Court Opinion

ID: 5503690
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:04:43.763763+00
Date Added: 2024-06-11T08:33:59.873003
License: Public Domain

PUTNAM, J.
We think the view taken of these cases at special term was correct. In addition to the opinion there delivered, we only deem it necessary to make a few suggestions. It is sought to avoid the assignment because of illegal preferences, but it is not claimed that any of the debts in fact preferred are fictitious or fraudulent. The claim for which Pettengill is preferred is shown to be an honest debt, owing to the First National Bank, of which David Cady was cashier. It is not claimed that the notes for which Gardnier and Mrs. Pettengill are indorsers were not honest claims due and owing from the firm. Also the debt for which H. Inman & Son were preferred was a debt owing by the firm to the Inman Manufacturing Company; the assignors making a mistake in the name of the creditors. It will be observed that in this regard the case differs from that of Ellis H. Roberts & Co. v. Vietor, 130 N. Y. 585, 29 N. E. Rep. 1025, and other cases cited by appellants, where the debts sought to be preferred were fictitious or fraudulent. The plaintiffs failed to show upon the trial any unlawful retention by the assignors of a portion of their property. Therefore, if the assignment should not be sustained, it would be because the assignors, although honestly owing the several notes above referred to, illegally preferred the indorsers instead of the party holding the notes,—in one instance such indorser being a member of the firm, and one of the assignors. We think the view taken below as to the last-named preference correct. The assignment and inventory are to be read together, (Phillips v. Tucker, 14 N. Y. St. Rep. 120;) and, being só read, we think the assignment should be deemed -a prel'erence of the debt of $1,200 owned by the First National Bank, of which David Cady was cashier. And see Smith v. Smith, (Sup.) 14 N. Y. Supp. 461.
*71It is claimed by appellants that the preference to the several other indorsers named who have not paid the indorsed notes should avoid the assignment; that the preferences should be made to the owner or holder of the debt. I am under the impression, however, that it has long been settled that a failing debtor may prefer an indorser or surety. See Bish. Insolv. p. 119; Cunningham v. Freeborn, 11 Wend. 250; Griffin v. Marquardt, 21 N. Y. 121. In the case last cited the following language is used:
“Nor are the trusts to pay the indorsers or sureties of the assignor the sums for which they were severally liable invalid. It appears from, the assignment itself that some of the indorsed notes were not due at the time the assignment was made, and were held and owned by corporations or persons other than those to whom the money was directed to be paid. But these were trusts to pay the debts or obligations of the assignor, for which the indorsers or sureties were severally liable, and there can be no doubt that the holders and owners of the claims designed to be protected might compel an appropriation of the assigned property to their payment. This being so, the provision has the same effect as if the holders were named the cestui que trust in the instrument. ”
Griffin v. Marquardt, supra, which, we think, has never been questioned, shows that the preferences to the several indorsers are in fact a preference to the owners or holders of the notes enforceable by the latter. Under the provisions of sections 3 and 4 of chapter 414 of the Laws of 1857 the fact that Gardnier had formerly been a special partner did not render the preference to him illegal.
The judgment should be affirmed, with costs. All concur.