Court Opinion

ID: 5181655
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:42:58.556326+00
Date Added: 2024-06-11T08:26:35.601160
License: Public Domain

Landon, J.:
Upon the merits we think that the order should be affirmed. The. action was to recover a sum of money for merchandise sold and delivered, and for services rendered. The warrant of attachment, was issued upon the ground that the defendants had assigned and. *12disposed of a large part of their property with intent to defraud their creditors, and' that they were about to assign and dispose of other property owned by them with like intent. The appellant contends that the plaintiff’s affidavits fail to show the existence of such grounds. The affidavit of the plaintiff’s manager, aftér setting forth the formal requisites, .states:
“ I have to-day called upon said defendants at their said manufacturing establishment, in the city of Elmira, and had a long talk with both of said defendants.' Both of said defendants have admitted the correctness of plaintiff’s claim and causes of action set forth in said complaint. They both told me that they have covered up alb their property by mortgages; that they have given a mortgage upon all their personal property of every description to the Cheinung Canal Bank and another Upon all their real property to said bank. • Neither of said mortgages has. been filed or recorded in the office of the clerk of said county of Chemung. Said defendants informed me that said mortgages were given two or three weeks or longer ago. When I called upon said defendants to-day they were both actively engaged in the charge of said manufacturing establishment. They were giving instructions 'to employees, and wyere in the- exclusive control and charge of said establishment and performing the usual duties incidental to the control and charge of such an establishment. They both told me that it rvould do the plaintiff no good to sue its claims set forth in the complaint herein, for the reason that if they were sued they would shut down and the bank would take possession of all the property they owned and prevent plaintiff reaching any part of it oil execution. Both of said defendants -told me that they owed large sums of money which they were unable to pay and that they had quite a number of merchandise creditors. They told me that the plaintiff and the Syracuse Tube Company were the largest of the merchandise creditors. They informed me that nobody was secured by said mortgage but said bank. ■ Both said defendants' also informed me that they. vrere negotiating a sale of their said manufacturing establishment and the personal property forming its equipment and their stock to some parties in Elmira, whose name they declined to disclose to me. They said they hoped to effect that sale before the 8th of October. They told me that if tliat sale was made the claim of the plaintiff, set forth in the complaint herein, would' *13be paid in full. Both of said defendants declined to give me a statement of tbeir present financial condition and they declined to give me the names of .their creditors, except as I have stated them herein. They also declined to give me the amount or terms of payment of either of said mortgages to said bank.”
The traveling salesman of the plaintiff makes the like affidavit, and adds that upon inquiry the same day at the Chemung Canal Bank for information respecting the financial condition of the defendants, its cashier said he could give it, but was not in a position to say anything.
Under the Revised Statutes (2 R. S. 136, § 5) the chattel mortgage given by defendants' to the bank upon their personal property — the property not having been immediately delivered and followed by an actual and continued change of possession—is presumed to be fraudulent and void as against the plaintiff, creditor of the mortgagors,'and these facts are conclusive evidence of fraud unless the presumption is repelled by other evidence.
Chapter 279, Laws of 1833, however, permitted the filing of such a chattel mortgage, and in this way permitted non-delivery of the mortgaged property to the mortgagor, and liis non-possession of it, but made an unified chattel mortgage absolutely void as against the creditors of the mortgagor. (Stephens v. Perrine, 143 N. Y. 476; Karst v. Gane, 136 id. 316.)
Thus we have in the second statute the declaration that this unfiled chattel mortgage was absolutely void, and in the first statute a rule of evidence by which its fraudulent character is to be determined.
The appellant urges that this is a mere statutory declaration of fraud, and that the Code requires actual intentional fraud, and cites Casola v. Vasquez (147 N. Y. 258) and Lexow v. St. Lawrence Marble Co. (16 Misc. Rep. 133; affd., 5 App. Div. 624). In the cases cited the statute declared the transfers void, but did not, as in the case before us, lay down a rule of evidence by which their fraudulent character could be determined.
In Casola v. Vasquez (supra), Andrews, Ch. L, said: “ To authorize an attachment under subdivision 2 of section 636 .of the Code, there must be actual or intended fraud upon creditors; such fraud as was contemplated by the Statute of Elizabeth and similar statutes.” Our statutes respecting the fraudulent sales or transfers of personal prop*14erty with intent to delay, hinder or defraud creditors are derived from the Statute of 13th Elizabeth, which-declared all such transfers void as against such defrauded creditors. (5 Reeves’ His. Eng. Law [Finlason’s ed.], 244; Sturtevant v. Bullard, 9 Johns. 337, revisors’ notes.) The provision in regard to filing chattel mortgages (Chap. 279, Laws of 1833) was introduced as an exception to the rule, which grew up under the Statute of Elizabeth (13th Elizabeth, chap. 5), and is embraced in the Revised Statutes, to the effect that a paper transfer of title secretly given, without change of possession, was prima facie evidence of a fraudulent intent to defraud the creditors injured thereby. (Twyne’s Case, 3 Coke, 80.) The reason is plain ; sufficient publicity is supposed to- be given to the chattel mortgage by filing it, and thus the danger from a secret transfer is lessened, if not wholly averted; hut the statute declares that if the privilege of filing is not embraced, the mortgage becomes absolutely void instead of presumptively so.
Is there here any evidence of the absence of a fraudulent intent % What did the defendants mean by the statements they made to the plaintiff’s agents % They assumed to speak both for themselves and for the mortgagee — the cashier of the latter declining to speak. Their declarations seem to imply a threat to the plaintiff, that if it brought suit against them, the defendants, with the co-operation of the mortgagee, would so wield the mortgage as to prevent the plaintiff from reaching any part of defendants’ property on execution. The threat was accompanied with a vague promise of payment, if defendants should effect an alleged contemplated sale of their entire property.
Thus to the statutory presumption and statutory conclusive evidence of fraud are added the declarations of defendants, from which the inference of active and actual fraud, and certainly of the intent to hinder and delay the plaintiff in the collection of its debt, might he drawn.
The defendants are residents of this State. The complaint states that the plaintiff is a' corporation organized under the laws of the State of Pennsylvania,, engaged in manufacturing, with its principal place of business at Coatesvillej in that State.
The appellant claims that, under section 15, chapter 687, Laws of 1892, the plaintiff cannot maintain this action, because it hr-- not *15alleged that it has obtained from the Secretary of State “ a certificate that it has complied with all the requirements of law to authorize it to do business in this State.” The section provides that “ no foreign stock corporation doing business in this State without such certificate shall maintain any action in this State upon any contract made by it in this State until it shall have procured such certificate.”
It does not appear that the plaintiff is doing business in this State. It, therefore, does not appear-that it needs such certificate. In Sawyer Lumber Co. v. Bussell (84 Hun, 114), to which we are cited, it did appear that the foreign' corporation, plaintiff, was engaged in doing business in this State.
The appellant cites Ladenburg v. Commercial Bank of Newfoundland (87 Hun, 269) and other cases against foreign corporations, in which it is held that the jurisdictional facts specified in section 1780, Code of Civil Procedure, must be alleged. Section 1779 permits a foreign corporation to maintain an action “ in like manner, and subject to the same regulations, as where the action is brought by a domestic corporation, except as otherwise specially prescribed by law.” It does not appear that the contract upon which the action was based was made in this State.
We think that as it is necessary for the plaintiff to allege the conditions conferring jurisdiction against foreign corporations, so it is necessary for the defendants to allege the exceptions, if the plaintiff does not state them, which exclude foreign corporations from invoking our jurisdiction against their domestic debtors.
The order should be affirmed, with ten dollars. costs and disbursements.
All concurred.
Order appealed from affirmed, with ten dollars costs and disbursements.