Page images
PDF
EPUB

串 **

who, when so acting, may, from an insolvent debtor, receive property in payment of his debt, in whole or in part? * In fine, it is the attending agreement, either to make an assignment, as was done in the Manning and Beck Case, or not to make it, as was done in this case, in both of which the creditor undertook to control the future conduct of the debtor, which shows a fraudulent intent of the parties, and renders void the transfer of property, though made in payment of a bona fide debt."

It is evident that the conclusion of the general term was founded upon the construction there given to the evidence and findings,that they established the fact that an agreement was made between the parties to the transaction that the debtor should not make a general assignment for the benefit of his creditors. This is further manifested in the opinion of the court, which, after referring to Woodworth v. Hodgson, [Sup.; 12 N. Y. Supp. 424,] proceeded:

"In that case there was no agreement whatever, relating to the subject of making or not making an assignment. There the plaintiff had furnished substantially all the capital to his son, in order to set him up in the grocery business in the city of Rochester, and such business had proved to be a losing venture; and the son had become discouraged, and wished to turn over the property to his father for his indebtedness, and accordingly did so, whereupon the father took possession of the property. That was exactly the transaction so repeatedly upheld by the courts,-that a creditor may take from a debtor any or all of bis property in payment of his debt, provided the transaction does not involve other matters rendering it void by reason of collision with some equitable principle, or with some statute of this state."

The evidence on the second trial can bear no such construction as that given the evidence of the first trial, but on the contrary it now appears that nothing whatever was said on the subject of a general assignment, or of any assignment, for the benefit of the creditors of the defendant Hunter. The reasons, therefore, given for the result on the review of that trial are not applicable to the case, as presented upon the present trial; and the question is whether, upon the facts as they now appear, the plaintiffs are entitled to recover. At the time he turned over his property to the bank to pay his debt, Hunter was insolvent. It was taken by the bank, at a fair price, for that purpose, and the debt upon which the value of the property was applied was valid. It must be assumed, upon the evidence, that the transfer of the property was made and taken for that purpose without any intent, in fact, to defraud the creditors of Hunter; and although the officers of the bank, who transacted the business, were then advised of the other liabilities of the debtor, they were at liberty to seek and obtain payment of the debt due to it, so far as the property of such debtor would go in that direction, unless the doing so was in contravention of the statute which provides that:

"In all general assignments of the estates of debtors for the benefit of creditors, hereafter made, any preference created therein * * shall not be valid, except to the amount of one-third of the value of the assigned estate, left after deducting such wages or salaries, and the costs and expenses of executing such trusts; and should said one-third of the assets of the assignor or assignors be insufficient to pay in full the preferred claims, to which, under the provisions of this action, the same are applicable, then said assets

shall be applied to the payment of the same pro rata to the amount of each said preferred claim." Laws 1887, c. 503.

This is an additional section (30) to chapter 466, Laws 1877, entitled "An act in relation to assignments of estates of debtors for the benefit of creditors." The assignments there referred to are those made to some person or persons, as assignee or assignees, in trust for the benefit of creditors of the assignors, and such is the import of the term, "general assignment for their benefit." The transfer to the bank does not, therefore, by its terms, come within the statute forbidding preferences in amount exceeding one-third in value of the property assigned. Nor can it be construed to be a general assignment, unless the policy of the law, as declared by that statute, is to prevent the transfer by an insolvent debtor (having other creditors) of all his property in payment of a debt due one of his creditors. This question arose in White v. Cotzhausen, 129 U. S. 329, 9 Sup. Ct. Rep. 309, in the application of the statute of Illinois to a transfer by a debtor of all his property to some, only. of his creditors. The Illinois statute did not permit any preferences in voluntary assignments for the benefit of creditors. In the opinion of the court there delivered by Mr. Justice Harlan, it was said that:

"When an insolvent debtor recognizes the fact that he can no longer go on in business, and determines to yield the dominion of his entire estate, and in execution of that purpose, or with an intent to evade the statute, transfers all, or substantially all, his property to a part of his creditors, in order to provide for them in preference to other creditors, the instrument or instruments by which such transfers are made, and that result is reached, whatever their form, will be held to operate as an assignment, the benefits of which may be claimed by any creditor not so preferred, who will take appropriate steps, in a court of equity, to enforce the equality contemplated by the statute."

The court assumed that such was the doctrine of the decisions of the highest court of that state, and cited Preston v. Spaulding, 120 l. 208, 10 N. E. Rep. 903, which presented a case where a voluntary assignment was made by an insolvent firm, and in contemplation of it the debtors had sought to prefer certain creditors, which purpose was held ineffectual. The supreme court of Illinois does not accept the views of the court in White v. Cotzhausen as expressive of the doctrine of its decisions, nor does it recognize or adopt them as such. Farwell v. Nillson, 133 Ill. 45, 24 N. E. Rep. 74. The reasoning of the court in the White Case was to the effect that the transfer by an insolvent debtor of all his property to one or more of his creditors, in exclusion of cthers, though in payment of valid debt or debts, is an attempted evasion of the statute restricting or prohibiting preferences in a general assignment; and it is accordingly here urged on the part of the plaintiffs that as the debtor, Hunter, intended to discontinue business, and surrender all his property to the bank in payment upon the debt due to it, the transfer must be deemed as a preference in contravention of the statute before mentioned, and that such creditor can take the benefit of such transfer to the extent, only, of one

third of the amount in value or proceeds of the property so transferred. As this objection could not have been available at common law the question arises whether it is made effectual by the statute. It seems clear that the conveyance and transfer made by Hunter to the bank did not constitute a general assignment, within the meaning of the statute. As before suggested, that term, as there used, has a well-understood meaning. As a general rule, statutes changing the effect of the common law will not be construed to abrogate it, further than the clear import of the language of the statute requires. Fitzgerald v. Quann, 109 N. Y. 441, 17 N. E. Rep. 354; Dean v. Railway Co., 119 N. Y. 541, 23 N. E. Rep. 1054. And it was said by Judge Andrews in Karst v. Gane, 136 N. Y. 321, 32 N. E. Rep. 1073:

"Courts are less disposed than formerly to depart from, or qualify, the plain words of a statute, in favor of what is termed 'an equitable construction,' in order to take particular cases out of its operation upon some supposed view of policy not indicated in the act itself."

In the present case there was no purpose to make a general assignment for the benefit of creditors, and none was made, by Hunter; and therefore the facts do not bring it within the doctrine of the adjudications in this state,-that the transfer made by him of the property was part of a scheme to create forbidden preferences. In those cases such general assignments were contemplated and made. Berger v. Varrelmann, 127 N. Y. 281, 27 N. E. Rep. 1065; Bank v. Bard, 59 Hun, 529, 13 N. Y. Supp. 688; and some other cases. In such cases no distinction is observed between a transfer (preliminary to a general assignment) embrac ing substantially all the property of the insolvent debtor, or a portion of it only. The ground upon which this rests is that the sale to the creditor, and the general assignment, constitute a scheme to create a preference, and that, for the purpose of their interpretation and effect, the means or instruments employed and made to accomplish it may be treated as one, and therefore within the application of the statute. But it is urged on the part of the plaintiffs that no purpose to make a general assignment, or its accomplishment, is essential to bring the case within the operation of the statute when the insolvent debtor has, by a single transaction, disposed of all his property to one, or a portion only, of his creditors, in payment of his debt or debts owing to him or them to whom the sale and transfer are so made. The support of that proposition would require the conclusion that such a transfer of his property for that purpose is, in legal effect, a general assignment for the benefit of creditors, within the statute. There is apparently no warrant for such construction of the statute in the language employed to express the legislative intent. Nor is it seen how its purpose, so manifested, can be extended to defeat the right of such debtor to make, and one or some, only, of his creditors to take, a transfer of his entire property, on payment of valid debt or debts owing by him to such creditor or creditors to whom it is made, and to hold it for that purpose, as against the

other creditors of the debtor. Woodworth v. Hodgson, (Sup.) 12 N. Y. Supp. 424, affirmed 129 N. Y. 669, 30 N. E. Rep. 65. This proposition, as has been seen, was recognized by the court in the opinion delivered upon the review of the first trial of this action. In Manning v. Beck, 129 N. Y. 1, 29 N. E. Rep. 90, the question arose whether a transfer by an insolvent debtor of a portion greater than one-third of his estate to a single creditor, in payment of a debt, was effectual as against other creditors, assuming that the debtor, at the time of such transfer, intended to make a general assignment, which he shortly after made, and that at the time the creditor took such transfer he was ignorant of such intent of the debtor; and it was held that cn such a state of facts the creditor would be entitled to the full benefit of the transfer so made to

him for such purpose. The reasoning of the court in the Manning Case, in the opinion there delivered by Judge Peckham, so far as it has any bearing upon the present case, goes in support of the proposition that the conveyance and transfer in question of the property cannot be brought within the operation of the statute hereinbefore mentioned. The case of White v. Cotzhausen was there cited, and after making some reference to its nature, purpose, and effect the court added: "Our statute does not in terms cover such a case." The conveyance and transfer in question cannot, by construction of the statute, be treated as a general assignment for the benefit of creditors of Hunter. The conclusion is required by the evidence that the sole purpose for which they were made by him, and taken by the bank, was in payment upon the debt due to the latter from him. On the first trial there was evidence tending to prove that the question whether the bank could legally purchase the property was considered by the bank officers and its attorneys. It now appears that this question of legality, so considered, had relation only to the federal statutes pertaining to national banks. In the view taken, there seems to be no support for the action. The complaint should be dismissed.

(69 Hun, 546.)

FULLER et al. v. ARTMAN.

(Supreme Court, General Term, Fifth Department. June 23, 1893.)

PAROL EVIDENCE-CONSIDERATION-SEALED INSTRUMENT.

Where an executory contract under seal recites a "consideration of one dollar and other valuable considerations, the receipt whereof is hereby acknowledged," such recital cannot be contradicted by parol evidence, though the contract binds only the party acknowledging receipt of the alleged consideration, and therefore lacks mutuality.

Appeal from judgment on report of referee.

Action by Edward K. Fuller and others against Arthur M. Artman for specific performance. From a judgment entered in Genesee county in favor of plaintiffs, defendant appeals. Affirmed. Argued before DWIGHT, P. J., and LEWIS, MACOMBER, and HAIGHT, JJ.

M. H. McMath, for appellant.
C. F. Bissell, for respondents.

DWIGHT, P. J. The plaintiffs are the assignees of the persons named as parties of the second part in the contract hereinafter set forth, and they bring this action to enforce its specific performance by the defendant, the party of the first part, named therein. The contract was in the following terms:

"This memorandum of agreement, made and executed this 23d day of September, 1890, between Arthur M. Artman, of the town of Le Roy, county of Genesee, and state of New York, of the first part, and David J. Bissell and Emory Elmore, of the town of Le Roy, county of Genesee, and state of New York, associates or assigns, of the second part, witnesseth that the party of the first part, in consideration of one dollar and other valuable considerations, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the said second party, his heirs, associates, or assigns, at any time which the said second party may designate within five months from the date hereof, that he will execute and convey to the said second party, heirs or assigns, a full covenant deed of the following described premises, situate in the town of Le Roy, aforesaid, consisting of about one hundred and twenty acres of land, and more particularly described as follows, to wit, being the premises now occupied by him as a homestead, reserving to party of the first part all growing crops at time tender is made. In case the party of the first part having chance to sell above premises to a bona fide purchaser prior to time above mentioned, then party of the second part shall have first chance to purchase at same price upon receiving thirty days' notice in writing, or forfeit this option, at and for the agreed price of $135.00 per acre; and that, whenever the said second party shall notify him that he will purchase said premises above, that he, the said first party, will forthwith procure an abstract of title of the said premises, and will, whenever a tender shall be made of such price of said premises, forthwith execute and deliver to said second party such deed of said premises as is above specified. Should there be any liens or incumbrances upon said premises, the amount of such liens or incumbrances shall be deducted from the amount of the purchase price; and the second party will take said premises subject to such liens or incumbrances: provided, however, that at the option and election of said party of the second part, and upon such tender of the sum of $15.00 per acre, and notice, as aforesaid, within the time for that purpose above limited, instead of executing such absolute conveyance for such land, the party of the first part shall and will execute a proper conveyance to the party of the second part or to their assignees of the right and privilege of mining for salt or other minerals under the same, but without the right of entry upon or injury to the surface of the same in any respect whatsoever, unless second party shall give notice of or make tender of purchase price before the expiration of the time above mentioned; then this instrument shall be null and void. In witness whereof the said party of the first part has hereunto set his hand and seal the day and year above written. [Signed]

"Arthur M. Artman.
"D. J. Bissell.
"Emory Elmore.

[L. S.]

[L. S.]

[L. S.]"

On the 18th day of October, 1890, the parties of the second part assigned all their interest in and rights under the contract to the plaintiffs, but the defendant was not informed of such assignment until the 21st day of February, 1891, mentioned below. On the 3d day of January, 1891, the defendant personally served on each of the parties of the second part a notice in writing as follows:

"To David J. Bissell and to Emory Elmore: I, Arthur Artman, hereby withdraw any and all offers heretofore made by me to you or to either of you

« PreviousContinue »