Majority
p. 421MORTON a. WEIL. Supreme Court, First District; Special Term, March, 1860.
Headnote
Creditob’s Araron.—Pabties.—Cause of Actios.Where the plaintiffs who are judgment-creditors, seek to obtain the debtor’s property from persons to whom it was fraudulently passed away, they may unite such persons in one action, although such persons received the property in separate and distinct parcels.
In such case the cause of action is the same, viz., the fraudulent disposition of the debtor’s property to the several defendants, although in several parcels. Hence it is an entire cause of action, affecting all the defendants, within section 167 of the Code of Procedure.
Form of a complaint in a creditor’s action by numerous plaintiffs to set aside several distinct judgments, suffered in favor of, and transfers made to, numerous defendants, held sufficient on demurrer.
Demurrer to complaint.
The action was brought by L. P. Morton and sixty others, plaintiffs, creditors of Moses Bettman, deceased, against the administratrix of Bettman, and others, transferees of his property.
The amended complaint, to which the demurrer was interposed, charged that Bettman in his lifetime made fraudulent purchases of the various plaintiffs, and that after they had severally sued him, and after an injunction had been granted against him in a suit prosecuted in the name of some of the creditors, ■ under an agreement that it should be for the benefit of all, twenty of the twenty-six defendants, with notice of plaintiffs’ rights, obtained collusive judgments against him; and that subsequently Bettman, in violation of the injunction, made a general assignment for benefit of creditors to two of the defendants, one of whom was one of those who had obtained an alleged collusive judgment. That subsequently, two other of the defendants received from Bettman certain of his property, and concealed it to defraud his creditors; and that still other two of the defendants aided in such concealment, and also themselves received property of Bettman for the like purpose.
p. 422
The allegations of the complaint were in the following form:
That at the time of the several sales and deliveries of goods to Moses Bettman, late of the city of Hew York, now deceased, and of the commencement of the several actions for the recovery thereof hereinafter set forth, .the plaintiffs in this action constituted the several mercantile copartnership firms herein named,-except as to said William M. Waterbury, who traded alone, viz.
[Here followed an enumeration of the several firms which the ' parties-plaintiff respectively composed.]
And plaintiffs further show, that they, as such co-partnership firms, and the said William M. Waterbury, did, prior to the 13th of April, 1857, sell and deliver certain goods and merchandise to the said Moses Bettman, now deceased, to large amounts, and which were sold upon various terms of credit as to time, and which time of credit had not expired pursuant to the terms thereof at the date of the bringing of the several actions for the recovery thereof, as hereinafter named; that said Bettman was guilty of a fraud in contracting the several debts upon which said several actions were brought; that he represented to one or more of said plaintiffs, when he purchased said goods, that he was solvent and in good circumstances, and would pay for them, but that he had no intention of paying for said goods at the several dates of the purchases thereof, and that the several plaintiffs therein sold the goods specified, relying upon the belief that said Bettman was solvent, bought them in good faith, and would be ablq, and intended to pay therefor at the maturity of the credit upon which they were sold; and further, said plaintiffs show that said Bettman, after the said purchases, and pursuant to his original intention to defraud, sold, transferred, and disposed of certain portions of his property, of great value, and threatened to make other sales, transfers, and dispositions of the remainder of his property with intent to defraud his creditors, including said plaintiffs; and by reason of such fraudulent acts and doings on the part of said Bettman, said plaintiffs were entitled to judgments againstsaid Bettman, for the amount and value of the said goods, so by them severally sold and delivered to said Bettman, notwithstanding the said several terms of credit had not at that time
p. 423
expired; that such proceedings were had in said actions, that judgments were rendered by said Supreme Court in favor of said several parties, plaintiffs in said several actions, and on the 6th day of March, 1858, judgments were perfected and duly docketed in the office of the clerk of said court, at the City Hall, in the city of New York, against said Bettman, and in favor of said several plaintiffs, for the several amounts of their claims and interests and the costs of such actions, by which judgments said Moses Bettman was adjudged guilty of the frauds herein charged, as in and by said judgments, and the judgment-rolls therein will more fully appear; that the several amounts of said judgments are as follows. [Describing them by the plaintiffs’ names in each, and the amount.] That in and by the several complaints in said several actions, the plaintiffs in ^ach of them asked for an injunction to restrain said Moses Bettman from making any transfer or other disposition of any of his property, and from any interference therewith whatever, and that a receiver might be appointed with the usual powers of receivers, as will more fully appear on reference to said several complaints; that prior to the commencement of said several actions, and on the 13th of April, 1857, at the request of the said plaintiffs in said several actions, Moncrieff Mitchell, Gideon Pott, and James Pott, composing the mercantile firm of Mitchell & Pott, who were also creditors to a large amount of said Moses Bettman, commenced an action in this court against said Bettman upon a complaint founded upon the same circumstances, and of the same character and description in all respects, as by said complaint will more fully appear; that by an agreement in writing between the plaintiffs first aforesaid, and the plaintiffs last named, said suit was commenced and prosecuted by them as well for the benefit and at the expense of the plaintiffs first aforesaid as for themselves, as was alleged in said complaint, and the avails and proceeds of any collections that might be made therein, were to be shared pro rata by and between said .parties and others hereinafter named; that upon said complaint, and an affidavit verifying the principal facts therein stated, said plaintiffs having given the security required by law, an order of arrest was granted by one of the justices of this court, directing the sheriff of this city and county to arrest, and hold said Bettman to bail, on account of the fraud therein alleged, in the sum
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of $5,000, and npon the same papers the same justice signed an injunction-order, of which the following is a copy:
[Here followed an injunction-order in the usual form.]
That upon the same day said Bettman was duly arrested under said order made for that purpose, and said injunction-order was duly served upon him. That at the time of the issuing and service of such injunction-order and of the said arrest, the said Bettman had property in his possession and under his control as owner of the value of at least the sum of $100,000, upon which the said injunction-order was operative according to law; of all which facts the defendants in this action had due notice at or about that time; that subsequently, and on the 20th of April, 1857, Hercules E. Gillelan and Adam H. Gillelan, composing the firm of Gillelan Brothers, on a like request, and under the same agreement as to avails and proceeds and expenses, having claims of a large amount of a similar character against said ' Bettman, commenced a like action in this court against said Bettman, upon a complaint of the same character in all respects, containing the same averments except as to the amount of their claims; and upon said complaint and a like affidavit, and the proper undertaking duly approved, obtained from a justice of this court an order to arrest said Moses Bettman for the frauds therein alleged, pursuant to statute, and to hold him to bail in the sum of $5,000, and upon the same papers said justice signed and issued a like injunction-order, dated said 20th day of April, 1857, which orders were on the same day duly executed and served upon said Moses Bettman, while he was still the possessor and owner of such property, as by reference to said complaint, affidavit, undertaking, and orders, will, among other things, more fully appear, of all which facts the 1 defendants herein had due notice; that, as was well known to the defendants herein at that time, the plaintiffs herein were jointly interested with the plaintiffs in the last two-named ac- ^ tions as above described, and contemplated and intended further to unite with them in said prosecutions by the commencement of their said actions, as soon as practicable; that while said orders of arrest and said injunction-orders were in full force, as was also well known to said defendants herein, the said defendants [naming twenty of the twenty-six defendants], having
p. 425
severally as individuals and executors, and copartners as aforesaid, claims of various kinds and amounts against said Moses Bettman, which claims plaintiffs charge were in part without consideration and invalid, and all of which were not due and payable by the terms of the several contracts and agreements out of which the indebtedness arose, and were not valid and subsisting claims against the said Moses Bettman or his property, and said defendants, conspiring with each other and with said Moses Bettman, and falsely and fraudulently contriving to defraud these plaintiffs out of their just claims against said Moses Bettman and his property, and of their lien and priority of claim upon such property, did arrange and agree with said Bettman to accelerate the time of payment of their said several claims and demands against said Bettman, so as to make the same appear presently and immediately due and payable, and did receive from him notes therefor, payable at once, so as to enable said parties to commence, and they did severally thereupon commence actions against said Bettman for the recovery of such claims, and in pursuance of such fraudulent design and agreement between said parties, said Bettman thereupon at" once signed and delivered to said several parties consents and stipulations allowing said parties to take judgment against him, said Bettman, forthwith, for the several amounts of their respective accelerated claims and costs, whereupon the said defendants severally and immediately entered their several judgments against said Moses Bettman, as follows. [Describing the judgments.] That said judgments were all taken and entered upon similar confessions, or offers, and consents of said Moses Bettman, pursuant to, and in furtherance of such fraudulent and corrupt conspiracy and design to defraud these plaintiffs, and immediately thereupon the several plaintiffs in said judgments, in the further prosecution of said corrupt and fraudulent agreement and design, caused executions to be issued and directed to the sheriff of the city and county of' New York, and directed him to, and he did thereupon at once levy upon the whole stock of merchandise of said Moses Bettman, by virtue of said several executions, being a part of said property so possessed and owned by him; that thereupon, and on or about the 6th of May, 1857, and before any sale had been made of said merchandise under said executions, plaintiffs, and the said Mon
p. 426
crieff Mitchell and others, and Hercules E. Gillelan and another, in said other two actions named, caused a notice of their rights and claims in regard to said property to be served upon the said sheriff, and upon the defendants [naming the same twenty last before named], and thereby notified said defendants that they and each of them would be held responsible for any interference with the said property of said Bettman, contrary to the said injunction-order, and the lien or charge acquired thereby, and by the service thereof, and to the rights and claims of the plaintiffs as aforesaid; and also at the same time caused a like notice to be served on the attorneys of the said Moses Bettman; that on the 30th day of June, 1857, in eight of the said actions against said Bettman [describing them by the names of the several parties-plaintiff], eight several attachments were issued out of this court against the property of said Bettman, based upon the same complaints and affidavits, by which complaints and affidavits it appeared that a cause of action existed in favor of said plaintiffs, against said defendant, for a money-demand arising on contract, and that said defendant had fraudulently contracted the debts therein specified, and had assigned and disposed of his property with intent to defraud his creditors, as by said affidavits will, among other things, more fully appear, and being for the full amounts of the several claims of said parties, afterwards included in their several judgments as aforesaid; and, the said plaintiffs having severally furnished the security required by law, which said attachments, on the 30th day of June, 1857, were delivered to the sheriff of the city and county of Hew York, with a notice that the plaintiffs in said attachments would claim any moneys collected by him by vii’tue of the executions in favor of any of said defendants in this action, and directing said sheriff to, and said sheriff did thereupon serve copies of such several attachments upon the said defendants, as were served with the notices as aforesaid, together with á notice thereon indorsed, apprising said defendants that it was intended by said attachments to seize, levy upon, and claim any money or property which they might receive by virtue of their said judgments or executions, which copies, attachments, and notices were served on or about the date of the said attachments, and prior to the receipt by said defendants of any money under said executions.
p. 427
And plaintiffs further show, that in the fifteen several actions wherein certain of the plaintiffs in this action [naming them], were plaintiffs, and said Bettman was defendant, attachments were also issued against the property of said Bettman, for the same cause, and on the same ground as aforesaid, of a similar character of those named in the above actions, and the same securities having been given and approved by a justice of this court; and said attachments directed the sheriff of the city and county of New York, to collect the several amounts of plaintiffs’ claims, named in this said complaint, and costs, and which were embraced in their several judgments finally recovered as aforesaid, which attachments were granted on the 24th day of August, 1857, and were on the 28th of August, 1857, delivered to said sheriff, with directions to serve copies with the same kind of notices as were indorsed upon the copies served in the first-named eight actions upon the same defendants, as by said affidavits, undertakings for security, attachments, and notices, will, among other things, more fully appear; and thereupon, and about the date last named, said sheriff did serve upon each of said defendants a like copy of each of said fifteen attachments, with a similar notice indorsed thereon, which were so served prior to the receipt by said defendants of any money, under their said executions ; that said executions in favor of all of said defendants, who took judgments against said Bettman, by stipulation and confession as above set forth, were all paid to said defendants in full, with interest, on or about the 3d day of September, 1857, by said sheriff, out of moneys arising from the sale of the property of said Bettman so seized upon, on or about the 25th day of April, 1857, by virtue of such executions, and which he so owned at the time of the service of the said injunction-orders, and in violation and fraud of the plaintiffs’ rights, acquired by said original injunction-orders, said arrest, and said several attachments and notices so served, as above described and set forth.
And plaintiffs further show, that on or about the 13th day of April, 1857, the said Moses Bettman, in violation of the said injunction-orders, and of the rights acquired by the plaintiffs under the same, made a general assignment, without any actual consideration being paid therefor, of his property to the defendants Emanuel Bernheimer and Max Weil [of whom the latter
p. 428
only, was one of the twenty defendants last above mentioned], as assignees, for the benefit of his creditors, including the property so possessed and owned by him, at the time of the service of said injunction-orders, by which he gave preference of payment to all the said judgments so confessed, or allowed by him to said defendants, over and above all other debts against him, and making other fraudulent preferences as against the claims of these plaintiffs, and providing for the payment of certain fictitious claims and demands, prior to the payment of plaintiffs’ claims, as by said assignment in the hands of said assignees will more fully appear; that as was well known to said assignees, at the time of receiving said assignment, said Bettman fraudulently withheld a large amount of'property from the effect of said assignment, and that such withholding and concealment of said property was with the consent and favor of said assignees, and which assignment these plaintiffs charge is fraudulent and void as to all of plaintiffs’ claims and demands, and was made by said Bettman, with the intent to hinder and delay, defeat and defraud the creditors of said Bettman; that at the same time at which said notices, and said copies of attachment with notices indorsed, were served upon the other defendants as above described, a like notice, and copy attachments and notice, were served upon said assignees; and that such notices apprised said assignees that said assignment would be treated as fraudulent and void as to the plaintiffs; that*notwithstanding such rights of plaintiffs, and such notices and services, said assignees proceeded to carry out and execute said assignment, and have collected, received, and disposed of large amounts of such property, and disposed of portions of the same under said assignment, the particulars whereof plaintiffs have no knowledge of, but pray may be inquired of in this action; and that said assignees so received the sum of about §1,700 from the sheriff of the- city and county of ¡New York, being the surplus of moneys collected by him from sales under said executions, after paying off said judgments and executions of said'defendants, as above specified.
And plaintiffs further show, that on or about the 27th day of March, 1857, the defendants Abraham Gump and Solomon Gump [who were not named among the twenty above men- ^ tioned], as copartners as aforesaid, received from said Moses
p. 429
Bettman, for the purpose of concealing the same from his creditors, a large amount of dry goods of the value of some nine thousand dollars, under a pretence of sale by said Bettman to said defendants Gump, for which no consideration was in fact paid, but with the agreement and understanding that the same were to be treated and accounted for by said defendants Gump, to said Bettman, as his said Bettman’s property; that said defendants concealed the same in this city, and have either sold and disposed of the same according to such agreement, paying over the proceeds thereof to said Bettman or his order, or they still hold the same subject to said original agreement, and as the property of said Bettman, . or his legal representatives; that no part of* said property was included in or covered by said assignment; that said defendants Gump had due notice of said injunction-orders and arrests, and the grounds upon which they were based, immediately upon their being issued, and they were also served with the same kind of notices as to plaintiffs’ rights, and copies of said attachments with notices thereon indorsed, at the same time that the other defendants were served therewith, as above specified.
And plaintiffs further show, that on the 11th day of March, 1858, executions were duly issued, directed, and delivered to the sheriff of the city and county of New York upon the said several judgments of the plaintiffs, in due form of law, which executions have been duly returned by said sheriff to the clerk’s office of this court, with his returns indorsed thereon to the effect that he was unable to make any thing upon said executions, or either of them, and that said defendant Bettman therein had no real or personal property out of which to collect any part of any of said executions, as by said executions and returns thereon, on file in said clerk’s office, will more fully appear; and said judgments remain wholly unpaid and unsatisfied ; that said Bettman resided in said city at the time of the issuing and return of said executions ; that on or about the 24th day of April, 1858, said Moses Bettman departed this life at the said city of New York, intestate, and that on or about the 7th day of January, 1859, letters of administration upon the estate of said Moses Bettman, were duly issued by the surrogate of the city and county of New York to the defendant Henrietta Bettman, widow of said Moses Bettman, whereby she be
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came, and is, the sole administratrix of the goods and chattels, rights, and credits of said Moses Bettman, deceased.
And plaintiffs further show, that the defendants David and Solomon Hausmann [who were not named among the twenty above mentioned] aided the said defendants Gump and said Moses Bettman, in the secreting of said dry goods and merchandise so left with said Gump, the same having been secreted in their store in this city; and that the said defendants David and Solomon Hausmann also received a large amount of accounts, bills receivable, notes, and other property from said Bettman, without paying any consideration therefor, at or about the time said original injunction-orders were served upon said Bettman; that said property belonged to said Bettman, and was so received by said last-named defendants as the property of, and to be accounted for to, said Bettman; that the said act of receiving the same was for the purpose and with the intent of placing the same beyond the reach of, and of defrauding the creditors of said Bettman of the same; that no part thereof was ever included in, .or transferred by said Bettman’s assignment, and no part of it was ever paid 'over to any of the .creditors of said Bettman; that all such dispositions of said property as are herein mentioned were made by said Bettman, and received by said defendants, with the full knowledge of his insolvent condition ; that these plaintiffs do not know the particulars or full details of such transactions, as to the nature and extent of the property so fraudulently disposed of and secreted by said defendants, at the request and for the benefit of said Bettman, but ask that they may be inquired of in this action; that the same kind of notices and copies of attachment were served upon said defendants last named, and at the same time as upon the other defendants, as above described; and said defendants Hausmann and others had from the commencement a full knowledge of all of plaintiffs and their associates’ proceedings and claims against said Bettman and his property; and that said defendants have either converted said property into money, and paid it over to said Bettman, or on his order, in fraud, and with a full notice of plaintiffs’ legal rights in the premises, or they still hold the same and the proceeds thereof, and are accountable to plaintiffs therefor.
Wherefore the plaintiffs pray that by the judgment of this
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court in this action the said several judgments in favor of said defendants against said Moses Bettman, and the executions issued thereon, may he declared fraudulent and void as against the claims and judgments of these plaintiffs, and as to all prop-, erty of said Bettman held by him at the time of the service of said injunction-orders; that the said defendants who so received the several amounts of their said judgments from the sheriff on their executions, may be required to account for and pay over the several amounts so received with interest to the receiver to be appointed as hereinafter specified; that the said assignment may be declared to be fraudulent and void, and that said assignees, Max Weil and Emanuel Bernheimer, may be required to render an account, under oath, of the property and assets received by them under such assignment, and to transfer the same to said receiver; that the said defendants Gump may also be required to account and pay over, under oath, to said receiver, for the said merchandise so fraudulently received and concealed by them; and that said defendants Hausmann may also be required to account, under their several oaths, and pay over and transfer to said receiver all of such property so fraudulently received by them, and that a receiver of such property and assets may be appointed by this court with the usual powers of receivers in like cases; and that out of the proceeds of said property and effects, the plaintiffs may be paid the full amounts of their said several judgments, interest, and the cost of this suit, and that the plaintiffs may have such other or further relief in the premises as may be just and equitable.
Barney, Butler & Parsons,
Plaintiffs’ Attorneys.
[Verification.]
One of the defendants who was named in the complaint as one of the twenty who obtained collusive judgments, demurred to the complaint on the grounds, 1. That there was a defect of parties-plaintiff.
2. That there was a defect of parties-defendant.
3. That several causes of action had been improperly united.
4. That the complaint did not state facts sufficient to constitute a cause of action.
5. That the complaint did not state facts of, and concerning
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the demurrant sufficient to constitute a cause of action against him.
Benedict & Boardman, for the defendants, in support of the demurrer.
George W. Parsons and Wm. Curtis Noyes, attorneys for the plaintiffs, opposed.
Upon all the grounds stated in the demurrer in this case, except the third, I am of the opinion that the demurrer is not well taken.
The third cause of demurrer is, that several causes of action have been improperly joined.
The object of the complaint appears to be, to set aside various liens by judgment and by assignment, on the debtor’s property, for alleged fraudulent acts on the part of the defendants, and to have the property, which was covered by such liens, or received in payment of the claims of those creditors who were made defendants, and the proceeds of such property, applied to the payment of the several judgments held by the various persons named as plaintiffs.
So far as these claims, whether by conveyance, judgment, or delivery, affect the same property, they are properly united together; but the point raised in the case is, whether different persons, having different liens or conveyances, by which they claim different pieces of land, or different parcels of personal property, may all be included in one action, and required to contest their respective titles to separate portions of the debtor’s property.
By the Code, it is provided, that the causes of action to be united, must affect all the parties to the action. (Code of Procedure, § 167.)
In the present case, part of the object of the complaint is to have the judgments recovered by several different judgment-creditors declared void. Another portion of the complaint charges that Bettman, the debtor, made an assignment for the benefit of certain creditors, and charges fraud in regard thereto, and claims to have that declared void.
Another portion of the complaint avers, that Hansmann and
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Gump, with Bettman, were concerned in secreting the goods and property of Bettman, for the purpose of concealing the same from the creditors, for the benefit of Bettman.
All these acts are declared to be fraudulent; but between the three classes above referred to, I can find in the complaint nothing that unites them together, or that shows them to be jointly interested even in any remote degree, except as to the general fraudulent intent in the debtor’s disposition of the property. It was said, on the argument, that these defendants were charged with conspiring together, and that the conspiracy was the cause of action, which allowed the defendants to be all united together. On reference to the complaint, however, it will be seen that no joint conspiracy of all the defendants is any where alleged, but that the conspiracy of a portion only is averred, with allegations that the other defendants had notice of the facts set up in the complaint as to the plaintiffs’ rights.
The only question then is, whether, where the plaintiffs, who are judgment-creditors, seek to obtain the debtor’s property, from persons to whom it was fraudulently passed away, they may unite such persons in one action, although the latter received the property in separate and distinct parcels.
That such an action could have been sustained before the Code, I have no doubt.
In Brinkerhoff a. Brown ( 6 Johns. Ch., 139 ) it was held that judgment-creditors of a corporation might proceed against the trustees, and others, to recover the property of the corporation, which bad been withdrawn from the reach of their executions by the fraudulent acts of the defendants, although having different interests in the property.
In Fellows a. Fellows ( 4 Cow., 682 ) the chancellor says: “The separation of the property into portions is a part of the fraud, and to allow that such a separation shall render separate suits necessary, would be to allow success to the fraud itself, so far as multiplicity of suits may impede the recovery of just demands.”
Justice Woodworth states the rule to be, that “unconnected parties may be joined in a suit where there is one connected interest among them all, centring in the point in issue in the cause;" and again he says: “ The claim against all of the defendants is of the same nature. The fraud alleged is the same.
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The transfer being fraudulent, the property was not changed by being put into the hands of the defendants. They are, therefore, all necessarily concerned in the thing to be recovered, although they set up distinct interests to separate parcels.”
Chief-justice Savage, in the same case, says: “ The common point of litigation is the fraudulent transfer of the property of the debtor to the other defendants. If the source of their title be corrupt, the property is taken with the taint of corruption. This is the common point of litigation, the decision of which affects the whole, and will settle the rights of all.” And in Boyd a. Hoyt (5 Paige, 65), the chancellor says: “Where the object of a suit is single, but different persons have or claim separate interests in distinct or independent questions, all connected with .and arising out of the single object of the suit, the complainant may bring such different persons before the court as defendants; and if the object of the present bill was to reach the property of the debtor in the hands of these several defendants, which ought to be applied in satisfaction of the amount due on the judgment, and to have it thus applied, I should find no difficulty in sustaining the decision overruling these demurrers.”
From these cases, which are very similar in their objects to the present action, it is apparent that such actions might have been maintained before the Code. It is also manifest that the courts throughout, in these cases, have based their decisions upon the supposition that the cause of action was the fraud of the debtor in disposing of his property, and that there was but one cause of action, although the defendants held the property of the debtor in separate parcels, in which there was no joint interest. They all hold by the same title, and are all affected by the same taint, and this is the cause of action on which the right of the plaintiffs rest.
Applying this rule to the provisions of the Code, there is no room for any other decision. The cause of action is the same, viz.: the fraudulent disposition of the debtor’s property to the several defendants, although in several parcels. The same reasons that existed before the Code for uniting them in one action still remain; and as the words of the section of the Code above referred to do not prevent it, I think the rule still continues, and that the demurrer is not well taken.
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The plaintiffs are therefore entitled to judgment on the demurrer, with leave to the defendants to answer on payment of costs.
Order accordingly.