Case Name: Dunham & Dimon, Respondents, v. H. Waterman, J. & G. Hecker, and W. Rowell, Appellants
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1864-01-19
Citations: 3 Duer 166
Docket Number: 
Parties: Dunham & Dimon, Respondents, v. H. Waterman, J. & G. Hecker, and W. Rowell, Appellants.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 10
Pages: 166–184

Head Matter:
Dunham & Dimon, Respondents, v. H. Waterman, J. & G. Hecker, and W. Rowell, Appellants.
■ A judgment confessed under §§ 282 and 288 of the Code cannot be treated as utterly void in a contract between the creditors of the party confessing it, in relation to property affected by it, where an actual intent to defraud by confessing it is not established, unless the statement on which it is entered is so essentially defective that no court has jurisdiction or authority to enter a judgment upon it.
A statement, by the party confessing, that “ this confession of judgment is for a debt justly due to the plaintiffs, arising from the following facts: a promissory note made by me, bearing date the twenty-second day of August, 1851, was given by me to the said plaintiffs, on settlement of account between them and me on the twenty-second day of that month; whereon, for value received, I promised to pay to the order of said plaintiffs the said sum of five thousand two hundred and fifty-one dollars and one cent, one day from its date,” is not so defective as to render the judgment entered upon it void.
An assignment of property, some of which consists of articles being manufactured and nearly completed, is not absolutely void on its face, merely because it authorizes the assignees, if in their judgment it should be proper and expedient, to complete the manufacture of any of the assigned property, or to fit any of the assigned property for sale, and pay the expenses out of the proceeds of the assigned property.
An assignment, executed by a debtor to his judgment and execution creditor, containing a provision that it “ is not in any event to stand in conflict with, or lessen, abate, or affect the said execution, or the force and effect of the said levy and the lien created thereby,” is not, for that cause, void, if the judgment is bond fide and valid.
When a judgment is ordered by the court in favor of the plaintiff, without trying issues of fact raised by the pleadings, under the idea that irrespective of how those issues might be determined on the proofs which the parties could make, the plaintiff is entitled to recover upon the admitted facts and upon the documentary evidence produced, an appellate court, if it deems the judgment erroneous, will not dismiss the complaint, but order a new trial
(Before Oakley, 0. J., Boswobth and Slosson, J.J.)
Jan. 18, 19, 1864.
This action was brought by the plaintiffs as judgment and execution creditors of defendant, Waterman (the judgment having been recovered in this court December 10,1851, and being for the sum of $1,102 03), to set aside a judgment confessed August 25,1851, in the Supreme Court for $5,257T%V, by Waterman, in favor of the defendants, J. & Gr. Hecker, on which an execution was issued on the day last named, and levied upon the leviable property of the Heckers. It was also an object of the action to set aside an assignment made to the Heckers by defendant, Waterman, on the same 25th of August, but subsequent to the confession of the judgment and the levy of the execution issued on it, and also to set aside and avoid all proceedings had and sales made under Heckers’ judgment and under the assignment, on the grounds that the judgment was confessed for a sum not actually due, that Waterman had continued in possession of the assigned property, managing and controlling it as he pleased, that sales of portions of the property levied upon and bought at a sale thereof by the sheriff, by the Heckers, and subsequently resold by them to defendant, Rowell, were entirely fictitious and without consideration; and on the grounds also that the judgment was confessed, and the assignment made to the Heckers with intent to hinder, delay, and defraud the creditors of Waterman; and on the further grounds that the judgment was so entirely unauthorized by the Code that it was a nullity, and that the assignment was void for matters appearing on its face.
Waterman and Rowell answered separately. The Heckers also put in a separate answer. The answers denied all the extrinsic facts alleged in the complaint, and relied upon to establish the fact of an actual fraudulent intent in confessing the judgment, in executing the assignment, and in the several subsequent proceedings and transactions under them.
Afterwards, and on the 26th day of March, 1853, at a special term of this court, the issues joined in this action came on to be tried before Mr. Justice Duer, one of the justices of this court, without a jury; and the said justice, on the said assignment having been produced and submitted to him, directed that the cause and the said issues should be then and there heard and tried upon the questions of law arising upon the face of the said assignment, and the facts in and by the said plead ings admitted, to the end that if the said assignment and judgment and purchase, or either, were fraudulent and void for reasons, or upon grounds, not susceptible of explanation, the same might be so found and determined as matters of law, and without the examination of any witnesses; and the said issues were then and there tried, according to such direction.
And thereupon the counsel of the plaintiffs read and put in evidence the said assignment in the words and figures following:—
“ Whereas, the undersigned, Henry Waterman, of the city of New York, is justly indebted to John Hecker and George Hecker, of the said city, on a judgment this day entered in the Supreme Court, on confession given by me in the sum of five thousand two hundred and fifty-seven dollars and one cent, on which execution has been duly issued to the sheriff of the city and county of New York, and levy made, as the undersigned has been informed, upon certain personal property.
“And whereas also, it is contemplated that the said John Hecker and George Hecker may make certain advances or payments on account of the business which has been carried on by the undersigned, and in the execution of this trust.
“ And whereas also, the undersigned is further indebted to other persons, and especially as hereafter mentioned:
“ Now, therefore, know all men, that in consideration of the premises, and of one dollar to me in hand paid by the said John Hecker and George Hecker, the receipt whereof is hereby confessed, the undersigned doth hereby sell, assign, and transfer to the said John Hecker and George Hecker, all my property real and personal, and all goods, chattels, merchandise, bills, bonds, notes, books, accounts, claims, demands, choses in action, books of accounts, evidences of debt, judgments, and property of every name and nature whatsoever of the undersigned, or in which the undersigned has any interest whatsoever, except such property as may be by law exempt from execution under the statute of the state of New York, the undersigned being a householder having a family ; to have and to hold the same and each and every part and parcel thereof, with the appurtenances, to the said John Hecker and George Hecker, their executors, ad. ministrators, and assigns, of which debts and property, in whole or in part, a schedule is hereunto annexed.
“ This conveyance and assignment is in trust, nevertheless, that the said John Hecker and George Hecker shall sell and dispose of the said property, collect the said debts, or such of them as shall be collectable, and compromise, as to them shall seem best, such of them as shall be doubtful or not collectable, and apply the proceeds to the following purpose, that is to say:— .
“First. To pay any such sum or sums of money as they may find proper and expedient in and about the management of the said property, or payment of hands employed or to be employed in and about the same, or in the business of completing the manufacture of any of the said property, or fitting the same for sale, of working up materials, &c., so as to realize the greatest possible amount of money therefrom, as in the judgment of the said John Hecker and George Hecker shall seem most advisable, including any other expenses they may incur in the premises, with their reasonable charges.
“ Second. To the payment, or in or towards the satisfaction of the said debt and judgment due as aforesaid to the said John Hecker and George Hecker, including interest and sheriff’s fees.
Third. Out of the remaining moneys that may be thus realized to pay the sum of sixteen hundred dollars, or so much thereof as may be, to the following persons and following amounts, to wit, of John Suinott, of Illinois, $1,200; for money lent; to my landlord, $75 for rent; to Mrs. Comin, $25, for cash lent; to William S. Waterman, $200, for cash lent; and to Mrs. M^ahill, $200, for cash lent to me.
Fourth. Finally, to apply any and all moneys that may remain after satisfying the claims aforesaid, in the order aforesaid, on or towards the payment and satisfaction of all other debts due from and owing by me, by applying such moneys upon or towards the said remaining debts rateably and by a fro rata distribution thereof.
It is hereby, however, expressly understood and agreed that this assignment is for all purposes, to be deemed and taken as, and is intended to be, collateral to the said judgment and levy made by the said sheriff by virtue of the said execution thereon, and as further and additional security to the said John Hecker and George Hecker, and is not in‘any event to stand in conflict with, or lessen, abate, or affect the said execution, or the force and effect of the said levy and the lien created thereby.
In testimony whereof, I have hereunto set my hand and seal, this twenty-fifth day of August, one thousand eight hundred and. fifty-one.
Henby "Waterman.
Signed, sealed, and delivered, in the presence of
Joseph Heilson.
Schedule within referred to.
DEBT DUE FROM
IT. T. Rice Mill . $172 23 T. & S. Richardson 40 77 J. Anderson & Co. 14 13 Mackull & Richardson 11 40 S. Millbank . • . 100 82 W. E. Milligan . 621 95 Cape and Trowbridge . 49 17 P. H. Fady 47 77 T. Hicks 235 42 Gordon & Rea . 25 89 Tapscott & Co. . 34 00 Hines .... • 11 00 J. H. Falco. 394 15 G. R. Jackson & Co. . 312 82 J. Swiffen, jun., & Co. 138 87 J. Mayheir & Co. 40 60 R. Hoe & Co. . ■ . 40 60 Cutler & Walsh . 9 76 J. R. Watson 6 77 T. Bally . 6 15 D. Jones 108 89 Capt. Abbott 6 25 J ames Plant 72 87
Gay & Perry 22 81 Noolsey 23 21 - N..A. Sholant 15 38 A. D. Perry 6 14 Hare & Rugh 4 63 West & Thompson 10 00 Jackson 00 63 L. R. Rose . 3 80 Townsend . 69 53 Hopeock & Jacobs , 11 25 J. Glass 3 74 Titchfield & Co. . 38 01 G. G. Howland & Co.. 7 48 S. D. & W. Barnes *1 174 69 S. Johnson . 370 04 C. & R. Poillon . 14 69 Hussey & Murray 170 48 R. S. Place . * . 7 33 S. Bryant . 3 23 J. Ghursby & Son 4 97 Dr. Rowell. 2 55 J. D. Ward 197 60 L. Cabin • . 18 00 G. A. Osgood 27 33 Morgan & West . 5 15
Personal property being in and about the shop and premises known as No. 239 and 241 Cherry-street, and No. 502 and 504 Water-street, New-York.
All the patterns—1 crane.
One blowing engine; one cupola; two core ovens and fixtures; four scales; iron and wood flasks; ten ladles; 50 tons of pig iron, more or less; ten tons of scrap iron, more or less; moulding sand, chairs, slings, shovels, sieves, and all the tools and fixtures belonging to the foundry.
Thirteen laths, two drilling machines, two planing machines, fifteen vices, four blacksmiths’ forges, and four sets of blacksmiths’ tools, a quantity of bar iron, one steam engine and boiler, four unfinished steam engines, one screwing machine, five lines of shafting, with drums, pulleys and belts, vice punches.
Blocks and falls, hammers, chisels, drills, reamers, files, bolts, wrenches, turning tools, chains, mandrills, boring bars, cutler's stocks and dies, taps, tumbler board, plank, pipes, and all stock, tools, and fixtures in the machine shop and yard situate 238 and 240 Cherry-street.
A lease from Agnes Hitchcock, admin. &c., &c., and heirs of estate to me for above premises; and a lease from Martha Fay for premises north side of Cherry-street, on both which separate assignments are made.
Attest— Henry Waterman.
Jos. Heilson.
And also read and stated to the court the contents of the complaint and of the several answers of the defendants in this action, such complaints and answers to be deemed a part of this case as fully as if the same were severally and at length inserted and repeated herein; and also read in evidence an exemplification of judgment in words following:
“ I do hereby confess judgment in this case in favor of John Hecker and George Hecker for the sum of five thousand two hundred and fifty-one dollars and one cent, and authorize judgment to be entered therefor against me.
“This confession of judgment is for a debt justly due to the plaintiffs, arising upon the following facts,- a promissory note made by me, bearing date the twenty-second day' of Atigust, 1851, was given by me to the said plaintiffs on settlement of account between them and me on the twenty-second1 day of that month. Whereon for value received I promised to pay to the order of the said plaintiffs the said sum of five thousand two hundred and fifty-one dollars and one cent, one day from its date.
“ Henry Waterman.”
City and County of New York, ss. :
Henry Waterman, the defendant above named, being duly sworn, says that the facts stated in the above confession are true, and further he says not.
Henry "Waterman.
Sworn to before me, the 25th day of August, 1851,
Marcus P. Ferris, Oommr. of Deeds.
[Endorsed.]
On filing the within statement and confession, it is adjudged by the court that the plaintiffs do recover against the defendant the sum of five thousand two hundred and fifty-one dollars and one cent, (§5,251 01,) with five dollars costs, and one dollar disbursements, making in all, $5,257 01.
Geo. W. Riblet, Olería.
J. Ueilson, DUff’s Atty.
The questions of law arising upon said assignment, and upon the pleadings herein, being stated and fully argued by the counsel of the respective parties, and having been duly considered, the said justice did then and there declare and decide, that the said assignment, judgment, and the execution, and the sale thereunder, were each and all of them fraudulent as against the creditors of the assignor, and consequently were fraudulent and void as against the plaintiffs in this suit; to which ruling and decision the counsel for the defendant did then and there duly except, separate and distinct exceptions being taken by defendants’ counsel to each decision touching said assignment, judgment, execution and sale, and each of them.
And the counsel for the said defendants, before the said decision, and before the case was submitted, stated and urged that the said court could not, and ought not, in the mode of trial then and there had, declare the said assignment, and judgment, and execution and sale, or either of them, fraudulent and void, unless for or upon questions of law, or for objections appearing upon the face of the said assignment, or for matters distinctly admitted to be true; that if the objections to the provisions of the said assignment, or to the judgment, execution, or sale, arose from or belonged to such facts, things, conduct, or intent as in their nature were or might be susceptible of explanation, then the defendants should, have the opportunity of making such explanations, and that, with this Anew, the said defendants then and there offered to prove, and claimed the privilege of proving, that the matters, facts and circumstances set up in the several answers by the several defendants were in all respects true; but his honor, the said judge, decided that-the evidence proposed and offered would be immaterial, and could not in any degree affect or change the determination of the questions of law then and there decided by him, or tend to sustain the said assignment and judgment, execution and sale, or either of them, and did then and there overrule the said offer to prove the said answers, and the defendants’ counsel excepted to the said ruling and decision of the said justice.
And thereupon the said justice did decide that the said plaintiffs were entitled to the relief prayed for in their said complaint.
Prom the judgment, entered in conformity with this decision, all the defendants appealed to the general term .of the court.
E. Sandford, Esq., for appellants, made and argued the following points.
I. The judgment confessed by Waterman to John Hecker and George Hecker was valid. 1. The statement in writing, signed by defendant, was in due form, and contained all that the Code requires. (Lawless v. Hackett, Code, §§ 382, 383; 16 J. R. 149.) 2. If there were any defect in it, such defect was a matter of form, and did not affect the jurisdiction of the court. The plaintiffs are not the parties who can take advan-. tage of any irregularity. (2 R. S. 282, § 2.) 3. The court- in which the judgment was entered had the power to permit the statement to be amended. 4. The judgment was confessed for an amount justly due from Waterman, for the sole purpose of securing its payment, and was valid as against other creditors. (Nelson v. Sharp, 4 Hill: 584; 2 Denio, 621; Candee v. Lord, 24 Wend. 94; 2 Coms. 269 ; Truscott v. King, 2 Seld. 147.)
H. The judgment was not attempted to be set aside ; an execution issued upon it, under which the sheriff levied upon and sold the property in question. The judgment and execution constituted a sufficient authority to the sheriff to sell, and bis sale conveyed a good title to the purchaser. (Jackson v. Bartlett, 8 J. R. 361; Butler v. Maynard, 11 Wend. 548, 51; Jackson v. Cadwell, 4 Cow. 622; Woodcock v. Bennett, 1 Cow. 61.)
ITT. The purchases of the property in question, at the sale made by the sheriff, were bond fide, and should be sustained upon legal and equitable principles against the claims of the plaintiffs. (Jackson v. Roosevelt, 13 J. R. 97; Broom’s Legal Maxims, 323, 329.)
IY. The execution on the judgment did not become dormant as against the plaintiffs. They had no judgment until after it' was executed. In such a case the effect of a delay is only to postpone the dormant process to the execution of a more vigilant junior creditor, or the title of a subsequent bond fide purchaser. (Benjamin v. Smith, 4 Wend. 332, 335 ; Russell v. Gibbs, 5 Cow. 390; Butler v. Maynard, 11 Wend. 548, 52; Benjamin v. Smith, 12 Wend. 404, 406.)
Y. From.the time of the levy until the sale, the sheriff, through his agent, had the actual possession of the property levied upon and sold. There were no instructions given by the plaintiffs in the execution to delay a sale or not to proceed upon the execution. There was no act, nor any declaration or conduct on the part of the plaintiffs, which would have rendered their execution dormant if another execution against Waterman had been delivered to the sheriff before he made the sale. There is no ground for the imputation of any actual-fraudulent intent to the Messrs. Hecker, nor for the inference of any trust as between Rowell and Waterman. The property of Waterman had been applied, at its full value, to pay his debts, and to the extent of that value, the judgment of the Messrs. Hecker had been satisfied and discharged before the plaintiffs had obtained their judgment, or placed themselves in a position where they could lawfully question the validity of the acts, which resulted in the transfer of the property to Mr. Rowell. (Power v. Van Buren, 7 Cow. 560 ; Kew v. Barber, 3 Cow. 272, 80 ; Doty v. Turner, 8 J. R. 20 ; Linnendoll v. Doe, 14 J. R. 222 ; Ray v. Hasbrouck, 19 Wend. 495, 97; Writingham v. Writingham, 20 J. R. 296 ; Hendricks v. Robinson, 2 J. C. R. 283.)
VI. The assignment executed to the defendants, the Messrs. Hecker, is legal and valid. 1. Nothing illegal appears upon its face. No facts appear in the case which are, per se, conclusive evidence of fraud. 2. There are no evidences or badges of fraud in the facts and circumstances, admitted by the answers, which will authorize the conclusion that any actual fraudulent intent existed. 3. The question of fraudulent intent is declared by statute to be a question of fact, and not of law. (Cunningham v. Freeborne, 11 Wend. 240.)
VII. The judgment at the special term should be reversed, and the complaint be dismissed with costs, as to all the defendants.
Charles H. Hunt, Esq., for respondents, made the following points.
I. The judgment which Waterman confessed in favor of the Heckers, and all proceedings taken under it, are void as to these plaintiffs. 1. Because the statement upon which it was entered evades and violates the statute in such case provided. (Code, § 383.) 2. Because Waterman continued his possession of and business with the property levied on. (Burnell v. Johnson, 9 Johnson, 243; Storm v. Wood, 11 Johnson, 110, 112, and cases cited from English authorities, note (a), p. 112.)
n. If the judgment were suffered to stand of itself, for priority of lien, or any similar purpose, yet the Heckers waived all right to any proceeding under it, by accepting the assignment. (Hawley v. Mancius, 7 Johnson, Ch. R. 174, and especially 184, 185.)
HI. The assignment by Waterman is void. 1. For matters appearing on its face, (a.) The provision authorizing the business to be continued. (b.) The provision making the instrument absolutely subservient to the judgment and levy held by the assignees. (2 R. S. 137, § 1; Hooper v. Tuckerman, 3 Sandford, 311; Grover v. Wakeman, 11 Wend. 202, Sutherland, J.; Haffner v. Irwin, 1 Iredell’s Law R. 490 ; Barney v. Griffin, 2 Coms. 365; Nicholson v. Leavitt, 1 Seld.; Bodley v. Goodrich, 7 How. 276.) 2. For Waterman’s continued possession of the property, and the actual continuance of the business, whether by him or his assignees, especially while the assignment was used as a shield for an effort to extort from Waterman’s creditors full releases to him, on payment of a small per centage of their demands. (Hart v. Crane, 7 Paige, 37; Connah v. Sedgwick, 1 Barb. S. C. 210 ; Grover v. Wakemam, 11 Wend. 187.)
IY. The purchase by Rowell was neither in good faith, nor without notice, nor for a consideration, but a manifest fiction; and his claim to own the property under it, with his complete knowledge of the judgment, levy, sale, assignment, and entire conduct of the other defendants, forms abundant ground to charge him as a party to the whole fraud.
Y. The value of the machine shop property alone (misapplied, converted, and claimed among the defendants, Heekers and Rowell) far exceeding the amount of the plaintiff’s debt, as the complaint and answers agree; an accounting therefor is unnecessary, and the provision in the judgment for the direct payment of that debt by those parties is entirely proper.

Opinion:
By the Court. Bosworth, J.
The appeal in this case presents substantially but two questions:—
First. Is the judgment confessed by Waterman to the Heckers fraudulent and void, as against the plaintiffs, either by reason of matters appearing on its face, or by reason of facts admitted in the pleadings, or by reason of both ?
Second. Is the assignment made by Waterman to the Heckers fraudulent and void, as against the plaintiffs, on any such ground ?
All the extrinsic facts alleged in the complaint, on the existence of which the charge of an actual intent to defraud is based, are denied in the answers. No evidence was permitted to be given of the extrinsic facts thus affirmed or denied, but the action was tried and decided on the ground that the assignment, judgment, and purchases of the assigned property mentioned in the pleadings, were, in judgment of law, fraudulent and void, for reasons or grounds in their nature not susceptible of explanation, arising from the terms of the assignment, and from the facts in and by the pleadings admitted.
First, as to the judgment. Is that void for any such reason, or upon any such ground ? The whole amount of it is alleged to have been justly owing to the Heckers. There is no fact admitted which can excite a doubt of the truth of this allegation. It was, therefore, confessed to secure a just and meritorious debt.
The allegations of extrinsic facts, and which, if admitted or proved, would furnish evidence of an actual intent to defraud, are severally controverted, and the existence of any such actual intent is denied. The third title of the chapter of the Revised Statutes, in relation to fraudulent conveyances and contracts, declares that every conveyance or assignment of property made with the intent to hinder, delay, or defraud creditors, and every judgment suffered with the like intent, shall be void, as against the persons so hindered, delayed, or defrauded. That the question of fraudulent intent, in all cases arising under that chapter, shall be deemed a question of fact and not of law.
There is no fact affecting the judgment, admitted by the pleadings, which furnishes any evidence of an intent to defraud, unless the fact that the judgment was confessed furnishes it. On the argument the validity of the judgment was assailed, on the ground that the statement or confession, on which it was entered, does not conform to the requirements of the Code. The complaint neither sets forth the terms of the statement, nor avers, nor intimates, that it is not, in any respect, a full compliance with both the letter and spirit of the statute. It seeks to avoid it, on the ground of there being an actual intent to defraud, evidenced by facts, other than the terms or form of the statement, or its non-conformity to the Code.
The statement was in writing, was signed by Waterman, and verified by his oath; it stated the amount for which judgment might be entered, authorized the entry of a judgment therefor, and- showed that it was for money to become due, and that the sum confessed therefor was justly to become due.
It is objected that the confession does not " state the facts out of which" the indebtedness arose, for the amount of which the judgment was confessed. The Code requires the instrument to " state concisely the facts out of which" the indebtedness arose; and is silent as to the consequences of an inartificial or imperfect statement, or of a substantial non-conformity to the Code.
•In the statement the indebtedness is alleged" to have arisen " upon the following facts. A promissory note made by me, bearing date the twenty-second of August, 1851, was given by me to the said plaintiffs (the Heckers) on settlement of account between them and me on the 22d of that month, wherein, for value received, I promised to pay to the order of the said plaintiffs, the said sum of five thousand two hundred and fifty-one dollars and one cent, one day from its date."
What is meant by concisely stating the facts out of which the debt arose ? The same phraseology is used in other parts of the Code. A complaint is required to contain " a plain and concise statement of the facts constituting a cause of action, without unnecessary repetition." (§ 142.) The provision prescribing the form of a confession of judgment requires it to state " concisely the facts out of which" the debt arose. The two phrases are of precisely equivalent import. Do the words used in § 308 make it indispensable to the validity of a judgment confessed, that more fulness and precision should be observed in detailing particulars than the same or equivalent words require in § 141 ? Under the latter it is unquestionably sufficient to state the making and delivery of the note, its terms, and that the whole amount of it is unpaid. But the confession not only states such facts, which facts, in judgment of law, constitute a good cause of action, but goes further, and states the actual consideration of the note, so far as to allege that it was given for a balance found to be justly due on a settlement of accounts between the parties, had on the day of its date.
The instrument authorizing a confession is both a complaint and a consent to the entry of a judgment for an amount, which the facts stated show to be justly due, or to become due. On a sworn complaint, in such terms, a plaintiff may have judgment at the expiration of twenty days from the service of the summons. On a statement containing such facts, when, in judgment of law, they show the person making it to be justly indebted in a sum certain, and agreed and sworn to by him, a judgment may be entered on filing the statement. Unless certain words used in one section of the Code are to be construed as meaning something essentially different, or requiring something substan tially beyond what is meant and required by the same words, when used in another section of the Code, we are not at liberty to hold that the judgment confessed was a nullity.
Whenever the Code uses any word as meaning something more or different than its commonly accepted meaning, the definition is given, to prevent any uncertainty or embarrassment as to its precise import, but with what success need not be discussed.
We are of the opinion that the judgment entered under the Code upon confession, where an actual intent to defraud creditors is not established, cannot be held void collaterally, unless the statement on which it is entered is so essentially defective that it is absolutely void for the sole reason that no court has jurisdiction or authority to enter judgment upon it.
The Code is essentially unlike the act of April 21, 1818. (Session él, ch. 259, § 8.) The latter required, when a judgment was confessed, that the plaintiff or his attorney, on filing the record, should also put on file, signed by him or his attorney, a particular statement and specification of the nature and consideration of the debt or demand; and " in case such demand shall arise on a note, bond, or other specialty, such statement or specification shall particularly set forth the origin and consideration of the same." It also provides that if the plaintiff in such judgment shall omit to file such statement or specification, " such judgment shall be taken, decreed, and adjudged fraudulent, as respects any other tona fide judgment creditors; and any ionáfide purchaser for valuable consideration of any lands bound or affected by such judgment."
A judgment confessed while that act was in force, was valid as between the parties to it, although the required specification was not filed. (Seaving & Mead v. Brinckerhoff, 5 J. Ch. R. 329.) It was only void as to such creditors as were specially named in that act. As to them it was made void irrespective of the existence of any fraudulent intent, and notwithstanding the confession might have been made to secure the most meritorious debt, and in the most perfect good faith.
There is precisely the same difference between the two statutes as between § 1 of 2 R. S. 135 and § 1 of 2 R. S. 137.
An assignment prohibited by the section first cited is void without reference to the intent with which it is made, while by the latter it can only be avoided on proof that it was made with an actual intent to defraud.
The Act of the 21st of April, 1818, was repealed from and after the 31st of December, 1829, and has not been since reenacted. (3 R. S., 2d ed., p. 159. Ho. 265.)
We are of the opinion that the confession was in proper form to authorize the judgment entered upon it, and that it cannot be held void for want of conformity to the requisitions of the Code. (See Mann & Savage v. Brooks, 7 How. P. R. 449; Whitney v. Renyon, id. 458.) And contra: (Plummer v. Plummer, id. 62 ; Schoolcraft v. Thompson, id. 446.)
Is the assignment void by reason of matters appearing on its face ?
It is insisted that the authority given " to pay any such sum or sums of money as they may find proper and expedient, in and about the management of the said property, or payment of hands employed, or to be employed, in and about the same, or in the business of completing the manufacture of any of the said property, or fitting the same for sale, or working up materials, &c., so as to realize the greatest possible amount of money therefrom," &c., renders it fraudulent and void as against creditors. *
We understand this clause, in connexion with the other parts of the assignment, simply to mean and provide, that if in the judgment of the assignees it should be " proper and expedient" to expend any money in " fitting" any of the assigned property for sale, or " in completing the manufacture of any of the said property," that the expenses thus incurred should be paid out of the proceeds of the sale. It is so obviously possible, to make it for the interest of creditors, to complete some articles that might be nearly but not entirely finished, or to incur some expense in "fitting" some of the property"for sale, that, in the absence of all authority, we should not feel at liberty to hold the assignment fraudulent and void merely because it contains that provision. We cannot hold it void without utterly disregarding the decision of the Court for the Correction of Errors in Cunningham v. Freeborne, 11 Wend. 240. In that case that court, by a vote of twenty-two to one, expressly adjudged that an assignment was not fraudulent and void on that ground.
The assignment directs the sale and conversion of the property into money, and does not authorize a sale upon credit. It is not, therefore, void, solely on account of any trust or provision contained in-it.
The clause declaring it to he collateral to the judgment, hut that it is not to stand in conflict with, or lessen, abate, or affect the said execution, or the force and effect of the said levy and the lien created thereby, does not affect the validity of the assignment. If the assignment had been to third persons instead of the plaintiffs in the judgment, and had contained precisely the trusts and authority now embraced in and conferred by it, it would - necessarily, so far as it affected the Heckers, have been collateral to the judgment, and could not have affected the levy or the lien created by it.
So long as the judgment is not impeached by proof of an actual intent to defraud creditors, it being good and valid on its face, an assignment otherwise valid would not be vitiated because on its face it was made subject to valid pre-existing liens, created by the judgment, and a levy of the execution issued on it, upon the property assigned.
Whether the Heckers, by accepting the assignment and executing it, until arrested in the further execution of it by the proceedings taken in this action, waived all right to proceed under the judgment, is a matter of no consequence, until the assignment itself is successfully impeached. By the provisions of the latter the debt and judgment in favor of .the Heckers were to be first paid. Under either the proceeds would be first applied to pay their debt.
Whether they should have sold under the assignment, or whether they had no power to so sell the property levied upon without waiving rights that would exist unless unnecessarily relinquished, a sale has been had, and the proceeds have been actually applied to satisfy their debt. If sold for all it was worth, I do not see that the creditors have any just grounds of complaint on account of the manner in which, or the instrumentality by which, the sale was made. It was competent for Waterman at the time the sale took place, but for the levy and assignment, to have himself sold the property, and with the proceeds to have paid the debts to which they have been applied. No creditor was then in a position to prevent such a sale and application, nor had acquired any rights, recognised by law, which were prejudiced by such acts. If the property has been sold and the proceeds applied, with the assent of the owner, to the payment of his just debts, the creditors who have received the proceeds can retain them, except as against other creditors, in a condition to call in question the good faith of the transaction, and who shall succeed in proving that the intent of it was to hinder, delay, or defraud them as such creditors.
Those who choose to claim under the assignment can call the assignees to an account, and charge them with such sums as a proper performance of their duties would have enabled them to realize. But the rights of persons, claiming under the assignment, are not now a subject of consideration.
If the assignment or judgment, either or both of them, is to be adjudged fraudulent and void, as against the plaintiffs, that adjudication can only be made upon proof of enough of the extrinsic facts, put in issue by the pleadings, to justify a jury in finding, or the court in adjudging, that the one was made, or the other confessed, with an intent to hinder, delay, or defraud them.
The judgment appealed from having been rendered without requiring any such proof to be given, and on the further ground that none could be given which would obviate the objections to both arising upon their face, and upon the admitted facts, it is erroneous and must be reversed.
If the assignment and judgment shall be established to have been made and confessed with intent to defraud creditors, the right of the plaintiffs to an accounting by Eowell for the assigned property bought by him, if he shall appear to be a purchaser for a valuable consideration, will depend upon their proving that Eowell had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. (2 R. S. 137, § 5 ; Jackson v. Henry, 10 J. R. 185 ; Jackson v. Slater, 5 Wend. 295 ; Woodcock v. Bennett, 1 Cow. 611.)
The defendants insist, that if the court shall be of the opi nion that the judgment is erroneous, a new trial should not be ordered, but that the complaint should be dismissed. It is urged that no objection appears by the record to have been made by the plaintiffs to a trial of the cause upon the pleadings, and upon such evidence as they gave; and that having taken their chances upon the trial that has been had, they should not be permitted to-now litigate it upon the issues of fact joined in it, but should be concluded by the trial that has been had. If evidence had been given, and all the material facts controverted had been specially found, and no appeal had been taken by the plaintiffs from the decision as to the facts, and the facts, as established, entitled the defendants to a dismissal of the complaint, such a judgment might be proper. In this case the issues of fact have not even been tried, and the record shows that the course taken at the trial was in obedience to the direction of the court, and we see no more reason in this ease for not ordering a new trial than in any case where a verdict has been erroneously ordered in favor of plaintiff.
In this case the judgment appealed from must be reversed, and a new trial ordered, with costs to abide the final determination of the court in the premises.