Case Name: Charles Schwartz et al., App'ts, v. William K. Soutter et al., Resp'ts
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1886-12-07
Citations: 4 N.Y. St. Rep. 288
Docket Number: 
Parties: Charles Schwartz et al., App’ts, v. William K. Soutter et al., Resp’ts.
Judges: 
Reporter: New York State Reporter
Volume: 4
Pages: 288–289

Head Matter:
Charles Schwartz et al., App’ts, v. William K. Soutter et al., Resp’ts.
(Court of Appeals,
Filed December 7, 1886.)
1. Assignment for benefit of creditors—Void fob preferences— Limited partnership.
An assignment for the benefit of creditors made by a limited partnernership containing preferences is void under 3 R. S. [7th ed.1, 3338, §§ fcO, 81.'
3. Same—When second assignment valid.
Hence, when a limited partnership after having made an assignment which was void by reason of containing preferences, an assignment made three days thereafter, in compliance with Laws of 1877, chapter 466, section 1, was valid and conveyed the title to the property embraced therein to the assignee, and an attachment issued to a creditor of the partnership on the ground that by the first assignment the members of the partnership had assigned the property with intent to hinder, delay and defraud creditors and to give preferences, is not maintainable,
Appeal from an order of the supreme court, general term, first department, reversing an order of the special term denying a motion to vacate an order.
On September 28,1885, the defendants, who were general partners in a limited partnership, made a general assignment for the benefit of their creditors containing preferences, which was recorded on the day following. The assent of the assignee was not embraced in or indorsed upon the assignment before the same was recorded, as required by the act of 1877, chapter 466, section 1. Upon the day of the record this omission was discovered and an assent, dated September 28, and acknowledged on the 29th, was separately recorded about an hour and a half after the assignment itself had been recorded. It also appeared that the firm finding itself insolvent sent for its counsel and was by him advised to make an assignment; and acting on his advice they executed one in good faith and without intent to hinder, delay or defraud any of their creditors or the plaintiffs herein, and without being aware that such assignment was contrary to law. The assignment contained preferences to two persons to whom the firm was indebted.
It also appeared that before any act was done under the assignment defendants’ counsel discovered that the firm of Soutter & Co. instead of being a general partnership was a limited one, and included Timothy H. Porter as special partner; and thereupon, on October 1,1885, another assignment was duly executed, acknowledged and recorded containing no preferences, which recited the true nature of the partnership and embraced in it the assent of the assignee. Under this last assignment the assignee filed his bond and schedule, treating the former assignment as a nullity. On the 30th of December, or nearly three months after the recording of the last mentioned assignment, the plaintiff's procured a warrant of attachment on an affidavit stating that said firm become insolvent on the 28tli day of September, 1885, and that “the defendants Soutter and Edwards, with intent to hinder, delay and defraud the creditors of said limited partnership, and of giving a preference to .two certain creditors hereinafter named, assigned all the property and assets of said limited partnership,” etc. The defendants moved to vacate it, upon the affidavit of the defendant Edwards, the two assignments and the papers upon which the attachment was granted. The motion was denied. From the order of denial defendants appealed to the general term, which reversed the order and granted the motion: “Upon the ground that the assignment of September 28, 1885, was void in law and passed no title to the assignee, because the consent of the assignee was not embraced in, or at the end of, or indorsed upon the assignment before the same was recorded, as required by section 1, chapter 466, Laws 1877. And the subsequent ass;gnment, executed October 1, 1885, and in compliance with the statute, no rights having intervened, was valid, and conveyed the title to the assignee named, of the property embraced within it, no evidence existed of any fraudulent intent in fact.” From this order the plaintiffs appealed to this court.
Eugene Smith and John H. Miller, for app’ts; Delos McCurdy, with Messrs. Vanderpoel, Oreen &. Cumminq, for respt’s.
Affirming 2 N. Y. State Rep., 633; 41 Hun, 323.

Opinion:
Per Curiam.
Under the provisions of the Revised Statutes (3 R. S., [7th ed.) 2238, § 20, 21), the assignment of September 28, 1885, was void'for the reason that it contained preferences. The assignment of October 1, 1885, was therefore valid. Upon this ground the order of the general term should he affirmed.
All concur.