People v. Commercial Alliance Life Insurance , 98 N.Y. Sup. Ct. 389 ( 1895 )

VAN BRUNT, P. J.

The case of Barnes v. Newcomb, 89 N. Y. 108, may possibly be an authority for the proposition that where an application is made for the appointment of a receiver of a corporation upon the ground of its insolvency, and the company employs counsel, •and opposes such application in good faith, and with a conviction of the solvency of the company and its right to conduct its own business, and it has probable cause and reasonable ground for such opposition, the court may, in administering the fund, allow the reasonable expenses incurred in repelling the attack upon the corporation, which its officers regarded as unfounded. But where, as in the case at bar, the officers of the company undoubtedly knew that the company was insolvent, and acted in bad faith, there seems to be no possible ground upon which indemnity for expenses incurred can be allowed. It has been suggested that, as the attorneys in the case at bar acted in good faith, the bad faith of their client cannot be imputed to them. But the authority quoted clearly only allows indemnity for reasonable expenses which the corporation has incurred in the conduct of an •opposition in good faith. It certainly would be a strange proposition to hold that, although the officers had acted in bad faith, yet the. agents whom they employed should be able to procure such an allowance in their behalf, and a preference over the other creditors of the •corporation. We think, under the circumstances of the case at bar, that no allowance can be made to the attorneys, notwithstanding that they acted in good faith, because of the want of good faith upon the part of the officers of the corporation who employed them. The •order should be reversed, with $10 costs and disbursements, and the motion denied, with $10 costs.

PARKER, J., concurs.