Case ID: nys_18/html/0391-02.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Gardner v. C. B. Keogh Manuf’g Co. et al.
    
    
      (Supreme Court, General Term, First Department.
    
    March 31, 1892.)
    Fraudulent Conveyances—Action to Set Aside—Parties.
    A complaint to set aside conveyances to a corporation, after setting forth the alleged fraudulent transfer, further alleged that the debtors hou also transferred a large amount of stock of the corporation to persons who were not bona fide creditors, with like fraudulent intent. Held that, the latter allegation being merely made to characterize the debtor’s action, the assignees of such stock were not necessary parties to the suit.
    Appeal from special term, New York county.
    Action by Charles B. Gardner against the C. B. Keogh Manufacturing Company and others to set aside alleged fraudulent conveyances. The company appeals from an order overruling a demurrer to the complaint, and from an interlocutory judgment entered thereon.
    Affirmed.
    Argued before Van Brunt, P. J., and Patterson and O’Brien, JJ.
    
      Myndert A. Vosburgh, (.Emmanuel J. Meyers, of counsel,) for appellant. Butler, Stillman & Hubbard, (2?. Kent and Adrian H. Joline, of counsel,) for respondent.
   Van Brunt, P. J.

This action was brought by a judgment creditor of the individual defendants composing the firm of C. B. Keogh & Co. against sucli individual defendants and the C. B. Keogh Manufacturing Company, to set aside as fraudulent a transfer or conveyance of certain property belonging to said firm, made by said firm to the defendant the G. B. Keogh Manufacturing Company. The defendant corporation interposed a demurrer upon the ground that it appeared upon the face of the complaint that there was a defect of parties defendant. The complaint alleges, among other things, that the property in question was transferred to the corporation, and was accepted by the corporation, with intent to hinder, delay, and defraud the just creditors of the firm of C. B. Keogh & Co. It then further alleges that the individual defendants, in pursuance of the scheme or plan aforesaid, transferred and delivered a large amount of the capital stock in said corporation to divers persons, who were not and are not bona fide creditors of said firm, and whose claims and demands against said firm were much less in amount than the value of said stock so delivered, and that said transfer and delivery were made in pursuance of said scheme, and with intent to hinder, delay, and defraud said creditors, and particularly the plaintiff. It is urged that because of this allegation the persons to whom this stock was delivered are necessary parties to this action, because it is claimed their holdings are assailed as being fraudulent. If this were true, and if the plaintiff was desirous •of reaching the stock in question, the claim would be well founded. But it •appears upon an inspection of the complaint that the plaintiff is not at all interested in or desirous of securing any part of the stock of the defendant company, and that all that this allegation was intended to aver was fraudulent practices upon the part of the individual defendants in connection with their dealings with the corporation. The allegation in question was probably entirely unnecessary. All that the plaintiff seeks to recover is property the ostensible title to which is in the defendant corporation, and he alleges a fraudulent scheme between the individual defendants and the corporation, and then, for the further purpose of characterizing the fraudulent character of the action of the individual defendants, he alleged that they transferred the stock they received from the corporation to persons without an adequate consideration. All the relief demanded is in respect to the property transferred by the individual defendants to the corporation. Stockholders, as such, do not own the property of a corporation, and are not necessary parties in an action brought to affect the title to property held by the corporation. Hence the stockholders were not necessary parties to the action, nor was the allegation contained in the complaint necessary in order that proof of fraudulent acts upon the part of the defendants might be offered. We are of opinion, therefore, that the demurrer was rightly overruled, and the judgment should be affirmed, with costs, with leave, however, to the defendant to answer on paying the costs of the demurrer upon this appeal, and the costs of the court below, within 20 days after entry of order hereon. All concur.