Case ID: ny-st-rep_35/html/0616-01.html
Source: Caselaw Access Project
Author: {"author": "Daniels, J. Van Brunt, P. J. Brady, J., (dissenting).", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Edward Dickson et al., Resp’ts, v. Mark Mayer, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed December 29, 1890.)
    
    Attachment—Affidavit—Insolvent cobpoeations.
    An affidavit for an attachment alleged that defendant, a corporation, was about to transfer or assign its property in contemplation of insolvency by means of judgments recovered against it. It appeared that all the judgments were recovered the same day, and that executions had been levied on defendant’s property, but it was not shown, except as to one in favor of' the president’s wife, that any of the judgments had proceeded from any act of any officer of defendant. As to said judgment it was alleged on information and belief that it was recovered at the instance of the president, and that it appeared from statements made by him and the attorney, the substance of which were not given, and also alleged a statement of the attorney in the president’s presence that he had been authorized to bring the suit by the president in the name of his wife, but it did not state that the president admitted or denied the truth of the statement. Held, that the affidavit was not sufficient to prove a violation of the statute or support an attachment on the ground stated.
    (Beady, J., dissents.)
    Appeal from an order denying a motion to vacate an attachment for the reason that the papers on which it was granted were insufficient.
    
      A. Blumenstiel, for app’lt; Kneeland, Stewart & Epstein, for resp’ts.
   Daniels, J.

The defendant was a corporation existing under the laws of this state, and the action was brought by the plaintiff for goods sold and delivered to the company upon which the amount claimed to be due was the sum of $2,556.56. This amount was stated in the affidavit of one of the plaintiffs to be due to them over and above all counterclaims known to him or to the plaintiffs.

The ground upon which the attachment was issued was that the defendant had assigned, disposed of and secreted property, or was about to do so, with intent to defraud its creditors. And the affidavit of one of the plaintiff’s attorneys was chiefly relied upon as proof of this intended disposition of the defendant’s property. It was not stated or shown in the affidavit that any of the defendant’s property had been directly disposed of in this manner, but it was affirmed that judgments had been recovered against the defendant under which this disposition of its property was intended to be made. What was charged was in substance that the defendant was about to transfer or assign its property in contemplation of its existing insolvency in violation of § 4, title 4, chap. 18 of part 1 of the Revised Statutes. The manner in which that was to be done was by the recovery of these judgments and the levy which had been made under executions issued upon them on all the property of the defendant. But as to all the judgments not recovered by the wife of Mark Mayer, who was the president of the corporation, no facts whatever were disclosed, or sustained by the affidavits, proving that they had proceeded from any act of this, or any ■other, officer of the corporation. All that appeared as to those judgments was that they had been recovered on the same day, and executions had been issued and levied on the property of the defendant. And as to them this was not sufficient to prove that the defendant was about to transfer or assign any of its property in contemplation of its existing insolvency. Varnum v. Hart, 119 N. Y., 101; 28 N. Y. State Rep., 262.

But as to the judgment recovered in favor of Dessa Mayer on the same day as the others were recovered, the facts were more favorable to the right of the plaintiffs to an attachment. But they ■still failed to prove that the president of the corporation, who was the husband of this plaintiff, had officially interfered in any manner to induce the commencement of the action, or to secure the Tecovery of the judgment in favor of his wife. That her judgment was recovered at the instance of her husband was alleged in the affidavit to have been the fact according to the belief of the person who made it, but that was clearly no proof that this, or ■either one of the other officers of the corporation had directly interfered to induce the commencement of the suit or the recovery of this judgment; for mere belief is no evidence.

The attorney did also swear that it appeared from statements of Schlesinger and Mayer at the creditors meeting that Mark Mayer, the president of the corporation, had personally procured the commencement of the suit on behalf of his wife. But this part of "the affidavit is entitled to no weight or effect on account of the (omission of the statements. from which the inference is to be drawn. They should have been set forth, if anything more had taken place than what is afterwards stated in the affidavit, to afford the court an opportunity of determining whether this conclusion was maintained by any statements made by either of these persons. It is probable that it was not, for at the conclusion of the affidavit it is added that Schlesinger further stated at the meeting, in the hearing of Mark Mayer, as follows:

Q. You are attorney for Mrs. Mayer in the suit against Mark Mayer? A. Yes, sir.

Q. Did Mr. Mayer authorize you to commence this suit in the name of his wife ? A. He authorized me in the name of Mrs-Mayer.

But this did not prove the fact that Mayer did give this authority, for it is no more than the statement of the attorney himself. And it does not appear whether Mayer admitted or denied the truth of this statement, or that he acquiesced in its correctness by omitting to make any response to it whatever. In these respects the affidavit is materially defective, for it does not prove the fact to be, and which it was for the plaintiffs to prove, that Mayer did direct this suit to be commenced in the name or for the benefit of his wife. Without that direction there was not sufficient to present a case of a violation of the statute restraining the action of corporate officers in assigning and disposing of the property of the corporation in contemplation of insolvency. The order therefore should be reversed, with $10 costs and the disbursements, and the attachment should be vacated.

Van Brunt, P. J.

I concur in the result. I cannot see any reason which prevented the husband of Mrs. Mayer from directing the commencement of the action which resulted in the judgment.

Brady, J., (dissenting).

The application for the attachment rested upon the allegation that the defendant had assigned, disposed of and secreted property, or was about to assign, dispose of and secrete with intent to defraud its creditors.

The affidavits upon which the attachment was granted allege that the defendant is a corporation and array the recovery of several judgments through the alleged connivance of the defendant, and particularly one in favor of Dessa Mayer, the wife of Mark Mayer, as to which it is alleged that the defendant Mark Mayer authorized the attorney by whom it was procured to commence the suit in the name of his wife. This was an affirmative act on the part of the corporation. It set in motion the legal process by which a judgment was to be obtained against it, and in that respect differs in some respects from the case of Varnum v. Hart, 119 N. Y., 101; 28 N. Y. State Rep., 262. In that case, although the badges of fraud were considered to be ample in the court below, the court of appeals held that whilst the corporation did no affirmative act, they were not subject to the charge of having violated the statute, R. S., part 1, chap. 18, title 4, § 4, which prohibits incorporated companies from making any transfer or assignment in contemplation of insolvency. It was there said that the officers of a corporation were under no legal duty in the case of its insolvency to take measures to procure a disposition of its property, without preference, among all its creditors. They might, like an insolvent person, permit the creditors to take hostile proceedings and allow those to obtain preferences who are the most vigilant.”

Furthermore, it was said that the “ statute contemplates affirmative action on the part of the corporation, and it cannot be violated by mere silence or omission to act on its part or the part of its officers.” And, again, that an insolvent corporation is not obliged to defend any suit brought against it for the sole purpose of defeating a preference, and it may, in such case, suffer default and thus allow a judgment to be obtained against it, knowing that the creditor designs to obtain, and will thus obtain a preference. Such conduct on its part does not constitute a transfer or assignment of its property, and there is nothing in the statute which condemns judgments thus obtained.

And further, it will be observed in that case that as to one of the j udgments the directors held a meeting and resolved that an attorney should be authorized to appear in the action and offer judgment to the amount claimed. In disposing of that feature of the controversy, the court said that that judgment was obtained in consequence of the affirmative action of the corporation taken for the express purpose of giving the judgment creditor" some advantage in its property, and the court assumes, without deciding, that that judgment was in violation of the statute and therefore void, referring to the case of Kingsley v. The First National Bank, 31 Hun, 329

The principle recognized in that decision is that any affirmative action on the part of the corporation by which the judgment is obtained is sufficient to render it invalid, as violative of the statute referred to ; and that principle applies to the judgment in favor of Dessa Mayer, which was obtained through the direct agency of the corporation, Mark Mayer having employed the attorney and authorized him to prosecute it; and was an unlawful preference over the other creditors of the company. Kingsley v. First Nat. B'k, supra. It was indeed a more affirmative act than the act of directors in passing a resolution authorizing the attorney to defend and to offer judgment for the amount claimed.

Without looking farther into the affidavits to see whether there are any other allegations of import and upon which the attachment might be sustained, it is thought the order appealed from should be maintained, the circumstances attending the procuration of the Dessa Mayer judgment being quite sufficient to uphold it. It was an unlawful attempt to transfer so much of the defendant’s property as would be necessary to pay the judgment, and thus to establish an unauthorized preference. It has not been required that it shall be made to appear that the defendant has removed or disposed of all his property with intent to defraud creditors, but they may proceed by attachment against him when he has disposed of a part of it with that intent. Nyman v. Kapp, 22 W. Dig., 310.

For these reasons the order appealed from must be affirmed.

Order reversed, with ten dollars costs and the disbursements,. and attachment vacated.