Commercial Bank v. Sherwood

• Decision Date: 27 March 1900
• Citation: 162 N.Y. 310,56 N.E. 834
• Parties: COMMERCIAL BANK et al. v. SHERWOOD et al.
• Court: New York Court of Appeals Court of Appeals

162 N.Y. 310

56 N.E. 834

COMMERCIAL BANK et al.

v.SHERWOOD et al.

Court of Appeals of New York.

March 27, 1900.

Appeal from supreme court, appellate division, Fourth department.

Action by the Commercial Bank and another against Frederick A. Sherwood and another to set aside a bill of sale. From a judgment of the appellate division (46 N. Y. Supp. 734) affirming a judgment in favor of defendant Sherwood, plaintiffs appeal. Affirmed.

The plaintiffs, as judgment creditors of Thomas Bolton, brought this action to set aside a bill of sale of a shoe-manufacturing plant, made by Bolton to the defendants Sherwood and Catharine Bolton in August, 1893, upon the ground that the sale was made to hinder, delay, and defraud the creditors of the said Thomas Bolton. The trial was had at an equity term of the court, and a decision was filed by the trial judge, containing findings of fact and conclusions of law. It was found that the sale was made prior to the recovery of the plaintiffs' judgments, and that it was in pursuance of an agreement between the parties thereto of the same date, and referred to the same. The agreement so referred to was between Thomas Bolton, Sherwood, and Catharine Bolton, and, after reciting and specifying an indebtedness from Bolton to Sherwood and from Bolton to Catharine Bolton, who was his wife, stated that, for the purose of paying said indebtedness, Bolton agreed to sell and transfer to Sherwood and Catharine Bolton, absolutely, his machinery, etc., stocks, manufactured and unmanufactured, and accounts owing to him, and that Sherwood and Catharine Bolton agreed ‘to purchase the said property, and in payment thereof to satisfy the indebtedness above mentioned owing to each of them, respectively,’ by Thomas Bolton. It was further found that ‘said purchase was made by said Sherwood of said undivided half of said factory and business and customers' accounts of said Bolton with full knowledge that by the said sale and transfer to himself and Mrs. Bolton the said Thomas Bolton would have no property remaining with which to pay his indebtedness to others, but said purchase was made by said Sherwood with no other purpose or intent on his part than to obtain payment of said Bolton's indebtedness to himself in preference to other creditors.’ It was found that, while the value of the undivided one-half interest sold to Sherwood, if taken and used in the business, with the right to use Bolton's name in connection therewith, was greater than the consideration paid by Sherwood therefor, its worth, ‘if closed out in the ordinary was of settlement of insolvents' estates,’ was less than the amount allowed therefor by Sherwood. It was further found that ‘Thomas Bolton made the said transfer to Sherwood for the purpose of paying his indebtedness to him, and without any intent or expectation of ever receiving to his own use any part of the undivided half of said property sold and transferred by him to Sherwood, and without receiving to himself any benefit therefrom, except that which would incidentally follow if he could have the business continued, and the half which he transferred to his wife employed therein.’ It was found that the sale to Catharine Bolton, his wife, ‘of the undivided one-half part of his property and assets, was, in any view that may be taken of their dealings with each other, made upon an inadequate consideration, and with the purpose and intent on their part of enabling him to retain and control the said property so transferred to her, and keep the same employed in said business for his own use and benefit, in fraud of his creditors, and particularly the plaintiffs herein.’ The conclusions of law were ‘that the complaint should be dismissed as against the defendant Frederick A. Sherwood,’ and, further, ‘that the said bill of sale * * * and the agreement * * * are, and each of said instruments is, fraudulent and void, so far as the same purport to sell and convey to the defendant Catharine Bolton the undivided one-half of the property terein mentioned and described, as against the plaintiffs in this action, and that the said undivided one-half of said property so transferred to the defendant Catharine Bolton was and is applicalbe to the payment of the plaintiffs' said judgments.’ The judgment, which was entered upon the decision of the trial judge, has been unanimously affirmed by the appellate division of the Fourth department. An application made by the plaintiffs for leave to appeal to the court of appeals from the judgment of affirmance was granted, and the appellate division, in its order granting the application, certified two questions of law to this court, to wit: ‘(1) Was the defendant Sherwood a bona fide purchaser for value, not having delivered all the notes of Bolton, which he agreed to deliver, prior to his receiving notice that the sale to him and Mrs. Bolton was claimed to be in fraud of creditors? (2) The trial court having found that the said bill of sale of August 2, 1893, was fraudulent and void in so far as it transferred property to Mrs. Bolton, does it follow, as matter of law, from the findings and from the undisputed facts in the case, that said bill of sale was fraudulent as to both vendees named therein?’ The appeal of the plaintiffs relates only to so much of the judgment as affirmed that part of the judgment of the trial court which dismissed the complaint upon the merits as to the defendant Sherwood.

Walter S. Hubbell and John Van Voorhis, for appellants.

William F. Cogswell, for respondent.

GRAY, J. (after stating the facts).

It should first be understood what effect is to be given to the order of the appellate division which allowed this appeal, and then certified the two questions mentioned to this court. By subdivision 2 of section 191 of the Code of Civil Procedure it was provided that no appeal should be taken to this court from a judgment of affirmance rendered in such an action as this, brought ‘to set aside a judgment, sale, transfer, conveyance, assignment or written instrument, as in fraud of the rights of creditors, * * * when the decision of the appellate division of the supreme court is unanimous, unless such appellate division shall certify that in its opinion a question of law is involved which ought to be reviewed by the court of appeals, or unless, in case of its refusal to so certify, an appeal is allowed by a judge of the court of appeals.’ This restriction of our jurisdiction by the legislative amendment of the Code section was within the authority reserved by the constitutional amendment of 1894 to the state legislature, and was in furtherance of the general plan to relieve this court by limiting its labors to the review of questions of law, which alone should come before the court of last resort, as it is constituted in this state. But in so restricting appeals which, prior to the amendment of section 191, could be taken, as of right, to this court, the legislature excepted cases where leave was given by the appellate division, or the appeal was allowed by this court. It will be noticed in that respect that the right to appeal, when conferred in either way, is quite other than the right which is given under section 190. There, when an appeal is allowed by the appellate division, questions are to be certified, and they only are brought up; while under section 191, when the appeal is permitted to be taken, the effect is to remove the restriction of the section, and thus to open the whole case for our review, so far as questions of law appear to be presented by the record. The provision of the one section goes to our jurisdiction to review; the other, while excepting classes of actions from the right of appeal, leaves the case whose appeal is permitted to our unrestricted review as to any questions of law involved. That those questions of law, however, do not include the legal question as to the sufficiency of the evidence to sustain a finding of fact, or a verdict not directed by the court, cannot be doubted, in view of the provisions of the third and fourth subdivisions of section 191, which impose conditions bearing upon all cases brought to this court under either section. By them our jurisdiction is ‘limited to a review of questions of law’ (subdivision 3), and we may not review a ‘unanimous decision of the appellate...