Case ID: ad_141/html/0336-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Edward G. Wasey, as Trustee in Bankruptcy of William A. Sturgeon, Bankrupt, Respondent, v. Edward Holbrook, Appellant, Impleaded with William A. Sturgeon and W. A. Sturgeon & Company, Defendants.
    First Department,
    December 2, 1910.
    Fraud — suit to set aside transfer — judgment according to pleadings — personal judgment against transferee — modification of judgment.'
    A judgment either at law or" in equity must be warranted by the allegations of the ■ complaint.
    Although a court of equity will adapt its relief to the exigencies of the case, . it will not order the defendant to pay a sum of" money or give the plaintiff a persona] judgment therefor, unless that relief be necessary to prevent a failure . of justice or unless it be impracticable to grant thespecific relief asked.
    Where the complaint in a suit by a trustee in bankruptcy to sot aside as fraudulent a transfer of stock asks that tlie defendant be ordered to return the certificates to the plaintiff, or, if he no longer holds them, tljat he pay their value in money, the court having found that the transfer was fraudulent - and that' the • - defendant still holds the certificates should direct their! return to the plaintiff. A personal judgment for the value of the stock at the ¡time of the transfer is unauthorized. • • i
    In a suit to set aside a transfer of property as in fraud! of creditors a personal judgment can be given against .the transferee only where he has done some act which renders it impossible for him to return the property,- or has destroyed or •impaired Hsr value, j
    The fact that the stock had depreciated in value since its] transfer is not sufficient ground for awarding a personal judgment against the- transferee, if it 'do not appear that the depreciation" was due to any act of his!
    Where, upon the findings, full and complete relief can be given by modifying á judgment it will not be reverseil, but will b.e modified and affirmed. ■
    Appeal by the "defendant, Edward" Holbrook, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 21st day of January, 1910, upon the decision of the court rendered after a trial at the New York Special Term.
    
      Peter B. Olney, for the appellant.
    
      Henry Fletcher, for the respondent.
   McLaughlin, J.:

This action was brought to set aside, as fraudulent'and void, a transfer to the appellant of 750 shares of the capital stock of, W. A. Sturgeon & Co., a Michigan corporation, and to compel him to return to the plaintiff certificates representing 740 shares, and if it were found that he no longer held such certificates and for that, reason it was impossible for him to return the same, that then he be ordered and adjudged to pay to the plaintiff “ as trustee for the creditors of said Sturgeon a sum of money equivalent to the value of said 740 shares of stock.” The answer put in issue the material allegations of the complaint.. Substantially all of the evidence introduced at the trial was directed to the issue as to whether the transfer of the stock in question were fraudulent as to the creditors of Sturgeon. ■

It would serve no useful purpose to detail at length the evidence upon which the trial court, reached the conclusion that the transfer was fraudulent and void, it being sufficient to sáy that after a careful review of the evidence we are satisfied with the finding on that • subject. The court also found that the appellant “ still has on hand, and is still the holder of the certificates for the shares of stock in question herein.” Having found that the certificates were fraudulently transferred and that the person to whom they were transferred still had them in his possession, the court should have granted a judgment directing the return of the same Jo the plaintiff as prayed for in the complaint. Instead of doing that, however, he granted a personal judgment against the appellant for what it is contended the stock was worth at the time the same was transferred. This is not the judgment prayed for in the complaint; it is not a judgment to which the plaintiff was entitled under the facts set out in the complaint or proved upon the trial.

1 While it is true the distinction between actions at law and suits in equity and the forms of those actions and suijts have been abolished (Code Civ. Proc. § 3339), nevertheless we still have, in fact the action at law and the suit in equity, and!in either case the •judgment obtained must be warranted by the facts stated in the complaint and embraced within the issue. (Code Civ. Proc. § 1207; Murtha v. Curley, 90 N. Y. 372; Harrison v. Obermeyer & Liebmann Co., 64 App. Div. 499.) If, however, thje suit be in equity the court will adapt its relief to the exigencies of the case, but it will order a sum of money to be paid to the plaintiff, or give him a. personal judgment therefor only when that species of relief .is necessary to prevent a failure of' justice or wherkfor any reason it is impracticable to grant- the. specific relief prayed for. (Hubbell v. Henrickson, 175 N. Y. 175 ; Valentine v. Richardt, 126 id. 272.)

Here, a personal judgment was not necessary, nor were any facts proved which would justify if. Pull and complete relief can be given the' plaintiff by directing the appellant I to return the certificates of stock in question and requiring him jko account for any dividends or benefits derived from them during the time he has held the same. " |

The awarding of the personal judgment is sought to be sustained upon the ground that the stock has, since it was transferred, depreciated in value. In the first place the evidence does not - clearly or satisfactorily establish such fact, and if it did, not a single fact was proved which tended to show that sucia depreciation was due to any act ,of the appellant or-that he had done a single thing to impair its value. Where a suit-is brought to set aside a transfer of property on the ground that it is fraudulent as to creditors, a personal judgment can only be given against the transferee when it appears that he has done some act which makes it impossible for him to return the property, or else has destroyjed or impaired its value. An examination of -the authorities cited jay the respondent will, it is believed, show that this is the ground upon which a personal judgment in such an action is given. I

The foregoing views do not necessarily lead tola reversal of the judgment. Opon the findings full and complete relief can be given by modifying the judgment so'that it shall direct the appellant to return to the plaintiff certificates representing Í4Q shares of the stock in question and to account for all dividends received thereon while he has held the same, and as thus modified the judgment is aflirmed, without costs to either party in this court.

Ingraham, P. J., Clarke, Scott and Dowling, JJ., concurred.

Judgment modified as directed in opinion, and as modified aflirmed, without costs. Settle order on notice.