Curran v. Rothschild
| Decision Date | 12 February 1900 |
| Citation | 60 P. 1111,14 Colo.App. 497 |
| Parties | CURRAN v. ROTHSCHILD et al. [1] |
| Court | Colorado Court of Appeals |
Appeal from district court, Arapahoe county.
Action by Victor Henry Rothschild and another against Hugh Grover Curran. From a judgment in favor of plaintiffs defendant appeals. Affirmed.
W.W. Dale, for appellant.
Bicksler & McLean, for appellees.
The appellees brought this action against the appellant to recover the amount due on a dishonored check. An affidavit for attachment was made, and a writ of attachment issued in the cause. The ground for attachment stated in the affidavit was that the defendant had fraudulently conveyed transferred, and assigned his property and effects, so as to hinder and delay his creditors. This allegation was traversed by the defendant, and the issue so formed was tried by a jury, who returned a verdict sustaining the attachment. The defendant was the only witness in the case. He was first called by the plaintiffs in support of the ground for attachment alleged by them, and afterwards he testified for himself. His testimony was perspicuous and consistent, and made the transaction on which the attachment was based very clear and intelligible. The defendant was doing business in Denver and Cripple Creek under the name of the Berlin Cloak Company. The value of his entire stock at both places was about $33,000. He was largely involved, and among his creditors were the plaintiffs. He had given them a check for the amount due them, but it was returned protested for nonpayment. Immediately afterwards, upon the suggestion of a Mr. Annisfield, one of the defendant's creditors, a corporation was organized, called the Berlin Cloak & Suit Company, to which the defendant transferred his entire stock and all his property. The capital stock of the company was divided into 30,000 shares, 29,997 of which were issued to the defendant, and 1 share each to three other parties. The shares issued to the defendant were embraced in one certificate, and immediately after receiving it he caused it to be transferred to his creditors, and new certificates made out in their names, severally, proportioned to the amounts of their respective claims. All these proceedings were conducted without the knowledge of the creditors, except Annisfield. Before the corporation was formed a general assignment for the benefit of all the defendant's creditors was suggested, but he did not favor the suggestion preferring the course which was afterwards pursued. His reason for his preference was that the good will of the business was his most valuable asset, and that there was no method other than the one he adopted to preserve it for the creditors. These were to have the privilege of taking the stock as absolute payment or as collateral security, as they might deem best. In the transaction nothing was reserved for the defendant, nothing was to be returned to him, and no present or future personal benefit to him was contemplated.
The statutory ground for attachment upon which the plaintiffs proceeded is as follows: "That the defendant has fraudulently conveyed or assigned his property or effects, so as to hinder or delay his creditors, or some one or more of them." Civ.Code § 92. The main controversy between counsel is concerning the meaning of the foregoing language. The opinion of counsel for the defendant seems to be that, to justify an attachment upon that ground, the transaction must be infected with fraud, in the general and odious sense of the term, and that, to sustain the attachment against a traverse, it is incumbent upon the plaintiffs to show that the motive of the transfer was dishonest, and its purpose to cheat creditors, and deprive them of the power ever to realize anything on their claims. Proof of such intent would of course, be sufficient, on the principle that the greater includes the less; but, to authorize an attachment, the existence of such extreme conditions is not required by the statute. A debtor may have no intention of defeating the claims of his creditors; he may sincerely believe that ultimately it will be better for them, and they will realize more money, if they are prevented from seizing and sacrificing his property; yet, if he conveys or assigns it for the purpose of hindering or delaying them, his act is fraudulent, within the meaning of the law, and the fraud with which he is chargeable is not constructive, but actual. Creditors have the right to use the machinery of the law for the collection of their debts. A disposition by the debtor of his property which puts it beyond the reach of legal process hinders and delays them; and if his intention in making the transfer is to deprive them of the benefit of their legal remedies, even though he also intends that eventually the proceeds of the property shall be applied in payment of their claims, the transaction is fraudulent. It is the intent to delay creditors which constitutes the act a fraud upon them. Spencer v. Deagle, 34 Mo. 455; Commission Co. v. Druley, 156 Ill. 25, 41 N.E. 48, 30 L.R.A. 465; Knight v. Packer, 12 N.J.Eq. 214; Van Nest v. Yoo, 1 Sandf.Ch. 4; Wells v. Bank, 23 Colo. 534, 48 P. 809; Buell v. Rope, 6 A.D. 113, 39 N.Y.S. 475. In this case the intention of the defendant is clearly deducible from the facts of the transaction; but it is evident that he had no desire for concealment, and, so far as he was permitted to do so, frankly stated why the corporation was formed, and his property transferred to it. His object, which he took no pains to hide, was to prevent the good will from being destroyed, and the goods from being sacrificed by forced sales on execution. He insisted that, while the transfer was of no personal benefit to himself, it was of advantage to his creditors, because the course he pursued would, as he thought, eventually have enabled them to realize their claims in full, whereas, if the transfer had not been made, they would have been unable to obtain more than 20 or 30 cents on the dollar. We see no reason to doubt that he desired the payment of his debts, and thought that by placing his property beyond the reach of legal process the end could ultimately be accomplished. But, however desirous he may have been that his creditors should be satisfied, the purpose and effect of his action were to delay them, and the transfer was therefore fraudulent.
This question was put to the defendant by his counsel: "What was your purpose in selling your store to the Berlin Cloak and Suit Company?" The court sustained an objection to the question, and the ruling is assigned for error. Where the fraudulent intent is not a conclusive legal presumption from the facts, the party who...
To continue reading
Request your trial
-
Fish v. East
...founded, does not clothe such debtor with a privilege to build up obstructions that will hold his creditors at bay. In Curran v. Rothschild, 14 Colo.App. 497, 60 P. 1111, the debtor conveyed his property to a corporation in return for its stock, for the purpose of delaying his creditors in ......
-
Addison v. Tessier
...be deprived of an immediate remedy or compelled to submit to a delay until there should be market value for the stock. Curran v. Rothschild, 14 Colo.App. 497, 60 P. 1111; First National Bank of Chicago v. F. C. Trebein Co., 59 Ohio St. 316, 52 N.E. 834. Hence, the legal entity of the corpor......
-
Chaffin, Inc. v. Wallain
...trial court held that the cases relied upon by Chaffin, Hafelfinger v. Perry, 52 Colo. 444, 121 P. 1021 (1912), and Curran v. Rothschild, 14 Colo.App. 497, 60 P. 1111 (1900), should not be followed since they predate changes in C.R.C.P. 102 and predate contemporary judicial concerns for the......
-
Mohler v. Buena Vista Bank and Trust Co., 77-770
...Italian-American Bank v. Lepore, 79 Colo. 466, 246 P. 792 (1926); Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908); Curran v. Rothschild, 14 Colo.App. 497, 60 P. 111 (1900). On this phase of the case, the Bank argues that the conveyance may be set aside merely because it Resulted in hindran......