Rosenberg v. Block — 1 N.Y. St. Rep. 646

Majority

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Herman Rosenberg and another, respondents, v. Hugo Block and another, appellants.

(Court of Appeals,

Filed April 13, 1886.)

Headnote

1. Assignment fob the benefit of ceeditoes—When its good faith mat

BE ATTACKED—EVIDENCE.

The plaintiff Rosenberg made an assignment in January, 1882, at Richmond, Virginia, owing defendants $1,593. He continued to deal with them from March to August 4th, when lie sent them goods to be sold by them, for the proceeds of which this action was brought. All his dealings had been carried on in the name of “H. Rosenberg,” but in this action he alleges a limited partnership with plaintiff Bottigheimer. Defendants counter-claim the amount due them from him personally, and allege that the partnership was a pretext to cheat his creditors. Held, that it was error for the trial judge on general objection to exclude questions by defendants tending to show that the pretended partnership was resorted to as a mere cover to prevent his creditors from reaching his property.

2. Same.

The claim that defendants could not assail the bona fides of the assignment of R., under the rule that a creditor at large cannot, before reducing his claim to judgment, maintain an action to set it aside as fraudulent, does not apply to this case, as defendants were not seeking to do this; but simply to counter-claim against defendant, and to prove that he was the only party in interest.

Appeal from judgment general term superior court of New York, affirming a judgment entered upon verdict of jury in favor of plaintiffs.

Sami. W. Wise, for appellants, Hugo Block and another.

Theron G. Strong, for respondents, Herman Rosenberg and another.

The jury found, upon evidence which justified the submission of the question to them, that the defendants, when they received'the goods, had notice that

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they belonged to a special partnership, doing business under the name of H. Eosenberg, and were not the individual property of Eosenberg. Upon this finding it is plain that there was no right to set on the individual debt of Eosenberg against the plaintiff’s claim. It is insisted, however, that the trial judge improperly excluded certain questions put to the plaintiff Eosenberg, relating to the disposition, by his general assignee for the benefit of creditors, of the assigned property, under his assignment of January 18, 1882, by which it was sought to prove that the assigned property, in whole or in part, constituted the contribution of the special partner to the capital of the special partnership formed between the assignor, Eosenberg, and his sister, Mrs. Bottigheimer, February 2, 1882. It is also insisted that the judge erred in excluding other questions put to Eosenberg, as to the consideration of the indebtedness of about $4,000, for which Mrs. Bottigheimer was preferred in the assignment, and questions relating to the management of the special partnership, and as to who received the profits of the business.

The defendants in their answer alleged in substance that the alleged special partnership was a mere sham, and that Eosenberg was in fact the sole person interested in the business and assets, and that the pretended partnership was resorted to as a mere cover to prevent his creditors from reaching his property. If these facts had been established, the right of set-off attached. The questions excluded should, we think, have been allowed upon this issue. They were not objected to or excluded upon any suggestion as to the order of proof; but on a general objection, no special ground being specified. If the answer had disclosed that there was no debt owing to Mrs. Bottigheimer from Eosenberg when his assignment was made; that the assigned property was transferred to her by the assignor in pretended payment of this fictitious debt; and that Eosenberg acted nominally as her agent in the transaction, and that immediately thereafter the special partnership was formed, and this property was put in as the capital of the special partner, and that Eosenberg received and appropriated the profits of the business—it cannot be said that these facts were not relevant to the issue tendered by the answer as to the real ownership of the consigned goods.

In passing upon the exception the defendants are entitled to the presumption that the answers to the excluded questions, if allowed, would have tended to establish the facts upon which they relied, and to which the questions pointed. The claim that the defendants cannot in this action assail the bona fides of the assignment of Eosenberg, under the rule that a creditor at large cannot, before reducing his

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claim to judgment, maintain an action to set it aside as-fraudulent, Southard v. Benner ( 72 N. Y., 424 ), is not tenable. The defendants are not seeking to set aside the assignment. Being called upon to pay a debt, they answer that they have a counter-claim against one of the plaintiffs, and that he is the sole party interested in the claim which, is sought to be enforced against them. The assignment has been executed, and we see no principle which precludes the defendants from showing that the property which went into the special partnership was his, and that the pretended transfer by the assignor to Mrs. Bottigheimer was a mere cover for Rosenberg.

For the error in rejecting the answers to the questions referred to, the judgment should be reversed.

All concur, except Rapallo, J., absent.