161 N.Y. 226, Hilton v. Ernst

Citation:161 N.Y. 226
Party Name:WILLIAM H. HILTON, as Receiver of the KILMER MANUFACTURING COMPANY, Respondent, v. MORRIS L. ERNST and CARL ERNST, Appellants.
Case Date:January 09, 1900
Court:New York Court of Appeals
 
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161 N.Y. 226

WILLIAM H. HILTON, as Receiver of the KILMER MANUFACTURING COMPANY, Respondent,

v.

MORRIS L. ERNST and CARL ERNST, Appellants.

New York Court of Appeal

January 9, 1900

Argued December 15, 1899.

COUNSEL

Page 227

A. J. Dittenhoefer for appellants. No question of fact is presented on this appeal, but only one of law. ( Otten v. M. Ry. Co., 150 N.Y. 395; L. 1882, ch. 409, § 187; Hirshfeld v. Fitzgerald, 157 N.Y. 166; Snyder v. Seaman, 157 N.Y. 449; E. V. B. Co. v. Prosser, 157 N.Y. 289; Griggs v. Day, 158 N.Y. 1; Laidlaw v. Sage, 158 N.Y. 73; People ex rel. v. R. R. Comrs., 158 N.Y. 421; Ayres v. D., L. & W. R. R. Co., 158 N.Y. 254; Marden v. Dorthy, 160 N.Y. 39; Reed v. McCord, 160 N.Y. 330.)

Charles F. Brown for respondent.

BARTLETT, J.

This action is brought by the plaintiff, as the receiver of the Kilmer Manufacturing Company, to recover of the defendants property transferred to them by the corporation when insolvent, with intent to give a preference in violation of the Stock Corporation Law, section 48, which reads in part as follows: '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.'

The defendants had from time to time made considerable loans to the company and were large creditors at the time of its insolvency. When a loan was made the corporation executed a note and secured it by the transfer of accounts for goods sold by the company.

It is found that in October, 1895, when the accounts sought to be recovered in this action were assigned, the corporation was insolvent.

The defendants endeavor to sustain the assignments on the ground that they were made to take the place of accounts previously assigned and which had been thereafter unlawfully collected by the corporation; that such assignments did not

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constitute a preference, as they were simply carrying out the original agreement in the premises and related back to the transfer of the accounts improperly collected.

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