Case Name: Morris Shidlovsky, Surviving Partner of the Firm of M. Shidlovsky & Brother, Appellant, v. Amelia Gorman, as Executrix, etc., of John J. Gorman, Deceased, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900-05
Citations: 51 A.D. 253
Docket Number: Nos. 1 and 2
Parties: Morris Shidlovsky, Surviving Partner of the Firm of M. Shidlovsky & Brother, Appellant, v. Amelia Gorman, as Executrix, etc., of John J. Gorman, Deceased, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 51
Pages: 253–258

Head Matter:
Morris Shidlovsky, Surviving Partner of the Firm of M. Shidlovsky & Brother, Appellant, v. Amelia Gorman, as Executrix, etc., of John J. Gorman, Deceased, Respondent.
(Nos. 1 and 2.)
Fraudulent conveyance — right of a creditor to take an assignment of the debtor’s property — commercial agency reports and declarations of unidentified persons, as evidence.
A creditor may, provided he does so in good faith, rightfully accept the debtors’ stock of goods in part payment of a bona fide indebtedness, even though he knows that the debtor is insolvent; and that by taking the goods he will deprive other creditors of the means of collecting their debts.
In an action brought against the executrix of a.sheriff to replevin property which the sheriff- had seized under an atta'climent issued against the firm from which the plaintiff had acquired title by an alleged fraudulent conveyance, it is error "to admit in evidence statements purporting to have been issued by a commercial agency criticising the. conduct of one of the plaintiff’s vendors upon his failure in business some fourteen years before the transfer in question, especially where there is no proof that the statements were actually issued by the commercial agency, or were traceable to the plaintiff’s vendors, or that they were-true.
It seems,.that declarations made in the vendors’ store in their absence, when the goods sought to be replevied were being packed up and marked with the plaintiff's initials, by unidentified persons who assumed to be in charge of the store for the plaintiff's vendors, are not competent to impeach the plaintiff’s title, or to show probable cause for the belief that the transfer was fraudulent.
Appeal by the plaintiff, Monis Shidlovsky, surviving partner of the firm of M. Shidlovsky & Brother, from judgments of the Supreme Court in favor of the defendant,’entered in the office'of the clerk of the county of New York on the 26th day of February, 1897, upon the verdict of a jury, and also from orders entered in -said clerk’s office on the 24th day of December, 1896, denying the plaintiff’s motions for new trials made upon the minutes.
These appeals were transferred from the first department to the second department, ■.
Nathan Ottinger [ John Frankenheimer and Edgar J. Kohler with him on the brief], for the appellant.
Emanuel Blumenstiel, for the respondent.

Opinion:
Woodward, J.:
There are two actions involved in this review. Both of them aré in replevin, and they were tried together, the issues being practically the same. Upon the trial the jury found in favor of the defendant, and judgments were entered accordingly. This appeal is from the judgments, and from an order denying a motion for a new trial,-the-principal questions being upon the competency of the evidence upon which the jury was permitted to jiass judgment in reaching its verdict.
Morris Shidlovsky, the plaintiff, is the surviving partner of the firm of Morris Shidlovsky & Brother, the defendant being Amelia Gorman, as executrix under the 'last will and testament of John J. Gorman, late sheriff of New York county. Shidlovsky & Brother were engaged in business in the city of New York as dealers in cloaks, etc. Prior to the',18th day of October, 1893, Cohen & Rosenfeld (the former being related to one of the mefnbers of the firm'of Shidlovsky & Brother by marriage) were engaged in the 'manufacture and sale of shirts, and the evidence shows that Shidlovsky & Brother had, for a considerable length of time, stood in the relation of financial sponsors for Cohen & Rosenfeld. The contention of the plaintiff, supported by evidence, is that" on the morning of the day last above mentioned Cohen & Rosenfeld made and executed a bill of sale to Shidlovsky & Brother of all their right, title and interest in the goods and fixtures contained in their store at No'. 36 White street, in the city of New York, in part payment of a honafide indebtedness aggregating something like §15,000, and that Shidlovsky & Brother entered into immediate physical possession of the same, and continued in possession until the afternoon of the day when the sheriff levied upo2i the goods t2nder attaclnnents obtained in two actions against Cohe2i & Rosenfeld, brought by Abraham Steinam and William L. Strong & Co. Subsequently plahrtiff's firm issued requisitions in these actions for the goods tiras attached to the coroner, who 2nade retm-n that the goods had been redelivered to the sheriff, upon thé latte2-'s undertaking, and they were there- , after sold at auction.
The issue raised by the pleadings was that of the plaintiff's title to the goods, the only suggestion of fraud being that " said goods and chattels so attached as aforesaid were, at the time of said attachr ing, the property of the said Jacob Cohen and Moses S. Rosenfeld', or that they had a leviable intei-est thei'ein, or that said goods and cliattels were liable to be levied upon and taken under and by virtue of said warrant of attach 2nent."
The trial proceeded, however, upon the theory that the defendant might show a condition of affaii-s to bring the case within the provisions of the Revised Statutes (2 R. S. [9th ed.] 1886, chap. 7, tit. 2, § 5), which provides: " Eve2y sale made by a vendo2', of goods and chattels in his possession, or under his control, and every assignment of goods and chattels by way of 2nortgage or security, or upon any condition whatever, unless the same be accompanied by an immediate delive2'y, and be followed by an actual and continued change of possession, of the things sold, mortgaged;or assigned, shall be presumed to be fraudulent and void, as against the credito2-s of the vendor, or the creditoi's of the person 2naking such assignment, or-subsequent purchasers in good faith; and shall be conclusive evi deuce of fraud, unless it shall be made to appear, on the part of the persons claiming under such- sale or assignment, that the same* was made in good faith, and without any intent tó defraud such •creditors or purchasers." The plaintiff introduced evidence to show -that the bill of sale was made for the purpose of paying a pre-existing bona fide indebtedness; that the plaintiff entered into immediate possession of the goods and chattels, and began at once the work of packing and removing the same from the building, and the defendant's witnesses support this evidence by showing that on the morning of the 18tli day of October, 1.893, they visited the premises and found the employees at work packing the goods in boxes marked with the initials of Shidlovsky & Brother. It was this fact which induced the issuing of the attachments, and the first point of the plaintiff is raised upon the admission of evidence in respect to what traiispired at the time the representatives of the attaching creditors appeared at the store in White street. Defendant's witnesses were allowed to testify, objections being overruled and exceptions taken, to conversations held with persons whom they found in the store, and who assumed to be in charge, hut who were not identified. The only evidence in the case up to that time was that the bill of sale had been made, and that Shidlovsky & Brother1 were in actual possession. Under the rule that a vendor's declarations cannot be received in evidence to affect the title of a purchaser from him (Cuyler v. McCartney, 40 N. Y. 221, 235 ; Bush v. Roberts, 111 id. 278), it is difficult to conceive of any reason why the declarations of unknown persons, in the absence of Cohen & Rosenfeld, and of the ' plaintiff, should be admitted in evidence to affect the plaintiff's title. "•No man's property would be safe and titles would be thrown into confusion,""say the court, in Lent v. Shear (160 N. Y. 462, 470), " if the declarations of a grantor, out of possession, whether made under the sanction of an oath or not, could be received in evidence as against his grantee." The evil must be greatly increased if the unsworn declarations of unknown persons, not shown to be the representatives- of the vendor, may be admitted in evidence to prejudice the vendee's title. The undisputed evidence, supported by that of the defendant's witnesses, was that Cohen & Rosenfeld were absent from the store, and the declaration of an unknown person that he was in charge for Cohen & Rosenfeld could not change the facts; nor was ifc competent, as against the plaintiff in this action, for the witness to spread this conversation before the jury. If the sale and delivery had been made, and the undisputed fact that the plaintiff's firm was engaged in the actual removal of the goods is evidence of this fact, the declarations even of a clerk, who may not have been advised of the state of affairs, could not be admitted to prejudice the rights of the plaintiff. As was said in Sharp v. Lamy (37 App. Div. 136, 140): " This statement of the clerk was no part of his duty, and what he said was" not competent on the question, who owned the property ? " Not being competent to dispute the title of the plaintiff, it could not be admitted for the purpose of showing a possible cause to believe that the transaction was fraudulent; and as the effect of such testimony must have been to prejudice the jury, its admission was fatal error.
But, should it be conceded that these declarations of unknown persons constituted a part of the res gestae of the case, and were, therefore, admissible in evidence, the error in admitting Exhibits G and H, purporting to be statements made by the R. G. Dun Commercial Agency, reflecting upon the character of one of the members of the firm of Cohen & Rosenfeld, would be sufficient to demand a reversal of the judgments. It was stated in these exhibits that " Cohen was at one time in business at 51 Canal street, where he failed in 1879 and was harshly criticised at the time. We learn that they are trusted moderate amounts by some good houses and considered a fair risk, but a failure of Cohen's in 1879 is not forgotten and causes a lack of confidence with some." This refers to a time fourteen yeai-s prior to the date of the transaction in controversy, and the respondent does not seriously contend that the matter had any bearing upon the question at issue, or that it was in any degree competent; but it is urged that it found its way into the record inadvertently and that it ought not to be allow'ed to defeat the judgment. The plaintiff objected to its introduction and took an exception to the refusal of the court to exclude the matter, and as it could not have failed to be prejudicial to the plaintiff, we are of opinion that he cannot be called upon to suffer the ills of this error because the defendant may have inadvertently put more in evidence than was intended. ' But the evidence is improperly in the case in those portions which do not reflect upon the character of one-, of the members of the firm of Oohen & Rosenfeld. It was first offered to be marked for identification,- without any proof of its-authenticity beyond what was afforded by the paper itself, and it was finally received in evidence, over the objection of the plaintiff,, without being proved either to have been a report made by R. G. Dun, or showing that it was in any manner traceable to Cohen &r Rosenfeld, whose condition it purported to state. So far as we are-able to discover, Exhibits G and II are nothing more than unidentified papers, in which the alleged financial standing, of Cohen & Rosenfeld is given, without in any manner showing that the statements are true, that they were authorized by the firm or that they were false at the time they are alleged to have been made, and any other piece of paper containing any other kind of a statement would, have just as good a right to appear in the record.
The -conclusion which we have reached in respect to the above questions makes it unnecessary to continue the -consideration of the-other questions presented by the record and the elaborate briefs of' counsel. There can be no doubt that the plaintiff, acting in good faith, had a right to accept the stock of goods owned, by Cohen &r Rosenfeld in part payment of a bona fide existing indebtedness,, even though he knew that the firm was insolvent, and that by taking these goods he would be depriving the other .creditors of. the means of collecting their debts; all that the law requires of' him is that he shall not have been a party to an intended fraud upon the part of Cohen & Rosenfeld (Galle v. Tode, 148 N. Y. 270, 279). and the legal evidence in the case does not establish such relation between the plaintiff and Cohen & Rosenfeld.
The judgment and order in each action should be reversed, and a new trial granted, costs to abide the event.
All concurred.
Judgment and order in each action reversed and a new trial granted, costs to abide the event.