35 N.Y.S. 138 | N.Y. Sup. Ct. | 1895
The alleged defense, and that which the defendants gave evidence tending to prove, in answer to the charge of fraud, was that the sale and purchase were made in good faith and for a consideration existing in the indebtedness of Thomas Bolton to the defendants Mrs. Bolton and Sherwood, respectively, and in payment of such indebtedness to them. It appears that Thomas Bolton commenced the business in or about the year 1872, and continued until early in the year 1883, when, by reason of a personal injury received by him, he was advised to discontinue his business, for a time at least. He then sold out to G-oodger and Naylor for the consideration of $33,000. They paid him cash $14,000, and the residue by their notes on time. This $14,000 he let his wife (the defendant Catherine Bolton) have, and it was deposited in bank and in securities in her name, and by them the fund, however invested, was then apparently treated as belonging to her. In the fall of 1883 he repurchased the business, and thereafter carried it on until the sale to the other defendants on the 2d day of August, 1893. This sale was evidenced by a written bill of sale made by the seller, accompanied by an agreement, in writing, of the parties to the sale, stating, among other things, that the consideration was an indebtedness to Sherwood of $11,744.56, all represented by promissory notes, except $1,492.42 in open account, and indebtedness to Catherine Bolton of $8,200, in two promissory notes, and a further indebtedness to her in a large amount for moneys loaned by her to him, and that he sold the property to her and Sherwood, and they purchased it in payment and satisfaction of his indebtedness to them. After Bolton repurchased the property, and in 1884, the plain Van Voorhis became his accommodation indorser, and continued to indorse his paper up to near the time of his sale in 1893, and the judgments recovered by the bank plaintiffs were upon notes so indorsed by him. And in the meantime Bolton obtained from his wife, for use in his business, her moneys and securities in which investments had been made by her. By written memorandum, of date January 31, 1893, by them subscribed, they made what purported to be a statement and settlement of matters between them, the result of which, as there represented, was an indebtedness of Bolton to his wife of $18,196.96, which they adjusted at $18,000, and he agreed to and did convey to her some property, and transfer to her certain claims, amounting together to $4,166.79, thus leaving a balance of $13,833.21 due her. This constituted the apparent consideration of the sale to her of the undivided half of the property in question. A creditor has the lawful right to transfer property to any, and less than all, his creditors in payment of his debts owing to them, and they to accept it in payment, to the exclusion of other of his creditors, provided it is done in good faith for such purpose, and has a reasonably adequate consideration in the amount of the debts for the payment of which the transfer of the property is made. Wilder v. Winne, 6 Cow. 284; Bank v. Fitch, 48 Barb. 344; Loeschigk v. Hatfield, 5 Rob. (N. Y.) 26, 51 N. Y. 660; Hale v. Stewart, 7 Hun, 591; Murphy v. Briggs, 89 N. Y. 446. The fact and amount of the liability of Bolton to Sherwood are not seriously questioned.
The view here taken is that whether or not the sale was made with intent to defraud the other creditors, and whether the act of purchase was infected with a like imputation, were questions of fact, within the province of the trial justice to determine, and his conclusion in that respect was permitted and supported by the evidence and the inferences legitimately derivable from it. This may have been founded somewhat upon the fact, as found, that the debts which Bolton owed the purchasers were much less in amount than the value of the property. He had annually for some years furnished to Van Voorhis statements of his assets and liabilities. While the later ones had shown much less balances in his favor than the earlier ones, that of June, 1893, showed a balance of resources over liabilities of $25,550.46. There was some evidence on the part of the defendants tending to prove that such statement was incorrect,, and that his resources were much less than his liabilities, and not equal in amount to the indebtedness, before mentioned, to Mrs. Bolton and Sherwood. The trial justice, however, found that the value of the property was $35,000. He also found that the consideration,, which was $13,952.01, of the sale made by Sherwood to Behn on August 15, 1893, was not inadequate, that the sale was of all of Sherwood’s interest in the property which had been transferred to him by Bolton except certain accounts, which before then had been collected, and a considerable amount of the stock which had by Sherwood been made up and sold. By reference to his opinion it seems that the trial justice, in the process by which he illustrated that the-value of the property was considerably reduced when Sherwood sold to Behn, assumed that Sherwood had received payment forthe $7,400 of manufactured goods he had shipped to customers before the sale-to Behn, and which, less the expense to him incurred, amounted to $5,400, and that he also had the benefit of $4,000 of accounts transferred by Bolton, thus reducing the property $9,500 in value during the time intermediate the two sales, and giving adequacy to- the-consideration of the sale by Sherwood of his interest to Behn. The evidence does not seem to warrant the conclusion that the value of the property was in that manner, to such extent, reduced within that time. The evidence on the subject is to the effect that the bills for goods shipped during the time between the two sales, and the accounts transferred by Bolton to his wife and Sherwood, remained, unpaid, less about $300, at the time of the sale to Behn, that Sherwood’s interest in them, as in the other property, was transferred in that sale to him, and that during that time Sherwood paid out in and about the business $2,698, and received $444.18, leaving a balance of $2,253.80 to his credit. These facts are mainly represented by the evidence given by Sherwood, and are to some extent corrob
It is true that exception was taken to the finding on the subject of the receipts from goods shipped and from accounts transferred to Mrs. Bolton and Sherwood; but that finding has no essential bearing upon the issues between the parties to this controversy. The misapprehended fact, that the value of the property had been reduced by taking out of it $9,500 before the sale to Behn, may have led to the conclusion that the consideration of the sale to him was not inadequate. This was the only material or available bearing of that fact, and it does not concern the remaining parties to the record.
The more serious question arises upon exceptions taken to the reception of evidence which may have led to the conclusion that the property transferred to Mrs. Bolton and Sherwood had the value of $35,000, and that the consideration of the sale was inadequate. A witness on the part of the plaintiffs went to the factory in September or October, 1893, with a view of ascertaining the value of the property transferred by Bolton to the other defendants on August 2, 1893. He there found the book containing the statement called “inventory,” made by Bolton or by his direction June 15,1893, before mentioned. The book was offered and received in evidence for the purpose of proving that the value of the merchandise as there represented was at that time $8,934.09. The sales book, cash book, and ledger of Bolton were also offered and received in evidence, and from those books the witness stated or read, as it there appeared, that after June 15,1893, and prior to the 2d day of August following, the amount of merchandise purchased was $11,400, the amount of cash paid for labor, $5,100, and the amount of new accounts charged, $8,500, making together $33,934.09, which, with the estimated value of the machinery, fixtures, furniture, lasts, dies, and patterns, made $43,354.22, from which he deducted the amount of the accounts which had been transferred to Van Voorhis, $5,003.62, leaving a balance of $38,350.60, thus represented as the value of the property sold and transferred by Thomas Bolton to Mrs. Bolton and Sherwood. The fact, so assumed, that the merchandise on hand June 15th may not have been reduced by the sales during that time is not very apparent. That, however, is not important for the purposes of the question here presented. When those books were severally offered in evidence, objections were taken by the defendants Mrs. Bolton and Sherwood to the reception of them as evidence against them, on the ground that the entries contained in the books were hearsay evidence, and, as against them, incompetent. The objections were severally overruled, the books received in evidence,
As has already been observed, there was evidence tending to prove that the sale was made, and the property taken in payment of debts owing by the vendor to the purchasers. That being so, the purchase was for a valuable consideration, within the meaning of the statute. Murphy v. Briggs, 89 N. Y. 446. The value of the property was a legitimate fact bearing upon the main issue; and those entries in the books apparently constituted the evidence upon which it was found by the court, as against the purchasers, that the consideration was inadequate. It is true that in respect to the items of amount of cash paid for labor and salaries ($5,100), and of new accounts charged ($8,500), there was some other evidence to the same effect. But no other evidence in the record tends to prove anything like the amount of merchandise on hand between June 15, and August 2, 1893, as that indicated by the entries in the books. And, in view of the fact which that evidence tended to prove, it cannot be seen that the result reached by the trial court, as against Mrs. Bolton and Sherwood, may not have been and was not in some sense attributable to it, although it possibly may have been controlled wholly by other considerations. The exceptions to reception of such evidence against those two defendants were well taken, and the error such as to require the direction of a new trial as to them.
The further question, relating to the nature and form of the judgments directed against those defendants, is not considered on this review. If that question had been reached, and any correction found to be necessary, it could have been accomplished by modification.
There was no error as against the defendant Thomas Bolton. The judgments against the defendant Thomas Bolton should be affirmed, and as to the other defendants reversed, and new trials granted, costs to abide the final award of costs. All concur.