Case ID: abb-pr_12/html/0397-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Leonard, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SCHLUSSEL a. WILLET.
    
      Supreme Court, First District;
    
    
      General Term, September, 1861.
    Attachment.—Sheriff.—Fraudulent Conveyance.— Variance.
    Where a sheriff, acting under an attachment issued as a provisional remedy under the Code before judgment, has seized property claimed by a third party under an assignment from the defendant in the attachment, and judgment has been subsequently recovered in such action against the defendant, the sheriff and the plaintiff in the attachment may show, in defence oí an action against them to recover the property, that the alleged assignment was fraudulent and void. Where such judgment was not recovered until after the action brought to recover the property was at issue, and the fact was not set up by pleading, but it appeared that the plaintiff was aware of its existence, and on the trial admitted the fact,—Held, that the omission to plead the fact might be disregarded, as an immaterial variance.
    An assignment for benefit of creditors, which authorizes the assignee to manage and improve the assigned estate, renders the assignment on its face fraudulent and void.
    Appeal from a judgment.
    This action was brought by the plaintiff, as assignee of one Meyer, against Willet as sheriff, and A. S. and M. S. Herman, to recover property seized by the sheriff, under an attachment issued as a provisional remedy under the Code of Procedure, in an action against Meyer in favor of defendants Herman, upon a claim for merchandise sold said Meyer prior to his assignment.
    
      Issue was joined January 5th, 1858, and the cause was tried before Justice Emott and a jury, April 5th, 1859.
    It was admitted on the trial that defendant, Willet, took the goods in question, as sheriff, under the attachment duly issued, and that judgment in the attachment-action was recovered, April 3d, 1858, for $1,194.88, and that plaintiff replevied the goods in this action. This was subsequent to the commencement of the present action. The fact that judgment had been recovered was not set up in the pleadings.
    Plaintiff read in evidence the assignment from Meyer to him, which was dated November 9th, 1857.
    The assignment conveyed the property to the plaintiff, his executors, &e., upon trust to manage and improve, sell, assign, dispose of, and collect, &e., the assigned property.
    The defendants then moved for a dismissal of the complaint, on the ground that the assignment was fraudulent and void.
    The court granted the motion, to which the plaintiff excepted.
    The property mentioned in the complaint haying been delivered to the plaintiff in this action, the court directed that the defendants have judgment for the return thereof, or for the value thereof,—the value not to be assessed beyond the extent of the defendants’ special interest therein, under the attachment, with damages for its detention.
    Testimony was then given as to the value of the property.
    The justice then charged the jury. The jury rendered a verdict for the defendants, and assessed the value of the property at $1,194, and assessed the damages at $115.56.
    Judgment was entered on the verdict, and the plaintiff appealed to the general term.
    
      A. R. Lawrence, Jr., for the appellant.
    —I. The respondents were precluded from taking any exception to the validity of the assignment by Meyer to the appellant, even conceding that such assignment was invalid for any of the reasons mentioned on the motion to dismiss the complaint. 1. The statute does not render an assignment made with the intent to hinder, &c., creditors, absolutely void against creditors at large, but only as against such creditors as have obtained judgment and execution. (Hall a. Stryker, 9 Abbotts’ Pr., 349; Andrews a. Durant, 18 N. Y., 500; and see Jackson a. Caldwell, 1 Cow., 622; Coleman a. Croker, 1 Ves., 160; Bean a. Smith, 2 Mas., 282.) 2. And a creditor who has not proceeded to judgment and. execution, is a mere stranger, and as much bound by the act of the debtor as the debtor himself. (Andrews a. Durant, 18 N. Y., 500.) 3. The proof of the fact, that a warrant of attachment •had been issued in the case against Meyer, did not supersede the necessity of the respondents’ proving that judgment and execution had been obtained against him. (Hall a. Stryker, 9 Abbotts’ Pr., 350; Andrews a. Durant, 18 N. Y., 500.) The attachment was issued ex parte. (See Code, § 229; Hall a. Stryker, 9 Abbotts’ Pr., 350, 351.) 4. Even if the issuing of the attachment was, as to Meyer, prima fade a determination that the respondents were such creditors as were entitled to attack the assignment, it is not so as against the appellant, who was no party to the action in which' the attachment was issued. 5. It cannot be said, that the suggestion, as it is termed, that judgment had been entered in the action, is an admission on the part of the appellant, that the respondents Herman were creditors who had proceeded to judgment and execution against Meyer, and that the appellant is therefore estopped from denying that the respondents are in a position to attack the assignment for these reasons. It does not appear from the case, that the appellant made any admission in regard to the facts suggested to the court. The suggestion appears to have come from the respondents’ counsel. Before a party can be estopped, it must appear that he has made an admission which is clearly inconsistent with the evidence he proposes to give, or the title or claim which he proposes to set up. (Dezell a. Odell, 3 Hill, 215, per Bronson, J.) The appellant might admit that the Hermans were creditors at large, and yet deny that they were such creditors as would be entitled to attack the assignment; i. e., that they were creditors who had proceeded to judgment and execution. (See Andrews a. Durant, 18 N. Y., 500.) It is very apparent, also, that the appellant did not intend to admit (conceding that he had any part in the suggestion), that the respondents Herman had obtained a judgment and execution against Meyer, because previously it had been distinctly admitted that the judgment in the case brought by the Hermans against Meyer had not been obtained until April 3d, 1858, long after the commencement of this action. 6. The true test whether the respondents were entitled to avail themselves of the defence set np in their answers, is: Could they, at the time of interposing such defence,'have brought an action to set aside the assignment? Clearly, they could not. They must first show that they have exhausted their remedies at law. (Mohawk Bank a. Allerton, 2 Paige, 54; Hastings a. Belknap, 1 Den., 190 ; and cases supra.)
    
    II. The assignment produced upon the trial is not void upon its face. The terms “ manage and improve” must be construed with reference to the other portion of the paragraph in which they are inserted; from which it is apparent that it was the intention of the assignor that the assignee should immediately convert the stock assigned into money. (Hitchcock a. Cadmus, 2 Barb., 381; and see Meachum a. Stevens, 9 Paige, 398.)
    
      Brown, Hall & Vanderpoel, and Solomon L. Hull, for the respondents;
    —The assignment is void. 1. The provision enabling the assignee “to manage and improve” the estate, is equivalent to empowering the assignee to carry on the business, and therefore hinders and delays creditors. (Dunham a. Waterman, 17 N. Y., 17; D’Ivernois a. Leavitt, 23 Barb., 64; Woodburn a. Mosher, 9 Ib., 255; Schufeldt a. Abernethy, 2 Duer, 533; Brigham a. Tillinghast, 3 Kern, 215; Jessup a. Hulse, 29 Barb., 539; Ogden a. Peters, 21 N. Y., 24.) 2. Authorizing the assignee to sell on credit, renders the assignment void, because it hinders and delays creditors. Authorizing the assignee to manage and improve the assigned property at his discretion (a clothing-store), equally hinders and delays creditors. (Barney a. Griffen, 2 Comst., 365; Nicholson a. Leavitt, 2 Seld., 510; Porter a. Williams, 5 Ib., 142.)
    [The points made by the counsel for the respondent in respect to the effect of the attachment and judgment, as enabling the defendants to impeach the assignment, were substantially the same as those made in the case of Thayer a. Willet (9 Ante, 323-7).]
    
      
       Compare Jacobs a. Remsen, Ante, 390; and Thayer a. Willet, 9 Ib., 325; Hall a. Stryker, Ib., 342; and see Clute a. Finch, 25 Barb., 428.
    
   By the Court.—Leonard, J.

—The proceeding by attachment under the Code is in rem, and is collateral and auxiliary to the action. The warrant authorizes the seizure of the property of the defendant therein, and creates an inchoate lien thereon. Such lien would he useless as a remedy, if it cannot be defended against false or fraudulent claims made by third parties. It is said that the attaching creditor, having no judgment, does not stand in a position to resist the claims of a fraudulent purchaser from the defendant in the attachment. If so, the remedy is useless as a means of securing the debtor’s property to answer the judgment which may be recovered in such action (§ 232), where the debtor has transferred it to a fraudulent vendee. Section 232 also directs the sheriff to proceed in the manner required of him by law in case of attachments against absent debtors. Under the provisions of the Revised Statutes there referred to, in case the property of the debtor seized shall be claimed by any other person, the sheriff shall call a jury and try the validity of the claim; and if found in favor of the claimant, the sheriff shall deliver the property to him, unless the attaching creditors shall indemnify the sheriff. In case the indemnity is given, then the sheriff must detain the goods. It seems very inconsistent and unreasonable that the sheriff should be required to hold the property so attached, after a trial before a sheriff’s jury and a verdict in favor of the claimant, if, when a like question is raised at the circuit or elsewhere in a court of record, the sheriff shall not be permitted to assail the hona fieles of the title of the claimant.

There are many other strong grounds for maintaining the right of the sheriff or the attaching creditor to contest the title to property of those claiming by transfer from the debtor in the attachment proceedings.

The right of trustees appointed under the Revised Statutes in attachment proceedings against absconding, concealed, or nonresident debtors, to invoke the aid of a court of equity against all parties claiming through an alleged fraudulent title derived from the debtor, has often been maintained, although the attaching creditor could prove a demand existing only by simple contract. That proceeding is taken for the benefit of all creditors who come in and prove their demands against the debtors in the attachment, and in that respect is unlike the proceeding authorized by the Code; but I am unable to perceive that this circumstance makes any difference in the application of the principle.

Had there been no prior decision of the Supreme Court on this question, I should not hesitate to uphold the decision of the learned judge who presided in this case at the circuit. The case of Hall a. Stryker (9 Abbotts’ Pr., 334), decided by a very eminent justice of this court, is adverse to these views, and in a case in all respects similar I should 'defer to that authority.

At the trial of this action it was admitted by the plaintiff that judgment had been recovered a year previously by the attaching creditors against the debtor in the same action, wherein the warrant of attachment, which was relied on as a link in the defence of this action, was granted. Ho objection was made by the plaintiff to the introduction of this evidence.

It was not a variance by which the plaintiff was misled. It was a proper case, after the evidence was in without objection, for disregarding the omission to plead the recovery of the judgment, under the authority of section 170 of the Code. The court ■evidently so considered it. If I do not mistake, the justice presiding at this trial was a member of the general term, which pronounced the judgment in Hall a. Stryker. The defendants might have set tip this judgment before the trial by a supplemental pleading, by leave of the court. But it is quite apparent that the plaintiff was aware of its existence, and was not surprised by the evidence, candidly admitting it without objection.

This fact being fairly before the court, the ground of the objection raised on the authority of Hall a. Stryker is obviated. The trust assignment for the benefit of creditors under which the plaintiff claimed title to the property in question, derived from the debtor in the attachment, authorized the assignee to “ manage and improve” the assigned estate.

This provision renders the assignment on its face fraudulent and void.

The judgment should be affirmed, with costs. 
      
       Present, Clerke, P. J., Leonard and Barnard, JJ.