67 N.Y.S. 472 | N.Y. App. Div. | 1900
This action by two judgment creditors was brought to set aside a bill of sale made by the National Silk Label Company, a foreign corporation, to the firm of William MacFarlane & Co., upon the ground that it was fraudulent and void, having been given with intent to hinder, delay, and defraud creditors; and to compel the defendant, the Garfield National Bank, to account for the proceeds derived from a sale of the property covered by such bill of sale under an execution issued upon a judgment which it had obtained against MacFarlane & Co. The plaintiffs had a judgment setting aside the bill of sale and directing the Garfield National Bank to account for the proceeds derived from the sale under its execution to all of the creditors of the silk label company. From this judgment the plaintiffs and the Garfield National Bank have appealed; the plaintiffs upon the ground that they are entitled to a preference over the other creditors of the silk company, and the Garfield National Bank upon the ground that by virtue of its levy and sale, and the payment over of the proceeds of the property sold under the execution, it is entitled to hold same, irrespective of the other creditors of the silk company. There is no dispute between the appealing parties as to the material facts involved in the subject-matter of the litigation. These facts are substantially as follows: On and for some time prior to the 25th of April, 1896, the firm of William MacFarlane & Co. was engaged in manufacturing “gum silk,” and for the purpose of utilizing the same the members of MacFarlane & Co., or the relatives of their families, organized, under the statutes of New Jersey, a corporation,—the National Silk Label Company. The business of the corporation and of the co-partnership was carried on separately, but in the same building, and both had offices at 81 Grand street, in the city of New York. On the 25th of April, 1896, the co-partnership and the corporation were insolvent, and unable to meet their maturing obligations, including certain notes held by the plaintiffs
The conclusion at which we have arrived renders it unnecessary for us to pass upon many of the questions discussed in the briefs submitted. The bill of sale from the silk company to MacFarlane &
“No conveyance, assignment or transfer of any property of any such corporation by it, or by any officer, director or stockholder thereof,' nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder when the corporation is insolvent, or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation shall be valid. Every person receiving, by means of any such prohibited act or deed of the corporation, shall bé bound to account therefor to its creditors, or stockholders or other trustees. * * * Every transfer or assignment or other act done in violation of the foregoing proceedings of this section shall be void.”
The silk company was a foreign corporation, and the section of the statute quoted applies to domestic corporations. It does not apply to foreign corporations. In Vanderpoel v. Gorman, 140 N. Y. 569, 35 N. E. 934, 24 L. R. A. 550, the court, referring to this section, said:
“We have no doubt that this section refers solely to domestic corporations. The whole of the chapter from which the section is taken is, in substance, a revision of the law relating to certain classes of corporations, as contained in the Revised Statutes and their amendments, and it is plain that those statutes generally, if not in every provision, refer to domestic corporations only.”
See, also, Coates v. Donnell, 94 N. Y. 168; Lane v. Wheelwright, 69 Hun, 182, 23 N. Y. Supp. 576.
Nor has section 64 of chapter 185 of the Laws of 1896 of New ■Jersey any application. This section, among other things, provides that:
“Whenever any corporation shall become insolvent, or shall suspend its ordinary business for want of funds to carry on the same, neither the directors nor any officer or agent of the corporation shall sell, convey, assign or transfer Any of its estate, effects, choses in action, goods, chattels, rights or credits, lands or tenements, nor shall they or either of them make any such sale, •conveyance, assignment or transfer in contemplation of insolvency and every such sale, conveyance, assignment or transfer shall be utterly null and void as Against creditors, provided that a bona fide purchase, for a valuable consideration, before the corporation shall have actually suspended its ordinary business, by any person without notice of such insolvency, or of the sale being made in ■contemplation of insolvency, shall be invalidated or impeached.”
This statute of New Jersey is a general one. It is not a part of the charter or the organic law of the silk label company, and there
“It is a conceded principle that the laws of a state have no force proprio vigore beyond its territorial limits. But the laws of one state are frequently permitted, by the courtesy of another, to operate in the latter for the promotion of justice, where neither that state nor its citizens will suffer any inconvenience from the application of the foreign law;” and, quoting the words of Paige, J.: “The statutes and laws of a country have no intrinsic extraterritorial force. They bind "only its own citizens, and citizens of other countries while within its jurisdictional limits; and they bind directly only property within those limits. They do not affect or bind property out of its territory, or persons not residents therein. Whatever extraterritorial force those statutes and laws are permitted to have is the result of the voluntary consent of other nations. This consent is accorded upon the principle of comity of nations alone, and not from any international obligation to yield to such statutes and laws the slightest obedience. But no nation, on any recognized principles of comity, is, morally or otherwise, bound to enforce foreign laws prejudicial to its own rights, or the rights of its own citizens.”
And as was also said in Mabon v. Electric Co., 156 N. Y. 201, 50 N. E. 806:
“While the laws of a foreign state have no force as such in this state, still our courts uphold the title of a foreign assignee or receiver upon the principles of comity. If the title is by virtue of a voluntary conveyance or transfer, it is sustained as against all, including even domestic, creditors; but, if it depends upon a foreign statute or judgment, it is sustained against all-except domestic creditors.”
What is here said of the statute of another state of course does not apply to the statute which forms a part of the charter-of the corporation, or under which it was organized, and which must be taken notice of by all persons dealing with the corporation. The distinction between a general statute and one which forms a part of the organic law of a corporation is pointed out in Hoyt v. Thompson’s Ex’rs, supra. Judge Comstock, delivering the opinion of the court in that case, said:
“There is no doubt that all persons dealing with or deriving title from a foreign corporation are bound to take notice of every limitation upon its powers contained in its charter. The question of corporate powers must, of necessity, enter into all such dealings. But other laws of a general nature, enacted by a foreign state, although tending to abridge or modify those powers, fall within the well-settled rule that, where knowledge of a foreign law is material upon a question of good faith, such knowledge must be shown. This rule must be applied to the case before us. Thompson was a citizen of New York, and purchased the bond and mortgage in controversy within this state. As his title rested upon the assignment of the Morris Co. to the state of Michigan, it would be defective if the assignment were forbidden by the charter of that company. But the statute of 1829 related to all the corporations in the state of New Jersey. It was substantially an insolvent law, applicable to those bodies, and having no extraterritorial force.”
Here no claim is made but that the Garfield Bank acted in good faith, not only in procuring its judgment against MacFarlane & Co., but also in issuing the execution, and causing a sale to be made under it of the property held by MacFarlane & Co. The levy, it will be remembered, was made by a creditor of the state upon goods situ
“The principle is well established that, where tangible personal property has been levied upon by execution prior to the commencement of an action or proceeding in the nature of a creditors’ bill to set aside transfers or judgments, the property is to be regarded as that of a judgment debtor; and, where there was a prior valid levy or lien, it is superior to any subsequent lien of the creditor who instituted such action or proceeding. A creditor is entitled to the preference acquired in the ordinary course of legal procedure, notwithstanding the insolvency of the corporation.”
And Wise v. Grant, 140 N. Y. 593, 35 N. E. 1078, is also in point. In that case it was held that, “where a sale and delivery of goods is procured by fraudulent representation on the part of the purchaser, the title and possession pass to him notwithstanding the fraud, subject to the right of the vendor to rescind the contract of sale”; and until he “has exercised his option to rescind either directly or by some act in disaffirmance of the sale, the purchaser has a leviable interest in the goods, and, if levied upon by attachment or execution against the purchaser prior to rescission” an action of replevin to recover the goods is not maintainable. The Garfield Bank held a valid judgment against MacFarlane & Co., upon which it caused to be issued an execution, under which the levy was made upon property both the title and possession of which were at that time in MacFarlane & Co. The silk company did not then have either the title or possession. It had at most only the right to reclaim possession by rescinding the bill of sale theretofore given upon the ground that there was either no adequate consideration for it, or that it was made with intent to hinder, delay, and defraud creditors. The creditors or stockholders might also rescind upon the same ground. But to us it seems clear that, so long as the bill of sale remained in full force and effect, until it had been questioned or assailed in some way either by the silk company, its stockholders or creditors, MacFarlane & Co. had a leviable interest, not only as against the silk company, but its creditors, stockholders, and all others. Upon the execution being delivered to the sheriff, it was his duty to levy and sell, and by such levy a legal lien was acquired upon the property levied upon which ripened into a good legal title when the sale was made. The bank, after the proceeds of the sale had been delivered to it, was substantially in the same position as it would have been had MacFar
It follows that the judgment appealed from must be reversed, and a new trial ordered, with costs to the appellant the Garfield National Bank to abide the event. All concur.