150 N.Y. 258 | NY | 1896
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The most serious question that arose in this case was the question of fact in relation to the fraud alleged to have been perpetrated by the judgment debtor and his wife against the creditors of the former. A careful examination of the record has convinced us that the affirmance by the General Term of the facts found by the trial court has placed that question beyond our reach, for it cannot be seriously contended that there is no evidence to support the findings of fact. (Crim v.Starkweather,
Courts scrutinize with the utmost care business transactions between husband and wife alleged to be fraudulent as against creditors, because fraud is so easily practiced and concealed under cover of the marriage relation. Fraud is one of the broadest issues known to the law, for it can seldom be proved by direct evidence, but is dependent upon circumstances which, separately considered, may be quite immaterial, but when combined are not only material but have great persuasive force. (1 Wheaton's Ev. § 33.) The facts in an issue of commercial fraud are frequently drawn with difficulty from hostile witnesses, whose effort is to conceal as much and reveal as little of the truth as their conscience and skill will permit. When the witness is a party his testimony may be rebutted by other *266
evidence introduced by the party in whose behalf he was called. (Code Civ. Pro. § 838.) Upon the trial of an issue, such as that now under review, much latitude has been allowed in modern times, not only as to the method of examination, but also as to the substance of the evidence itself. (Bump Fraud. Conv. 579; Story Eq. Jur. § 190.) In determining whether a given transaction was fraudulent, courts carefully look at the ordinary transactions of the person charged with fraud, and especially at such entries upon his books, bearing upon the subject in hand, as were made at a time when he could have had no object in manufacturing evidence. Accurate bookkeeping should present a complete history of a man's business affairs, and the entries made in the ordinary course of his business are regarded as acts and not as mere declarations. While they are not received in an ordinary action at law to recover a debt, except under peculiar circumstances, or as against the party who kept the books, in an action in equity, and especially upon the trial of what are known as "creditors' actions," they are admitted not only against the judgment debtor, whose transactions they are supposed to record, but also against those deriving title to property from him, as to such entries as were made while such property was still in his possession. The absence of entries required by commercial usage, especially when transactions with other parties, similar to those in question with the parties before the court, are duly entered, is regarded as a competent fact, whenever the entries themselves, if duly made, would have been competent. Although the books are not competent as against a creditor seeking to recover a judgment for his debt, they may be introduced by a judgment creditor to support an attack in equity upon the transfer of property by the judgment debtor to a third person, claiming a valid debt as the consideration for the transfer. Entries made in the ordinary course of business, while the debt in dispute was in process of contraction, are competent as to another creditor, for the purpose of showing that there was no such debt, or that it was materially less than the amount claimed. While such *267
evidence is not conclusive, it has a bearing upon the question of the intent and good faith of the judgment debtor, as it shows how he acted or failed to act with reference to a principal fact. If the transfer attacked is defended as a preference given in consideration of a precedent debt, and it appears that the debtor in the common course of business did not regard or treat the alleged debt as genuine, it bears upon his honesty in making the transfer. Any evidence tending to establish that fact would be competent, not only as against himself, but also as against those standing in his shoes, for the motives of both parties to the acts effecting the preference are open to inquiry. Unless both acted in good faith, the preference, under ordinary circumstances, cannot stand. The good faith of the debtor, therefore, is an important element in the title of the person accepting the preference. If his acts, such as the deliberate record made in his own books, show that he thought there was no such debt, or that it was materially less than was subsequently claimed, they may be received upon the question of fraudulent intent. Where, as in this case, the most intimate relation of life existed between the alleged debtor and creditor, and the former did all the business for both, and was in fact the commercial alter ego of the latter, the entries are of peculiar significance, because made by the one who represented both contracting parties and who alone knew all about every transaction. When there is no sign of unfriendly feelings between the alleged debtor and creditor, and no reason to believe that the books were unfairly kept, the entries are entitled to great weight, for they are the contemporaneous record of deeds done, made by one who knew the facts and had no motive to set down or omit anything to injure the creditor. This was held, in substance, in the late case of Loos v. Wilkinson (
We think that the evidence in question was competent because it tended to show acts of the debtor, done in the ordinary course of his business, while he was still the owner of the property subsequently transferred in consideration of the alleged indebtedness. As we find no error in the record upon the appeal from the judgment, the latter should be affirmed, *269
but the appeal from the order should be dismissed, because "the decisions of one court resting in discretion are not reviewable in another unless such review is especially authorized by law." (Reilley v. President, etc., D. H.C. Co.,
The judgment should be affirmed and the appeal from the order dismissed, with costs upon each appeal.
All concur.
Judgment accordingly.