Beattys v. Straiton

Before proceeding to discuss the questions which we-consider decisive of this appeal, it may not be amiss to call attention, to the fact that the appellants’ brief has been of no assistance to the court because the statements of fact do not have any folio references to the record, and we have been unable to find in the record support for some of them.

There is a suggestion in the brief of the respondent that the instrument,‘adjudged fraudulent and void, amounted to an unlawful preference within the bankruptcy act (Act July, 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, c. 3418]), but it is quite apparent that that question has not been litigated. The plaintiff’s theory, stated at the commencement of the trial, was that the assignment was voluntary and was-made when the said Martin V. Cook was insolvent, and was therefore fraudulent and void as to creditors. The case was tried upon that theory, and the judgment so adjudges. No attempt whatever was made-to prove actual fraud or an intent to create an unlawful preference. The plaintiff rested upon proof of the adjudication of bankruptcy and; of the fact that the financial condition of the bankrupt had remained the same for upwards of a month preceding that time.

The learned counsel for the respondent ingeniously argues that the legacy to Christine Straiton, charged upon the bequest to Martin V. Cook and Arthur E. Helmrich, created no lien upon the assets of thecopartnership, for the reason that the testator had an equitable interest only; that, by continuing the firm business, the survivors' did not accept the bequest or become liable to pay the charge thereon; that therefore, when the instrument in question was made, Martin v. Cook was under no obligation to pay the legacy of $5,000 to his sister, and1 that she had no interest, lien, claim or charge upon the firm assets or business which she could assign. No doubt, the legal title to copartnership assets passes to the survivors. But that does not preclude us from-giving effect to the will of the testator. While the surviving partners-took title for the purpose of liquidating the copartnership, it is quite evident that they accepted the bequest and continued the business, not as survivors but as successors to the old firm. Moreover, it appears-that the bequest was of individual property as well as of the testator’s-interest in the copartnership. While the record- is meager of facts, showing the condition of the business at the déath of said testator and

But in any view of the case, the statute of limitations is a bar to' the maintenance of the action. At least as early as December 17, 1900,. the plaintiff was chargeable with knowledge of the assignment and of the consideration for it. But it is claimed that he did not know that the said Martin V. Cook was insolvent on the 29th day of September, 1900, although he knew that there was an adjudication of bankruptcy in the United States District Court on the 15th of October, 1900. The plaintiff knew every fact upon which he relied to maintain this action except the fact that the financial condition of said Cook remained unchanged for at least a month prior to the adjudication in bankruptcy, and we-think he was chargeable with that knowledge, as matter of fact, if not as matter of law. The respondent is quite right in saying that he was not required to bring, and probably would not have been justified in bringing, an action on mere surmise or suspicion, and that the statute does not begin to run until knowledge of the facts, necessary to maintain the action, is acquired. Erickson v. Quinn, 47 N. Y. 410 . But surely, a voluntary assignment on September 29th, if it was voluntary, followed by an actual adjudication of bankruptcy on October 15th, should give rise to more than a suspicion of insolvency on the 29th. While an adjudication of bankruptcy on a given date would not create any presumption as to insolvency on a given date prior thereto, proof of an assignment, followed by such an adjudication within two weeks, would at least be sufficient, if unexplained, to justify a finding of insolvency at the time of the assignment. While knowledge is necessary to set the statute running, a party cannot close his eyes to facts upon which any reasonable man would act. It is claimed that the plaintiff did not acquire knowledge of the said Cook’s insolvency until the latter testified in May, 1903, in the action brought by William Cook, as trustee ; but in his verified answer, interposed in that action, he made precisely the same claim which he now asserts in this action, and there is no pretense that he had any more knowledge when he verified that answer in March, 1903, then he had, or was chargeable with, on the 17th of December, 1900. The said testimony had not then been given.

Upon the facts disclosed by this record, then, the action was barred on the 17th of December, 1906, 2 years 4 months and 14 days before it was brought, unless some part of that time is to be excluded pursuant to section 412 of the Code of Civil Procedure. With respect to the action in which this plaintiff’s counterclaim was interposed, all we know is that it was pending on March 24, 1903, when the answer uvas verified, and that it terminated June 26, 1903. It can hardly be supposed that the action was pending more than two years before the answer was

The judgment should be reversed on the law and the facts, and a new trial granted, with costs to appellant abide the event.

INGRAHAM, P. J., and McLAUGHLIN, J., concur.

(dissenting). Upon the record it would seem that the transfer in question was a purely voluntary one. There is no proof -of any absolute acceptancé by either Martin V. Cook and Arthur E. 'Helmrich, or by Cook after the latter’s death, of the bequest of the interest of Valentine Cook, Sr., in the firm, charged with the payment of the legacies to Christine Straiten and William Cook. The mere fact that the business was continued by the surviving partners did not constitute such an acceptance, for that was their right and duty as survivors ; nor is there any proof that they ever realized any profit from the interest so bequeathed, or in any way treated it as their own. All that the legatees could claim, as it seems to me, was the payment of -their legacies from the interest so bequeathed, if, upon an accounting, it was found that there was a surplus after the satisfaction of the firm debts, and then to the extent only that the interest of the testator in -the firm was found able to respond to their claims.

Furthermore, I do not believe that the statute of limitations had barred the plaintiff’s right to recover. It is quite true that on December 17, 1900, the plaintiff, through his attorney, knew that the transfer in ■question was a voluntary one, for on that day it was offered in evidence on behalf of plaintiff by his attorney in the bankruptcy proceedings. But it seems quite clear that plaintiff did not then know the other ■essential fact that at the time of making such transfer Cook was insolvent. Upon the proof the first time that plaintiff had reason to believe that fact was when he interposed his counterclaim in the suit of Cook v. Straiten on March 24, 1903, wherein he alleged, upon information and belief, practically the same facts as he sets-up in his complaint in this action. Upon the trial of that action on May 7, 1903, Martin V. Cook for the first time was examined as to his financial condition, and he then admitted for the first time that although his petition in bankruptcy had been filed October 15, 1900, he had been insolvent for a month prior thereto, and had been engaged in preparing the schedules for a week or ten days before the petition was filed. The transfer in question bore date September 21, 1900. Plaintiff testified that he had no knowledge of the matters in controversy save as he acquired it through his attorney, and the latter testified that he first knew on May 7, 1903, of Cook’s insolvency at the time of making the transfer. It

I believe, therefore, that the judgment appealed from should be affirmed, with costs.

LAUGHLIN, J., concurs.