Vanderpoel v. Gorman

Decision Date16 January 1894
Citation35 N.E. 932,140 N.Y. 563
PartiesVANDERPOEL v. GORMAN, Sheriff.
CourtNew York Court of Appeals Court of Appeals

OPINION TEXT STARTS HERE

Appeal from common pleas of New York city and county, general term.

Action in trover by Augustus H. Vanderpoel, as substituted assignee, against John J. Gorman, sheriff. A judgment for defendant, dismissing the complaint, was affirmed at general term, (22 N. Y. Supp. 541,) and plaintiff appeals. Reversed.

Gibson Putzel, for appellant.

William E. Stillings,(S. F. Kneeland, of counsel,) for respondent.

PECKHAN, J.

The North River Lumber Company was a company incorporated under the laws of New Jersey, and transacting its business in the city of New York. On the 24th of February, 1891, the corporation made in this state a general assignment to the predecessor of the plaintiff of all its property for the benefit of its creditors, and without any preferences. Subsequent to the assignment, certain of its creditors commenced actions against it to recover the amounts of their debts, respectively, and in those actions attachments were issued and delivered to the defendant, who was the sheriff of New York county; and he subsequently levied, by virtue of such attachments, upon property which was alleged to belong to the corporation. The plaintiff, as its general assignee, has commenced this action to recover from the defendant the value of the property thus levied on by him. The question turns upon the validity of the general assignment of the corporation to the plaintiff. If it were a legal and valid act, it carried the title to the property in question to the plaintiff, and, if not, then the defendant was justified in his levy. The defendant, on the trial, objected to evidence of the assignment, and urged as grounds for his objection (1) that a foreign corporation cannot, under the laws of this state, while insolvent, or in contemplation of insolvency, make a general assignment for the benefit of creditors; (2) that, if such corporation could make that kind of an assignment, it could not make it in the manner of this instrument, viz. by the signature of an alleged president and secretary; (3) there is no sufficient proof of any authority on the part of the persons executing this assignment to make a general assignment for the benefit of creditors. The trial court sustained the defendant's objections, and upon appeal the judgment entered in defendant's favor was affirmed by the general term of the New York common pleas. The plaintiff has appealed from such judgment of affirmance to this court.

The defendant's first ground of objection must mean that the courts of this state will not recognize as valid, so far as respects property within their jurisdiction, a general assignment of its property, made for the benefit of its creditors, by an insolvent foreign corporation. The law of the domicile of the foreign corporation may, of course, permit it, upon insolvency, to assign all its property to an assignee in trust for its creditors; and it also might permit it to make such an assignment through its agents, who were at the time domiciled in a foreign state. But the state which created the corporation could not exercise jurisdiction in another state, where the corporation might have property; and in such case the question would be one for the state in which the property was situated to determine, as to the validity of the attempted transfer of title to an assignee. Assignments of personal property, which are valid by the law of the domicile of the assignor, are generally recognized as valid by the law of the state where the property may be situated, unless they violate its statutory law, or its known and settled public policy. Cases cited in Barth v. Backus, (decided by this court in November, 1893, and not yet officially reported,) 35 N. E. 425. In the case just cited, we refused to recognize the validity of the assignment of a foreign corporation to a foreign assignee, as against those who took title to the property of the assignor in this state by virtue of proceedings under our attachment laws. The refusal was based upon our holding that the law under which the general assignee of the Wisconsin corporation claimed title was in effect a bankrupt law enacted by the legislature of Wisconsin, and laws of that nature are within one of the admitted exceptions to the general rule, which recognizes the validity of assignments of personal property, if valid by the law of the domicile of the party making them. Authorities in the case cited. There can be no doubt that an insolvent corporation could, at common law, make a general assignment in trust to an assignee for the benefit of its creditors. Haxtun v. Bishop, 3 Wend. 13;De Ruyster v. Trustees. 3 Barb. Ch. 119, 124, on appeal 3 N. Y. 238; 2 Mor. Corp. § 802, and note. Under the law of New Jersey, in which state the corporation was created, its right to make an assignment of this nature seems to be established. Wilkinson v. Bauerle, 41 N. J. Eq. 635. At any rate, no statute of New Jersey prohibiting such an assignment was proved by defendant; and we cannot presume that the common law has been altered in New Jersey, upon this subject, without some proof to that effect. The assignment of property by an insolvent corporation for the purpose of paying its debts is a very different action from so disposing of its property while solvent as to make its continued exercise of its franchises impossible. People v. Ballard, 134 N. Y. 269, 294,32 N. E. 54. The Ballard Case was subsequently brought to the attention of the court on a motion for a reargument upon the question whether such a sale or transfer of property as appeared to have been made by the corporation was not valid upon the ground that the corporation could not operate the business except at a loss, and it was not bound to do that. The question was left open for the reason mentioned in the opinion given upon denying the motion. The case is no authority for the proposition that an insolvent corporation cannot make a general assignment for the benefit of creditors. As the common law permits such an assignment, and the state of New Jersey also permits it, and as it does not appear that the charter or by-laws of this particular corporation prohibit it, we are left to the question whether there is any statute or public policy in this state which would be violated if the courts should recognize the validity of an instrument good at common law, and good in the state which created the corporation. The power of the legislature to impose terms upon a foreign corporation as a condition for granting it leave to do business within another state is admitted. Paul v. Virginia, 8 Wall. 168;Insurance Co. v. Massachusetts, 10 Wall. 566.

The sole question now is as to what has been the legislative action of this state upon this subject. The defendant alleges that there is a statute of this state which prohibits such act on the part of a foreign corporation. The statute referred to is chapter 564, § 48, Laws 1890, (Sess. Laws, p. 1075.) It is, in substance, the same as section 4, tit. 4, art. 3, c. 18, pt. 1, Rev. St. (1 Rev. St. p. 603, § 4,) after its amendment by subdivision 4, § 1, c. 245, Laws 1880. It provides, among other things, that no corporation shall make any transfer or assignment to any person whatever, in contemplation of its insolvency, and every such assignment is declared to be void. We have no doubt that this section refers solely to domestic corporations. The whole of the chapter from which the section is taken is, in substance, a revision of the law relating to certain classes of corporations, as contained in the Revised Statutes and their amendments, and it is plain that those statutes generally, if not in every provision referred to domestic corporations only. This opinion is arrived at by a reference to the whole subject-matter treated of in this portion of the Revised Statutes, and it becomes apparent, from a perusal of those general provisions, that the statutes were designed for the government and regulation of corporations created by this state. When the language used in the particular section is referred to, it becomes still more apparent that it is only applicable to domestic corporations. The legislature declares, as above stated, that certain transfers or assignments made by the corporation shall be void. What power had the legislature to enact any such provision as to a foreign corporation? There is nothing in the section limiting its scope and effect to such property as the foreign corporation might have within this state. It is a broad enactment, affecting every assignment made by a corporation under the circumstances mentioned. Can it be supposed that the legislature had in mind a foreign corporation, and intended to assume a jurisdiction to declare such an act, even when done outside this state, and in respect to property also outside of its boundaries, to be void and of no effect? This cannot be supposed, for we cannot impute to the legislature such ignorance upon the subject of its inability to give extraterritorial effect to its own laws. And if it had foreign corporations in mind, when proposing to legislate upon the subject, and knew it could not affect the validity of such transfers outside this state, and intended to provide that such transfers should not carry the title to property of the corporation held within this state, and subject to our jurisdiction, it must be clear that language somewhat appropriate to express such purpose would have been used. The language actually used was neither apt nor pertinent for this purpose. It is both appropriate and pertinent when applied to domestic corporations only. The language of the section clearly implies full and complete jurisdiction over the whole subject-matter. It implies the right to forbid absolutely. It also implies the right to declare the consequences of a violation of the prohibition, not in regard to some particular property,...

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