Court Opinion

ID: 5471816
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:41:54.552407+00
Date Added: 2024-06-11T08:33:20.743798
License: Public Domain

Bradley, J.
(dissenting). — The defendant had made a contract with Allis & Co. for the purchase of some flouring mill apparatus to be sent by railroad to him at Marcellus, N. Y. A portion of this was manufactured by Allis & Co., at Milwaukee, some at Jackson, Mich., and some by the Farrell Foundry and Machine Company, of Ansonia, Conn. The portions from the two former places were shipped to the defendant in April, and that from Ansonia in May, 1881. And it all amounted to $3,850. By the contract, the title to the property was vested in the defendant when loaded on the cars and consigned to him, and therefore the levy of the attachment on the property was ineffectual (29 Hun, 493). This action is in aid of the attachment (Code Civil Pro., sec. 677). And the important *309question is, where was the legal title to the claim against the defendant for the property so contracted to be sold, and sold by Allis & Co. to him at the time of the levy of the attachment, on the 21st day of May, 1881? On the part of the defendant, it is contended that it was not then in Allis, but by transfer from Allis & Co. the Farrell Foundry Machinery Company had taken such title. While the contention of the plaintiffs is, that no effectual transfer had been- made to the latter company, and that the attempted transfer was fraudulent and void as against the plaintiffs, the Throop, &c., Company, a creditor of Allis.
The plaintiffs’ right to maintain this action is dependent wholly upon the creation of a specific lien by the levy of the attachment, and that was not accomplished unless the legal title was then in Allis to the claim against the defendant. If a ■transfer had been in fact made of it to the Farrell, &c., Company, the attachment levy was not effectual to furnish any lien or right of the action. The question whether or not the transfer was fraudulent as against the creditors of Allis cannot arise, nor is it entitled to consideration in this action (Anthony agt. Wood, 96 N. Y., 180; Lawrence agt. Bank of the Republic, 35 id., 320.)
It seems that the attachment had been levied May 7th upon the machinery which had arrived at Marcéllus, and on the 9th of May the defendant advised Allis & Co.' by telegram of the levy; and on May 10th that company sent to the Farrell, &c., Company two sight drafts on the defendant, ^ one for $1,050 and the other for $2,800, and by letter wrote the company that the drafts had been sent and requesting credit for them; and by another letter of the same date to the cdmpany say: “Our people to-day send drafts on Smith for amount due from him. We charge the amount to you in general, account, and want you to credit the same and collect it. Please have no error in receiving and treating the drafts as belonging to you.” And by letter of the same date Allis & Co. say to the defendant: “We have to-day assigned our account against you to the Far*310rell Foundry and Machine Company, of Ansonia, Conn. You will kindly honor their drafts when presented.” Farrell & Co., by letter of May 13, acknowledge receipt of that to them of the 10th, and say to Allis & Co.: “We have sent the' two drafts on H. C. Smith forward for collection. * * * Will report when the drafts are paid.” And May 19th the Farrell Company wrote the defendant: “We have credited the drafts on his Allis & Co.) account, they became ours, * * * and we would like New York drafts for the amount, as you and he agree.” And evidence was given tending to prove that Allis & Co. charged the amount of the claim to the Farrell Company when the drafts were sent to them, and that the latter company made an entry of the drafts on their bill book, but did not place them to the credit of Allis & Co. by any entry in their account with them. That at the time the drafts were sent to, and the request made of the Farrell Company to credit the amount, the indebtedness of Allis & Co. to that company exceeded the amount of those drafts.
The evidence was sufficient as between those parties to support a transfer of the claim against the defendant to the Farrell Company. It is, however, contended by the learned counsel for the plaintiffs that such fact was ' not conclusively established, but that the evidence, at most, presented a question of fact for the jury which should have been submitted to them. The transaction rested wholly in written communications.
The drafts were sent with information that the amount was charged in account and with request of the Farrell Company to so credit them.
The latter company received the drafts and advised Allis & Co. that they had sent them forward for collection, and informed the defendant that they had given Allis & Co. credit for them. This, as between the parties, would seem to take from the latter the right to collect the claim and vest it in the Farrell Company. The fact that the drafts were sent forward by it on the receipt of them, with information to Allis & Co. that they were so used, was an effectual adoption of the ex*311pressed purpose for which, they were sent to and received by them. The two drafts correspond in amount with that of the amount of the defendant’s liability upon his contract for the supply of machinery, and there was then no other existing dealing or transaction between him and Allis & Co.- Those drafts were understood to be, as they were in fact, drawn on account of such liability or debt, which in some states would give to the drafts, as between the drawer and' payee, the effect of an equitable assignment of the claim (Daniel on Neg. Insts., secs. 17-28; Mandeville agt. Welch, 5 Wheat., 277; Roberts agt. Austin, 26 Iowa, 315; Forgaities agt. Bank, 12 Rich, 518; Mann agt. Buck, 25 Ill., 35).
In this state, the rule is such that the mere drawing and transmission of the drafts by the drawer to the payee would not have the effect of an assignment of the fund or debt due from the defendant, as the drafts were not in their terms drawn upon the particular fund, but were in form negotiable bills of exchange, and the acceptance by the defendant was requisite to effect an assignment of the debt or of his liability to pay it (Attorney-General agt. Continental Life Ins. Co., 71 N. Y., 325; S. C., 27 Am. Rep., 55). But here the defense does not rest alone upon the effect of the drawing and receiving the drafts. The intention and purpose of transfer are expressed in the correspondence, and is necessarily by it so understood by all the parties to the transaction.
The delay in acceptance by the defendant was not caused by any misunderstanding or want of acquiescence in that respect, but to obtain indemnity against the proceedings taken by the Throop, &c., Company to charge the defendant with liability to it for the amount of the debt. The reason which induced the transfer does not defeat its operation as such between the parties, but goes only to the good faith of the transaction. It rs evident from the correspondence that the reason and one purpose of the transfer was to defeat the right of the Throop, &c., Company to obtain a lien upon the claim by attachment or to appropriate it to the payment of the judgment, that the com*312pany might recover in its action against Allis. But there is not sufficient in this and the circumstances as between Allis & Co. and the Farrell Company to so qualify the transaction as one for collection of the debt simply as distinguished from and in exclusion of a transfer. While the former result was in view, the right of the Farrell Company to the fund was given by the transfer, and could not be diverted by Allis & Co., although as against a creditor of the latter permitted to allege fraud as against their creditors the transfer would be treated as void. The fact that the entire amount of the drafts had not become due at the time they were drawn is not important, as the liability to pay was in a then existing contract for the purchase of property a portion of which had then been delivered. The residue was to go from the Farrell Company and was delivered before the levy of the attachment
The transfer covered the debt arising out of the liability of the defendant given by such contract; and when the Farrell Company sent forward the drafts for collection they advised the defendant that the rest of the property would be delivered the then next week and requested him to have the bank hold the larger draft until the arrival of such residue of the property.
In Bills agt. National Park, Panic (89 N. Y., 343), and Gibson agt. Same (98 id., 87), the fund in question belonged to the corporation debtor at the time the attachments were levied and the outstanding certified checks drawn upon it were then held by its officer for its purposes, and did not go into the hands of a bona fide holder, but were paid to such officer by transfer to his individual credit and the fund used for the benefit of such debtor. The lien of the attachment was held effectual to support the actions against the bank because it wa’s chargeable with notice of the relation of the officer. The checks were drawn by and payable to him as such.
The cases cited by the plaintiffs’ counsel relating to the effect of the levy of an attachment upon tangible property, capable of manual delivery, which had been transferred in fraud of creditors, do not necessarily have any application to the case at bar. *313In such case the lien of attachment will support an action in aid of it, and of the execution issued upon the judgment recovered in the action, and the plaintiff may attack the transfer as fraudulent against the creditors of the debtor (Rinchey agt. Stryker, 28 N. Y., 45; Frost agt. Mott, 34 id., 253). But no sucb lien is acquired upon choses in action, not tbe subject of levy by execution, as against a fraudulent assignment
The question of good faith of the assignment, or fraud as against creditors, cannot arise in an action by tbe attaching creditor in support of tbe lien of bis attachment.
Tbe remedy for relief in sucb case is in equity only by action in tbe nature of a creditor’s bill (Thurber agt. Blanch, 50 N. Y., 80; Anthony agt. Wood, supra).
Tbe view taken of tbe case leads to tbe conclusion tbat there • was no evidence to support a verdict for tbe plaintiffs; and tbat • tbe motion for a new trial should therefore be denied, and judgment directed for tbe defendants.