Case ID: ny-st-rep_51/html/0741-01.html
Source: Caselaw Access Project
Author: {"author": "Barnard, P. J. Pratt, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Augustus N. Lindsley, Resp’t, v. Henry W. Van Cortlandt et al., App’lts.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed February 13, 1893.)
    
    1. Judgment — Entry on offer — Proof of service not necessary.
    The judgment roll entered upon an acceptance of an offer of judgment need not contain proof- of service of the summons.
    2. Fraud — Preference.
    There is nothing illegal and fraudulent in the fact that a debtor facilitates the proceedings of his creditor, unless there is a fraudulent intent.
    
      3. Same — Transfer.
    A son being honestly indebted to his father gave him a bill of sale of certain personal property, the sum mentioned as the consideration being a fair price for the goods, which was credited on the debt. Meld, that a finding that the bill of sale was fraudulent was erroneous.
    4. Same.
    The mere fact that the son intended to prefer the father and the father wished to be preferred, and they were co-operating to that end, is not suffi-" cient without proof to connect the father with the fraudulent intent of the son, if that existed, to prove fraud in a judgment recovered by the father.
    Appeal from judgment in favor of plaintiff, setting aside a judgment recovered by defendant, Augustus Yan Cortlandt, against his son, Henry W. Yan Cortlandt, and the subsequent proceedings thereon, as irregular and fraudulent.
    
      John H. Ferguson, for app’lts, Henry W. Van Cortlandt et al.; W. W. Schrugham, for app’lt, Augustus Van Cortlandt; James M. Hunt, for resp’t.
   Barnard, P. J.

The finding that the judgment obtained by Augustus Van Cortlandt against Henry Van Cortlandt on the 21st of July, 1891, was irregular, illegal and void, is not supported by the evidence. The debt upon which it was founded was good and it is so found by the trial court. The claim was put into the hands of Reevs & Scrugham for the purpose of obtaining a judgment upon it. Wm. H. Scrugham served a summons-personally upon the defendant and he made an offer of judgment which was accepted. In filing the papers for judgment no proof of the service of the summons was annexed; but the summons and complaint, and offer and acceptance, both acknowledged by the respective parties. The omission was subsequently corrected and the plaintiff, Augustus Lindsley, was permitted to file proof of service. The judgment lacks nothing in form. Was it given to defraud creditors? There is nothing to prove such an intent, assuming the judgment to be valid. The plaintiff immediately issued execution upon it and obtained a receiver. The bill of sale of the personal property given by Henry Yan Cortlandt was valid. The debt to his father was reduced by this sale $728. Augustus Yan Cortlandt took immediate possession and has ever since retained it. The receiver took possession of the remaining personal assets as receiver and under the order of the county judge proceeded to advertise the same at public auction, when he was arrested by the injunction herein. Augustus Yan Cortlandt was diligent and did not suffer his execution to become dormant, and if he bad a good debt he had the same rights as a stranger. Hpon the merits the defendants are entitled to have a reversal of this judgment. It seems to be established by a long line of authorities that the plaintiff in this action, not being a judgment creditor, cannot maintain it. Sullivan v. Miller, 106 N. Y., 635; 11 St. Rep., 312; Briggs v. Austin, 129 N.Y., 208; 41 St. Rep., 378; Frothingham v. Hodenpyl, 48 id., 449.

The granting of the order to file the proof of the service of the summons and complaint was clearly within the power of the court, if it was necessary. The service was made and the order merely permitted the filing of the proof as if it had been filed in due time. I think the judgment was good without it. The granting of the motion made by plaintiff to insert allegations in the complaint that the bill of sale was fraudulent, was also proper. It could have been proven without the insertion of § 4 of the complaint under the general allegations of fraud. An act done in fraud of creditors at about the same time will be received to show fraudulent intent.

The order should be affirmed, without costs.

The judgment should be reversed and the complaint dismissed, with costs.

Pratt, J.

I am unable to concur in the conclusions reached by the learned trial judge in this cause. The action was brought to set aside a bill of sale and certain judicial proceedings on the theory that they were fraudulent as against creditors. The controlling facts have been found or appear by evidence substantially undisputed.

Young Van Cortlandt owed his father $7,988.50 on July 20, 1891. He also owed the plaintiff quite a sum, the precise amount not being important in my view of the questions here involved. Hé on that day sold certain property to his father by a bill of sale, apparently regular on its face, in consideration therein expressed of $728.35, which sum was immediately credited by the father in reduction of this debt, thus" leaving the debt $7,260.15. The father immediately entered into possession of these goods, and there is no evidence that he did not maintain it. The sum mentioned as a consideration in the bill of sale was a fair price for the goods covered thereby. So much appears by the findings. The defendants each requested the court to find that on the same day the father commenced an action in this court against the son to recover $7,060.15. The court refused so to find on the request of the father and omitted to pass on a like request by the other defendant. The request was undoubtedly material, as will presently appear. There can be no question but that the action was commenced on that day. The son swore that the summons was served, but did not state the date. But the findings show that on the 20th day of July, 1891, the son appeared in person in the action and offered judgment for $7,060.15 with costs, and that this offer was accepted on the same day. These facts appeared without contradiction by the affidavit of the father’s attorney and also by due acknowledgment of both the offer and acceptance, all attached to the judgment roll.

Judgment was entered July 21,1891, on these papers and upon the summons and complaint, which was verified on the 20th. But no proof of service of the summons was originally filed with the judgment roll. The letter of the Code did not require such proof of service. It provides that plaintiff may file the summons, complaint and offer with proof of acceptance, and thereupon the clerk must “enter judgment accordingly.” It is thus plain that the judgment roll included everything required by the statute, and showed that the action was actually commenced on July 20, 1891.

It is suggested that the practice required that the summons must have been actually served before the offer could have been properly made, on the authority of Trier v. Hermann, 115 N. Y., 163; 24 St. Rep., 552. The answer is three-fold :

First. This case decides no such point. That precise question was not involved in that case. The learned court simply and incidentally remarked obiter that the plaintiff “must pursue the practice prescribed.”

Second. The Code, § 738, does not require filing of the proof of service of the summons. Hence, this judgment was regular on its face without that proof.

Third. At most, the plaintiff in such a judgment must prove the service, if required, but not necessarily by the judgment roll. And he did prove it by the son’s oath as a witness on this trial. Of course, his statement raised the question of his credibility; but the circumstances satisfy my mind that the statement was true. And, again: pending the trial of this action, the court, on special motion in the father’s action, allowed him to file the affidavit of service in that summons, and directed the clerk to attach it to the judgment roll nunc pro tunc. See White v. Bogart, 73 N. Y., 256.

I think this supposed irregularity had some influence upon the decision. Its twenty-eighth paragraph states, without limitation or qualification, that this judgment was irregular, illegal and void. The defendants excepted to this finding. What the irregularity was,-in what respect it was illegal, and how it was void, are matters which are difficult to understand. Here was an honest debt, covered by what seems to me a perfectly regular judgment. Possibly the purpose of the parties may have been to obtain a preference ; but that was not a wrong per se. Beards v. Wheeler, 76 N. Y., 213. Soo, too, circumstances might exist which would satisfy the court that it was entered in pursuance of a scheme to defraud creditors ; but such an inference wonld require most convincing proof of fraudulent intent on the part of both parties in a case where the judgment was entered upon an honest debt justly and wholly due.

An execution was issued on this judgment July 21, 1891, to the sheriff of the county where the judgment debtor resided, which was returned on or before August 1, 1891; and on that day an order was obtained against him in supplemental proceedings granted by the county judge of that county, under which he was examined before that judge on the same day; and on the same day, at the close of the examination, an order was made by the same county judge appointing Mr. Hall a receiver of the judgment debtor’s property, and the receiver duly qualified August 8, 1891. These dates unquestionably show that the judgment debtor was facilitating these proceedings, but there was nothing illegal or fraudulent in that unless there was a fraudulent intent. The county judge had jurisdiction to make this order for this examination, Code, § 2434; and because the application was made “ at the close of the examination," he unquestionably had jurisdiction to make the order appointing the receiver. Sec. 2464. The case does not affirmatively show that this order was filed, but we cannot presume such an omission in view of the receiver’s subsequent qualification and proceedings. The title of the judgment debtor’s property, therefore, vested in the receiver. Sec. 2468. Subsequently, August 15, 1891, the receiver applied to the county court of that county by petition, and that court assumed to make an order instructing him to sell the property in his hands. This may have been wrong. Sec. 2471. But this action did not hinge upon that point, as will presently appear.

In the meantime the plaintiff sued on his debt; and on August 31, 1891, obtained an attachment, which was delivered, based on allegations that the son had fraudulently disposed of his property. That attachment was delivered to the sheriff of the same county and was served on the receiver, who was then in possession of the property formerly owned by the son The plaintiff then commenced this action, the object of which was to attack the bona fides of the bill of sale to the father and these judicial proceedings in bis favor, and to have them adjudged irregular, illegal and void. And the court has, in substance, held them not only fraudulent, but irregular and illegal.

For reasons already stated- they were not irregular, and it was error, as it seems to me, that they should have been thus adjudged. Nor were they void, except on the theory that they were fraudulent as against the plaintiff. This remark, of course, does not apply to the order of the county court instructing the receiver, who was doubtless subject to the direction of this court. Code, § 2471. But no harm has been done in that regard because the plaintiff applied to this court in this action for and obtained an injunction; and the court, on heaving the parties, permitted the receiver to collect the assets, and directed that when he realized $1,890, that sum should be paid into this court, and the injunction was dissolved on the subsequent payment of that sum.

Now I fail to detect any evidence upon which to adjudge any bad faith on the part of the receiver, and since the judgment holds all these proceedings void there was an error committed against him which calls for reversal and a new trial. Perhaps the direction by the county court was invalid, but his appointment was undoubtedly valid ; and since he has acted in good faith, he was entitled to the protection of the court. There was, therefore, no reason why he should have been ignored, or for the appointment of a new receiver.

In the next place I think the decision proceeds upon the theory of the illegality and irregularity of the bill of sale to and proceedings in favor of the father. The findings in that particular are erroneous, and there should be a reversal and new trial in favor of all parties on that ground.

In the next place the finding of fraud seems so interwoven with this theory of irregularity and illegality that I am satisfied that a new trial should be ordered on that ground.

In the next place, when we consider the evidence of fraud itself, it seems limited to the son. There was evidence that he declared to one witness that he intended to “beat-Gus,” evidently referring to plaintiff; but the father was not present and, for aught that •appears, knew nothing about that statement. Hor can I see any evidence which, in my judgment, justifies the finding of fraud against the father. Here was a perfectly valid claim by the father against the son which was paid to the extent of $728.35 by this bill of sale, a transaction which both of them had a right to make. So, too, the judgment and subsequent proceedings were based upon indebtedness actually found. If these proceedings had not been thus supported by truth, equity and justice, there might be ground for imputation of fraud against the father as well as the son. But the fact is the other way; and the utmost-that can be said is that the son intended to prefer the father and the father wanted to be preferred, and they were co-operating to that end. Of course I do not mean to say that there may not be fraud in such a case. But I simply hold that there must be some other evidence of it, something more than here happens to connect the father with a fraudulent intent on the part of the son, if even that exist. True enough their relations require us carefully to scrutinize their dealings ; and perhaps to treat them with suspicion ; but suspicion is not proof of fraud. It must be proved, not by surmise, but by evidence which rises above the realm of mere suspicion, and to the dignity of proof. Otherwise it would be next to impossible to sustain transactions between near relations upon any other theory. The mere relationship would justify an inference of fraud, and that is going much too far.

It is in this view that I am unable to approve the disposition •of some of the requests for findings. The refusal to find that the action was commenced July 20, 1891, in face of this proof, was -certainly a technical error, and in view of the other findings seems to have affected the decision. So, too, the finding in the decision that this bill of sale “was without adequate consideration,” seems to me entirely at variance with the finding on the joint request of the son and the receiver “that the sum mentioned as a consideration in said bill of sale was a fair price for the goods.”

Finally, I am afraid that the weight of authority is against the maintenance of this action in any view. The plaintiff is a mere attaching creditor and bad recoved no judgment in his attach-' ment suit when this action was commenced. He may, therefore, wisely consider the question whether or not he will gain any advantage by a retrial of the action. See Galle v. Tode, 38 St. Rep., 862.

In any view, I think the present decision proceeds on erroneous theories, -and, therefore, conclude that there should be a new trial, with costs of this appeal in favor of the father to abide the -event of the action.

Judgment and order denying new trial reversed, and new trial granted, costs to abide event.

Dykmait, J., not sitting.