Case ID: misc_28/html/0123-01.html
Source: Caselaw Access Project
Author: {"author": "Freedman, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Victoria Paper Mills, Respondent, v. The New York and Pennsylvania Co., Appellant.
    (Supreme Court, Appellate Term,
    June, 1899.)
    Sales — Bona fide purchaser.
    •Where the only new consideration for a transfer of goods from fraudulent vendees is a payment of $50, made under advice of counsel and solely to protect the bill of sale from attack, the transferees are not T)ona fide purchasers and have no title which they can successfully assert against the defrauded vendor.
    Victoria Paper Mills v. New York & Pennsylvania Co., 27 Misc. Rep. 179, affirmed.
    Appeal, by the defendant from a judgment of the General Term of the City Court, affirming a judgment rendered in favor of the plaintiff, and also from the order affirming the judgment.
    James H. Fay (George Walton Green, of counsel), for appellant.
    Joseph A. Arnold, for respondent.
   Freedman, P. J.

This was an action for the conversion of personal property.

The property in question was purchased from the plaintiff by the firm of Cashriel & Co., and within a few days thereafter transferred to this defendant by a bill of sale, the consideration being for a pre-existing indebtedness for the sum of $1,600 and a present payment of $50 in cash. The case was tried before a jury and the plaintiff recovered a judgment for the amount claimed.

The appellant makes no claim upon this appeal that the facts did not justify the finding by the jury that the purchase of the goods by Cashriel & Co. from the plaintiff was fraudulent, and that at the time of such purchase Cashriel & Co. had no reasonable grounds to believe that they were able to pay for them.

The grounds asked for a reversal are: First. That there is no-proof that the goods in question were ever in the possession of either Cashriel & Co. or of the defendant, and, second, That the defendant was a bona fide purchaser for a valid consideration.

The property in question was a quantity of paper contained in three shipments to Oashriel & Co., designated in the invoices as Ho. 2 fibre ” -and S. Rope,” and the schedule of the goods attached to and made a part of the bill of sale from Oashriel & Oo. to defendant was shown to contain paper of a similar name and designation.

The treasurer of the defendant company testified that his company got practically all the property mentioned in the schedule aforesaid, and his testimony, together with the other evidence upon that subject adduced from the witnesses upon the trial was sufficient upon the question, both as to the delivery of the goods to Oashriel & Co. and the subsequent delivery by them to the defendant of the same property, to authorize its submission to the jury as a question of fact.

Having shown upon the trial that the sale from the plaintiff to Oashriel & Oo. was induced by and consummated through the fraud of the vendee, it devolved upon the defendant to show that it was a bona fide purchaser for value from Oashriel & Oo., its vendors. Devoe v. Brandt, 53 N. Y. 462; Stevens v. Brennan, 79 id. 258; Seymour v. McKinstry, 106 id. 240.

The defendant swore no witness upon the trial, and the testimony bearing upon the question of the consideration for the bill of sale shows that it was given for two promissory notes indorsed by Oashriel & Co. and held by -defendant aggregating the sum of $1,500, an existing indebtedness from Oashriel & Oo. to defendant upon an open account, amounting to the sum of $100, and the sum of $50 paid in cash, at the time the bill of sale was executed and delivered to the defendant. It appears from the testimony that this payment of $50 was made upon the advice ¡of counsel for the defendant, who suggested such sum should be paid to Oashriel & Co. by defendant in order, as one- of the attorneys stated at the time the bill of sale was executed, to make the bill of sale valid, and to show, in case it should be attacked, that some money consideration was paid, in addition to the preexisting indebtedness of Oashriel & Oo.

In view of all the facts and circumstances of this case, such payment was not sufficient to constitute the defendant a bona fide purchaser for value.

There can be no question, that had the consideration for the bill of sale consisted only of the pre-existing indebtedness of Oashriel & Oo. to defendant, the defendant would not have been-such a purchaser (Woodburn v. Chamberlin, 14 Barb. 446), and the payment of the $50 did not constitute the defendant such purchaser, because such payment was made with a knowledge on its part that in that way alone the just claims of creditors could be defeated.

It is not claimed that the $50 was paid as part of the real on .estimated value of the property, but only to make legal and valid that which it is conceded would otherwise have been illegal and void as against the plaintiff. In the case of Moyer v. Bloomingdale, 38 App. Div. 227, the justice writing the opinion, quotes with approval the decision in Lynch v. Beecher, 38 Conn. 490, which says: Such a purchaser (that is, a purchaser from the fraudulent vendee) in order to hold, must be a purchaser in absolute good faith and for value, and if his title is tainted with any fraud the court will not be particular to inquire into its generic character. It is enough that he is not an honest purchaser.”

In the case at bar, while perhaps no moral dishonesty may properly be imputed to the treasurer of the defendant company, who transacted the business relative to the transfer to his company of the property obtained from its fraudulent vendor under the advice of the counsel, yet the transaction was of such a character, and the circumstances surroimding it of such a nature, as to constitute fraud on the part of Cashriel & Co. and as to taint with legal dishonesty the sale to the defendant, and the payment of the $50 must be regarded as an attempt to give an outward appearance of good character to a transaction that would other.,wise have contained nothing but indices of trickery.

MacLean and Leventbitt, JJ., concur.

Judgment affirmed, with costs to respondent.