Murphy v. Cosentino

SHINN, P. J. This is an appeal from an order charging each of the parties with one-half of certain fees and attorneys’ fees of a receiver. Plaintiffs appeal, contending they should not have to bear any part of this expense. The appeal is before us upon an agreed statement. The facts are that plaintiffs and defendants as equal copartners owned an office building valued at between $170,000 and $230,000, subject to a trust deed of $89,424.32. Plaintiffs sued for dissolution of the partnership and an accounting, and on their application, with the consent of the defendants, a receiver was appointed to manage the property. For services during the first year the receiver was paid $2,529.66, which included attorneys’ fees. The receivership thereafter was operated at a loss of about $1,500, and each of the parties contributed equally to the loss and the current operation expense. Defendants purchased plaintiffs’ interest in the partnership for $85,000 but the prospective expenses of the receivership were not taken into account and no agreement was made with respect to the same. After this settlement the action was dismissed, and upon the final accounting of the receiver the court fixed the receiver’s fee at $1,137.12 and the receiver’s attorneys’ fee at $400. By the order which is under review these sums were charged to the parties equally.

The parties are in agreement as to the applicable principles of law and that the matter was one within the discretion of the court; that the court in such circumstances has the power to charge the expense against the property in receivership or to either the parties exclusively, or by allocating the expense between them in equitable proportions. It is also agreed that the customary procedure is to deduct the expense of the receivership from the property administered upon. Plaintiffs properly concede that the method adopted by the trial court will not be disapproved on appeal in the absence of a showing of a clear abuse of discretion. We cannot see that the court [616]abused its discretion in charging plaintiffs with half of the receivership expense.

When the expense of a receivership is taken out of the property administered upon, the theory is that each party has benefitted by the receivership in proportion to his interest, and should stand his proportionate share of the expense. In the present case the order implies that the court decided that the respective parties derived benefit from the receivership proportionate to their several interests and this would seem to be the correct view to take of receivership expense in the ordinary action for dissolution and liquidation of a partnership.