6 Barb. 91 | N.Y. Sup. Ct. | 1849
Upon the facts disclosed in the answer I cannot see how the sale, by Hart, of his stock of goods in his store to Miller, can be upheld. Hart and Miller admit, in the answer, that on the 13th of October, 1840, the day of the sale, Hart was largely in debt, and embarrassed in his business and unable to pay his debts, and that for the purpose of avoiding a great sacrifice of his goods, and of applying the whole of the same in a just and equitable manner, he sold such goods to Miller for $1500, and received from him two notes for $400 each, payable in one and two years after date, and allowed the residue of the purchase money to be retained by Miller in payment of a debt of $63 which Hart owed him, and to secure him for his liabilities as endorser or surety for the then late firm of Miller <fc Hart. And Hart and Miller also admit in their answer that the paper on which Miller was either endorser or surety for the firm of Miller & Hart was not taken up by Miller, and that the same remained unpaid. Miller knew, when he purchased the goods, that Hart had been prosecuted; and he undoubtedly also knew that he was then insolvent. And although he had, by the purchase of the goods, received the full amount of the note on which he was endorser or surety, such notes remained unpaid, and Hart continued liable thereon. From these facts, and from the fact that the goods were sold to Miller on a long credit, it seems to me that the inference must be deduced that the sale of the goods was made with the intent to hinder, delay and defraud creditors. The single fact of a sale of all Hart’s goods on a credit of one and two years for the greatest portion of the purchase money, when he was irretrievably insolvent, and while suits against him by his creditors were pending, is quite conclusive as to the intent to hinder, delay and defraud his creditors. The sale of the goods in the store must be adjudged fraudulent and void. I think the allegations in the bill sufficient to put in issue the validity of this
The assignment to Livingston is not fraudulent on its face. It devotes, unconditionally, the whole of the property assigned to the payment of the debts of the assignor. It contains no reservation or condition for his benefit. It contains no provision calculated to hinder or delay creditors. By the assignment the assignee was bound immediately to convert the property assigned into money, and apply the proceeds in payment of the debts, in the order directed in the assignment. A man in embarrassed or insolvent circumstances, is not precluded from making an assignment of his property, in trust for the payment of his creditors. His assignment is valid if it unconditionally and absolutely devotes the whole of the property assigned to the payment of his debts, if it be made without any intent to hinder, delay or defraud his creditors. And if the assignment is valid in its creation, no subsequent fraudulent or illegal acts of the parties can invalidate it. There was no necessary connection between the sale of the goods in the store, and the assignment. And I do not think the evidence authorizes the conclusion that Livingston, when he accepted the assignment, did so with the intent to hinder, delay or defraud the creditors of Hart. The provision of the revised statutes (2 R. S. 136, § 5) which requires the immediate delivery, and an actual and continued change of possession of goods and chattels sold, mortgaged or assigned, does not embrace choses in action. Undoubtedly the non-delivery of a chose in action at the time of its assignment is, at common law, a badge of fraud, but it is not conclusive evidence of fraud, and may be explained. The defendants, in their answer, I think, sufficiently explain why the assignee did not take actual and immediate possession of the household.
Upon a careful examination of the whole case, I have come to the conclusion that the assignment must be declared to be a valid assignment.
In Brownell v. Curtis, (10 Paige, 219,) the chancellor decided that where an insolvent debtor makes a fraudulent transfer of his property, he can not, by an assignment wholly voluntary on his part, take away the right of his creditors generally, to set aside such fraudulent transfer, and transfer that right to his own assignee, for the benefit of preferred creditors, or of all his creditors equally. According to this decision, the right of the creditors of Hart to set aside the fraudulent sale of his goods in the store, to Miller, was not taken away by his assignment to Livingston. If the plaintiffs had not examined Miller as a witness, they would have been entitled to a decree against him for the value of the goods delivered to him by Hart; and the result of such a decree would have been that he would
Whether Miller can hold the note delivered to him by Hart will be a question to be settled between him and the assignee, or the creditor, preferred in the assignment. If the property assigned is not sufficient to satisfy the debts of the creditors preferred in the assignment before those compromised by Miller, he may be liable to pay such creditors the amount of that note; especially if he received it from Hart with notice of their rights. (5 Wend. 20, 566. 12 Id. 484.)
All three of the defendants united in a joint appeal from the decree of the vice chancellor. Hart had no interest in the question as to the validity of the assignment. Whether the assignment is upheld or set aside, his property must alike be applied in payment of his debts. He was not injured by that part of the decree which set aside the assignment; and he could not, therefore, appeal from it. The residue of the decree, as to him, was correct, and must be affirmed. The decree, so far as it sets aside the assignment and charges Livingston with costs, and directs him to deliver over to the receiver all property of the defendant Hart, which came into his hands under the assignment, (except as to the note of $400 given by the defendant Miller, now in his possession,) must be reversed. And the decree must be so modified as to declare that the sale of the goods in the store of Hart, by him to the defendant Miller, was and is fraudulent and void as against the plaintiffs. And the decree to be entered on this decision must direct that the defendant Livingston deliver up to the receiver such remaining note of $400 given by Miller to Hart; and that the defendant Miller pay to such receiver, or to the plaintiffs, such amount of the value of the goods so delivered to him by the defendant Hart, on the sale aforesaid, as shall be equal to the amount due on the said note of $400, and that on such payment being made, such note be delivered up to the said Miller; such sums so paid, to be applied on the debt of the plaintiffs against the defendant Hart. No costs in the suit before the vice chancellor should, under the