The Wall Street Crash of 1929 occurred only weeks after the building was completed.
At that time more than 80% of the apartments were rented and some 300 students had signed up to take classes at the Institute.
However, both rentals and student fees were soon depleted, and the nonprofit corporation that ran the building was unable to meet its payments.
On April 6, 1932, this organization was sued for nonpayment of taxes and sinking fund payments due on the mortgage bonds.
At that time, it was alleged that the building was being mismanaged, the principal evidence offered being the provision of free living quarters to the Roeriches and their followers.
Horch successfully contested the suit, partly on a technicality and partly by explaining that the 20 rooms occupied rent-free were used by management as partial compensation to employees of the corporation.
Representatives of the bond holders had argued that the parts of the building that did not produce rental income—that is, the museum, institute, and other cultural spaces—should be converted to apartments, but Horch successfully countered that the cultural spaces were an asset that generated a substantial tax exemption and that, in normal times, they led to higher rental rates from the existing apartments than would comparable apartments.
He also pointed out that the demanded conversion would be expensive (about $100,000).
In June 1932, the foreclosure case ended, with Horch being named one of two receivers tasked with clearing the building's debts.

In 1934, Horch arranged to have Master Institute of United Arts, Inc., the educational corporation he had created in 1923, take over responsibility for the building from the organization he had previously used to run it.
He did this because the Institute was free of debt and, due to its status as an educational organization, was tax-exempt.

In 1935, the receivership ended and control over the Master Building and the cultural organizations it contained was turned over to the Master Institute of United Arts, Inc. with Horch as its president.
At this time, Horch arranged for the Institute to give a five-year mortgage for $1,674,800 to the entity that managed the building (now organized as the Riverside Drive & 103d Street Corporation) at five and one-half percent interest.

Horch, who had remained a devoted follower of the Roeriches since his acceptance of their spiritual quest as his own in 1923, started to fall out with them, for unclear reasons.
The Roeriches maintained that Horch's motives were base: through guile and deception, they said, he had taken control of the Master Building, closed the cultural institutions it contained, and severed them and their associates from everything connected with the building and its contents.
Horch countered that the Roeriches had improperly attempted to countermand his decisions as building owner and director of the cultural organizations it contained.
He said they had shown bad faith when they asserted that they alone could receive and interpret the commands of the supreme being whom they all worshiped.
On June 8, 1935, he wrote Helena Roerich to say he feared that the Roeriches had lost confidence in himself and his wife Nettie.
Then, on July 13, 1935, Nettie wrote Helena of her and Horch's "fourteen years of complete devotion in heart and in deed" and of their enduring "loyalty and selfless sacrifice" over that period.
She reaffirmed their "flaming devotion" which they continued to hold in their hearts.
And she said the Roeriches' attempt to exert unilateral control over their affairs had caused them to "contemplate, review and think of matters in a new light."
These letters explain actions that Horch took on June 5, 1936, to sever relations between the Institute and the other cultural organizations housed at the Master Building and discharge all their employees.
The employees who occupied rent-free apartments were told to vacate immediately.

In February 1936, the Roeriches and their associates attempted to obtain an injunction to prevent these actions.
When the attempt failed, they sued
The Wall Street Crash of 1929 occurred only weeks after the building was completed. At that time more than 80% of the apartments were rented and some 300 students had signed up to take classes at the Institute. However, both rentals and student fees were soon depleted, and the nonprofit corporation that ran the building was unable to meet its payments. On April 6, 1932, this organization was sued for nonpayment of taxes and sinking fund payments due on the mortgage bonds. At that time, it was alleged that the building was being mismanaged, the principal evidence offered being the provision of free living quarters to the Roeriches and their followers. Horch successfully contested the suit, partly on a technicality and partly by explaining that the 20 rooms occupied rent-free were used by management as partial compensation to employees of the corporation. Representatives of the bond holders had argued that the parts of the building that did not produce rental income—that is, the museum, institute, and other cultural spaces—should be converted to apartments, but Horch successfully countered that the cultural spaces were an asset that generated a substantial tax exemption and that, in normal times, they led to higher rental rates from the existing apartments than would comparable apartments. He also pointed out that the demanded conversion would be expensive (about $100,000). In June 1932, the foreclosure case ended, with Horch being named one of two receivers tasked with clearing the building's debts.
In 1934, Horch arranged to have Master Institute of United Arts, Inc., the educational corporation he had created in 1923, take over responsibility for the building from the organization he had previously used to run it. He did this because the Institute was free of debt and, due to its status as an educational organization, was tax-exempt.
In 1935, the receivership ended and control over the Master Building and the cultural organizations it contained was turned over to the Master Institute of United Arts, Inc. with Horch as its president. At this time, Horch arranged for the Institute to give a five-year mortgage for $1,674,800 to the entity that managed the building (now organized as the Riverside Drive & 103d Street Corporation) at five and one-half percent interest.
Horch, who had remained a devoted follower of the Roeriches since his acceptance of their spiritual quest as his own in 1923, started to fall out with them, for unclear reasons. The Roeriches maintained that Horch's motives were base: through guile and deception, they said, he had taken control of the Master Building, closed the cultural institutions it contained, and severed them and their associates from everything connected with the building and its contents. Horch countered that the Roeriches had improperly attempted to countermand his decisions as building owner and director of the cultural organizations it contained. He said they had shown bad faith when they asserted that they alone could receive and interpret the commands of the supreme being whom they all worshiped. On June 8, 1935, he wrote Helena Roerich to say he feared that the Roeriches had lost confidence in himself and his wife Nettie. Then, on July 13, 1935, Nettie wrote Helena of her and Horch's "fourteen years of complete devotion in heart and in deed" and of their enduring "loyalty and selfless sacrifice" over that period. She reaffirmed their "flaming devotion" which they continued to hold in their hearts. And she said the Roeriches' attempt to exert unilateral control over their affairs had caused them to "contemplate, review and think of matters in a new light." These letters explain actions that Horch took on June 5, 1936, to sever relations between the Institute and the other cultural organizations housed at the Master Building and discharge all their employees. The employees who occupied rent-free apartments were told to vacate immediately.
In February 1936, the Roeriches and their associates attempted to obtain an injunction to prevent these actions. When the attempt failed, they sued
Master Apartments