Hyde v. Wolf — 31 A.D. 125

Majority

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Albert G. Hyde and Others, Respondents, v. Abram J. Wolf and Ike J. Wolf, Appellants, Impleaded with Others.

Headnote

Fraudulent transfer of property by a judgment debtor — when the burden of showing good faith rests upon the transferee.

A debtor who was in complete possession of bis business on Wednesday, with no claim due in less than three months existing against him, but who, on the following Monday, is absolutely denuded of everything, including his books of account, he having in the meantime disposed of outstanding accounts amounting to 816,000 for 810, and his stock in trade, amounting to 820,000, for 81,400, is presumptively guilty of a disposition of his property in fraud of his creditors.

A transfer by an insolvent debtor for an expressed nominal consideration imposes upon the person who receives such transfer the burden of showing that he was a purchaser in good faith for a valuable consideration.

Appeal by the defendants, Abram J. Wolf and Ike J. Wolf, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Hew York on the 17th day of February, 1898, upon the decision of the court rendered after a trial at the Hew York Special Term.

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A. II. Pcwfckurst, for the appellants.

James J. Allen, for the respondents.

This is an action by a judgment creditor to set aside the transfer of certain outstanding accounts made by the defendant Ike J. Wolf to the firm of B. J. Wolf & Sons.

It appears from the evidence that the defendant Ike J. Wolf was a manufacturer of clothing, doing business in the city of Hew York, and that the other defendants were manufacturers and dealers in clothing in Hew Orleans; and that Ike J. Wolf manufactured clothing for B. J. Wolf & Sons and shipped it south to them. On Wednesday, February 24, 1897, Wolf transferred all his outstanding accounts that he thought good, aggregating in amount to about $16,000, to B. J. Wolf & Sons, for a nominal consideration of $10. He continued business, left his store as usual on Saturday, February twenty-seventh, and on Monday, March first, sold all his stock in trade (which he would not swear was not worth $20,000 on the 1st of February, 1897) for $1,400, claiming to have been compelled to do so by the solicitations of a creditor named Ilessell, to whom he was indebted, but whose indebtedness was not due for three months. His stock was insured for $25,000. From this time forward, neither stock nor books of account have been heard of. Thus, we find that this defendant Ike J. Wolf was in complete possession of his business on Wednesday, and absolutely denuded of everything, including books of account, on Monday, with no claims due in less than three months; disposing of book accounts amounting to $16,000 for $10, and a stock in trade amounting to $20,000 for $1,400. It does not seem as though it required much argument to indicate the fraudulent intent of such a transaction.

It is claimed, however, that the assignment of the accounts was for the protection of an indebtedness owed by Ike J. Wolf to the firm of B. J. Wolf & Sons. There is no reliable evidence in the case showing that any such indebtedness existed. An account of the indebtedness was given upon the examination of the defendant in supplementary proceedings, which is proven to be false. The transfer is attempted to be bolstered up by the evidence of B.

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actions were; the only person who had such personal knowledge is not called as a witness, and B. J. Wolf claims to testify from information which he has received from his partner. This will hardly do in a court of justice. It was an evident attempt to prevent the plaintiffs from finding out from the only person who had knowledge in regard to this transaction what its true inwardness was. It it were at all necessary to prove the fraudulent intent in the receipt of this assignment of accounts, it was clearly shown when Wolf & Sons utterly failed to produce any legal evidence in regard to the existence of the indebtedness from Ike J. Wolf to them. The transfer being by an insolvent debtor for an expressed nominal consideration, it was necessary for the person who received such transfer to show his good faith, and that he was a purchaser for valuable consideration in order to avoid the taint which affected the transaction resulting from the undoubted fraudulent intent of the grantor.

The judgment should be affirmed, with costs.

Patterson, O’Brien and Ingraham, JJ., concurred.

Judgment affirmed, with costs.