Stewart v. Lyman — 62 A.D. 182

Majority

p. 182

Charles F. Stewart, Respondent, v. John Grant Lyman, Appellant, Impleaded with Others.

Headnote

Attachment — presumption where no new affidavits are furnished on a motion to vacate it — what is a sufficient statement of injury to pi'operty—allegations in the alternative as to departure from or concealment in the State—rule as to the debtor’s having assigned or being about to assign his property with intent to defraud his creditors.

Where, upon a motion to vacate an attachment, the defendant presents no affidavits in support of the motion, the plaintiff is entitled to' the benefit of all legitimate inferences from the facts shown.

Where the basis of the action in which an attachment has issued is the purchase by the plaintiff from the defendant, and the acceptance by the plaintiff’s assignor from the defendant, in return for services, of worthless stock in reliance upon the defendant’s representations that it was valuable, the fact that the complaint failed to specifically allege that the stock was worthless when purchased by the plaintiff and when accepted by his assignor; affords no .grounds for vacating the attachment where it is obvious from a reading of the complaint that the allegation of worthlessness is directed generally to the stock as a condition inherent in it from its inception.

An allegation of the complaint that “ said certificates (when accepted) then were, ever since have been and now are worthless and of no value,” states an injury to property within the meaning of section 3343 of the Code of Civil Procedure.

Where the moving affidavits show that the defendant was not to be found at his home or office or through his attorney on two designated days, and that contradictory messages had been given as to whether he was away or was at home sick, and that the office boy said that he had come into the office for something and had gone away at once; that persons to whom he owed money had searched for him in vain; that a newspaper had published an account of his absconding; that his attorney had failed to throw any light on the subject or even to arrange for an appointment, and that the sheriff had not succeeded in executing an order of arrest, sufficient is shown, in the absence of any explanation on the part of the defendant, to justify the inferences that his acts were induced by an intent to defraud his creditors.

An attachment, the ground of which is stated to be that the defendant has departed from the State of New York with intent to defraud his creditors or keeps himself concealed therein with like intent, is not defective because the grounds therefor are stated in the disjunctive.

Semble, that the attachment would be defective if it contained a disjunctive or alternative statement as to the disposition of the defendant’s property, for example, if it alleged that the defendant had assigned and disposed of property with ini ent to defraud his creditors, or that he was about to assign or dispose of property with intent to defraud his creditors. N

p. 183

Appeal by the defendant, John Grant Lyman, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 11th day of April, 1901, denying said defendant’s motion to vacate a warrant of attachment issued against his property.

The verified complaint herein, which is dated February 16, 1901, states two causes of action: First, to recover the sum of $1,550, which the plaintiff alleges that he paid the defendants for shares of stock of the International Zinc Company, relying upon their false and fraudulent representations, which shares “ are worthless and of no value; ” and second, as assignee of Julius Leszynsky, to recover $25,000 due from the defendants to the said Leszynsky for services rendered to them at their request, and for which he was given by them certain certificates of stock which he took relying upon their false representations that the same were of value. An affidavit by Leszynsky supports the allegations of the complaint From a,n affidavit by the plaintiff, made on the application for the warrant of attachment against the property of the defendant Lyman, which it is .now sought to vacate, it appears that on March 11, 1901, the defendants Lyman and Hartwell answered by general denial, and that the International Zinc Company defaulted, and in this affidavit, which is dated March 23, 1901, the plaintiff avers that “as this deponent believes, the defendant Lyman has departed from this state, or keeps himself concealed within this state, with intent to defraud his creditors, and the grounds of his belief are the affidavits of Felix H. Levy and Harry H. Kutner,” and that though an order of arrest has been issued against the defendant Lyman, the sheriff has been unable to execute the same.

The affidavits of.Levy aver that on March 22, 1901, he was informed by Mr. Vause, attorney for the defendant Lyman, upon inquiry whether a report published in the New York Sun to the effect that Lyman has absconded was true, that he had not seen Mr. Lyman since the preceding Tuesday, the nineteenth of March, at which time he was sick in bed, and he did not know his present whereabouts, nor whether he was in the city nor how_ to communicate with him so as to arrange an appointment; that the deponent was informed by telephone on March twenty-second by Dr. Lyman’s butler that the doctor was out of the city, but he did not know

p. 184

where nor how to reach him, and Mrs. Lyman was out and.he did not know when she would return ; that a few moments later, the telephone having been cut off, Mrs. Lyman answered that her husband was not in town, but that his attorney, Mr. Vause, knew where he was, and would forward any communication; that he was told by those in charge of Dr. Lyman’s office that the doctor had been away several days, and his address was unknown, but to address any communication to his residence; that the sheriff had informed him that efforts made on March twenty-third to execute upon the defendant Lyman an order, of arrest resulted in failure to find him. Mr. Kutner averred in his affidavit that he had accompanied the assistant deputy sheriff on March twenty-third for the purpose of assisting him in the execution of the order of arrest, and that the butler had said Dr. Lyman had gone away, and he did not know when he would return, and that he was instructed to refer them to Mr. Vaiise; that at Dr. Lyman’s office the boy in charge said that “ on Wednesday Doctor Lyman' came in and went into inner office, took something out of q box and skipped away ; ” that the bookkeeper, upon coming in, said, “ I don’t expect Doctor Lyman here to-day. I think he is sick, but I don’t know where he is,” and did not know when he would return; that there were several men who appeared to be waiting about the office, and one said, “ I am looking for Doctor Lyman; he owes me,some money, and I would like to lay my hands on him,” and said to the bookkeeper, “ I telephoned to the doctor’s house last night and I received an answer that he was sick in bed and would not be down for a few days,” and the bookkeeper made, no answer- and the man remarked, “ Doctor Lyman has played his . best friends.”

Upon the complaint and affidavits the warrant of attachment was issued, and it recites that it appears that “ one of the causes of action specified in sec. 635 of the Code of Civil Procedure exists against the defendants, and each of them severally, to recover a sum of money only, to wit: the sum of Twenty-six thousand five hundred and fifty dollars as damages for injury to personal property in consequence of fraud; ” that the affidavits show “ that the defendant Lyman is a resident of this state and has departed therefrom with intent to defraud his creditors or keep himself concealed therein • with like intent.”

p. 185

Motion to vacate the attachment on the papers on which it was granted'was denied, and the defendant Lyman appeals.

Morris J. Hirsch, for the appellant.

Felix H. Levy, for the respondent.

Among the other grounds it is contended upon this appeal that the complaint does not show sufficient facts to constitute the cause of action set forth in the warrant, i. e., injury to personal property in consequence of fraud; that the papers on attachment failed to disclose any intent on the part of the defendant Lyman, to defraud his creditors; and that the warrant itself does not comply with the provisions of section 641 of the Code of Civil Procedure, in that it does not recite any grounds for the attachment.

In support of the first contention, it is pointed out that the complaint alleges in the first cause of action that the stock in question is worthless now •— not that it was worthless when purchased — and that the second cause of action does not allege that the stock was worthless when accepted by Leszensky. This contention, we think, affords no ground for vacating the attachment. We think it obvious, as the respondent says, from a reading of the complaint, “ that the allegation of worthlessness is directed generally to the stock as a condition inherent in it from its inception, otherwise the allegations set out at great length in the complaint of the false representations made prior to the purchase by the plaintiff of the said shares, would have no application and be meaningless.” And as' to the second cause of action the allegation is that “ said certificates (when accepted) then were, ever since have been and now are worthless and of no value.” Section 3343 of the Code of Civil Procedure, subdivision 10, defines an injury to property as “ an actionable act, whereby the estate of another is lessened, other than a personal injury, or the breach of a contract.” ' It is manifest that the acts here complained of constitute a lessening of the estate of the plaintiff and Ins assignor, the gravamen of the complaint being the taking away from the plaintiff of' sums of money by means of fraud. That he has a cause of action, therefore, against defendant is made to appear.

It must be remembered, moreover, m construing both the com

p. 186

plaint and the other papers, that the plaintiff here is entitled to every reasonable inference in his favor. The defendant has not presented any counter-affidavits in support of the motion to vacate the attachment, and under such circumstances the plaintiff “ is entitled tp the benefit of all legitimate inferences from the facts shown.” (Globe Yarn Mills v. Bilbrough, 2 Misc. Rep. 100 .) As said in Jaffray v. Nast ( 32 N. Y. St. Repr. 250 ), “ the affidavits upon which the attachment was issued show circumstances strongly tending to establish fraud in the absence of any explanation. on the part of the defendants. All the facts were peculiarly within their knowledge, and when, instead of basing .the motion to vacate upon affidavits, they saw fit to rest on those upon which the attachment was granted, all legitimate deductions and inferences must be construed against them.”

Keeping this rule in mind, we think it is impossible, upon reading the affidavits in behalf of the plaintiff, to conclude, as the appellant contends, that they fail to disclose any intent on the part of the defendant to defraud his creditors. The affidavits show that Dr. Lyman was not to'be found on the twenty-second or twenty-third of March at his home or office or through his attorney, and that contradictory messages had been given as to whether he was away or was at home sick, and the office boy said he had come into the office for something and gone away at once; that persons to whom he owed-money had searched for him in vain ; that the paper had published an account of his absconding, and his attorney had failed to throw any light upon the subject or even to arrange for an appointment, and the sheriff had not succeeded in executing an order of arrest. What was said in Stevens v. Middleton ( 26 Hun, 470 ) is peculiarly applicable here, that “it is not always practicable to establish by proof the existence of a fraudulent intent on the part of the debtor even when in reality it exists. Direct proof of the fact can rarely be obtained, and when it is established it must ordinarily be inferred from circumstances. The facts as they are disclosed m this case, in the absence of any explanation on the part of the debtor, justify the inference that his movements were prompted by the intent alleged in the attachment. It is sufficient that such an inference was warranted by the circumstances, and as that was their effect the motion to discharge the attachment was properly denied by the court.”

p. 187

We thus come to the appellant’s contention that the warrant itself is defective and not in compliance with section 641 of the Code of Civil Procedure in that' it is in the disjunctive, the statement being, as a ground for the attachment, “ that the defendant Lyman is a resident of this state, and has departed therefrom with intent to defraud his creditors or keep himself concealed therein with like intent.” This alternative statement, the appellant says, does not furnish a recitation of either ground and the warrant would be properly granted only if it were shown either that the defendant had departed from the State with intent to defraud his creditors, or else keeps himself concealed with - intent to defraud his creditors. To entitle the plaintiff to a warrant of attachment he must show by affidavits, as stated in subdivision 2 of section 636 of the Code of Civil Procedure, that the defendant, if he is a natural person and a resident of the State, “ has departed therefrom with intent to defraud his creditors * * * or keeps himself concealed therein with the like intent,” and these it will be seen are the words used in the warrant. . The appellant cites many cases wherein it has been held with regard to the provisions of the same section as to property, that the warrant must not be disjunctive or alternative, but must state either that the defendant had assigned and disposed of property with the intent to defraud creditors, or else that he is about to assign or dispose of property with the intent to defraud creditors, the principal case relied upon being that of Cronin v Crooks ( 143 N. Y. 352 ).

The question which the appellant thus presents has been thoroughly discussed and, as we think, correctly decided in the case of Garson v. Brumberg ( 75 Hun, 336 ) wherein the requirements of a warrant of attachment both as to allegations regarding the disposition of property with intent to defraud creditors, and as to the absence of a debtor from the State or his concealment therein with intent to defraud creditors were defined, and it was held as to the former that a disjunctive statement was defective, but as to the latter it was not, the court saying: “ The removal of property with the intent to defraud creditors is one ground, and the assignment of it with like intent is another; but they are based upon different facts and both cannot well be included in or established by the same facts, whilst under the other provision of the Code the intent to defraud creditors or to avoid the service of a summons, may be

p. 188

established from the same facts. Whether he has departed from the State or keeps himself concealed therein, is immaterial where the purpose and intent is the same. It appears to us that this subdivision of the section may properly receive a construction which allows the grounds to be stated in the attachment in the alternative. Otherwise the clause can be' of but little benefit, for where the debtor has secreted himself either by departing from the State or by hiding himself within the State, the creditor, if compelled to establish which, will in most cases be powerless to do so for reasons which are obvious.” And among other authorities the' court quoted from Van Alstyne v. Erwine ( 11 N. Y. 331 ); wherein it was said": “It is objected that the application is in the disjunctive; that the debtor had departed from the state or was concealed within it with intent to defraud his creditors; and it is said that the creditor should have stated his cáse under one or the other aspect and not in the alternative. * * * A case may be so circumstanced that although it may be conclusively shown that the debtor has' left his place of residence in order to defraud his creditors by depriving them of their remedies* yet it may be impossible even to conjecture whether he has'continued his flight beyond the boundaries of the state, or lias resorted to some place of concealment in it. * * * If the objection is well founded there could be no proceeding under this statute in a case thus circumstanced. The debtor would have only so to conduct his evasion as to make it uncertain which course he had adopted and he would avoid this remedy. I do- not think the statute requires such a construction.”

Apart from'the fact that the remedy might, under the construction for which the appellant contends, be eliminated m certain cases, the real objection to such a construction is that the wrong which the issuance of the warrant is intended to redresss is the concealment of the debtor with intent to defraud his creditors. Whether the concealment is within or without the State is a mere incident. The provision of the Code must be read so as to afford the creditor a remedy when the debtor with intent to defraud remains in concealment. The casé of Cronin v. Crooks (supra) and like cases, upon which the appellant relies, are clearly distinguishable. Therein the attachment was sought upon the ground of fraudulent disposition of property, and the recital in the warrant was that the debtor had

p. 189

assigned, or was about to assign, acts which are separate and distinct; and, as said in the opinion in Cronin v. Crooks, “ to state in the alternative is to state neither the one nor the other fact. Such an alternative statement of grounds results in a mutual exclusion.”

In other words, if a man has assigned, he is not about to assign his property,' whereas with regard to the question of concealment with intent to defraud creditors, a recital that the debtor has departed from the State or remains concealed therein with such intent, are not mutually exclusive but tend to support the fact needed to be established, namely, that he remains in concealment in one place or the other with intent to defraud.

Our conclusion, therefore, is that the order appealed from should be affirmed, with ten dollars costs and disbursements.

Patterson, McLaughlin, Hatch and Laughlin, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.

Cases cited

Cronin v. Crooks 143 N. Y. 352 N.Y. 1894-10-16 p. 187
Van Alstyne v. Erwine 11 N. Y. 331 N.Y. p. 188