Ellis H. Roberts & Co. v. Buckley
| Decision Date | 05 March 1895 |
| Citation | 39 N.E. 966,145 N.Y. 215 |
| Parties | ELLIS H. ROBERTS & CO. v. BUCKLEY et al. |
| Court | New York Court of Appeals Court of Appeals |
Appeal from supreme court, general term, Fourth department.
Action by Ellis H. Roberts & Co. against John Buckley, George F. Vietor, Thomas Achelis, and others to set aside an assignment for the benefit of creditors. From a judgment of the general term (29 N. Y. Supp. 873), affirming a judgment entered on the report of a referee sustaining the assignment, defendants Vietor and Achelis appeal. Affirmed.
For prior report, see 130 N. Y. 585, 29 N. E. 1025.
George F. Danforth and James Dunne, for appellants.
William P. Quin, Henry J. Cookinham, and W. A. Matteson, for respondent.
The plaintiff, a domestic corporation and judgment creditor of the firm of John Buckley & Co., brought this action to set aside a general assignment made by the firm for the benefit of creditors, to the defendant Bulger, on the 17th of March, 1886. The complaint charges that it was made to hinder, delay, and defraud creditors, and is therefore fraudulent and void. At the time the assignment was made suits were pending against the firm in behalf of various creditors, in which judgments were rendered subsequent to the assignment, and executions levied upon the property in the hands of the assignee. The complaint stated that the action was brought, not only for the purpose of enforcing the judgment of the plaintiff and the lien obtained or claimed under the execution issued thereon, but also in behalf of all other creditors who were similarly situated, and who desired to join in the prosecution of the action. The other creditors who had obtained judgments, and claimed liens acquired thereunder, were made defendants, and, among them, the firm of Vietor & Achelis, who had a large debt, and claimed a lien by attachment issued in an action for the recovery of the debt, in which an attachment has been granted and levied upon the property after the assignment. This firm, by answer, joined with the plaintiff in assailing the assignment upon the allegations of fraud contained in the complaint, and the action finally assumed the form of a controversy between this firm and the assignee, both defendants, all the other creditors, including the plaintiff, having practically abandoned the contestin regard to the validity of the assignment, though there has been no change in the parties or the form of the action. On a former trial before a referee and a review at the general term, the assignment was held to be free from fraud and entirely valid. The judgment, however, was reversed in the Second division of this court, and a new trial granted. Ellis H. Roberts & Co. v. Vietor, 130 N. Y. 585, 29 N. E. 1025. This appeal is from an affirmance of the judgment rendered on the second trial, before another referee, in which it was again decided, upon a full trial, that the assignment was valid, and the charges of fraud not sustained. These charges were originally aimed at claims preferred in the assignment, in favor of various of the creditors, with respect to which it was alleged that they had no existence in fact, and were fictitious and fraudulent, and preferred in the assignment with a fraudulent intent and for a fraudulent purpose. In the progress of the litigation, which is of long standing, the charges against these preferred debts have all been abandoned except so far as they relate to the claim of a single creditor. The charge of fraud now rests entirely upon the facts and circumstances connected with the debt of Daniel G. Major, the brother inlaw of Buckley, one of the assignors, and whose claim was preferred in the third class. This complaint alleged that the debt so preferred was fictitious and fraudulent, and so invalidated the whole assignment. This was the simple and well-defined issue before the referee on the last trial, and this appeal presents only questions resulting from the trial of that issue.
Whether the debt which the assignors directed the assignee to pay to this creditor was honest, or merely fictitious, and thus fraudulent, was the question, and the only question, in controversy. From the very nature of the issue the whole controversy turned upon a question of fact which is ordinarily capable of ready and easy solution in any mode of trial. The learned referee has determined this issue in favor of the assignment. He has found that the debt preferred in the assignment to this creditor was honest and free from all fraud, that it was justly due to the creditor from the assignors, and that no part of it was fictitious. The consideration of the debt, and all the facts and circumstances connected with its origin, creation, and preference in the assignment, have been found with great fullness of detail against the contention of the creditors assailing the assignment. After such an issue has been twice tried, and as often reviewed in an appellate court, having jurisdiction over questions of fact, it is seldom that any question is left demanding serious consideration in this court. But the judgment which was the result of the first trial was reversed, as we have seen, upon the former appeal, and the case has again been argued in this court by distinguished counsel, who insist with great earnestness that the same result should follow this appeal. Moreover, the discussion among ourselves reveals the fact that some of my brethren are disposed to take that view of the case. These circumstances and this situation will perhaps justify a more extended discussion of the question decided in the court below, and in the Second division upon the former appeal, than would otherwise be thought necessary.
There is no dispute concerning the rules of law that govern in such a case, with respect to the construction to be given to the assignment and the inventory and schedules. They must be interpreted, like all other instruments, according to the intention of the parties, and, if possible, such a construction should be adopted as will sustain the assignment, rather than defeat it, in accordance with that quaint rule given by Coke: ‘Whensoever the words of a deed may have a double intendment, and one standeth with law and right, and the other is wrongful and against law, the intendment that standeth with law shall be taken.’ Co. Litt. 42. The onus is upon the party charging fraud to show affirmatively some illegal provision or some act, consciously and purposely done, which is inconsistent with an honest purpose. A mistake in the inventory of the property or in the assignment, with respect to the description of the debt, or its amount or form, in the absence of actual fraud, will not invalidate the instrument. As was said by Judge Finch, in one of the cases cited below: When the instrument and the acts of the parties are fairly capable of a construction consistent with innocence and the general rules of law, they should be given that construction in preference to one which would impute a fraudulent intent or defeat the general intent and purpose of the conveyance. Townsend v. Stearns, 32 N. Y. 209;Shultz v. Hoagland, 85 N. Y. 467;Bagley v. Bowe, 105 N. Y. 171, 11 N. E. 386;Crook v. Rindskopf, 105 N. Y. 476, 12 N. E. 174. Nor will a direction in the assignment for the payment of a debt at a greater amount than is justly due invalidate the instrument, in the absence of a fraudulent intent. In a recent case the debt was preferred for $20,000 in excess of what was really due, and that excess paid to the creditor. We held that as there was no actual fraud the assignment was not avoided, but the assignee could simply recover back the excess paid. Peyser v. Myers, 135 N. Y. 599, 32 N. E. 699. The assignment in this case was valid or invalid, fraudulent or honest, at the moment it was made. When it was delivered the title to the property passed under it, if ever, and if at that time it represented an honest purpose, and was made in good faith, fraud could not be fastened upon it afterwards by any acts or statements of the assignors, whether verbal or written. These acts and statements, at most, could amount to nothing more than evidence reflecting light, with more or less force, according to their nature, upon the intent and purpose with which the assignment was made, and thus bearing upon the issue of fact between the parties. But the character of the instrument itself must be determined upon the facts and the situation existing when it was delivered and recorded. The assignment in question directed the assignee to pay in full certain debts enumerated in Schedule C annexed, after having first paid and discharged in full, with interest, the two other classes of preferred creditors described in the two preceding schedules. On turning to Schedule C we there find the debt of Major, upon which the issue of fraud in this case turns, and which it is alleged is fictitious, described in these words:
+-----------------------------------------------------------------------------+
¦Name of ¦Residence. ¦Consideration.¦Form of ¦Amount. ¦Date for Interest. ¦
+---------+-----------+--------------+-----------+--------+-------------------¦
¦Creditor.¦ ¦ ¦Debt. ¦ ¦ ¦
+---------+-----------+--------------+-----------+--------+-------------------¦
¦ ¦ ¦ ¦ ¦ ¦ ¦
+---------+-----------+--------------+-----------+--------+-------------------¦
¦Daniel G.¦Washington,¦Money ¦Account and¦About ¦$1,000, ¦
¦ ¦ ¦ ¦ ¦ ¦Jan.12,1883. ¦...To continue reading
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...must not be ambiguous. If taken together they are consistent with an honest intent, the fraud is not established. Roberts & Co. v. Buckley, 145 N.Y. 215, 39 N.E. 966 (1895). After considering all of the facts and the proof established, this court finds that the defendants did not participat......
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