Case ID: ad_39/html/0477-01.html
Source: Caselaw Access Project
Author: {"author": "Barrett, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Schwarzschild & Sulzberger Company, Appellant, v. John J. Mathews, Respondent, Impleaded with Others.
    
      Equity — action to remove fraudulent obstructions to a levy — it does not abate after sixty days from the issue of the execution—transfer, by a debtor, of property on which there is an invalid mortgage, to the mortgagee in payment of the mortgage debt — transfer by one of two partners.
    
    An action in equity, brought by a judgment creditor to remove alleged fraudulent obstructions to a levy under an outstanding execution issued upon his judgment, does not abate by reason of the inability of the creditor to bring his case to trial within the life of the execution — namely, within sixty days after the date at which the execution is issued.
    Where a chattel mortgage is invalid as to creditors because of a failure to file it, a transfer of the mortgaged property to the mortgagee by the mortgagors in liquidation of a portion of the mortgage debt, if made before any other creditor obtains a lien upon the property, confers upon the mortgagee a good title to it.
    One of two partners may execute, in his individual name, a bill of sale of the partnership property to a creditor thereof.
    
      Appeal by the plaintiff, the Schwarzschild & Sulzberger Company, from a judgment of the Supreme Court in favor of the defendant, John J. Mathews, entered in the office of the clerk of the county of Hew York on the 19th day of May, 1898, upon the decision of the court, rendered after a trial at the Hew York Special Term, dismissing the plaintiff’s complaint.
    
      Daniel P. Hays, for the appellant.
    
      De Witt Bailey, for the respondent.
   Barrett, J.:

This is an appeal from a judgment entered upon a decision which did not state separately the facts' found. It was in this respect such a decision as is authorized by section 1022 of the Code of Civil Procedure. It stated concisely the grounds upon which the issues were decided, and directed judgment, for the defendant Mathews to be entered thereon. We think the grounds assigned for the decision untenable. The action was in equity to-remove what were alleged to be fraudulent obstructions to a levy under an outstanding execution issued upon a judgment in favor of the plaintiff against the defendants Fife & Petty. The case was tried upon the merits, but. the learned trial judge, instead of determining whether the obstructions to the levy were in fact fraudulent, simply held that the plaintiff could not maintain its action because the time for returning the execution passed while the suit was taking its ordinary course on the road to trial. The effect of this decision, if sustained, would be to throw every such plaintiff out of court unless he could manage to bring* his action to trial within sixty days from its commencement. We need not now discuss this question. It was fully considered by this court in Home Bank v. Brewster & Co. (15 App. Div. 339). We there held that the rights of the plaintiff in such an outstanding execution were not defeated by his inability to bring his case to trial within sixty days from the date when the execution was issued. His rights, we said, “ were to be determined with reference to the condition of things existing at the time the action was commenced. The court affords the relief to which the plaintiff was then entitled.” It follows, if we are limited upon this appeal to a review of the reasons assigned by the learned trial judge for his decision, that the judgment should be reversed. But we are not thus limited. On the contrary, we are bound, under -the express provisions of the section of the Code of Civil Procedure already cited, to review all questious of fact and of law presented by the record now before us. This is the language of the section: “ Whenever judgment is entered on a decision which does not state separately the facts found, the defeated party may file an-exception to such decision, in which case, on an appeal from the judgment entered thereon upon a case containing exceptions, the Appellate Division of the Supreme Court shall review all questions of fact and of law, and may either modify or affirm the judgment or order appealed from, award a new trial, or grant to either party the judgment which the facts warrant.” In the case at bar the plaintiff duly filed an exception to the decision. The decision was, “ that the defendant John J. Mathews is entitled to judgment * * * dismissing the complaint on the merits, with costs.” It is that decision which, upon an exception thereto filed by the defeated party, is brought up for review. And it is with respect to that decision that the Appellate Division is required upon a case containing exceptions ” — which we have here — to review all questions of fact and of law. We have accordingly gone through this case containing exceptions and have reviewed all questions of fact and of law appearing therein. Our conclusion upon that review is that the decision of the learned trial judge was entirely correct and that the instruments alleged to be obstructions to the levy of the plaintiff’s outstanding execution were not fraudulent, but were in fact l)ona fide.

The specific obstructions complained of were a mortgage executed by the defendants Fife & Petty to the defendant Mathews on ¡November 21, 1896, and a judgment recovered against Fife & Petty by Mathews on February 3, 1897. The judgment debtors were engaged in conducting the Metropolitan Hotel in the city of ¡New York, and the mortgage was upon the fixtures and furniture of the hotel. At the time if was executed Mathews loaned Fife & Petty $5,000. He had previously loaned $5,000 to the firm and $6,000 to Petty individually; the mortgage was made to secure the whole sum of $16,000. Mathews did not file the mortgage until the latter-part of January, 1897, when he took possession of the property through an agent. On January 26, 1897, the plaintiff obtained an attachment against the property of Fife & Petty and under it levied upon certain property in the hotel. Ho attempt, however, was made to levy upon any of the property covered by the mortgage. On January 27, 1897, Mathews began an action against Fife & Petty .to recover the $16,000. The summons and complaint were served upon Petty only. He answered, but the answer was held insufficient, and judgment "was granted to Mathews upon the pleadings. This judgment was entered February 3, 1897, and execution was issued upon it the same day. The following day Petty had an interview with Mathews’ attorney and was informed that the mortgage was void; and that, if his firm would make a bill of sale to Mathews of the property covered by the mortgage, it would be accepted in payment of $10,000 of the debt. Petty consented to this and he executed and delivered the bill of sale, the property being already in Mathews’ possession. The plaintiff recovered its judgment on April 8, 1897, and issued an execution the same day, which is still outstanding. This action was begun on April 17,1897. The complaint demands that the mortgage and judgment be set aside, but asks no relief with reference to the bill of sale. The answer of the respondent Mathews sets up the latter as -a source of title.

We think the plaintiff entirely failed to make out a case. That Mathews loaned $10,000 to the firm of Fife & Petty and $6,000 to Petty individually is quite undisputed. That the latter debt was assured by the firm is proved by the overwhelming weight of evidence which shows that this was the actual understanding and agreement of the parties. The mortgage was invalidated by the failure to file it, but it was perfectly competent for Fife & Petty to transfer the property to Mathews, the mortgagee, in extinguishment of a portion of their debt to him; and, if this transfer was made before any other creditor obtained a lien upon the property, Mathews obtained a good title. (Bowdish v. Page, 153 N. Y. 104.) The plaintiff had not obtained a lien upon the -property when it was transferred to Mathews. Ho levy was made upon this property under the attachment, and the plaintiff’s judgment was not obtained until after the transfer by the bill of sale. Petty individually had power and authority to execute the bill of sale. (Mabbett v. White, 12 N. Y. 442; Bulger v. Rosa, 119 id. 459, 467.) Ho attempt was made to prove that $10,000 was not a fair price for the prop- ' erty. On the contrary, the only evidence on the point tends to prove that the goods were worth not more than $8,000, and they brought only $7,020 when sold by the receiver.

The attack on the judgment is equally unfounded. As has been stated, the decisive weight of evidence shows that the firm of Fife & Petty owed Mathews $16,000 when he began his action against them. Ho honest defense could have been interposed in that action, and it is not surprising that the truthful answer put in by Petty was held to be insufficient. After the court had decided that the facts stated in Petty’s answer constituted no defense, he was certainly not bound to and, indeed, he could not resist further. The judgment which followed was properly rendered against the defendants jointly upon service of the summons on Petty alone. (Yerkes v. McFadden, 141 N. Y. 136.) At the time this judgment was entered .the bill of sale had not been executed, and consequently the full $16,000 was due. There has been no attempt since the transfer under the bill of sale to enforce the judgment for any more than was actually left unpaid.

It is said, and quite correctly, that if the mortgage and judgment were obtained with fraudulent intent they were void though given for an honest debt, and it is contended that there was here such fraudulent intent. The latter contention is wholly unfounded. The sole intention was to secure to Mathews the payment of his debt, and the method adopted was designed to effect that legitimate end. It was neither designed nor used to shield Fife & Petty against their other creditors.

As the judgment and bill of sale were valid, it was proper to dismiss the complaint. The void mortgage was in no sense an obstruction to the plaintiff’s levy. The only obstructions to such levy in existence at the time of the issuing of the plaintiff’s execution were the valid bill of sale and judgment.

It follows that the judgment appealed from was right and should be affirmed, with costs.

Van Brunt, P. J., Rumsey, Patterson and McLaughlin, JJ., concurred.

Judgment affirmed, with costs.