Hurd v. New York & Commercial Steam Laundry Co.

• Decision Date: 30 April 1901
• Citation: 60 N.E. 327,167 N.Y. 89
• Parties: HURD v. NEW YORK & COMMERCIAL STEAM LAUNDRY CO.
• Court: New York Court of Appeals Court of Appeals

167 N.Y. 89

60 N.E. 327

HURD

v.NEW YORK & COMMERCIAL STEAM LAUNDRY CO.

Court of Appeals of New York.

April 30, 1901.

Appeal from supreme court, appellate division, First department.

Action by Jehiel T. Hurd, as receiver of the Commercial Steam Laundry Company, Limited, against the New York & Commercial Steam Laundry Company. From an order of the appellate division (65 N. Y. Supp. 125) reversing a judgment in favor of plaintiff, and granting a new trial, plaintiff appeals. Reversed.

Edwin C. Dusenbury, for appellant.

W. W. Westervelt and Delos McCurdy, for respondent.

WERNER, J.

Three companies figure in the transactions out of which this controversy arose. Two of these were to Commercial Steam Laundry Company, Limited, a domestic corporation, and the New York Steam Laundry Company, not incorporated, the latter being owned and conducted by one Thomas E. Sloan. On November 3, 1890, the defendant, the New York & Commercial Steam Laundry Company, was incorporated. Thereupon the two first-named companies were consolidated with the last named, and the business previously conducted by the two was taken over and continued by the third. For the sake of brevity, these companies will be referred to as the Commercial Company, the New York Company, and the defendant company, respectively. Prior to the so-called consolidation, the Commercial Company was indebted to one Eliza N. Hall on a disputed claim, upon which judgment was obtained against that company, on August 9, 1893, for $4,381.16. Before the entry of this judgment, and on April 30, 1891, the plant and machinery of the Commercial Company were transferred to the defendant by a bill of sale pursuant to a resolution of the board of directors of the Commercial Company. Upon the same day that the Hall judgment was obtained an execution was issued thereon and returned unsatisfied. Thereafter an action was brought by said Hall as judgment creditor against the Commercial Company for the sequestration of its property, and a judgment was had therein appointing the plaintiff in this action receiver of said company. As such receiver he became vested with the title to all its property and things in action. He qualified, but has never received any of the company's property. This action is brought by the plaintiff, as such receiver, to compel an accounting by the defendant as to the assets received by it from the Commercial Company and to recover a money judgment. The plant and machinery of the Commercial Company were valued at $20,000. The resolution, by virtue of which they were transferred to the defendant company, directed the president and treasurer of the Commercial Company to execute the bill of sale for a consideration of $20,000, to be paid in the capital stock of the defendant company, which was to be issued to Anthony O. Rowe, as treasurer, and to be afterwards distributed among the stockholders of the Commercial Company. Shortly after the execution and delivery of this bill of sale 200 shares of the capital stock of the defendant company, of the par value of $100 each, were issued to Margaret H. Rowe, who was the principalstockholder of the Commercial Company, and the wife of Anthony O. Rowe, its president. No consideration passed from the defendant company to the Commercial Company, or its officers or directors, except the 200 shares of stock issued to said Margaret H. Rowe. About seven months after the issue of stock above referred to, and subsequent to the commencement of the action by Hall against the Commercial Company, said stock was, under the advice of counsel, returned to the defendant, and a new certificate for 200 shares of defendant's stock was issued to Anthony O. Rowe as treasurer of the Commercial Company. This stock has since been distributed among its stockholders. The transfer of the plant and machinery of the Commercial Company was not made in the usual course of business. The effect of such transfer was to terminate the regular business of that company, and it was made and accepted by the defendant for that purpose. These are, in substance, the facts as found by the trial court, and upon which it predicated the legal conclusions that the transfer to the Commercial Company was illegal, fraudulent, and void against its creditors and against the plaintiff in this action; that the defendant is chargeable with notice of the existence of the claim of Eliza N. Hall, and took the assets of the Commercial Company charged with all its debts; that such assets constituted a trust fund in the hands of the defendant for the payment of such debts; that, the 200 shares of stock issued by the defendant in payment for the assets of the Commercial Company having been divided among the stockholders of the latter company, there was no claim of such stockholders against the defendant; that the proof did not show that there were any other debts owing by the Commercial Company than those growing out the Hall claim. Upon these findings and conclusions, judgment was directed in favor of the plaintiff for the amount of the Hall judgment, the costs in the sequestration action, the interest on both amounts, and the commissions of the receiver, amounting in all to the sum of $6,608.15. This judgment was reversed in the appellate division by a divided court. The order of reversal is silent as to the grounds upon which it is based, and we must therefore assume that the facts found at special term remain undisturbed. Section 1338, Code Civ. Proc. Upon these facts, we cannot concur in the prevailing opinion below. That opinion rests in part, as it seems to us, upon assumptions of fact which conflict with the findings of the trial court, and in part upon a misapprehension as to the effect of other facts regarding which there is no dispute. It is not denied, and the trial court expressly found, that the object of the consolidation, as it is called,...