Court Opinion

ID: 6132641
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:21:44.65639+00
Date Added: 2024-06-11T08:53:48.925982
License: Public Domain

Daniels, J.
(dissenting):
The essential ground of the motion depends upon the question whether the court was justified in holding the sale of a stock of goods, made on the 2d day of October, 1883, by Robert Gordon to Donald Gordon, to have been fraudulent and void as to creditors. The vendor was engaged in business as a merchant in Oswego and *472in the village of Mexico, in the county of Oswego, and the vendee was engaged in similar business in the city of Rochester. The vendor was at the time insolvent and unable to pay his debts, and the fact of his embarrassment was communicated to the agent of the vendee, and it resulted in the suggestion of the making of the sale of the goods which the plaintiffs, as judgment-creditors, assail as fraudulent. This sale included all the debts, fixtures, stock in trade and articles of property owned by the insolvent vendor. And it was made in consideration of the sum of $1,000 paid at the time and the remainder of the purchase-price of $10,000 was evidenced by four promissory notes of the vendee, the first for $1,500, the others for $2,500 each, payable in three, six, nine and twelve months thereafter.
At the time when this sale took place the vendor well understood his inability to proceed with his business. That seems to have been financially out of his power, and information of the fact was communicated to Mr. Orr, who represented the vendee in the transaction. This was an extraordinary disposition of the property of the vendor. He knew, as the agent of the vendee must also have known, that the notes taken could not be held by the vendor, or collected by him. His obligations to his creditors would not permit that to be done. And if the transaction could be allowed to stand it would have the effect, even if the notes were taken by them, of necessarily hindering and delaying them in the collection of their debts for the time the notes had to run. And that such a delay was contemplated by the vendor is to be further inferred from the fact that on the following day he made an assignment of all his property for the benefit of his creditors. What the assignee had to receive under the assignment was this sum of $1,000 in money and these notes, necessarily for a corresponding period delaying the creditors in the collection of their debts.
These facts certainly render the transaction a suspicious one, and that suspicion was increased to a conviction by the further evidence given in the case, for by that evidence it was shown that the business continued to be carried on from the third of October until the twenty-first of December, under Donald Gordon, the vendee. And at the time when the bill of sale was made and delivered, the vendor expected to be employed in the store, although no actual *473agreement or arrangement for that purpose was made. And that expectation was afterwards carried into effect, for be stated in bis evidence: “ I was in fact employed .as floor manager after that; I don’t think there was anything particular said about that; the same employees were employed; I went right on; there was no change in any of the employees; the same people were continued.” The vendor had been examined in supplementary proceeding in which he repeated this expectation on his part, and he was asked what led him to expect it. His answer was “ friendship on the part of Donald Gordon; I had known him some time.” And after the sale of these goods no sign was put up over the store indicating the business to be that of Donald Gordon. These facts show that no actual or continued change of possession of the property took place, but the vendor, together with the persons previously employed in the store and others afterwards engaged, continued in the possession and sale of the property, carrying on the business substantially as that had previously been done to the time when Donald Gordon himself made a general assignment for the benefit of his creditors, which he did on the 20th of December, 1883. This continued possession and management of the property by the vendor has been declared by the statute to be conclusive evidence of fraud in favor •of the creditors of the vendor, unless it shall be made to appear on the part of the persons claiming under the sale that it was made in good faith and without any intent to defraud such creditors. (3 R. S. [6th ed.], 143, § 5.) "What the statute has required to avoid this presumption is an actual and continued change of possession of the property sold. No such change of possession was made, and the omission to make it, leaving the vendor in charge of the property and the business, created this statutory presumption of fraud. (Tilson v. Terwilliger, 56 N. Y., 273.)
And it was not overcome by the statement of the vendor himself, as a witness, that he did not intend to hinder, delay, cheat or defraud his creditors. For the facts, nevertheless, remained out of which such an unlawful intent could be very well inferred by the court. And as the vendee was a party to these facts, he was in like manner involved in the same inference that a fraudulent intent, or an intent at least to hinder and delay the creditors of the vendor, •existed upon his part. And in the conclusions drawn by the court *474from tbe evidence, tbe learned justice presiding at tbe trial was well warranted by these circumstances. Tbe sale itself was made on terms affording a suspicion, at least, that one of tbe objects was to prevent tbe creditors from interfering with tbe property sold» Its terms afforded ground for sucb a suspicion, and tbat was ripened into a complete presumption under tbe provision of tbe statute, by tbe continued possession and management of tbe property by tbe vendor.
Upon tbe other point urged in support of tbe appeal the opinion of tbe presiding justice is entitled to approval. But upon this it is considered tbat tbe authority of the law is against the conclusion stated in tbat opinion, and tbat tbe motion made for a new trial should therefore be denied, with costs.
Motion for new trial granted, with costs to abide event.