Feldstein v. Fusco

This action was brought by the plaintiffs on behalf of themselves and other creditors similarly situated of Alexander Fusco to set aside certain sales of personal property by him to the appellant Peters. These sales were three in number and were made in June and July, 1921.

The complaint further alleges that Fusco did not, five days before such sales, give notice to the plaintiffs, and defendant Peters failed to comply with the requirements of section 44 of the Personal Property Law; that by reason thereof the sales were invalid and he was accountable to the plaintiffs and other creditors similarly situated for the goods transferred.

The second cause of action re-alleges the facts set out in the first cause of action and sets forth that .the goods sold, or the greater part of them, were purchased by Fusco upon credit obtained by false and fraudulent representations and that the sales made by him to Peters were made with intent to hinder, delay and defraud his creditors, including the plaintiffs, which fact was well known to Peters at the time of such sales.

The trial court, a jury having been waived, sustained the plaintiffs’ contention as to one of the sales and held that the same was void under section 44 of the Personal Property Law, but that the two other sales referred to in the complaint were valid and not in violation of the statute. It also dismissed the complaint as to the second cause of action.. Judgment to this effect was entered upon the decision, from which an appeal was taken to the Appellate Division, third department. The Appellate Division modified the judgment, holding that one of the sales which the trial court held valid (“ the one made between the 12th and 14th days of July, 1921 ”) was void, since it was “ not made in the regular course of trade, nor in the regular prosecution of the business of the defendant, Alexander Fusco,” and directed the receiver appointed in the action to sell such goods and apply the proceeds in such way as the court might thereafter direct. As to this sale the Appellate Division reversed the findings made by the trial court which were necessary to sustain its judgment and in place thereof found as above indicated. It did not, however, reverse a finding to the effect that on the 10th of July, 1921, and for sometime prior thereto, Fusco was engaged in the business of buying and selling leather, leather goods, findings and supplies for the shoemakers’ trade, and did not have any fixed place of business or any fixtures or stock of merchandise.

The defendant Peters appealed to this court.

It appeared at the trial that Fusco, for sometime prior to the 25th of June, 1921, was a dealer in leather goods and shoemakers’ supplies and was engaged in the business of repairing shoes at St. Johnsville, N. Y., where he had a stock of merchandise and fixtures; that he took a quantity of leather which he had in stock from his business and delivered the same to the defendant Peters under an

The trial court found that on the 25th of June, 1921, Fusco sold to Peters his shoe repairing business' which was described as “ all the stock, fixtures, tools .and machinery, including one Champion stitching machine and finisher, one Singer Sewing Machine, chairs, etc., which are now located and situated in a shoe repairing shop at No. eleven Main street, in the Village of St. Johnsville, Montgomery County, New York.” This is the sale which the trial court held invalid and no complaint is made of the judgment in this respect.

The sale made between the 12th and 14th of July, 1921, which the Appellate Division held invalid, consisted, substantially, of a truckload , of leather. It was. purchased a few days before by Fusco from the plaintiffs in New York city, and possibly from some others, who were wholesale dealers in leather and leather goods. The purchase was made on credit, Fusco representing that he was solvent and was engaged in the business of dealer in leather, leather goods and findings and supplies for the shoemakers’ trade at St. Johnsville, N. Y., which representations were untrue. He was not engaged in business at St. Johnsville, having previously sold his entire stock in trade, including fixtures, to Peters. Nor, so far as appears, was he solvent. The statements made by him to the contrary were not only false, but undoubtedly made for the purpose of cheating and defrauding the persons from whom he purchased the leather. The leather which he purchased he directed to be, and the same was, shipped from New York to Albany, N. Y.,

In view of the finding of the trial court, undisturbed by the Appellate Division, that Fusco did not, at the time the sale was made, have any fixed place of business or any fixtures or stock of merchandise, but that he was simply engaged in the business of buying and selling leather goods, the findings of the Appellate Division do not, in my opinion, support its judgment, and for that reason the judgment must be reversed. There is no finding that this truckload of leather was a part of any stock of merchandise, nor is there a finding that Fusco had any fixed place of business. The findings, so far as any were made by the trial court bearing on this subject, were to the contrary. Fusco was engaged in the business of buying and selling leather. He did not have any fixed place of business nor did he have any fixtures or stock of merchandise. He obtained title to the leather when he made the purchase. Having obtained title, he had the legal right, upon the facts set out in this record, to transfer such title by a sale. The sale certainly was not void. If it were made with intent to hinder, delay and defraud creditors, then it could be set aside in a judgment creditor’s action. In such an action a judgment not only had to be recovered, but an execution issued and returned unsatisfied before the action could be maintained. The recovery here sought is not upon the theory" of a judgment creditor’s action, which obviously could not be maintained, but solely under section 44 of the Personal Property Law.

The findings as made by the Appellate Division do not

His cock, Ch. J., Cardozo, Pound, Crane, Andrews and Lehman, JJ., concur.

Judgments reversed, etc.