Case Name: In the Matter of the Final Accounting of Julia E. Roberts, as Assignee of the Charlotte Steel and Iron Company under a General Assignment for the Benefit of Creditors. Michael J. Galvin, Appellant; Julia E. Roberts, as Assignee, etc., and Others, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1904-11
Citations: 98 A.D. 155
Docket Number: 
Parties: In the Matter of the Final Accounting of Julia E. Roberts, as Assignee of the Charlotte Steel and Iron Company under a General Assignment for the Benefit of Creditors. Michael J. Galvin, Appellant; Julia E. Roberts, as Assignee, etc., and Others, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 98
Pages: 155–158

Head Matter:
In the Matter of the Final Accounting of Julia E. Roberts, as Assignee of the Charlotte Steel and Iron Company under a General Assignment for the Benefit of Creditors. Michael J. Galvin, Appellant; Julia E. Roberts, as Assignee, etc., and Others, Respondents.
Gen ral assignment by a defendant pending an action against him — a judgment in favor of the plaintiff is evidence against the assignee and creditors.
Where, during the pendency and before the trial of an action, the defendant makes a general assignment for the benefit of creditors, and the action, after a trial at which the defendant appears and defends, results in a judgment in favor of the plaintiff, the judgment in the action is not only competent evidence as to the amount of the plaintiff's claim against the assigned estate, but, in the absence of fraud or collusion in the recovery of the judgment, is conclusive evidence thereof against the assignee and the defendant’s other creditors.
Appeal by Michael J. Galvin from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 24th day of December, 1903, settling the accounts of Julia E. Roberts, as assignee of the Charlotte Steel and Iron Company, under a general assignment for the benefit of creditors, and directing the distribution of the moneys in her hands.
The general assignment was made September 24,1900, to Charles C. Hoge. The action referred to in the opinion was commenced August 16, 1900, and the answer was served August 24, 1900.
J. H. Metcalf, for the appellant.
Eugene Van Voorhis, for the assignee, respondent.

Opinion:
Laughlin, J.:
The assignee for the benefit of creditors of the Charlotte Steel and Iron Company filed her accounts. The appellant filed a claim with the assignee based upon a judgment recovered against the assignor and claimed a preference. Objection was made to the amount and to the claim for preference and the court referred the matter to a referee to take and state the account of the assignee and to " try the question of the amount and right to preference of the claim " of the appellant. Upon the hearing before the referee the appellant offered in evidence a judgment roll in an action in the Supreme Court by him against the company showing that his complaint was on a qucmtum mendt for $1,500, for work, labor and services performed between the 1st day of December, 1899, and the 15th day of July, 1900; that the defendant appeared and answered, putting in issue the material allegations of the complaint; that the issues were tried on the 19th day of December, 1900, before a court and a jury, the defendant appearing and taking part in the trial; that a verdict was rendered in favor of the plaintiff for $1,400, upon which judgment was entered upon the • same day for that amount and costs. The assignee named in the general assignment accepted the trust but it does not appear whether or not he qualified. However, he was on his own petition relieved from the trust and the present assignee was appointed on the 19th day of May, 1902. The assignee was permitted to show, under the objection and exception of the appellant, that his judgment was conclusive both as to the amount of liability and as to his right to a preference; that the company was not incorporated until the 25th day of January, 1900 ; that the services rendered by the appellant extended over a period of only three or four months during the year 1900 and consisted of traveling and inspecting raw material for purchase, recommending the purchase and supervising the delivery thereof to and acceptance by the company; and that these services were rendered without employment by any officer of the company. It appeared, however, that the services were rendered with the knowledge of the officers of the company, were beneficial to and were accepted by the company. _ It did not appear that the plaintiff was not employed by resolution of the board of directors. The minutes of the meeting of the board of directors were introduced in evidence by the assignee for the purpose of showing the absence of a resolution of employment, but upon objection they were excluded. The judgment roll offered in evidence by the appellant, was received under the respondent's objection and under a ruling that the referee was to consider the objections further and if he deemed them well founded was to exclude it. His report shows that he did exclude the judgment roll and gave the appellant an exception.
The learned counsel for the respondent contends that the judgment, having been rendered after the general assignment, was not competent evidence either of the amount of the claim or of appellant's right to a preference, and that even if it was prima facie evidence upon either point it was overcome by the evidence introduced, the substance of which has been stated. We are of opinion that the judgment roll was not only competent evidence as to the amount of the appellant's claim, but that, in the absence of fraud or collusion in its recovery, it was conclusive evidence thereof against the assignee and creditors. Although the rule may be different in other jurisdictions, such we understand it to be in our State. (Merchants' National Bank v. Hagemeyer, 4 App. Div. 52; Pringle v. Woolworth, 90 N. Y. 502 ; Acker v. Leland, 109 id. 5.) In Merchants' National Bank v. Hagemeyer (supra) the question was necessarily involved and decided. There, during the pendency of an action, the defendants made an assignment for the benefit of creditors, and the assignee applied to be made a party. The motion was granted upon the theory that the judgment would be binding upon the assignee as to the amount of the indebtedness and would be conclusive in the absence of fraud and collusion.
The evidence introduced by the respondent falls far short of invalidating the judgment on the ground of fraud or collusion. It does show that the appellant was to be compensated by stock by one of the promoters of the corporation for his services anterior to the formation of the company, but this did not include the services rendered subsequent to the formation of the company. Although the period during which the appellant alleged in this complaint that the services were rendered embraced a period of several weeks prior to the incorporation of the company, yet he did not recover the amount demanded and it is not to be inferred that he was awarded compensation for that period. The treasurer of the company, who gave the testimony which the respondent claims impeaches the judgment, had full knowledge of the pendency of the suit, and the assignor company appeared and was defended by its attorneys. We are of opinion, however, that the judgment does not necessarily determine that the services were of a character which entitled the appellant's claim to a preference. The evidence given upon the trial forms no part of the judgment roll. The nature of the services is not definitely stated in the complaint. It was competent to show a Hunde what the services were. We think we should not decide the question of a right to preference upon this record and that there should be a rehearing of the claim.
The order should, therefore, be reversed and the matter should be brought on for a further hearing at Special Term or before a referee as the court may direct, with costs to the appellant ¡payable out of the funds in the hands of the assignee.
Van Brunt, P. J., Patterson, O'Brien and Hatch, JJ., concurred.
Order reversed and further hearing ordered as directed in opinion, with costs to appellant payable out of fund in the hands of the assignee.