Case ID: ny-st-rep_69/html/0540-01.html
Source: Caselaw Access Project
Author: {"author": "Andrews, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Adolfo Casola, Resp’t, v. Francisco Vasquez, Impleaded, etc., App’lt.
    
    
      (Court of Appeals,
    
    
      Filed October 15, 1895.)
    
    1. Attachment—Fraud.
    To authorize an attachment under subd, 3, section 636 of the Code, there must be actual or intended fraud upon creditors.
    3. Same.
    The violation of the Limited Partnership Act by the preferential payment of an honest debt by a solvent limited partnership, organized un der such act, does not establish that the debtor has “assigned, disposed of or secreted his property” with intent to defraud his creditors, within the attachment law.
    Appeal from order of general term of the supreme court in the first judicial department, which affirmed an order of the special term entered December 3', 1894, denying defendant’s motion to vacate a warrant of attachment.
    
      
      William H. Blymer and Jones & Covin, for app’lt; Louis Marshall and Charles W. Bennett, for resp’t.
    
      
       Reversing 65 St. Rep. 840.
    
   Andrews, Ch. J.

The application for - the warrant of attachment was based on the ground that the defendants “ had assigned, disposed of or secreted their property with intent to defraud their creditors.” The affidavits wholly failed to establish a case within this clause of the statute. They show simply that the firm of Kugelmann & Co., in violation of the Maryland statute regulating the formation of limited partnerships, being insolvent, sold and transferred to the defendant, Francisco Vasquez, or to the firm of Francisco Vasquez & Sons, effects of the firm in payment of a valid debt owing by the firm to Vasquez or Vasquez & Sons, with intent to give a preference to such creditor or firm. The honafides of the debt is not questioned, nor it it claimed that the effects transferred exceeded in value the amount of the debt. The Maryland statute declares (§ 15, art. 73 of the Public General Laws of Maryland) that a transfer made by a limited partnership under such circumstance, “ shall be void as against the «creditors of such partnership.” Vasquez having been at the time of the transfer a special partner in the firm of Kugelmann & Co., became, as is claimed, by accepting this transfer, liable under the 17th section of the act as general partner. The sale and transfer, although in violation of the limited partnership act, did not bring the case within the attachment law. It was void, but solely by force of the partnership statute. It was not a fraud at common law, under which preferential payments by an insolvent debtor are permitted. The transaction could be set aside for the benefit of the body of creditors of Kugelmann & Co., because the statute of Maryland declared it to be void, and Vasquez, by assenting to the transfer in violation of the act, may-have subjected himself to liability as a general partner. But to authorize an attachment under subdivision 2 of section 636 of the Code, there must be actual or intended fraud upon creditors ; such fraud as was contemplated by the statute of Elizabeth, and similar statutes. The violation of the limited partnership act by the preferential payment of an honest debt does not show that the debtor has assigned, disposed of or secreted his property ” with intent to defraud his creditors, within the attachment law.

The orders of the general and special terms should be reversed, and the attachment vacated, with costs.

All concur. Orders reversed.