Wilmerding v. Cohen

Headnote

Arrest.—Sufficiency of Affidavits.

Affidavits to obtain an order of arrest, in an action brought in December, 1809, for the value of goods sold, alleged that in August and September, 1869, defendants procured credit and induced the sale representing that they were solvent, &c.; but that they now had suspended, and declared their assets would not pay more than twenty cents on the dollar; that of their indebtedness of sixty-five thousand dollars, a deficiency of over forty thousand dollars had accrued since their representations of solvency were made; that' on an examination of their affairs by creditors, they pretended to have lost their cash book; but it appeared from other books, that since such representations, and before suspension, they had doubled the rate of their purchases and sales, and had converted all bills receivable into cash, and collected all that was due them; and that they accounted only.for fifty-eight thousand dollars cash received, out of at least eighty-seven thousand dollars; and that there was a deficiency of over twenty thousand dollars.

J-Ield, that these circumstances, unexplained by counter-affidavits, were sufficient to sustain the order of arrest.

Form of the affidavits in such case.

Appeals from orders of arrest.

Three actions were "brought against S. A. Cohen and. Abraham Cohen, defendants and appellants ; one by Henry A. Wilmerding and others ; another by Effinerham Townsend and others ; and a third by L. E. Schmieder; in each of which orders of arrest were obtained by the above named plaintiffs, who were respectively auctioneers in this city, against the defendants, on two grounds:

1. Fraudulently contracting the respective debts.

2. Fraudulently disposing of their property with intent to defraud their creditors.

The order in the Schmieder case was to hold defendants to bail in three thousand fív¿ hundred dollars.

The debt was two thousand three hundred and seventy-two dollars and eighty-seven cents.

In the Wilmerding case the debt was seven " thousand and thirteen dollars and thirty-two cents ; the order to hold bail was ten thousand dollars. ,

In the Townsend & Montant case the debt is five thousand one hundred and nineteen dollars and thirty-two cents ; the order is seven thousand dollars.

The defendants moved below on the plaintiffs’ papers in each case, to set aside the order, or for a reduction of bail.

In each order of arrest Judge Ingraham, who granted the orders in question, filled in their respective amounts to hold to bail.

The papers in each case, upon which the respective orders of arrest were obtainéd, were, the affidavits of one of the plaintiffs, and of Mr. Jaffe, one of a committee of creditors who examined into the affairs of the defendants’ firm.

The affidavits -were relied on as showing the follow- . ing matters:

1. That the respective debts sued for were due and payable, &c.

2. That they had been fraudulently contracted, and at the time of contracting the same the defendants

never intended to pay for the same, but bought the goods with intent to cheat and defraud the plaintiffs out of nearly their entire value.

The affidavits in the first entitled suit, and they weie substantially the same in the others, and dated December 27, 1869, were as follows :

{Tille of Pie cause, ¿r.]

■ Robert J. Hoguet, "being duly sworn, saith he is one of the plaintiffs in this action.

That plaintiffs are copartners, engaged in business in the city of Hew York as auctioneers.

That defendants are copartners, and have been for some time past engaged as jobbers in the city of Hew York.

That the plaintiffs have a cause of action against defendants arising on contract, and said defendants are now justly indebted to the plaintiffs in the sum of seven thousand and thirteen dollars and thirty-two cents, over and above payments and just deductions.

That the grounds of said cause of action are as follows, to wit: During the months of August, September and October, 1889, at the city of Hew York, the plaintiffs sold and delivered to the defendants, and at their request, merchandise of the reasonable and agreed value of seven thousand and thirteen dollars and thirty- ' two cents in the aggregate, no part of which has been paid, but the whole amount thereof is now due and payable to the plaintiffs from the defendants.

Deponent further states a.nd alleges that said indebtedness was fraudulently contracted.

That at the time of the several purchases of the goods constituting said debt, said defendants never intended to pay for the same, but bought the same with the intent to cheat and .defraud the plaintiffs out of nearly their entire value, and also of their- other creditors, of whom they should make purchases about the same time.

That deponent makes said sta‘ement and allegations on the following grounds, and for the following reasons, to wit: During the months of August, 1869, and Sepber, 1869, and about the time of the purchases, aforesaid, from plaintiffs, S. A. Cohen, one of the defendants herein stated, and represented to deponent, and to other creditors of his (defendant’s) firm that they were perfectly solvent and able to pay their debts in full, and by that means they established a credit for themselves by inducing parties to believe that they were then solvent.

Believing such statements and representad ms to be true, the plaintiffs sold and delivered to the defendants the'aforesaid amount of goods, and gave them a credit therefor.

Deponent further saith that within a few days last past said defendants have suspended payment, and are now endeavoring to procure a settlement and compromise with their creditors, including the plaintiffs.

Said defendants now offer twenty cents on a dollar to compromise their indebtedness. They state their indebtedness exceeds the sum of sixty-five thousand dollars, and that their assets will not pay said twenty cents on a dollar of the same, but if accepted by their creditors, they expect, by the aid of friends, they will be able to pay the same.

All this amount of indebtedness has been incurred, and goods constituting -the same purchased, since July 1, 1869, most of it since August 1, 1869, thus showing a deficiency of over forty thousand dollars since their aforesaid statement and representations in August and September last, and for this deficiency they cannot, or will not, account, or give any reasonable explanation.

That it is impossible in their business that they could, during said time, have lost or sunk said amount.

Deponent further saith that the creditors of said defendants, with a view to arrive at some explanation of said defendants’ affairs, appointed a committee of four to examine into their affairs and their statements.

The said committee have fully-examined the affairs of said defendants, and their books, so fardas they could get possession of same of have access to them, and have made their report. That the most important book for the proper examination of said defendants’ affaiisby said committee, to wit, their cash-book, cannot be had.

Said defendants pretending to said committee that they have lost the same.

From said report, which deponent believes to be correct and true, it appears that said defendants’ purchases from January 1, 1869, to June 30, 1869, were about twenty-eight thousand dollars.

Their sales during said time about thirty-one thousand dollars.

That- their purchases from July 1,1869, to November 30, 1869, were about seventy-two thousand dollars, and their sales about sixty-nine thousand dollars.

That tlieir cash sales from January 1, 1869, to July 1. 1869, were about seven thousand dollars.

That their cash sales from July 1, 1869, to December 8, 1869, were over thirty-seven thousand dollar*.

That during the last five months, and since said statement and representations, the said defendants have increased their purchases and sales by over one hundred per cent, of the preceding six months; and the amount of their cash sales during the last five months are over five hundred and fifty per cent, of the preceding six months, and yet a deficiency appears in their assets amounting, as deponent believes, to over forty thousand dollars.

That the greater part of the sales of defendants since August last have been for cash. That all bills receivable received by them have been converted into cash, and the accounts and claims due them have been collected in previous to their suspension.

That the amount of cash collected and received, so far as can be ascertained from defendants’ books, without said cash-book (lost as is pretended), is over eighty-

seven thousand dollars, for which they only account .or fifty-eight thousand dollars. _ _

_ _ That deponent believes the cash receipts to have been much larger than said committee report; that there is, in their opinion, a deficiency of from twenty thousand dollars to twenty-five thousand dollars, for which said defendants cannot account. •

For • the reasons aforesaid, deponent alleges and charges that said defendants, with the intent to cheat and defraud the plaintiffs and other creditors, made said false and fraudulent statements, and incurred said indebtedness to deponent’s firm and other cieditors, with a view to cheat and defraud them, and that they have secreted and concealed a large portion of their assets.

And he prays an order of arrest against said defendants. __

That-deponent has reason to believe, and fears that said defendants are about to leave this State ; and further, deponent saith not.

The affidavit of Otto Jaffe was as follows:

[Title of the cause, &c.]

Otto Jaffe, being duly sworn, saith he is one of the creditors of the defendants, and one of the committee of four who investigated the affairs of said defendants mentioned in the preceding affidavit.

That the reference in said affidavit to the report and investigation of said committee in the affairs of said defendants are true to the best of deponent’s belief.

That, in'the opinion of deponent and said committee, there is a deficiency of over twenty thousand dollars unaccounted in the assets of said defendants.

, That said defendants pretend to have lost their cash

book. That in. the opinion of deponent there is a much larger deficiency in their assets.

At a special term of the supreme court, held January 26, 1870, by Caedozo, J., a motion made by defendant on the plaintiffs’ papers to vacate the orders of arrest, was denied with costs.

The following opinion was rendered on denial" of the motion:

Caedozo, J.—If it be true that the affidavits would scarcely justify the defendants’ arrest on the ground of false representations, because it does not appear that they were the cause of the sale, yet the statement of ability when the debt was contracted may be used in conjunction with their speedy failure, as a ground to infer a fraudulent disposition of property.

The case, therefore, especially where the defendants offer no explanation, is sufficient.

The bail does not seem disproportioned to the claim.

Motion denied.

From the order entered on this decision in each action, the defendants appealed.t