25 Barb. 408 | N.Y. Sup. Ct. | 1857
In the absence of a general bankrupt law—so much needed at the present time—the legislature of the state have deemed it wise to curtail, in certain
The 219th section of the code provides that “ where, during the pendency of an action, (meaning of course before the recovery of final judgment) it shall appear by affidavit that the defendant threatens or is about to remove or dispose of his property, with intent to defraud his creditors, a temporary injunction may be granted to restrain such removal or disposition.”
The present plaintiffs having commenced an action against the defendant on their demands, applied accordingly to a judge, during its pendency, for a temporary injunction and receiver» They were met immediately by two objections; first, that their complaint, on its face, admitted that the goods had been sold on an unexpired credit of eight months. The credit, however, it is alleged, was obtained fraudulently, and the right to it thereby forfeited; so that the seller had the option of treating the transaction as a cash sale. The plaintiffs in their complaint make the election and the necessary averments to warrant it. I must assume, therefore, for the purposes of the motion, that a present prima facie cause of action exists.
But fraud in contracting the debt is, alone, not sufficient to warrant a preliminary injunction on all the debtor’s property, before the debt has been established by final judgment; it must further appear that he is about to “ remove or dispose of his property with intent to defraud his creditors.”
In the present case it did so “ appear by affidavit” to the judge at special term, and he accordingly, after hearing both parties, did grant a temporary injunction to restrain the defendant from removing or disposing of any part of his property; but added the words, “ with intent to defraud his creditors, or any of them;” leaving him free to make any other disposition, and refusing to place his property in the hands of a receiver. In this order, although founded on the assumption of threatened fraud, the defendant acquiesces. The plaintiffs alone appeal; insisting that the property of the defendant should have been taken
Every day’s experience shows that in disputes between partners, a receiver is the invariable attendant upon an injunction. The practice proceeds upon the principle that where two parties have an interest in goods and debts, and neither is willing to trust the other, both should be restrained and an impartial intermediary appointed to protect the rights of both. The parties are regarded in some sense as trustees for each other, and liable, as such, to be removed for cause, at the instance of each other. In the case of limited partnerships a quasi trust is regarded as existing, even as between the firm and its creditors; and the latter as a consequence, and independently of the code, may interpose without first getting a judgment lien. (2 John. Ch. 144. 7 Paige, 583.)
The code, even before the recent amendments, seems to have contemplated an extension.of the principle to the general case
Mitchell, Roosevelt and Peabody, Justices.]