Andes Cooperative Dairy Co. v. Baldwin

Bliss, J.

The Fort Schuyler Farms, Inc., was engaged in operating milk gathering stations at Andes, Quaker Bridge, Indian Castle, Herkimer and Peekskill, all within the State of New York. It had furnished to the State its bond in the sum of $10,000 conditioned for the prompt payment of all amounts due to producers for milk or cream sold by them to it. Upon its failure to pay the producers promptly, the Commissioner of Agriculture and Markets collected from the surety on this bond $10,133.59. The Commissioner also now holds bonds of the par value of $15,000 of the Meadow Sweet Farms, Inc., deposited with him on June 28, 1932, by Fort Schuyler Farms, Inc., to be devoted to the same use and purposes as the sum of $10,133.59.

On December 21, 1931, the Andes Cooperative Dairy Company leased its creamery property at Andes, N. Y., to the Fort Schuyler Farms, Inc., and there is now due to it from such tenant for rent the sum of $3,271.05. On June 13, 1932, the Fort Schuyler Farms, Inc., the Andes Cooperative Dairy Company and three certain individuals residing at Andes, N. Y., entered into an agreement whereby the Fort Schuyler Farms, Inc., delivered to said individuals as trustees $15,000 par value of bonds of the Meadow Sweet Farms, Inc., to be held by these trustees on condition that if the Fort Schuyler Farms, Inc., should default for thirty days in the payment of its rent or for three days in making payments to the producers delivering milk to the Andes plant, then the trustees should sell these bonds and the proceeds of such sale should first be applied by them toward the payment for milk delivered by producers at Andes, and the balance in payment of the rental then due the Andes Cooperative Dairy Company, and the surplus, if any, less expenses, was to be rendered to the Fort Schuyler Farms, Inc. The Fort Schuyler • Farms, Inc., on June 28, 1932, assigned to the Commissioner of Agriculture and Markets its equity in these bonds for the same purposes as the other block of $15,000 actually deposited with him on' that day. On August 24, 1932, the Fort Schuyler Farms, Inc., was adjudged a bankrupt.

After the' bankruptcy of the Fort Schuyler Farms, Inc., the Commissioner proceeded to determine the claims of producers filed with him, and found that the total amount of claims was $43,854.52. Of this amount $16,623.56 were claims of producers at Andes who were entitled to participate in the distribution of the proceeds of the sale of the $15,000 of Meadow Sweet Farms, Inc. On January 31, 1933, he determined after a hearing that, as it was impossible at that time to determine whether and to what extent the $15,000 of Meadow Sweet Farms, Inc., bonds deposited at Andes, operated or would operate as a payment of those claims totaling $16,623.56, he would at the time of the determination, namely, January 31, 1933, make a present distribution of the $10,133.59 fund as follows: To the Andes producers three and four-tenths per cent of the amount of their claims, and to the remaining producers twenty-three per cent of their claims. He further determined that the sum of $3,271.22, being that portion of the total sum of $10,133.59 which the Andes producers would be entitled to receive should their $15,000 of Meadow Sweet Farms, Inc., bonds prove valueless, be retained in his custody until it was possible to determine whether and to what extent said $15,000 of. Meadow Sweet Farms, Inc., bonds should operate as a payment on the claims of the Andes producers; that: should the Meadow Sweet Farms, Inc., bonds be liquidated at par this $3,271.22 should be distributed pro rata among all producer claimants, and should the Meadow Sweet Farms, Inc., bonds prove worthless, this $3,271.22 should be distributed pro rata amongst the Andes producer claimants only, with a corresponding provision for a pro rata distribution should these Meadow Sweet Farms, Inc., bonds be liquidated at something less than their par value.

The Andes Cooperative Dairy Company and one individual Andes producer claimant seek to review by certiorari this determination of the Commissioner of Agriculture and Markets.

Succinctly stated, the question here is whether the Andes producers may share with the other producers according to the full amount unpaid on their claims, or must first deduct from their claims the value of the $15,000 bonds, or any proceeds thereof,' held by the trustees as security. The Commissioner’s determinations of questions of fact, unless made final by statute, are quasi-judicial rather than purely administrative or ministerial. These questions of fact should be decided judicially and not arbitrarily. Property rights are presented to him for determination and his errors at law present no element of finality. (People ex rel. Dawley v. Wilson, 232 N. Y. 12.) No statute has been called to the attention of the court nor is the court able to find any which makes the Commissioner’s determination final. The usual judicial tests upon a review by certiorari may, therefore, be applied.

A secured creditor has the right to prove and receive a dividend upon the full amount of the debt without being compelled to deduct from the amount of the proved debts the value of collateral securities, or of any proceeds thereof. (People v. Remington & Sons, 121 N. Y. 328.) A creditor may not be required to surrender any part of his collateral till, payment has been made in full. (McGrath v. Carnegie Trust Co., 221 N. Y. 92.) In the light of these decisions, the Commissioner could not compel the Andes producers to first realize upon their security before sharing in a distribution of the funds in his hands, and the present distribution must be made to all producer claimants pro rata. It being impossible from the record before us to properly modify the determination, the matter is hereby remitted to the Commissioner of Agriculture and Markets for the purpose of proceeding in accordance with this opinion.

Hill, P. J., Bhodes and Heffernan, JJ., concur; Crapser, J., dissents, with opinion.