People ex rel. Cauffman v. Van Buren

• Decision Date: 20 December 1892
• Citation: 32 N.E. 775,136 N.Y. 252
• Parties: PEOPLE ex rel. CAUFFMAN et al. v. VAN BUREN et al.
• Court: New York Court of Appeals Court of Appeals

136 N.Y. 252

32 N.E. 775

PEOPLE ex rel. CAUFFMAN et al.

v.VAN BUREN et al.

Court of Appeals of New York.

Dec. 20, 1892.

Appeal from supreme court, general term, fifth department.

Proceeding on the relation of Joseph Cauffman and others to punish John Van Buren and Frank Hopkins for contempt in violating an injunction order. From a judgment of the general term (18 N. Y. Supp. 734) affirming an order of special term adjudging defendants guilty, and thereby defeating and prejudicing the rights of the plaintiffs in the action of Joseph Cauffman and others against Hiram Klock and others, and that the loss to plaintiffs thereby was $1,470.32, and fining the defendants that amount, and directing their imprisonment until the fine is paid, defendants appeal. Affirmed.

Earl, C. J., and Finch and Peckham, JJ., dissenting.

Hopkins & Bondy, (M. M. Waters, of counsel,) for appellants.

Wm. F. Cogswell, for respondents.

MAYNARD, J.

The defendants were properly adjudged guilty of contempt in disobeying the preliminary injunction order granted by the county judge of Monroe county, unless the order was void upon its face for an utter lack of jurisdiction on the part of the judge who granted it. People v. Sturtevant, 9 N. Y. 263. No matter how erroneous the action of the court may have been in taking cognizance of the suit and awarding a madeatory process, unless there was an entire absence of judicial authority to act in the premises it was the duty of the defendants to obey its commands until they had been revoked by an order made in the action in which they had been issued, either upon motion or appeal, or by some other method of direct review. It is not denied that the court acquired jurisdiction of the person of the defendants in this case, and its power to act was unquestionable, provided it had jurisdiction of the subject-matter of the action. For the purpose of determining this question, all the averments contained in the complaint and in the plaintiffs' moving papers upon the appfication for the injunction order must be taken as unqualifiedly true. The plaintiffs were creditors at large of the defendants Klock & Tiffany, who, a few days before the commencement of this action, it is alleged, fraudulently confessed judgments to three of the defendants to the amount of $17,000, and about the same time fraudulently mortgaged or conveyed their real property to two of the other defendants. The defendant debtors were insolvent when these transactions occurred, and, as it must be assumed upon this appeal, they were entered into by the various parties to them, with the intent and for the purpose of defrauding the other creditors of Klock & Tiffany, and in order to secure preferences to themselves, not obtainable under the general assignment laws of the state. Immediately upon the confession of these judgments, executions were issued to the sheriff of Oswego county, where the debtors resided, and a levy was made by him upon all their tangible property, and, it is to be inferred, upon all the property which they then owned, which was subject to seizure; and the sheriff had advertised the property to be sold to satisfy the executions. Upon the discovery of these facts, the plaintiffs at once began suit against their debtors, to recover the amount of their debt, and obtained and issued a warrant of attachment upon the ground that their debtors had assigned or disposed of, or were about to assign or dispose of, their property with intent to defraud creditors. It does not appear whether the attachment was delivered to the sheriff or the coroner, and it is perhaps immaterial, but it is claimed it was levied on the same property upon which the sheriff had levied under the executions issued upon the fraudulent judgments. But such levy would, prima facie, be subject to the levy made under the prior executions, and the proceeds of the personal property, if sold by the officer, must be first applied to the satisfaction of the elder process. This, we think, correctly states the legal relations of the parties to this property when the present action was commenced upon the equity side of the court, to which the fraudulent judgment creditors and grantees, the sheriff and the defendants in the attachment suit, were made defendants; and the plaintiffs de mand, as a part of the relief to which they claim to be entitled, that the lien of the fraudulent judgment creditors under the executions which they have procured to be issued upon their judgments shall be postponed to the lien which the plaintiff has acquired by virtue of his attachment.

The question whether the facts alleged constitute a cause of action, and afford sufficient grounds for the equitable interference of the supreme court, is one which has never been authoritatively determined by this court, and the decisions in the courts below have been far from harmonious upon the subject. There has also been a great diversity of judicial opinion upon this point in other states, and it is stated in the American and English Encyclopedia of Law (volume 4, p. 575) that ‘whether an equitable suit, analogous to of the lien created by an attachment before the recovery of judgment, is a question to which the American courts have given directly different answers.’ In the cases of Hall v. Stryker, 27 N. Y. 596, and Rinchey v. Stryker, 28 N. Y. 45, it was held that under a warrant of attachment any property of the debtor transferred in fraud of his cieditors could be seized, and that, after service of the warrant, the party procuring it is no longer to be deemed a creditor at large, but a creditor having a specific lien upon the goods attached; and that for the purpose of upholding the attachment and the lien acquired under it the decision of the judge granting the warrant is to be deemed an adjudication of the existence of the debt, which is conclusive upon the fraudulent transferee of the debtor's property. In both cases suit was brought against the attaching creditor by a party claiming title from the debtor by a transfer anterior to the attachment, and the creditor was permitted to show by way of defense to the action that the alleged transfer was fraudulent, and hence void as to him. It has therefore been contended, and perhaps correctly, that they are not authority for the proposition that a party suing out an attachment can take affirmative action before the recovery of judgment to set aside afraudulent conveyance of his debtor's property. He may use his process, it is claimed, for defensive purposes, but not for offensive warfare. Still the cases may be regarded as decisive of the general question that an attaching creditor ceases to occupy the defenseless position of a creditor at large, and becomes, in a certain sense, invested with the privileges of a creditor whose debt has been adjudged valid, and who finds himself embarrassed in its collection by the fraudulent conduct of the debtor. In Hall v. Stryker, Chief Judge DENIO, at page 601, says: ‘When the creditor has procured legal process, such as the law allows a creditor to have against the property of his debtor, he has acquired the standing of a creditor in respect to all the property of his debtor, and that which he has conveyed with the intent forbidden by the law (the conveyance being void) is as much his in the judgment of the law, and as fully subject to the process, as if the conveyance had not been made. Under certain circumstances, the law has, upon motive of policy, allowed an ex parte determination as to the existence of the debt, and permitted process to issue against the debtor's property upon such determination, providing, however, for sufficient security to the debtor if, upon a regular trial, the alleged creditor shall fail to establish the existence of the demand.’ These cases were followed in Frost v. Mott, 34 N. Y. 253, where PORTER, J., states the doctrine without qualification that ‘a creditor, by attaching property in the posession of his debtor, acquires a specific lien upon his interest, and is entitled, like a judgment creditor, to impeach the colorable title of afraudulent mortgagee.’ But this was also a case where the attaching creditor had been made a defendant in an action of trespass for the taking of the property, and nothing was therefore necessarily decided, except that, under such circumstances, he could defend his possession by showing the fraud which would defeat the claimant's title.

In Thurber v. Blanck, 50 N. Y. 80, it was held that an attaching creditor had no standing in court to reach equitable assets until his remedy at law was exhausted, nor to attack afraudulent transfer of the property ofhis debtor until after judgment; and in Bank v. Dakin, 51 N. Y. 519, the commission of appeals held that an attaching creditor, after the recovery of judgment and the issuing of execution, may maintain an equitable action in his own name to set aside a fraudulent transfer of the property which had been seized under the attachment. The impression seems to have prevailed that there was an irreconcilable conflict between these two cases, and the reporter, in a footnote in 51 N. Y., says: ‘This case, it will be perceived, was argued prior to the decision of the case of Thurber v. Blanck, 50 N. Y. 80, with which it is in conflict. That case had not been brought to the attention of the commission at the time of the decision herein.’ But we fail to discover any real ground of antagonism between them. In Thurber v. Blanck the court was dealing with an attempt on the part of an attaching creditor to reach equitable assets, which it has been uniformly held cannot be done until judgment has been recovered, execution issued and returned unsatisfied, and an action or proceeding in the nature of a creditors' bill instituted. The provisions of the Revised Statutes (now sections 1871-1879 of the Code) which authorized a judgment creditors' action imperatively required the recovery of a judgment, and the...