Court Opinion

ID: 5454750
Source: CourtListenerOpinion
Date Created: 2022-01-08 20:03:01.509589+00
Date Added: 2024-06-11T08:32:35.368345
License: Public Domain

ROSS, J.
I concur in the judgment. According to the testimony before us, when in June, 1877, Mr. Naphtaly’s legal advice vras sought, there were outstanding notes of the firm of Schoenfeld, Cohn & Co., aggregating $18,000, drawn in favor of Newman, by him indorsed to Lewis and by the latter permitted to be pledged to the London and San Francisco Bank, Limited, as collateral security for certain moneys advanced by the bank. These notes were payable on demand and evidenced all the indebtedness from Schoenfeld, Cohn & Co. to Lewis. There was also then (in June, 1877), in existence a simulated note for $17,000, dated December 23, 1878, executed by Schoenfeld, Cohn & Co., to Lewis. I say simulated, because this note purported to represent an indebtedness that did not exist—the true and only indebtedness to Lewis being evidenced by the notes then held by the London and San Francisco Bank, Limited, as collateral security for the moneys it had advanced on the faith of those securities. When Mr. Naphtaly’s legal advice was sought, the firm of Schoenfeld, Cohn & Co. was insolvent, and he knew it. Extensive purchases of goods had been but recently made by the firm, which had not been paid for. A scheme was then concocted by Sehoenfeld, Newman and Lewis looking to the application of these goods as well as the balance of the stock of the insolvent firm to the payment of the amount due Lewis and the local creditors, and to the securing of the remainder to the members of the firm. This purpose was palpably fraudulent. Whether, when first retained, Mr. Naphtaly was informed of the whole of the scheme is immaterial, for he admits that he advised the execution by the firm of a simulated note for $17,000, as of date December 23, 1876, and payable six months after its date, on which he proposed to bring, and did bring, an attachment suit in Lewis’ name, by virtue of which the property was attached and subsequently sold. His purpose in thus advising and acting, as explained by himself, was to prevent any proceedings in bankruptcy on the part of those creditors not a party to the conspiracy. And according to his own statement, he was fully informed of the fraudulent nature of the scheme shortly after the commencement of the action, and, with, that knowledge, he prosecuted the suit to judgment, and subsequently resisted, professionally and by his personal affidavit, a motion to vacate the judgment made on behalf of one of the partners who had, *393from some cause, become dissatisfied with the plan or its execution.
All this involved falsehood and deception on the part of the promoters and prosecutors of the scheme, fraud on the creditors not parties to it, and imposition on the court. When, in June, 1877, Schcenfeld, Cohn & Co., signed the note to Lewis, antedated December 23, 1876, and made payable six months after the fictitious date, Lewis was not entitled to any note from them, for there remained in existence the notes from them evidencing the amount due him, and which were still held by the bank as collateral security. Not only was Lewis not entitled to another note from the firm (the execution of which Mr. Naphtaly advised), but the note was made to speak falsehood after falsehood, for the unlawful and fraudulent purpose of deceiving those creditors of the firm not parties to the conspiracy; and it was this note that the court was made the innocent instrument in enforcing by one of its own officers. Mr. Naphtaly testified before us that in acting as he did he did not realize he was doing anything wrong, but thought he was justified in thus securing advantages to his clients. I am inclined to think he did not sufficiently reflect before advising and acting, and hence I am disposed to make the punishment reasonably light. But it would never do for the court to acquit him of blame in the face of such facts as are presented to us. Judicial sanction of such proceedings would, in my opinion, surely and justly bring the courts as well as the bar into disrepute and contempt.
We concur: McKinstry. J.; Morrison, C. J.