said hotel in substantially the same manner in which it has heretofore been carried on," provided that he gave a bond in the sum of $15,000, conditioned for the faithful performance of his duties as such receiver.
Upon his appointment, Mohun at once took possession of the hotel and personal property, as receiver, and carried on the business until December 4, 1891, when he was directed to surrender the property to the appellant Cake, who became the purchaser under a decree of foreclosure, subject to the prior mortgage, as well as the unexpired term of the lease, which was sold by the marshal on an execution against Woodbury. Before taking possession, however, Cake was required to file an undertaking, with surety, conditioned for the prompt payment to the receiver of such amounts as should be found to be due him on account of his expenditures or indebtedness, as well as of his compensation, and also conditioned that a decree might be pronounced against such surety, as well as against the principal obligor, for the payment of such amounts. This undertaking was executed by Cake, with William B. Moses as surety, and was filed December 4, 1891. The undertaking having proved satisfactory to the court, possession was surrendered and the cause referred, by order of the court, to an auditor with directions to state the account of the receiver, and directing that all questions as to the payment of expenses incurred by him in the performance of his duties, or as to the settlement of his unpaid obligations, be reserved until the coming in of the auditor's report. Before the accounts were stated, Moses, the surety upon the undertaking, died intestate, chanroblesvirtualawlibrary
and the administrators of his estate were brought in and made parties to the cause.
The auditor proceeded to take proof under the reference and stated an account, showing an aggregate sum to be paid to the receiver of $8,332.53. This sum was made up as follows:
Indebtedness of the receiver incurred
in the conduct of the business . . . . . . . $5,038.74
Allowance for compensation for his
services . . . . . . . . . . . . . . . . . . 2,793.79
Allowance to his counsel . . . . . . . . . . . 500.00
Total . . . . . . . . . . . . . . . . . $8,332.53
Exceptions were filed to this report by the appellant Cake, by the administrators of Moses, as surety upon the undertaking, and by Mohun, the receiver. Upon the hearing of these exceptions, they were all overruled, the report ratified and approved, and a final decree passed for the payment to the receiver of the above amount. All parties appealed from this decree to the Court of Appeals, which affirmed the decree of the Supreme Court of the District, reducing the amount, by a small credit of $7.59, to $8,324.94. Cake v. Woodbury, 3 App.Cas. D.C. 60. Before this decree was entered, Mohun having died, his executrix, Martha v. Mohun, was substituted in his place. From this decree of the Court of Appeals, Cake and the administrators of Moses, his surety, appealed to this Court. chanroblesvirtualawlibrary