Case Name: Francis Higgins, Receiver, Resp't, v. John J. Curtis, Impleaded, App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1892-02-18
Citations: 44 N.Y. St. Rep. 194
Docket Number: 
Parties: Francis Higgins, Receiver, Resp’t, v. John J. Curtis, Impleaded, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 44
Pages: 194–199

Head Matter:
Francis Higgins, Receiver, Resp’t, v. John J. Curtis, Impleaded, App’lt.
(Supreme Court, General Term, First Department,
Filed February 18, 1892.)
Fraud—Evidence on—Sufficiency.
In an action by a receiver to set aside a sale of the assets of a firm, as a fraud upon creditors, it appeared that when the sale was first mentioned, the proposed purchaser thought it a joke; that he had never been in the business; that he made no inquiry as to whether the firm was solvent or insolvent, nor as to the reason for the proposed sale; that the property was appraised on Sunday, when no one but the vendee, appraiser and purchaser were present; that the price paid was inadequate, and that the purchaser paid cash, although he had a bank account. Held, that the evidence sufficiently showed that the sale was fraudulent as to creditors, and should be set aside.
(Van Brunt, P. J., dissents.)
Appeal by defendant Curtis, from a judgment rendered at the special term, • setting aside a bill of sale, etc.
Charles H. Woodbury and William H. Blain, for app’lt; Henry McCloshey, for resp’t

Opinion:
Lawrence, J.
This is an appeal by the defendant Curtis from a judgment rendered at special term, by which it was decreed that the sale of the assets of the firm of T. A. Anglim, by said defendant, to defendant Curtis, was null and void, as a fraud upon creditors.
We think it is evident that the sale and transfer by Anglim to Curtis of the stock, fixtures, good -will and lease of the premises number 23 Murray street, was a fraud upon the creditors of the firm, of which he was the general and Miss Brophy the special partner.
On the evidence we are obliged to conclude that Anglim intended a fraud upon his creditors, to which the special partner refused to consent. There also cafi be no reasonable doubt that Curtis knew that Anglim intended to commit a fraud upon the latter's creditors in making the sale. Curtis had never been in the' toy business, and so far as the evidence discloses, knew nothing-about the method or manner in which it was carried on. The-transaction is open to suspicion, from its beginning to its close. No inquiry seems to have been made by Curtis as to whether the-firm was solvent or insolvent, nor as to the reason why Anglim proposed to sell his business and stock. The evidence shows that when Anglim first mentioned the subject to Curtis the latter thought that he was joking. It is not compatible with common sense to argue that one man could propose to another the sale of a large stock of goods, in a business with which the proposed vendee was entirely unacquainted, without having the suspicions of the latter aroused, nor that the proposed purchaser should not make some inquiry, apart from the statements made to him by the proposed vendor, of the reasons which induced the sale. We are of the opinion that Curtis did know that Anglim was insolvent, and that his reason for making the sale to Curtis was to enable him to hinder, delay and defraud his creditors. Without reiterating the fact already stated, as to the ignorance of Curtis of the business, the further facts that the property was appraised on Sunday, when no one but the vendor and proposed vendee and the appraiser were present; that before the bill of- sale was signed Anglim said to Curtis that he had a store in Twentieth street, and Curtis told him that he had better put it in, and that this was done, and that Curtis paid cash, although he had a bank account, sufficiently show that the design was that the transaction should be kept secret from the creditors of the firm, and from the special partner, and that the sale was fraudulent as to creditors.
Again, the calling of the creditors' meeting the day after the sale and the offer which was then made characterized the whole transaction as one which had been entered into • by Anglim for the purpose of hindering, delaying and defrauding the creditors of the concern. We think it is also evident that Curtis' knowledge of Anglim's insolvency^made him a party to the fraud on the firm's creditors, even although he paid $4,000 in cash and gave the four notes for $1,500 each upon consummating the transaction.
In Billings v. Russell,, 101 N. Y., 226, it was held that the fact that a mortgage is given, or it seems that property was transferred by a debtor for a valuable consideration, is not as a proposition of law inconsistent with the existence of an intent on the part of the debtor to defraud his creditors, or of such knowledge thereof on the part of the mortgagee or purchaser as will avoid the mortgage or conveyance, and that in this regard no distinction can be made between the consideration furnished by an existing- debt and that arising in any other manner. Also, that where there is an actual intent to defraud no form in which a transaction is put can shield the property transí erred from the claim of creditors. That case was much stronger than this. There the proof showed that the mortgage executed by an insolvent debtor was given to secure a debt actually owing by the mortgagor, and yet it was held, as a matter of law, that the execution of the mortgage, did not disprove the existence of a fraudulent intent on the part of the debtor. .See particularly opinion of Euger, Ch. J., at pages 231 and 232. The transaction which is the subject of consideration in this case cannot be upheld under the cases Mabbett v. White, 12 N. Y., 442; Bedell v. Chase, 34 id., 386; Van Brunt v. Applegate, 44 id., 544, and Graser v. Stellwagen, 25 id., 315, for the reason that in those cases the conveyance and transfer of the firm's property was made to a bona fide creditor of the firm in payment of a partnership -debt, and no question of fraud was presented.
If it is necessary to add anything more to support the conclusion at which we have arrived in this case, it is sufficient to say that we are of the opinion that the consideration which was paid for the sale of the property in question was far below its actual value, and that fact goes far to convince us that the transaction was intended to be, and was fraudulent as to creditors. We are, therefore, of the opinion that no error was committed in the disposition which was made of this case by the special term, and that the judgment which was rendered below should be affirmed, with costs and disbursements.
O'Brien, J. The evidence conclusively shows that 'Anglim's intention in selling was to defraud the creditors.
The remaining question is, does the testimony show that Curtis had knowledge of this intention and did- he co-operate in effectuating this fraudulent intent.
That he was aware of Anglim's insolvent condition before the-receipt of the bill of sale seems to me reasonably free from doubt. This fact, however, would not be conclusive against his title if he had purchased in good faith for a valuable consideration.
That he did not so purchase is shown by the evidence which, supports the findings to that effect of the learned judge below and the opinion of Mr. Justice Lawrence on this appeal. To my mind the course pursued by Curtis before and iminediately after the sale is susceptible of one construction only, viz.: that with knowledge of Anglim's condition, and without desiring to become-a real purchaser, he was willing to assist Anglim in his scheme to obtain a compromise with creditors which could have been, arranged on more favorable terms with a bill of sale outstanding and a third party in possession of the business than with Anglim himself in possession of the property. This, moreover, would have prevented attachments by- creditors, which was one of the things feared by Anglim. Having lent himself to a scheme thus-devised which would show an intent to hinder, delay and defraud creditors, he should suffer the legal consequences.
I do not mean that Curtis was guilty of any fraud from which he was to profit, but that his friendship for Anglim induced him to enter into an arrangement which should not, as against the-plaintiff, as receiver for the creditors, be upheld. I therefore, concur with Mr. Justice Lawrence in affirming the judgment.