22 Barb. 550 | N.Y. Sup. Ct. | 1856
The learned justice, at the special'term, decided that the assignment was fraudulent and void as to thes creditors of the assignors, and that the assignment, upon its face, furnished the evidence of the fraud. It will be necessary to examine the assignment with .care, as it contains the provisions and evidence relied upon to sustain the judgment. It was made December 13, 1854, by S. Y. Talcott of Albany, and H. H. Hale of Buffalo, as partners, and also as individuals. It recites that they are justly indebted, as well individually as copartners, in sundry considerable sums of money which they have become unable to pay and discharge with punctuality or in full, and being desirous of making a fair and equitable distribution of their separate and individual, and also their copartnership, property and effects, among their respective individual and their copartnership creditors; and then follows the sale and trans
The first objection is made to this clause in the assignment. It is argued that the provision necessarily has the effect to hinder and delay the payment of the other creditors longer than they would have been delayed, in case the names of that class of creditors had been mentioned, with their places of residence, and the respective amounts due to each. In my opinion this objection is not sufficient to avoid the assignment. Such a provision is not unusual in assignments, and I am not aware that any objection has been made to it. Ho authority is cited. In Rathbun’s assignment there was a similar provision for the payment of clerks, mechanics and daily laborers in the employment of Rathbun at Buffalo and Hiagara Falls. (Pratt v. Adams, 7 Paige, 418.) There are also several other clauses in that assignment involving the same principle. It is true, that the question that those provisions avoided the assignment, was not raised.
Objections are taken to the provisions contained in the clauses relating to the fifth and sixth classes of creditors. As to the fifth class the direction is that, by and with the residue and remainder of the net proceeds and avails, if any there should be, the assignees shall pay and discharge all copartnership debts and demands of the said firm of Talcott & Hale, for which the
Several objections are made to these provisions. It is insisted that the assignors have provided for the payment of debts which they did not owe. In other words, that they have devoted their property to the payment of the debts of other persons, which they, the assignors, were not liable to pay. If the assignors by the assignment, have appropriated their property to the payment of debts not owing by them, and not contracted on their account, to the exclusion and prejudice of their own creditors, it cannot be doubted that the assignment is fraudulent and void as to their creditors. There can be no dispute about the law of such a question. Counsel do not differ about it. The difference is touching the fact, and-both parties refer to, and rely upon, the assignment itself for the evidence of the fact.
After a careful examination of the pleadings and the assignment, I have come to the conclusion that the learned justice, at the special term, erred in finding, from the evidence, that the assignors had provided for the payment of any debts other than their own. The onus of showing the assignment fraudulent, was upon the plaintiff. Fraud is not to be presumed, but there must be proof of it, and the plaintiff relies upon the face of the assignment for the proof. It is said that the direction to pay certain sums upon certain notes or drafts, which notes or drafts are described as being made by other persons, is controlling evidence „ of an attempt to appropriate the property of the assignors to the payments of debts other than their own. It may be conceded that upon the production of a note made by John Doe, the presumption would be that he alone owed the debt; and in the absence of other evidence, there would be no presumption that he had contracted the debt on account of any other person, or that any other person was liable to indemnify him. But the present case differs from the case supposed. Talcott & Hale, the assignors, speak in the assignment, and their declarations are resorted to as evidence. And what do those declarations prove? They begin, by declaring, in substance, their insolvency; that they are indebted individually and as partners; that they
On consulting the complaint, it will be found that it is extremely meager, touching any question of fraud. It is alleged that the assignors continued in possession of the assigned property. This is denied in the answer. The plaintiff says that he “is advised and charges that the said assignment is merely colorable, and was made with intent to hinder, delay and defraud the creditors of Talcott & Hale.” This is denied in the answer. There is no allegation that the assignors had provided for the payment of debts other than those they owed. The assignment is referred to and copied. I doubt whether the point or question we are considering ever occurred to the defendants until it was raised upon the argument at special term. However this may be, both parties rely upon the assignment as proof of their positions, or rather the plaintiff relies upon it as proving its position that the assignors have misapplied their property, and thus attempted to defraud their creditors. In my opinion, the assignment fails to prove it.
In the fifth class the assignees are directed to pay the company debts of the firm of Talcott & Hale, for which the assignors and Angelica Talcott are severally and jointly liable, as drawer, indorser, guarantor or otherwise; and in case Andrew T. Hale shall be compelled to pay the whole or any part of two drafts for $8000 each, drawn by E. B. Hale on B. H. Buckingham and indorsed by the said Andrew, at the request of and in part for the accommodation of the parties of the first part, then the assignees shall pay to the said Andrew T. Hale the amount that he may be compelled to pay on said drafts. It is argued by the plaintiff, that this provision shows an in
In the sixth class there is a direction to pay $1350, being the amount of a promissory note made by Fassett <fc Wash-burn, indorsed by the assignors and discounted by Duncan, Sherman & Co.; but this last mentioned sum is not to be paid until Fassett & Washburn shall have surrendered up and delivered over to the assignees, to be canceled, a note bearing even date with the one last mentioned, for the same amount and maturing at the same time, made by the assignors, and payable to the order of Fassett & Washburn. It is insisted that this provision shows the assignment fraudulent, and renders it void. That a condition is here imposed upon the creditor, which the law will not allow, and one which Duncan, Sherman & Co. were under no obligation to perform, and which it might be out of their power to perform. It is undoubtedly true that the debtor cannot make terms in his assignment which shall result to his benefit, or impose conditions upon the creditor which the law has not imposed, and which shall delay and hinder him. The positions of law, as advanced by the plaintiff’s counsel, are sound, but have they any application to the case before us 1 .The assignees are directed to pay $1350, being the amount of a promissory note made by Fassett & Washburn, indorsed by the assignors and discounted by Duncan, Sherman & Co. It may be remarked that the direction is not to pay the note, or to pay Duncan, Sherman & Co., but to pay the amount of the note. The note was to mature in about a month after the assignment was made, and Fassett & Washburn were the makers. They were a firm doing business in Albany, and the presumption was that this firm was responsible." They were liable to Duncan, Sherman & Co. and could be compelled to pay. I cannot, therefore, well understand how the assignors could have designed to hinder and delay Duncan, Sherman & Co., or how the condition could affect them, as the holders of the note.
In the assignment it is declared that inventories of all the property assigned shall be made, with all reasonable dispatch, and be annexed and considered a part of the instrument. It is objected that these inventories were not made. I do not so understand the evidence. Cagger, in his affidavit—made evidence by stipulation—says that the schedules were made and annexed to the assignment. This affidavit ivas not to be used, except for the purpose of disproving fraud not apparent on the face of the assignment. The clause in the assignment relating to inventories does not prove fraud. It is very different from that contained in the assignments referred to by the counsel. (Averill v. Loucks, 6 Barb. 470. Riggs v. Murray, 2 John. Ch. R.
In my opinion the plaintiff has failed to show fraud, in the present case. The assignment, properly understood, does not prove it, and there is no other evidence. The question is, whether the provisions of the instrument are such, that when carried out according to their apparent and reasonable intent, they will be fraudulent in their operation. We should not presume fraud from the provisions of an instrument which admits of a contrary construction. (Ward v. Tingley, 4 Sandf. Ch. R. 480. Brigham v. Tillinghast, 15 Barb. 618, 620. Jacobs v. Allen, 18 id. 550. Kellogg v. Slauson, 15 id. 56. S. C. 1 Kernan, 304. Jewett v. Woodward, 1 Edw. Ch. R. 197. Archibald v. Thomas, 3 Cowen, 284.)
The judgment of the special term should be reversed, &c.
Mtillett, J., concurred.
Bowen, P. J., dissented.
Judgment reversed.
Bowen, Mullett and Marvin, Justices.]