8 N.Y.S. 505 | N.Y. Sup. Ct. | 1890
Lead Opinion
Upon the affidavit of one of the plaintiffs showing a cause of action against the defendant for damages because of alleged fraudulent representations made by the defendant at the time of the sale of certain goods, wares, and merchandise upon credit, an attachment was issued against the property of the defendant upon the ground 'that the defendant had disposed of his property with intent to cheat and defraud his creditors. A motion having been made upon the papers upon which the attachment was granted to vacate the same, such motion was denied; and from the order thereupon entered this appeal is taken.
A good cause of action was set out in the affidavit; and the only question presented upon this appeal is whether there were any facts stated in the affidavit which justified the justice who issued the attachment in concluding that the defendant had disposed of his property with intent to cheat and defraud his creditors. The affidavit in question alleged certain representations made by the defendant as to his financial standing at the time he obtained the credit for the goods in question, and that, relying upon such representations, the plaintiff sold and delivered to the defendant such goods upon credits that had not then expired. Among the representations made by the defendant alleged in the affidavit were that he was perfectly solvent; that the plaintiffs were his largest creditors; and that, outside of the moneys due and owing to them, he owed only to the amount of one or two thousand dollars, and solely for merchandise. These representations, it is claimed, were false, because, at the time they were made, the defendant had made .and delivered to one Charles F. Levy, his son, a promissory note for $6,400, which note the defendant at the time knew he could not pay, and which was not made for goods sold and delivered. The affidavit further states that the defendant, having concealed the fact of his alleged indebtedness to his son Charles F. Levy, as aforesaid, from the plaintiffs, on or about the 11th of October, 1889, permitted and caused the said Charles F Levy to commence an action in this court upon said note and indebtedness, and thereafter, for the purpose of expediting judgment in said action, offered judgment in the sum of $6,000, which offer was accepted, and judgment was thereon entered in favor of said Charles F. Levy against the defendant for the sum of $6,017.90, and that an execution was issued-upon said judgment, and the sheriff thereupon levied upon the whole of the stock in trade and fixtures of the defendant under the said execution. The affidavit contains the further averment that this concealment of the promissory note, and the levy upon the execution, was part of a scheme on the part of the defendant to dispose of his property .with intent to cheat and defraud his creditors, especially these plaintiffs. It is apparent upon the face of the affidavits that most of the allegations in regard to the fraud connected with the entry of the judgment are mere surmises upon the part of the atiiant, and there is no evidence whatever to support the same. There is nothing from which we may infer that the holder of the promissory note, in the proceedings which he took, did anything more than that which the law allows, in endeavoring to secure the payment of the just claim which he had against the defendant. And the question thus presented is whether the offer to allow judgment upon the part of the defendant in the action brought by Charles F. Levy to secure the payment of the indebtedness due to him is such a fraud upon the creditors of the defendant as to warrant the issuing of an attach-
It is, however, suggested that, the whole of the stock of the defendant having been levied by virtue of the execution, such seizure in favor of one of the creditors of the defendant, brought about with his consent, is opposed to the policy created by chapter 503 of the Laws of 1887, and that by that act the right of an insolvent debtor to prefer one creditor, or class of creditors, to others, has been restricted to one-third of his estate, and that the provision then made was enacted to prevent abuses of this description which had so frequently arisen in the disposition of estates of insolvent debtors. By that act it is provided that in all general assignments of the estates of debtors for the benefit of creditors any preferences created therein, other than for wages or salaries, shall not be valid, except to the amount of one-third of the assigned estate, after deducting such wages or salaries, and the costs and expenses of executing such trusts; and, should said one-third be insufficient to pay in full the preferred claims to which, under the provisions of the section, the same are applicable, then said assets are to be applied to the payment of the same pro rata to the amount of each of said preferred claims. It will be seen that the act relates entirely to general assignments. It provides that, in all general assignments, any preferences therein created shall not be valid, except to the amount of one-third in value of the assigned estate, etc. The. fact of an excess of preference in no way affects the validity of the assignment. It only requires that the preferences shall be reduced pro rata until the same shall not exceed one-tliird of the assigned estate. If the policy of the law, as therein declared, should be held to apply to the judgment in question, it clearly would not render the judgment totally void, because the law in no case makes any preference inoperative, except so far as it exceeds one-third of the estate. Sow, there is no way in which it is possible to ascertain, in the case of a judgment and execution, as to what one-third of the estate would be; and, as a consequence, it seems to be clear that the provisions of the act in question can have no application to the case of a judgment, and an execution levied thereunder. The provisions of the law in reference to remedies of that description remain unaltered and unabridged; and it seems to us that it would be a violent assumption to hold that, because of the provisions of this
Brady, J., concurs.
See Spellman v. Freedman, 7 N. Y. Supp. 693.
Dissenting Opinion
(dissenting.) The attachment states the grounds upon which it was issued to be that the action was for damages for fraudulently obtaining and converting merchandise, and for the disposition by the defendant of his property with intent to cheat and defraud his creditors. In support of these facts, it was stated in the affidavit made by one of the plaintiffs that they had a good cause of action against the defendant for damages for a fraud, and for fraudulently obtaining and converting the goods, wares, and merchandise of the plaintiffs. The affidavit then proceeded to state that the defendant applied to the plaintiffs for the purchase of a quantity of tobacco. He had previously been a purchaser from the Arm, but at this time desired to increase his purchase to so large a5 extent that a statement was required of him of his financial condition. Such a statement was made by the defendant; and in the statement made he is sworn to have represented to the plaintiffs “that he was perfectly solvent; that the plaintiffs herein were his largest creditors; that, outside of the moneys due and owing them, he owed only to the amount of one or two thousand dollars, and solely for merchandise; and that they might well trust him, since his business was prosperous and increasing so that he needed those goods for sale.” The affidavit then proceeded to state that the plaintiff relied upon this statement, and sold and delivered to the defendant goods, wares, and merchandise of the value and at the price of $2,828.27, upon a credit ranging from five to nine months. This sale took place in the month of May, 1889, and no payment upon the purchase price
The only other or further requirement is that contained in section 636 of the Code of Civil Procedure; and that has provided, to entitle the party to an attachment in addition to the cause of action, that it shall be made to appear, either that the defendant is not a resident of the state, or that he has departed from the state with intent to defraud his creditors, or to avoid the service of a summons, or keeps himself concealed in the state with the like intent, or that he had removed, or is about to remove, from the state with intent to defraud his creditors, or has assigned, disposed of, or secreted, or is about to assign, dispose of, or secrete, his property with the like intent. And, to bring this case within this provision of the Code, and establish the fact that the defendant had assigned or disposed of his property with intent to defraud his creditors, it was further shown by the affidavit that an action had been commenced and judgment recovered against him, by his son, upon the note which has been mentioned.
This action was commenced on or about the 11th of October, 1889; and on the!4th of the month an offer was made to allow the plaintiff in the action to take judgment against the defendant for the sum of $6,000, with costs. This offer was on the same day accepted by the plaintiff in that action; and judg
See Spellman v. Freedman, 7 N. Y. Supp. 698.