Sewall v. R. M. & I. Russell

2 Paige Ch. 175 | New York Court of Chancery | 1830

The Chancellor.

The objection that as R. M. Russell had assigned all his interest in the property and effects of the firm to his copartner, he ought not to be a party defendant, cannot be sustained. -The complainant’s judgment at law being against him, as well as against Israel, he was a proper party' to a suit seeking satisfaction of that judgment, although the property might all be in the hands of his co-defendant. It is evident from the answer that the judgment to Smith was given to defraud creditors ; as there could be no good reason for giving a judgment bond conditioned to pay $25,-000 when the debt intended to be secured was less than $3000. The object must have been to cover property to a much larger amount, and to keep it under the control of the defendants, or of their brother in law. As Smith is not a party no decree can be made affecting his rights to the property bid in by him under that judgment. The assignment from one partner to the other of the partnership property to, secure the payment of the partnership debts, was a palpable attempt on their part to keep the property under their own control, and it cannot succeed. Unless there was a surplus beyond the debts of the firm, the assignor had no interest in the partnership effects which could pass by the assignment so as to give any greater interest to the assignee than he before possessed. The only effect of the assignment was to exclude the assignor from any control over the property ; and it is even doubtful whether it could have that effect here. I think also the assignment must be considered fraudulent as against the creditors of the firm, in consequence of the trust to pay the assignor’s expenses in obtaining the benefit of the insolvent act, and the' costs of defending suits which might be brought by the creditors for the recovery of their debts.

There must be a decree declaring the assignment fraudulent and void, as against the complainants and other creditors of the firm. It must also be referred to a master in the city of New-York to appoint a receiver of the property and effects of the company, and of the defendants individually; and to collect and apply the same to the satisfaction of the complainant’s judgment. And the defendants must assign and deliver over on oath to the receiver all the property and effects of the firm, and of each of them individually, and all books of account and choses in action relating thereto, as the master shall direct. The receiver is also to be directed to pay out of the proceeds thereof the complainant’s costs in this suit to be taxed, and the amount of his judgment with interest. The proceeds of the property and effects of the firm to be first applied for that purpose.