National Park Bank v. Whitmore

The attachment herein was granted on the 31st day of December, 1885, and a levy made under it on the property of the defendants on the afternoon of that day. On the second of January the defendants united in an assignment of their firm and individual property for the benefit of their creditors, which was filed on that day.

The attachment was granted upon affidavits presenting what were supposed to be sufficient reasons to justify the •conclusion that the defendants were about to make an assignment or dispose of their property with the intention of defrauding their creditors. The defendants moved to vacate the attachment upon the affidavits of two of the defendants, and the motion was heard upon these and affidavits read in opposition, and granted.

The respondent assails the affidavit read on plaintiff’s behalf, stating the indebtedness, upon the ground that it does not contain the allegation required by section 636 of the Code of Civil Procedure, namely, that the plaintiff is

In the case of the Marine National Bank of New York v. Ward ( 35 Hun, 398 ), it was said by Davis, P. J., expressing the opinion of the court, that the affidavit in this respect might undoubtedly be made by an agent of the plaintiff, or an officer of the corporation to whom the facts were personally known, or where the information was based upon such facts disclosed by evidence as would show satisfactorily that the plaintiff was entitled to recover the sum stated over and above all counterclaims known to the plaintiff and the affiant. It was also held in that case, it is true, that it was not enough for the agent or officer to make the statement simply upon information and belief without showing whence and from whom his information, was derived, and why the affidavits of the informants were not produced.

This case entirely differs from that in the respect to which attention has already been called, namely, that there is an affirmative declaration on the part of the assistant cashier, that the sum claimed is due over and above all counterclaims known to the plaintiff. There are averments of some acts tending to establish the proposition of a contemplated sale by the defendants of their property with intent to hinder and delay their creditors, which rest chiefly upon information and belief, and which are not perhaps sustained by confirmatory affidavits; but it is not necessary to give them examination inasmuch as the conclusion arrived at in reference to one feature of the case renders-’ that ceremony unnecessary.

It appears from the assignment made by the defendants-that the Whiting Paper Company was preferred in it for an amount asserted to be due. The plaintiff, in the moving affidavits, had charged that the defendants had agreed, in the event of an assignment, to prefer William Whiting, who was spoken of as the company, and were using threats of such a preferential act to coerce their creditors into a favorable compromise. To this the defendant Whitmore, responded, and while he emphatically denied the use of any threats, admitted that the deponent’s firm had made an. agreement with the Whiting Paper Company to the effect that, in the event of an assignment becoming necessary to protect the property of the firm, that company should be preferred to the amount of the stock so furnished and unpaid for.

This is analogous to the principle announced in the case of Potts v. Hart ( 99 N. Y., 168 ), in which it was declared that a chattel mortgage was fraudulent and void as to creditors, where it was given with a tacit or express understanding and arrangement that the mortgagor might sell and dispose of the mortgaged property and apply the avails, to his own use.

It is also analogous to the familiar proposition that a creditor who signs a composition deed for his debtor cannot, by any secret agreement with the debtor, preserve the entire indebtedness or acquire any superior advantage, when by the composition deed he agrees with others to-take a portion of it only in full discharge.

The legal proposition affecting the integrity of the assignment, and intended to be declared hereby, is that the-debtor will not be permitted, at or before the time the debt is created, by a secret tacit agreement or understanding with any one or more of his creditors to make an engagement in reference to his property, by which their debts shall, in case of emergency, be preferred under any and all circumstances, and by such an arrangement in effect place a secret mortgage upon his assets.

The only possible answer to this doctrine is that such an agreement could not be enforfced by the creditor. But this view is not responsive in a case where the agreement has assumed a positive form by which the debtor has carried it out and the creditor has taken advantage of it, as appears in this case.

The answer might have some force if the plaintiff had made the arrangement, and was insisting that the assignment was fraudulent, because of the failure of the assignor to keep his promise with it. In other words, whilst the

The levy having been made before the assignment was executed, and the latter containing a fraudulent element, in accordance with the previously existing arrangement or agreement, that instrument itself furnishes the evidence of an intention to assign and dispose of property fraudulently and with a view to defraud the creditors.

The application of this view is new, but it has been invoked by the learned cousel for the plaintiff in an able and elaborate argument. It rests on sound doctrine, as he has demonstrated, and is unquestionably sustained upon the proposition of fair dealing between man and man.

For these reasons the order appealed from should be reversed, and the motion to discharge the attachment •denied, with ten dollars costs.

Daniels, J., concurs.