Matter of Accounting of Morgan

By the assignment to him Morgan became the trustee of the creditors of Fonda and Clark, and the National Herkimer County Bank was one of the beneficiaries of the trust. That bank was equitably entitled to the $906.25, which the trustee by mistake paid to the appellants. That sum should have been paid to it and the appellants had no right to receive it, and no legal, equitable or just right to retain it. The trustee having made the payment by mistake could have compelled the appellants by a suitable action to return the money to him. (Walker v. Hill,17 Mass. 380; Lupton v. Lupton, 2 Johns. Ch. 614; Trusteesof Harvard Col. v. Quinn, 3 Red. Rep. 514.) So, too, an action might have been maintained by the bank against these appellants, to recover the trust fund thus improperly diverted from it to their hands by the trustee.

It is claimed, however, that there was no power in the County Court in this proceeding to compel the restitution of this fund, and that is the only point of difficulty in this case. By the General Assignment Act (Chap. 456 of the Laws of 1877), as amended by chapter 318 of the Laws of 1878, very broad and general powers over assignments and assigned estates are given to the County Court. It may, upon the petition of an assignee or of a creditor, or of an assignee's surety, or of an assignor, issue citations requiring the parties to show cause why an accounting and settlement of the assigned estate should not be had. On such an accounting the court has jurisdiction to settle and adjudicate upon the accounts and claims presented, and to decree payment and distribution of the trust fund, and generally to exercise all the powers expressed, and such other and further powers in respect to the proceedings on the accounting, as are provided by law for an accounting before a surrogate of an executor or administrator. By section 22 of the act, it is provided that all orders or decrees in proceedings under the act shall have the same force and effect and may be entered, docketed and enforced and appealed from the same as if made in an original action brought in the County Court. By section 26 the court in its discretion may order a trial by jury or before a referee of any disputed claim or matter arising under the provisions of the act, and by section 25 it is provided that any proceeding under the act shall be deemed for all purposes, including review by appeal or otherwise, to be a proceeding had in the court as a court of general jurisdiction, and that the court shall have full jurisdiction to do all and every act relating to the assigned estate, the assignees, assignors and creditors; and that after the filing or recording of an assignment under the act, the court may exercise the power of a court in equity in reference to the trust and any matters involved therein. These appellants, by accepting the payment of their claim and thus dealing with the assignee, became parties to the assignment. Upon the general accounting of the assignee, the County Court had jurisdiction over all matters between the parties to the proceeding in reference thereto. It had power to see that the fund was properly administered and that the trust was fully and properly carried out. It had authority to order its proper distribution, and if by inadvertence or mistake any of the parties before it had received more than their share of the fund, it had power and authority to order that it should be restored so that it might be properly distributed, and to enforce its order. It is a convenient power and jurisdiction for the County Court to possess, and under the broad language contained in the statute we must hold that the court possessed the power which it exercised. The able opinion pronounced at the General Term is so satisfactory that no further discussion is now needed.

The judgment should be affirmed.

All concur.

Judgment affirmed.