Court Opinion

ID: 6140510
Source: CourtListenerOpinion
Date Created: 2022-02-05 14:38:07.801694+00
Date Added: 2024-06-11T08:54:37.265653
License: Public Domain

Larremore, J.
No objection was made on the trial to the jurisdiction of the court. But on the argument of the appeal it was urged that plaintiff, as assignee in bankruptcy, -could not maintain this action in a State court.
Section 711 of the Revised Statutes of the United States -confers upon the Federal Courts exclusive jurisdiction of all matters and proceedings in bankruptcy, but this is not a proceeding in bankruptcy. The act to declare and extend the powers of executors, assignees, and trustees, and protect creditors from fraud (Laws 1858, ch. 314), authorizes an assignee of an insolvent for the benefit of creditors to disaffirm and *42treat as void all transfers made of any estate or property in fraud of the rights of any creditor.
Our attention has been called to the case of Frost v. Hotchkiss (14 Bank. Reg. 443) as an authority upon the question of jurisdiction. There the suit was brought, not by the assignee, but by a trustee in bankruptcy (chosen as such at a meeting of the creditors), to recover real estate conveyed by the bankrupt to his wife in fraud of creditors. The court on demurrer held that the State court had no jurisdiction, and properly so held, for § 5103, Revised Statutes United States, in pursuance of which such trustee was chosen, expressly declares that the winding up and settlement of any estate under its provisions shall be deemed to be proceedings in bankruptcy. The sections of the act defining the powers and duties of an assignee in bankruptcy, do not prohibit a suit by him at law in a State court against a party whom the debtor might have sued. We are of opinion, therefore, that plaintiff had legal capacity to sue in this court. (Cook v. Whipple, 55 N. Y. 150.)
The first exception taken at the trial, was to the denial of the motion to dismiss the complaint on the ground that no cause of action had been established. In this we think there was no error. The statute of frauds expressly declares that every assignment of goods and chattels by way of mortgage unless accompanied by immediate delivery and followed by an actual and continued change of possession of the thing mortgaged, shall be presumed to be fraudulent and void as against creditors of the mortgagor, and shall be conclusive evidence of fraud unless it shall be made to appear- that the transaction was in good faith, and without intent to defraud. (2 R. S. [Edmonds ed.] § 5, p. 140.)
The uninterrupted possession and disposal of the mortgaged property by the mortgagor, raised the statutory presumption of fraud as to the validity of the transaction, and it -was the province of the jury to decide upon the facts and circumstances presented whether or not the mortgage was made in good faith. (Ford v. Williams, 24 N. Y. 359.)
The remaining exceptions to the judge’s charge and *43refusals to charge may be considered under one head. The jury were instructed that if the mortgage was not fraudulent, and defendants knew of the sales of lumber, but supposed the proceeds were to be applied to payment of their debt, they were entitled to a verdict; and upon facts showing the converse of this proposition, the plaintiff would be entitled to-a verdict. The charge of the learned judge was in conformity with the law as settled in Gardner v. McEwen (19 N. Y. 123); Ford v. Williams (24 N. Y. 359); Conkling v. Shelley (28 N. Y. 363) ; Miller v. Lockwood (32 N. Y. 293) ; Frost v. Warren (42 N. Y. 207).
There was nothing said that could have misled the jury, and no valid reason has been shown for disturbing the verdict.
Charles P. Daly, Ch. J. and Robinson, J., concurred.
Judgment affirmed with costs. ,