77 N.Y.S. 11 | N.Y. App. Div. | 1902
The bank had no lieu upon the deposits of Mr. Johnson for the payment of the note before the maturity thereof, for the reason stated in Jordan v. National Shoe & Leather Bank (74 N. Y. 467), that such right does not arise from mere possession, but from contract or operation of law, and where . there is no contract the law does not imply one until after the note falls due, remains unpaid and no other rights have intervened. Before the note fell due Mr. Johnson had made and delivered the assignment. As Mr. Johnson had the right to draw out his balance at any time before the note fell due, inasmuch as the bank then had no lien upon it, that right passed to the assignee previous to the maturity of the note, so that when the bank attempted to enforce the lien it dealt not with its debt to the depositor, but with his assignee. (See, too, Coffin v. McLean, 80 N. Y. 560, 563.) In Beckwith v. Union Bank of New York (9 N. Y. 211) an insolvent firm with money on deposit in a bank made a general assignment. Thereafter, but before notice of the assignment to the bank, a bill against the firm held by the bank, larger than the deposit, fell due and was charged up by the bank against the account. The court held that the bank had no lien which would have prevented the assignors from drawing out their deposit before the maturity of the bill, that the right passed to the assignees, and that no notice was necessary to perfect that right except that only in default of notice the bank might have so dealt by its subsequent acts as to have affected his rights. (See, too, Lawrence v. Congregational Church, 32 App. Div. 489 ; affd., 164 N. Y. 115.) In Coates v. First National Bank of Emporia (91 N. Y. 20, 27) it is said that the only object of notice is to guard the debtor against dealings with the assignor in the belief that he still owned the debt. The learned counsel for the appellant contends that the plaintiff as trustee. in bankruptcy took the property as though no assignment had been made, and subject to all lawful liens upon it for the reason that the bankruptcy proceedings avoided the
.Mr. Collier, in his work on Bankruptcy, says that such an assignment is voidable and not void, and is good except in proceedings instituted in bankruptcy. (3d ed. pp.41,42, citing many authorities.) Moreover, the present act differs from the act as it existed when MacDonald v. Moore (supra) was decided, in that it provides that all property assigned within four months prior to the filing-of the pietition, with intent to hinder delay and defraud creditors, shall be and remain a pmrt of the assets and estate of the bankrupt, and shall ptass to the trustee, whose duty it shall be to recover and to reclaim the same by legal proceedings or otherwise for the benefit of the creditors. The assignment in the case at bar was not set aside’, but was invalidated by the bankruptcy proceedings. I think, then, that before the defendant had any right to exercise a lien, the title to the deposit vested in the assignee, and that when the
The learned counsel for the appellant contends that under the Bankruptcy Act the right of setoff existed from the time the notes were discounted, citing sections 63 and 68 of the act (30 U. S. Stat. at Large, 562, 565). He points out that section 68, to quote his language, “ provides that in all cases of mutual debts or mutual credits between the estate of a bankrupt and a creditor, the account shall be stated, and one debt shall be set off against the other, and the balance only shall be allowed or paid,” and that section 63, also quoting the counsel’s language, provides that “the ‘debts’ of a bankrupt which may be proved and allowed against his estate are a fixed liability as evidenced' by judgment or an instrument in writing absolutely owing at the time of the filing of the petition against him, whether then payable or not,” and hence he contends that the bank had the right of setoff even if the notes had not fallen due before the bankruptcy proceedings were commenced. I think that those provisions must be interpreted as applicable to the proceedings in bankruptcy and to the incidental proof and allowance of claims, but not as intended to change the principles of setoff in actions. (Munger v. Albany City National Bank, 85 N. Y. 580, 588, citing Sawyer v. Hoag, 17 Wall. 610.) When the plaintiff was declared a bankrupt, there was no mutual debt or mutual credit as between him and the bank, for the reason that he had, before even the filing of the petition, parted with his title to the assignee for the benefit of his creditors, and the claim in effect was that of the creditors as against the bank.
In order to render a preference voidable within section 60 of the Bankruptcy Law (sufra, 562), it is necessary, inter alla, to establish that there was reasonable cause on the part of the creditor to believe that a preference was intended. (Sebring v. Wellington, 63 App. Div. 498.) In Matter of Eggert (4 Am. Bank. Rep. 449) Jenkins, O. J., after a review of many authorities, pertinently
Mr. Collier, in his work on Bankruptcy (3d ed. p. 343), says: “ The present statute does' not make any preferences voidable unless the transferee had reasonable cause at the time of the transfer to believe that a preference was intended. It is to be noted that the reasonable cause is cause to believe, not that the transferrer is insolvent, but cause to believe-that a preference was intended. This would, however, seem to require reasonable cause to believe that insolvency existed, and also reasonable cause to believe there was a preferential intent. The former act as amended (R. S. §§ 5128, ’5129) required that the transferee- should have reasonable cause to. believe the tranferrer insolvent, and that he should also know that the transfer was made as a preference or to defeat the object of the act. Now, no positive knowledge of any fact is required, but simply a reasonable cause to believe that a preference was intended.”
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■ It is - established that the wife had about $12,000 of her own money, collected in April, 1900, upon a policy of fire insurance. It is established that she gave it or loaned it to her .husband, so there-existed at that time the relation of debtor and creditor. Thereafter,' and on May 3,1900, the husband caused to be conveyed to her by third parties, certain premises in Cumberland street and in Forty-seventh street, for which he had exchanged some of his realty. The husband, who was called by the plaintiff, - testified that he had agreed in April to give to his wife that or some other property, in payment or as security for the $12,000, and that as soon as he “ got this piece,” he suggested that he would give it to her, and that he did, thereafter, give, to her the Cumberland street property and this property for the $12,000-. Mrs. Johnson testified that. she
The learned counsel for the respondent says that Mr. Johnson was Mrs. Johnson’s agent, and, therefore, his knowledge was her knowledge. This loses sight of the fact that the transaction now in view is that of a transfer from debtor to creditor, and that it must ^appear that the creditor had reasonable cause to believe that a preference was intended. In this view it makes no difference whether Mr. Johnson. conveyed the premises directly or caused another to convey them. Certainly if he conveyed them directly, his knowledge was not her knowledge, otherwise the provision of the statute would be meaningless.- And I think that his mere direction that the grantor convey to her instead, of first to him that he .might convey to her does not make him her agent in the sense that she is presumed to know all that he knew or is to be charged with his intent.
The subsequent dealings with the bank were isolated from the ■conveyance to Mrs. Johnson. If the conveyance to her was valid, then we have not even the case of an owner of property discharging the debt of another, but of the owner of property discharg
' The judgment should be reversed and a: new trial granted, costs to abide the final award of costs.
All concurred.
Judgment reversed and new trial granted, costs to abide the final award of costs.