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Smedley v. Smith

15 Daly (N.Y.) 421 Court N.Y.C.P. Decision date 1889-12-19 English

Delivered by Bookstaver, J.

Contents

Majority

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Frederick G. Smedley, Respondent, against George V. Smith et al., Appellants.
(Decided December 19th, 1889.)

Headnote

Persons resident of another state, doing business in this state, may-make an assignment for creditors of their property in this state which may be valid here, though invalid by the laws of their domicile.
An assigment for creditors by a firm, not executed in conformity to law, in that it was not acknowledged by the assignors and that the assignee’s acceptance was not acknowledged by him, does not work a dissolution of the firm so as to render ineffectual a subsequent assignment.
Sheriff’s indemnitors, substituted in place of the sheriff under order of court on their own consent and that of all the parties, the order expressly providing that they should assume and be responsible for the sheriffs acts, are liable to the extent that he would be liable, irrespective of the amount of their undertaking.
Appeal from a judgment of this court entered on the decision of the judge on a trial without a jury.
The facts are stated in the opinion.
Arthur Furber, for appellants.
The assignment was void, because the same was in violation of the laws of the state of the domicile of the assignors ( Varnum v. Camp, 1 Green 326 Moore v. Bonnell, 2 Vroom 90 ). The spirit of our general assignment law requires an assignment of all the property, except such as is exempt by law, and its application to the payment of the assignor’s debts (Curtis v. Leavitt, 15 N. Y. 132 ; Griffin v. Barney, 2 N. Y. 371 : McClelland v. Remsen, 36 Barb. 622 ; White v. Fagan, 18 N. Y. Week. Dig. 358; Stenson v. Miller, 38 Ala. 642 ; Huggard v. Lehman, 36 Hun 309 ). The assignors were domiciled in New Jersey. That is where they resided; that is where they had their permanent home; that is where they returned immediately after making their assignments. That they did business in New York did not give them a dom
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icile there (Barry v. Bockover, 6 Abb. Pr. 374 ; Chaine v. Wilson, 8 Abb. Pr. 78 , 16 How. Pr. 552 ; Burroughs v. Bloomer, 5 Denio 532 ; Bache v. Lawrence, 16 How. Pr. 554 ; Lee v. Stanley, 9 How. Pr. 272 ; Story Conflict of Laws, § 41; Wallace v. Castel, 68 N. Y. 374 ; Briggs v. Loitoll, 41 Mich. 79 ; King v. Foxwell, 18 Eng. Rep. (Moak’s notes) 644; Plate v. Att. Gen., 24 Id. 234, and cases collected in notes at page 241; Uding v. Uding, L. R. H. L. Cas. 441, 447; Faulkner v. Hyman, [Mass.] 2 Northeast. Rep’r 184). The law of the domicile governs the disposition of movables (Ackerman v. Cross, 40 Barb. 465 ; Ackerman v. Cross, 54 N. Y. 32 ; Dupuy v. Pemberton, 53 N. Y. 556 ; Kelly v. Crapo, 45 N. Y. 86 ; Willitts v. Waite, 25 N. Y. 584 ; Graham v. F. H. Bank, 84 N. Y. 399 ; King v. Sarria, 69 N. Y. 30 ; Moultrie v. Hunt, 23 N. Y. 396 ; Van Buskirk v. Warren, 34 Barb. 457 ; Black v. Zacharie, 3 How. [U. S.] 483 ; Livermore v. Jencks, 21 How. [U. S.] 126 ; Story Conflict of Laws, § 383, 404, § 423a, 423d ; Richardson v. Forepaugh, 7 Gray 546 ). The capacity of parties is governed by the law of the domicile (Savage v. O'Neil, 42 Barb. 374 ; Waldron v. Ritchings, 9 Abb. Pr. N. S. 359; Guillander v. Howell, 35 N. Y. 657 ; Graham v. F. H. Bank, supra). And this law (lex domicilii) is a part of the law of the place of the contract ; it is injected into it (Parson v. Lyman, supra ; King v. Sarria, 69 N. Y. 30 ; Moultrie v. Hunt, supra ; Savage v. O'Neill, 42 Barb. 374 ; Black v. Zacharie, supra; Waldron v. Ritchings, 9 Abb. Pr. N. S. 359, 3 Daly 288 ). While the form of the instrument is to be governed by the lex loci actus, its validity is to be governed by the lex domicilii, it being a voluntary transfer inter vivos (Holmes v. Remson, 20 Johns. 258 ; Wait Fraudulent Conveyances, p. 416; Manny v. Logan, 27 Mo. 528 ). The assignment failed to transfer all the property of the assignors, because of the law of their domicile acting upon their capacity to make such a transfer as they attempted to make; (Varnum v. Camp, 1 Green 326; Moore v. Bonnell, 2 Vroom 90 ; Guillander v. Howell, 35 N. Y. 657 East. Nat. Bank v. Hulshizer, 2 N. Y. St. Rep’r 93 ). All a debtor can reasonably be required to do is to make his assignment in good faith and in accordance with the provisions of the laws of the
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state in which he lives, and when he has done this the title to his personal property, wherever situated, is vested' in his assignee (Frink v. Buss, 45 N. H. 328 ; Howard Nat. Bank v. King. 1 Am. Insol. Rep. 106 ; Green v. Van Buskirk, 5 Wall. 307 ; Livermore v. Jencks, 21 How. [U. S.] 126; Story Conflict of Laws, § 404 ; Kely v. Crapo, 45 N. Y. 90 ).
The instrument of February 17th was ineffectual to convey any title to the property in litigation, because the assignors had divested themselves of their title by their assignment of February 14th. The instrument of February 14th was voidable only, not void, and was valid between the parties (Dunham v. Reilly, 110 N. Y. 366 ; Randall v. Dusenbury, 39 N. Y. Super. Ct. 174 ; 63 N. Y. 645 ; Metcalf v. Van Brunt, 37 Barb. 621 ; Porter v. Williams, 9 N. Y. 142 ; Sutherland v. Bradner, 37 Hun 134 ; Gates v. Andrews, 36 N. Y. 658 ; Place v. Miller, 6 Abb. U. S. 178 ; Matter of Raymond, 27 Hun 511 ; Rennie v. Bean, 24 Hun 123 ).
William F. MacRae, for respondent.
This instrument was fatally defective in two essential particulars. (1.) It was not acknowledged by the assignors, but only proved before witnesses. (2.) The acceptance of the trust by the assignee was not acknowledged by him as required by the general assignment act (N. Y. Act of 1877, § 2). These provisions of the statute are mandatory, and if not complied with the instrument of assignment is void (Hardman v. Bowen, 39 N. Y. 196 ; Britton v. Lorenz, 45 N. Y. 51 ; Smith v. Tim, 14 Abb. N. Cas. 447 ; Smith v. Boyd, 10 Daly 149 ; Treadwell v. Sackett, 57 Barb. 440 ). The first instrument of assignment being inoperative and void, it was perfectly competent for the parties to make, execute, and deliver a new and effectual instrument of assignment in compliance with the statute, as was done on. the 17th February, 1884 (Schwartz v. Soutter, 44 Hun 323 , affirmed 103 N. Y. 683 ; Juliand v. Rathbone, 39 N. Y. 369 ). The instrument of assignment was executed and delivered here, was to be carried out here, and was authorized by the laws of the state. It is therefore governed in its validity by the laws of this state (Grady v. Bowe, 11 Daly 259 ).
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While the general rule is that the title and transfer of personal property is regulated by the law of the owner’s domicile, the rule is not applicable to voluntary conveyances or assignments, as in this case; but the law of the situs of the property prevails (Warner v. Jaffray, 96 N. Y. 248 , 254).
The defendants having been substituted in the action as defendants in'place of the sheriff, by the order of this court, on-their own consent, there can be no question of their liability precisely in and to the extent he would have been liable (Code Civ. Pro. §§ 1421—1426 ; Posthoff v. Bauendahl, 43 Hun 570 ). And even as indemnitors of the sheriff, they would each and all be liable (Herring v. Hoppock, 105 N. Y. 413 ; Ball v. Loomis, 29 N. Y. 412 ; Wehle v. Butler, 61 N. Y. 245 ).

The plaintiff is the general assignee of the firm of W. I. Negus & Co., lately doing business in the City of New York. It was composed of William I. Negus and William B. C. Carpenter, both of whom resided in New Jersey, where they owned real and personal property.

On the 14th of February, 1888, they executed an instrument purporting to be an assignment of all their property to the plaintiff for the benefit of creditors. This instrument was delivered to the plaintiff and by him recorded on the next day, but was not acknowledged by the assignors nor by the assignee as required by law. To cure this defect, a new assignment, dated on the 14th of February, 1888, was executed and acknowledged and delivered to the plaintiff as assignee on the 17th of that month, and was by him recorded on the.same day.

Both assignments contained preferences, which were forbidden by the laws of New Jersey. The assignee took possession of the property of the assignors under the first assignment, and held it under the second until it was taken from him by the sheriff.

On the 16th of February, 1888, several attachments against ■ the property of the assignors were issued to the sheriff, and others were afterwards issued to him, but, as found by the

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court, none of them were levied on the property in question until after the sécónd assignment had been recorded and the plaintiff had taken possession.

The sheriff then levied on the property, took it into his .possession, and afterwards, under indemnity from the defendants, sold the same. .The plaintiff thereupon commenced this action against the sheriff for wrongfully seizing and converting the property, and subsequently, on the sheriff’s motion and the consent of the indemnitors, they were substituted as defendants in his stead.

The first question presented on this appeal is whether the assignors, being residents of a state whose laws forbid the making of a preferential assignment and declare the same void, can make a valid preferential assignment in this state. The appellants contend that they cannot, for the reason that the law of the domicile of the assignors controls the disposition of personal property. While this is true as a general rule, there are exceptions to it, and such exceptions are well pointed out in Warner v. Jaffray ( 96 N. Y. 254 ), where Earl, J., delivering the opinion of the court, says : “ It is the general rule that the transfer of personal property is to be governed everywhere by the law of the owner’s domicile, and this rule proceeds on the fiction of law that the domicile draws to it the personal estate of the owner wherever it may be. But this fiction is by no means of universal application, and yields wherever it is necessary for the purposes of justice that the actual situs of the thing should be examined, and always yields when the law and policy of the state where the property is located have prescribed a different rule of transfer from that of the state where the owner lives; and to this effect are all the authorities” (citing a number). It was expressly decided by this court, in Grady v. Bowe ( 11 Daly 259 ), that copartners residing out of this state could make a valid assignment of their property within this state according to the laws of this state. See also Eastern Nat. Bank v. Hulshizer 2 N. Y. St. Rep. 9 ). And this is so, although, as in this case, the preferences in the assignment make it obnoxious to the law of the assignor’s domicile.

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The appellant claims there is a distinction to be drawn between Gr ady v. Bowe a and this case, in that, in the former it was an assignment of specific property situate in this state, and not of all of the assignor’s property; but we can see no difference in principle between the two cases. It was held under the act of 1860 that, inasmuch as the assignment was to be recorded in the county in which the debtors resided, non-resi.dents of the state could not make an assignment under that act. But the act of 1877 inserted a further provision for recording the assignment in the county in which the debtor carried on his business, and this language, we think, evidently contemplates those cases where the assignors live out of the state, and is intended to apply to every transfer of property situate in the state of New York made for the benefit of creditors when the assignor has carried on his business within this state.

The appellant further contends that the assignment of the 17th of February was ineffectual to pass any title to the assignee, in view of the assignment of their property by the instrument of the 14th of February, because by making the latter the copartnership was dissolved. This we think untenable, because the assignment executed on the 14th of February was not in conformity with the general assignment act of this state, in that it was not acknowledged by the assignors, but only proved by a witness, and the accept- ’ anee of the trust by the assignee was not acknowledged by him as required by that act. This rendered that assignment not only voidable, but absolutely void (Hardman v. Bowen, 39 N. Y. 196 ; Britton v. Lorenz, 45 N. Y. 51 ; Smith v. Boyd, 10 Daly 149 ). Being void, it could not operate to convey any title to the assignee, nor could it work a dissolution of the firm, and there was consequently no reason why the assignors could not make and execute a new assignment (Swartz v. Soutter, 41 Hun 323 , affirmed 103 N. Y. 683 ; Juliand v. Rathbone, 39 N. Y. 369 ).

The appellants also contend that the plaintiff could not prove title under the instrument executed on the 17th of February, because the allegations of the complaint were not

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sufficient for that purpose, but upon a careful review of the complaint we think that it sets forth all the allegations necessary to allow such proof.

It was also contended on behalf of the appellants that the several defendants could in no event be held in more than the amount of their undertakings respectively. This question was not raised on the trial, and we think it now too late. But even if taken at the trial we do not think it could prevail in this action, for the defendants were substituted in place of the sheriff by order of this court, on their own consent, and with the consent of all the parties to the action, and the order entered upon that consent expressly provided that they should assume and be responsible for the acts of the sheriff on the levy and for his other acts in relation to the matter, which would make them liable to the same extent that the sheriff was; and from this order'there has been no appeal.

We therefore think the judgment, should be affirmed, with costs.

Larremore, Ch. J., and J. F. Daly, J., concurred.

Judgment affirmed, with costs.

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