Passavant v. Cantor

Headnote

Bill of particulars ; fraudulent assignment.] In an action to set aside a fraudulent assignment the complaint alleged (1) a failure to pass over the entire property to the assignee and a reservation with intent to defraud creditors; and, (2) an intent to defraud plaintiffs, including the acquisition of goods on credit, and the disposition of them for cash and a reservation for the benefit of the assignor. The defendants demanded a bill of particulars of a detailed statement of the property, which the assignor failed to deliver to his assignee, which he fraudulently secreted and reserved for his benefit; also the dates of such reservations and the names of the persons with whom they were made ; further, a detailed statement of the goods claimed to have been fraudulently obtained, from whom such goods were obtained, and what portion thereof was reserved by the assignor for his own benefit. Held, that the motion for a bill of particulars should be denied.

The same.] An application for a bill of particulars should not be granted where the knowledge in reference to the statements of fraud, alleged in a complaint to set aside a fraudulent assignment, are, by reason of the possession of the books and the entire estate of the assignor within the possession of the assignee.

Motion for a bill of particulars.

Herman Passavant and others, as judgment creditors o£ Isaac Sickle, brought this action against Sickle and Herman Oantor, to have the assignment made by Sickle to Cantor,, for the benefit of creditors, set aside as fraudulent.

The plaintiffs, in addition to other allegations in their complaint, alleged as follows :

“ XII. That, as plaintiffs are informed and believe, the said instrument, purporting to be a general assignment for the benefit of creditors, was made with intent to hinder, delay and defraud the creditors of said assignor, including-these plaintiffs,

“ XIII. That, as plaintiffs are informed and believe, the said defendant, Isaac Sickle, failed to deliver to his assignee, the said defendant,. Herman Cantor, all the property owned by him, or in which he had an interest at the time of the-making of the said instrument purporting to be a general assignment, but that the said defendant Isaac Sickle, as-plaintiffs are informed and believe, has fraudulently secreted and reserved for his own benefit a large portion of the property that he then had, and executed the said instrument-with intent to hinder, delay, and defraud his creditors, including these plaintiffs.

“ XIV. That, as plaintiffs are informed and believe, the-said instrument, purporting to be a general assignment, is the-culmination of a conspiracy on the part of the said defendant, Isaac Sickle, to fraudulently obtain goods, wares and merchandise from his different creditors, including these-plaintiffs, for the purpose of fraudulently disposing of the same, or a portion thereof, and with the further intention not to apply the proceeds of the said disposition to the payment of the claims of the said creditors, but to reserve the same for his own benefit; and after greatly reducing his-assets by such fraudulent reservations and fraudulent secretions, to hinder and delay his said creditors, by the making of the said instrument, purporting to be a general assignment.”

The defendants then made a demand for a bill of par

ticulars, serving upon the plaintiffs’ attorneys the following notice :

“ Please take notice that the defendants above named hereby demand a bill of item's of the particular facts upon which plaintiff intended to establish the allegations in the 12th paragraph of the complaint, and upon which they intend to rely as showing that the assignment was made with intent to hinder, delay and defraud the creditors of the said assignor; also a statement of the property which the plaintiff’s claim that the said Isaac Sickle failed to deliver to the said assignee, and which plaintiffs claim the said Isaac Sickle fraudulently secreted and reserved for his own benefit, referred to in the 13tli paragraph of the said complaint; also a statement of the goods alleged by the plaintiffs that the said Isaac Sickle fraudulently obtained and from whom such goods- were obtained, and what portion thereof the plaintiffs claim were reserved by the said Isaac Sickle, as referred to in the 14th paragraph of the said complaint.”

The motion came on for a hearing before Hon. Morgan J. O’ Brien, sitting at chambers, who rendered the following opinion:

. The defendant assignee asked for a bill of particulars of -certain,matters relating to plaintiff’s cause of action, which •alleges fraud by the assignor, invalidating an assignment for the benefit of creditors, as the basis of the action, and the particulars of the alleged fraud are required. This same motion was made before Mr. Justice Patterson, and was by him disposed of upon the ground that the moving papers were technically defective, and upon that ground the motion was denied, with leave to renew, so that upon new affidavits the motion is presented to me upon its merits. The paragraphs of the complaint to which reference is made are as follows : “ Thirteenth. That as plaintiffs are informed and believe the said defendant, Isaac Sickle, failed to deliver to his assignee, the said defendant," Herman Cantor, all the property owned by him or in which he had an interest at the time of making of the said assignment, reported to be a

general assignment, and that the said defendant, Isaac Sickle, as plaintiffs are informed and believe, has fraudulently secreted and reserved for his own benefit a large portion of the property that he then had, and executed the said instrument with intent to hinder, delay and defraud liiscreditors, including these plaintiffs. Fourteenth. That as-plaintiffs are informed and believe, the said instrument purporting to be a general assignment is the culmination of a conspiracy on the part of the defendant, Isaac Sickle, to-fraudulently obtain goods, wares and merchandise from liis different creditors, including these plaintiffs, for the purpose of fraudulently disposing of the same, or a portion thereof, and with the further intention not to apply the proceeds of the said disposition to the payment of the claims of the said creditors, but to reserve the same for his own benefit, and: after greatly reducing his assets by such fraudulent reservations and fraudulent secretions, to hinder and delay his said creditors bv the making of the said instrument purporting to be a general assignment.”

The particulars asked for upon this motion are: First. A detailed statement of the property which the defendant Sickle failed to deliver bo his assignee, which he fraudulently secreted and reserved for benefit; also the dates of such-reservations and the names of the persons with whom they were made. Second. A detailed statement of the goods-claimed to have been fraudulently obtained, from whom-such goods were obtained, and what portion thereof was-reserved by defendant Sickle for his own benefit. The assignor and assignee, the two defendants in this action, are both parties to the conveyance which is alleged to be fraudulent, and to that extent may be regarded as in privity with each other. They appear by the same attorneys, and, upon the motion before Mr. Justice Patterson, joined in the demand for a bill of particulars, which, if granted on the assignee’s application, enures to the benefit of the assignor. There is nothing presented upon this motion as to the assignee’s knowledge -or lack of knowledge as to the reser

vations. The defendant, Cantor, has received the books and papers of the assignor, and has made up a schedule. As said by Judge Wallace in Wilson v. Pierson (13 Federal Rep. 386): “ The particularity with which a defendant

should be required to inform his adversary as to essential facts which are in controversy, depends upon .the nature of the facts and the extent to which the information may be fairly presumed to be within the cognizance of the respective parties. A party should never be required to make specification of the matters which from their inherent character are not capable of exactitude, or which constitute evidence rather than substantive facts, nor to require information which is more presumably within the knowledge of the adversary than his own.” There is no vagueness or uncertainty about the allegations of the complaint. The facts stated being, first, a failure to pass over the entire property to the assignee, and a reservation with intent to defraud; creditors; and, second, a scheme to defraud, including the acquisition of goods on credit, and the disposition of them for cash, and a reservation for the benefit of the assignor.

In Wigand v. Dejonge ( 18 Hun, 400 ), it is said that,. “ If the information sought is in the possession of the party asking it, then it will be plain that the application for specific details should be denied, if it appears in addition that the parties from whom the particulars are asked are not in a situation to answer the demand.” In Newell v. Butler ( 38 Hun, 104 ), it was said : “ The result of the numerous adjudications relating to the scope and nature of a bill-of partic nlars is, that its only proper office is to give information of the proposition which plaintiff intends to prove in respect to any material and issuable fact in the case, but not to disclose the evidence relied upon to establish any such proposition.” I have not overlooked the cases of Clafiin v. Smith (13 Abb. N. C., p. 206), and Gas Works Construction Co. v. Standard Gas Light Co. (13 N. Y. State Rep. 339). In the former case a bill of particulars was ordered. In that case, however, the motion was made by one set of

creditors seeking to sustain the assignment against another set of creditors seeking to set it aside on the ground of fraud. The present case seems to me to be clearly distinguishable, for while in Claflin v. Smith it was evident that ■the persons seeking the information did not'know the facts, aior were they in a position to know, and as the learned justice there said, “ The plaintiff in such a case may be compelled to furnish a bill of particulars of the time and place of the acts and things which he intends to prove as showing fraudulent intent.” What was said in Mayor, &c. of N. Y. v. National B’way B’k (14 Weekly Digest, 492) is applicable here. These applications are addressed wholly to the discretion of the court. Whether it shall be granted or not depends on the particular circumstances of each case. Conflict in the authorities is due to the lack of similarity between the cases presented for decision.

Upon the complaint, it appears to me that.the effect of requiring the plaintiff to furnish a bill of particulars will not only be to compel him to disclose much of his evidence, but would be a hardship. The complaint itself appears to me to satisfy the rules applicable to equity pleadings. A general certainty is sufficient in pleadings in equity, and though a mere general charge of fraud is insufficient, it is not to be understood that particular facts and circumstances which confirm and assist should be minutely charged. It is not necessary or proper that pleadings at law or in equity ■should be encumbered with all the matters of evidence the ■complaint may intend to introduce ( Waite on Fraudulent Conveyances, .§ 142). Were the plaintiffs compelled to ■state the persons with whom and times when and the manner in which the defendant had fraudulently disposed •of his property, in a bill of particulars, they would upon the trial be confined to such proof, yet they might be in a position, without being possessed of this knowledge, to establish a prima facie case by showing such a gross deficiency between the assets which the assignor turned over to the assignee and the assets which under ordinary business

■dealings he should have had at the time of his assignment as to put the defendants to their proof. Considering the nature of the action itself and the relative positions of the parties, and the fact that the knowledge in reference to the statements of fraud, if they existed, are, by reason of the possession of the books and of the entire estate of the assignor, more within the possession of the assignee, this application is denied, without costs.

From the order denying the application the defendants appealed to the general term.