Sweetser v. Smith — 20 N.Y. St. Rep. 62

Majority

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Sweetser, Pl’ff, v. Smith, Def’t.

(Supreme Court Chambers, New York County,

Filed January 14, 1889.)

Headnote

1. Assignments—Voluntary conveyances made at same time—When CREDITOR MAY BRING SUIT.

. Voluntary conveyances made contemporaneously with the making of a general assignment are to he regarded as part of the assignment, and if" the preferences thus given, are void in whole or in part, the assignee may maintain an action to prevent the enforcement of such conveyances or liens, and if he neglects to do so, a creditor as a cestui que trust under the assignment may bring suit to preserve the property in aid of the assignment.

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2. Same—When conveyances and assignment to be considered as one. TRANSACTION.

The confession of seventeen judgments and the delivery of three chattel mortgages on the morning of the assignment may will he regarded as forming part of one transaction with the execution of the assignment.

It has been held in this district, in several special term cases (Reisner v. Cohn, May, 1888; Third National Bank v. Clark, and Spellman v. Soussman, October, 1888), that voluntary conveyances, made contemporaneously with the making of a general assignment, are to be regarded as part of the assignment, and if the preferences thus given are void, in whole or in part, the assignee may maintain an action to prevent the enforcement of such conveyances or liens, and if he neglects to do so, a creditor, as a cestui que trust under the assignment, may bring suit to preserve the property, in aid of the assignment. This action is brought on the theory mentioned, and the allegations of the complaint are apt for the purpose. The confession of the seventeen judgments and the delivery of the three chattel mortgages were all done on the morning of the day of the assignment, and on the facts proven may well be regarded as forming part of one transaction with the execution of that assignment.

The assignee has substantially refused to bring the suit. The demand was made, and his procrastination upon the pretexts, stated in his letter, may well be considered an effort to postpone committing himself to any course of action until the day of sale under the levies should have passed. His position as chashier of the bank, and as assignee, cast upon him a decided duty, and called for a prompt, immediate and direct response to Mr. Stiles’ demand. But for bringing this suit the very consequences sought to be averted would probably have taken place, and the plaintiff’s rights would have been lost. The serious question involved is as to the plaintiff’s having a claim to be protected as cestuis que trustent. By proceeding with their replevin suit they disaffirmed the contracts of sale, and cannot claim to be creditors entitled to bring this action on the basis of that indebtedness. Morris v. Rexford, 18 N. Y., 552 ; Kenney v. Kiernan, 49 N. Y., 164 ; Moller v. Tuska, 87 N. Y., 166 .

A claim for unliquidated damages, or in tort, is not a debt to be paid by an assignee of an insolvent (Kellogg v. Schuyler, 2 Denio, 73 ; Crouch v. Gridley “ 6 Hill, 250 ; see also in re Adams. 15 Abb. N. C., 61 ), and the deed here refers to the-payment of debts and liabilities, meaning only such as are due and payable at the date of the instrument, or are expressly provided for therein

Powers v Benedict, ( 88 N. Y , 610 ) decides nothing to the contrary and is not an authority for the broad propo

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sition claimed by the plaintiffs. It merely holds that by bringing one replevin suit, a party is not precluded from following property or its proceeds not taken on the process in the first suit into the hands of other persons, and that an action for damages or in trover will lie for the value of the untaken property. The reference made to proof of claim in that case as not affecting the right of the plaintiff to maintain that particular action, must be understood as relating only to the terms of the national bankrupt act which, by an express provision (sec. 5067, U. S. R. S.), permits «proof of claims for damages for conversion, etc.

But there appears to be an indebtedness of the assignors to the plaintiffs here, named in the schedule to the assignment and specifically stated at the sum of $2,017, and its consideration is referred to as a particular kind of merchandise. I do not understand the addendum after the name Sweetser, Pembrook & Co., in the column of creditors to apply to anything more than the $5,000 referred to in connection with the replevin suit, and hence this action may be maintained as the indebtedness admitted in the schedule to be a contract debt. This is not a case in which the full security on staying- a judgment pursuant to section 613, Code Civil Procedure is required. That section does not apply to a case of this character Packer v. Nevin ( 67 N. Y., 550 ). The motion to continue the temporary injunction until final hearing, is granted.

The motion for change of venue must also be granted. The judgments affect real estate in Saratoga county, and the action is local. It is too late now for the plaintiffs to reform their action and change its character, even if they could do so. They must do what would be required of the assignee, viz.; seek full and not partial protection for the assigned estate, and it is doubtful if they can be permitted now to abandon any part of the necessary relief; At all events the character of the action cannot be changed by a disclaimer or stipulation or concession of one side only so as to make it triable in any other county than that in which the real estate is situated (Acker v. Leland ( 96 N. Y , 383 ; Wyatt v. Brooks, 42 Hun, 502 ).