Court Opinion

ID: 5499759
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:57:44.289353+00
Date Added: 2024-06-11T08:33:53.911967
License: Public Domain

Brady, J.,
(dissenting.) The application for the attachment rested upon "the allegation that the defendant had assigned, disposed of, and secretedprop•erty, or was about to assign, dispose of, and secrete property, with intent to defraud its creditors. The affidavits upon which the attachment was granted allege that the defendant is a corporation, and array the recovery of several judgments through the alleged connivance of the defendant, and particularly one in favor of Dessa Mayer, the wife of Mark Mayer, as to which it is alleged that the defendant, Mark Mayer, authorized the attorney by whom it was procured to commence the suit in the name of his wife. This was an affirmative act on the part of the corporation. It set in motion the legal process by which a judgment was to be obtained against it, and in that respect differs in some respects from the case of Varnum v. Hart, 119 N. Y. 101, 23 N. E. Rep. 183. In that case, although the badges of fraud were considered to be ample in the court below, the court of appeals held that, while the corporation did no affirmative act, they were not subject to the charge of having violated the statute, (Rev. St. pt. 1, c. 13, tit. 4, § 4,) which prohibits incorporated companies from making any transfer or assignment in contemplation •of insolvency. It was there said that the officers of a corporation were under no legal duty in the case of its insolvency to take measures to procure a disposition of its property, without preference, among all its creditors. They might, like an insolvent person, permit the creditors to take hostile proceed*362ings, and allow those to obtain preferences who are the most vigilant. Furthermore it was said that the statute contemplates no affirmative action on the part of the corporation, and it cannot be violated by mere silence or omission to act on its part, or the part of its officers; and again, that an insolvent corporation is not obliged to defend any suit brought against it for the sole purpose of defeating a preference, and it may in such case suffer default, and thus allow a judgment to be obtained against it, knowing that the creditor designs to obtain, and will thus obtain, a preference. Such conduct on its part, does not constitute a transfer or assignment of its property, and there is nothing in the statute which condemns judgments thus obtained; and, further, it will be observed in that case,,that, as to one of the judgments, the directors-held a meeting, and resolved that an attorney should be authorized to appear in the action, and offer judgment to the amount claimed. In disposing of that feature of the controversy, the court said that judgment was obtained in consequence of the affirmative action of the corporation, taken for the express purpose of giving the judgment creditor some advantage in its property, and the court assumes, without deciding, that that judgment was in violation of the statute, and therefore void, referring to the case of Kingsley v. Bank, 31 Hun, 329. The principle recognized in that decision is that any affirmative action on the part of the corporation by which the judgment is obtained is sufficient to render it invalid, as in violation of the statute referred, to, and that principle applies to the judgment in favor of Dessa Mayer, which was obtained through the direct agency of the corporation, Mark Mayer having employed the attorney, and authorized him to prosecute it, and was an unlawful preference over the other creditors of the company. Kingsley v. Bank, supra. It was indeed a more affirmative act than the act of directors in passing a resolution authorizing the attorney to defend and to offer judgment for the amount claimed. Without looking further into the affidavits to see whether there are any other allegations of import, and upon which the attachment might be sustained, it is thought the order appealed from should be maintained, the circumstances attending the procuration of' the Dessa Mayer judgment being quite sufficient to uphold it. It was an unlawful attempt to transfer so much of the defendant’s property as would be necessary to pay the judgment, and thus to establish an unauthorized preference. It has not been required that it shall be made to appear that the defendant has removed or disposed of all of his property with intent to defraud creditors, but they may proceed by attachment against him, when he has disposed of a part of it with that intent. Hyman v. Kapp, 22 Wkly. Dig. 310. For these reasons, the order appealed from should be affirmed.