Levyv v. James — 16 N.Y. St. Rep. 762

Majority

p. 762

Samuel Levy et al., App’lts, v. Thomas L. James, Impleaded, etc., Resp’t.

(Supreme Court, General Term, First Department,

Filed June 19, 1888.)

Headnote

1. Assignment fob benefit of cbeditobs.

A party accepting the benefits of an instrument cannot attack the same unless it is made to appear that such acceptance was made in ignorance of facts which justify the granting relief against the same.

2. Same—When creditor estopped from attacking.

After the creditors of a debtor who has made an assignment for the benefit of creditors have accepted the assignment and called upon the assignee to carry out the trust therein contained, they cannot attack its validity.

p. 763

Appeal from judgment entered at special term dismissing the plaintiff’s complaint.

L. S. Phillips, for app’lts; Stern & Myers, for resp’t.

In September, 1883, the firm of F. Meyer & Co., composed of Ferdinand Meyer and Benjamin Meyer, by one instrument, made a co-partnership and individual assignment for the benefit of their co-partnership and individual creditors.

Certain judgment creditors of the firm brought equity actions to set aside the assignment upon the ground that it contained a preference of a fictitious debt and prevailed. The plaintiffs herein were judgment creditors of Ferdinand Meyer alone, and after the decision made in the said co-partnership creditors’ action above referred to, sent the following notice to the assignee: “You will take notice that the undersigned, being individual creditors of Ferdinand Meyer above named, do hereby accept and ratify the assignment of his individual property made by the said Ferdinand for the benefit of his individual creditors, of which estate you are now substituted assignee, and that they will hold you accountable for their pro rata share of and in said individual estate.”

Subsequently the plaintiffs brought this action to have this assignment declared void as to them.

Upon the trial of the action the plaintiffs’ complaint was dismissed upon the ground that, after having accepted the assignment, and called upon the assignee to carry out the trust therein contained, they could not attack its validity. This conclusion seems to be entirely correct. The question involved is precisely of the same character as though the plaintiffs had upon the assignment itself signified their acceptance of its provisions for their benefit; and it is a well-settled rule that a party accepting the benefits of an instrument cannot attack the same unless it is made to appear that such acceptance was made in ignorance of facts which justified the granting relief against the same.

In the case at bar the plaintiffs do not claim to have discovered any new facts, but it would appear that they had been advised at the time that this notice was given that a fraudulent preference contained in the assignment did not vitiate the whole instrument, but only so far as it related to the copartnership estate, and that the individual assignments of individual estates remained in full force and effect.

It would appear that subsequently, and prior to the commencement of this action, they had changed their mind in reference to the law as applicable to the facts of which they were well aware, and that they had come to the conclusion that an instrument which was partially void, was necessarily void as a whole, and hence the bringing of this ac

p. 764

tion. The ground upon which the appellants seem to base their appeal is that because no estoppel has been worked,, the plaintiffs therefore were not prohibited from changing their position, but the question does not rest at all upon the doctrine of estoppel. It rests upon the fact that the plaintiffs have formally, deliberately, and in writing, accepted the provisions made for them in the instrument in question. They have thereby made themselves parties to it, and the fact that the assignment is under seal, and the acceptance not under seal, in no way alters this proposition. Having accepted the provisions of the assignment for 'them, ana having called upon the assignee to perform his duties as such assignee, the plaintiffs have elected the course which they would pursue, and, having made that election, they cannot be permitted to recede unless such election was made under a mistake of fact.

There is no question of estoppel, and therefore the rule as applicable to estoppel cannot apply.

The judgment should be affirmed with costs.

Brady and Daniels, JJ., concur.