Throop Grain Cleaner Co. v. Smith

• Decision Date: 12 June 1888
• Parties: THROOP GRAIN CLEANER CO. et al. v. SMITH.
• Court: New York Court of Appeals Court of Appeals

110 N.Y. 83

17 N.E. 671

THROOP GRAIN CLEANER CO. et al.

v.SMITH.¹

Court of Appeals of New York.

June 12, 1888.

Appeal from general term, supreme court, Fifth department.

Proceedings by the Throop Grain Cleaner Company and Hiram K. Edwards, sheriff of Onondaga county, to subject to an attachment against Allis & Co. a debt due from defendant, H. Cordenio Smith, but which was claimed by the Farrell Foundry & Machine Company to have been transferred to them prior to the attachment. From an order of the general term reversing the order of the trial term nonsuiting plaintiffs, defendant appeals.

M. M. Waters, for appellant.

Rollin Tracy, for respondents.

RUGER, C. J.

Assuming that the proceedings by which the plaintiffs attempted to secure a lien by attachment upon the debt alleged to be due from the defendant to E. P. Allis & Co. were regular and valid, we are brought directly to the real question in the case, viz., whether, at the time of such levy, the debt attempted to be levied upon was then due to Allis & Co., or had been previously transferred by them to the Farrell Foundry & Machine Company. Both Allis & Co. and the Farrell Company were non-residents of this state; Allis & Co. residing at Milwaukee, in the state of Wisconsin, and the Farrell Company in the state of Connecticut. The Throop Grain Cleaner Company and H. Cordenio Smith both resided in this state. The attachment referred to was issued in an action in the supreme court of this state between the Throop Grain Cleaner Company, plaintiff, and Allis & Co. as non-resident defendants, and jurisdiction is claimed to have been acquired by the court in that action upon the allegation that Allis & Co. had property in the state subject to levy under attachment. The only property of that character claimed to exist was the alleged indebtedness of Smith to Allis & Co. The attempted levy under the attachment was made on May 21, 1881. It is contended by the defendant that, previous to that time, Allis & Co. had transferred their debt against him to the Farrell Company, and that, at the time of such levy, it was a debt owing by him to the Farrell Company.

The trial court held, as matter of law, that the debt had been transferred previous to the levy, and therefore nonsuited the plaintiffs. One of the main questions litigated upon the trial was whether the alleged transfer by Allis & Co. was made with the intent and design, on their part, of defeating an intended levy upon such debt by the plaintiffs. If this were proved, it was contended by the plaintiffs that the alleged transfer would be fraudulent and void as to them. It may be assumed that such was the intent of Allis & Co., without affecting the result of this action, for the plaintiffs do not occupy a position which enables them to raise any question as to the bona fides of such transfer. This can be done only by a judgment creditor in an action to enforce the equity of the creditors of Allis & Co. Anthony v. Wood, 96 N. Y. 180;Gibson v. Bank, 98 N. Y. 96. This equity was not the subject of a levy under an attachment, even if an attempt had been made to effect it. We may, therefore, in the further consideration of the case, lay out of view all of the evidence tending to show that the attempted transfer was made in bad faith, as it has no bearing upon the real issue in the case. The plaintiffs, however, upon the trial, requested to be allowed to go to the jury on the question of fact as to whether the evidence showed a valid transfer of the debt prior to the attempted levy. This was refused by the trial court, and the plaintiffs duly excepted to its ruling. The learned general term was of the opinion that the evidence did not show, as matter of law, that a transfer had taken place. There was no conflicting evidence upon the question of the alleged sale, as it was effected entirely by written correspondence; and if a contract was thereby made, free from latent ambiguity or language of doubtful significance, a question of law is presented for the consideration of the court, and not a question of fact for the jury. Dwight v. Insurance Co., 103 N. Y. 341, 8 N. E. Rep. 654. This question must be determined from an examination of the correspondence passing between the parties, their relation to and the circumstances surrounding the transaction at the time of the making of the alleged contract, and the acts of the parties in consummating the sale prior to the attempted levy. No claim is made here that the mere delivery to a third person of a check or draft drawn by a creditor upon his debtor affects a legal transfer of the debt; but it is contended that the correspondence accompanying the transfer of certain drafts discloses an intention to effect thereby a transfer of the debt referred to in such correspondence. That an equitable assignment of an account may be effected in this way, even though it is not referred to in the draft or order, admits of no doubt. Thus, it was held in Rieley v. Bank, 83 N. Y. 318, that the delivery by a creditor of a check or draft upon his debtor for the whole or a part of a debt, to a payee therein named, to enable him more conveniently to recover such debt, does not preclude such payee, in an action against the debtor, from showing a parol contract, aside from the check or draft, to transfer the debt itself. It was also said, in the same case, that ‘an assignment of an account may be made without writing or delivery of any written statement of the claim assigned, so as to vest in the assignee a right to proceed in his own name for the recovery of the debt, provided only that the assignment is founded on a valid consideration between the parties.’ The sole question, therefore, presented in this case, is whether the evidence shows a valid contract, as between Allis & Co. and the Farrell Company, for a transfer of the claim in question; and, if it appears therefrom that it was their intention to transfer such debt, it is the undoubted duty of the court to carry out such intention. The debt arose out of a written contract between Allis & Co. and the defendant, made April 4, 1881, whereby Allis & Co. agreed to sell and deliver to him, free on board cars at Milwaukee, a certain quantity of milling machinery consigned to Smith at Marcellus, N. Y., to be paid for on receipt of goods. These goods were all manufactured and shipped, and many of them had arrived at their destination, before the time of the attempted levy, and the liability of Smith to pay the cost thereof to Allis & Co. had previously thereto become fixed by their delivery on the cars. Smith v. Edwards, 29 Hun, 493. On the 10th day of May, 1881, Allis & Co., who were then incebted to the Farrell Company in an amount exceeding the contract liability of Smith to them, made their two sight drafts in favor of the Farrell Company upon Smith for the sums of $1,050 and $2,800, respectively, being the precise amount due upon the contract, and transmitted the same to the Farrell Company in a letter of which the following is a copy: ‘MILWAUKEE, May 10, 1881. Farrell Foundry & M. Co., Ansonia, Conn.: We inclose two drafts on H. C. Smith, of Marcellus Falls, the one $2,800, the other $1,050, which kindly credit to our account. The $2,800 will be paid as soon as the rollers for which you have order are delivered at Marcellus Falls. The other is now due. Kindly acknowledge, yours, truly, E. P. ALLIS & CO.’ By letter of the same date, they also advised the Farrell Company that ‘our people today send drafts on Smith for amount due from him. We charge the amount to you in general account, and want you to credit the same, and collect it. Please have no error in receiving and treating the drafts as belonging to you.’ These letters were apparently received at the same time by the Farrell Company, and must be treated together as parts of the same transaction, and constituting the conditions upon which the drafts were transmitted. On the 13th of May thereafter, the Farrell Company replied to such letters as follows: ‘Yours of the 10th at hand. We have sent the two drafts on H. C. Smith forward...