Case ID: ad_19/html/0329-01.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

Edward J. Merriam, Respondent, v. The Wood and Parker Lithographing Company, Defendant. Benoni Lockwood, Jr., Assignee, etc., of The Wood and Parker Lithographing Company, Appellant.
    
      Attachment — an assignee may move to vacate it — an allegation that he “is the assignee" is sufficient—-a corporation may secure the debts of its bona fide creditors.
    
    Proof that an insolvent corporation had for some time had great difficulty in meeting its obligations and continuing its business, had resorted to various devices to pacify its creditors, and that it had assigned certain of its book accounts and property to bona fide creditors, is insufficient to support an attachment obtained on the ground that the corporation was about to assign and dispose of its property with intent to hinder, delay and defraud its creditors.
    The assignee of the property of a corporation, against which an attachment has been obtained, may move to vacate the attachment upon the mere allegation that he is such assignee, and he is hot required to bring his title into court until it is questioned.
    Appeal by Benoni Lockwood, Jr., assignee, etc., of The Wood and Parker Lithographing Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 26th day of January, 1897, denying his motion to vacate an attachment issued against the property of his assignor.
    
      
      John J. Townsend, for the appellant.
    
      Almet R. Latson, for the respondent.
   Van Brunt, P. J.:

This action was brought to recover for goods sold-and delivered. An attachment was obtained on the alleged ground that the defendant', had assigned and disposed of its property with intent to hinder, delay and defraud creditors, and was about to do so with like intent. The attachment was obtained upon the affidavit of the plaintiff, the material allegations of which, after setting out the cause of action, were upon information and belief, said information being obtained from one Parker, who had been .a vice-president of the defendant and was then, an employee thereof, and from one Preston, the then vice-president of the defendant corporation and a director thereof, and upon the affidavit of one Latson, who states that he was present at a conversation between Merriam and Parker, and also at a conversation between Merriam, Parker and Preston, and that he heard them make; the statements set forth in the affidavit of Merriam.

It is undoubtedly true that for a period long prior to the granting of the attachment in question, the defendant had great difficulty in meeting its obligations and continuing its business, and it resorted to various devices for the purpose of keeping, quiet its creditors, and raising money to meet its most pressing obligations. It is also true that it assigned certain of its book accounts and property to certain of its creditors; but it is nowhere claimed that any such transfers were made to persons who were not creditors, or.for the purpose of securing fictitious debts. All the allegations which were contained in the affidavits of Merriam and Latson, from which any possible inference of fraudulent intent could be drawn, are denied by Parker and Preston in the most positive terms, and explanations are given of the circumstances attending the transactions which show that they were entirely free from any fraudulent intent. It is no fraud upon the part- of a debtor to secure his creditor. He has a right to transfer his property as security for his debts and to make pledges of the ■ same for the same object, where such transfers and pledges are not made with the intent of hindering and delaying his other creditors. In order that fraud should be established, there must be evidence from which no inference of an honest purpose can be drawn. An examination of the record shows undoubtedly some suspicious circumstances ; but when we consider all of the evidence which has been offered, both upon the part of the plaintiff and upon the part of the defendant, it is apparent that all that was done by this corporation was done for the purpose of securing creditors whom they desired to secure, and for the payment of debts which were pressing upon it. We find nowhere any attempt to secrete its property from its creditors, or to defraud its creditors, but merely, as already stated, an application of its property to pay certain creditors whom it desired to secure. This was by no means a fraudulent disposition of its property such as would entitle the plaintiff to the extraordinary relief which has been granted to him.

It is urged upon the part of the plaintiff that the appealing defendant, the assignee of the debtor, has no standing in court to move to vacate this attachment. We cannot see the force of this objection. H’e alleges that he is the assignee of the property, and-there is no denial of this position. He was not required to bring his title into court until it was questioned, and an allegation of a fact within the personal knowledge of a witness is always sufficient in the absence of question' to establish the same.

Upon an examination of the whole case, therefore, it would seem that the plaintiff had failed to make out a fraudulent intent in the various dispositions of property set out in the papers, and consequently the attachment should have been set aside.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion to vacate the attachment granted, with ten dollars costs.

Williams, Patterson, O’Brien and Ingraham, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.