Galle v. Tode

• Decision Date: 21 January 1896
• Citation: 42 N.E. 673,148 N.Y. 270
• Parties: GALLE et al. v. TODE et al.
• Court: New York Court of Appeals Court of Appeals

148 N.Y. 270

42 N.E. 673

GALLE et al.

v.TODE et al.

Court of Appeals of New York.

Jan. 21, 1896.

Appeal from supreme court, general term, Third department.

Action by Samuel Galle and another against Adolph Tode and others. From a judgment of the general term (26 N. Y. Supp. 633) affirming a judgment for plaintiffs, defendants appeal. Affirmed.

E. J. Myers, for appellants.

Benjamin N. Cardozo, for respondents.

Bacon & Merritt, for respondents Wolff.

HAIGHT, J.

The plaintiffs are judgment creditors of the defendants Tode and Wulling, who were copartners, doing business under the name of Tode Bros., and engaged in the grocery business in the city of New York, and at Monroe, in the county of Orange. The plaintiffs bring this action to set aside certain judgments confessed by Tode and Wulling in favor of the other appellants, on the ground of fraud, or to postpone such judgments, with the executions issued thereon, to the lien of the plaintiffs' judgment and execution.

On or about the 7th day of March, 1891, the defendants Tode and Wulling became financially embarrassed, and convinced that they could not longer continue their business without obtaining from their creditors an extension of time for the payment of their debts. Thereupon, they, in company with the defendants Levi and Materne, organized a corporation by the name of Tode Bros. Company, and transferred thereto all of their property and stock in trade, without receiving therefor any consideration, money, or stock in such corporation. They then called a meeting of their creditors for March 16, 1891, for the purpose of procuring a compromise. At such meeting the defendants Tode and Wulling disclosed to their creditors the fact that their property had been transferred to the corporation, so that it could not be reached by them. They were then advised that such transfer was fraudulent and void in law, and the creditors appointed a committee to formulate an arrangement by which the property could be applied pro rata upon the debts of the firm. On the 24th day of March, a meeting of the committee was held, at which the defendants Wulling, Levi, and Materne were present, and at which the committee formulated a plan for the adjustment of the affairs of the company. They then prepared and signed a notice to the creditors calling a meeting for the 26th of March, in order to present their plan for approval and acceptance. The notice was delivered to Wulling to be sent to the creditors, but, instead of sending the same, he withheld and suppressed it, and, in company with Levi and his counsel, went to the residence of the defendant Materne; and there Levi, as president, Materne, as treasurer, and Tode and Wulling, as directors, passed a resolution authorizing a retransfer of the property of the corporation to the defendants Tode and Wulling, and then executed such a transfer. On the next day the defendants Tode and Wulling confessed judgments in favor of Levi for the sum of $3,058.09, and in favor of Materne for the sum of $5,543.09, which judgments were immediately docketed in the office of the clerk of the county of New York, and transcripts thereof filed in the office of the clerk of Orange county, upon which executions were issued to the sheriffs of the respective counties. The defendants Tode and Wulling thereafter, but on the same day, confessed judgments in favor of eight other creditors of their firm, but without such creditors' knowledge, and they caused these judgments to be entered, executions to be issued thereon to the sheriffs of the counties of New York and Orange, and levies to be made upon the property of Tode and Wulling. After the execution of such judgments, and the levy of the executions thereon upon the property of the defendants Tode and Wulling, the plaintiffs procured an attachment to be issued in an action brought by them to recover a judgment for the amount of their claim, which attachment was levied upon the property of the defendants Tode and Wulling, but after the levy of the executions upon the judgments previously confessed. Subsequently the property so levied upon in the county of New York was sold, and the same was purchased by the defendant Levi, under the assumed name of Levison, and shortly thereafter the same was transferred to the wives of the defendants Tode and Wulling, who formed a copartnership, and continued the business through their husbands at the same place and in the same manner that it had theretofore been conducted. At about the same time the property levied upon in Orange county was sold to the defendant Materne, who caused a corporation to be organized under the name of the Monroe Cheese Company, that being the name under which the defendants Tode and Wulling had formerly conducted their business in that county; and such business was continued by the corporation with the defendant Tode as manager, and the defendant Wulling as secretary.

The referee has found as facts that the corporation first organized by the defendants Tode and Wulling, under the name of Tode Bros. Company, was organized for the purpose of receiving the transfer of the property and estates of Tode Bros., so that such property and estates might be placed beyond the reach of their creditors, including the plaintiffs, and as part of a scheme contrived by them to obtain from their creditors an extension of time for the payment of their debts; that such transfer embraced all of the property, estates, and effects of Tode Bros., and was made with a fraudulent intent to hinder, delay, and defraud their creditors; that the retransfer of the property of the corporation to Tode and Wulling, and the confessions of judgments by them in favor of the other defendants, and the issuing of executions thereupon, under which all of the property of the defendants Tode and Wulling was levied upon, were done and accomplished by the defendants Tode and Wulling with the like fraudulent intent and purpose, and the intent and purpose of incumbering and covering up their property, so that their other creditors, including the plaintiffs, should not be able to reach the same, and for the purpose of hindering and delaying such creditors in the enforcement and collection of their claims against such defendants, and of compelling such creditorsto compromise or settle their claims upon unfavorable terms, and for less than the full amount thereof, and with a view of, in some manner, reserving to themselves an interest in the property, notwithstanding the sale thereof under the executions. The referee also, in substance, found that the attorneys who advised and represented the defendants Tode and Wulling in the transactions pertaining to the confessions of judgments and the issuing of the executions were the attorneys of the defendants Levi and Materne, and the same attorneys who, in the matter of the confessions of judgments, acted or assumed to act in behalf of the creditors or plaintiffs in the judgments so confessed, as well as in behalf of the defendants who confessed them; that the confessions were prepared, judgments entered, and executions issued thereon by such attorneys; that they had knowledge of the said corporation and of the transfer thereby of all the property and...