Smith v. Payne — 21 N.Y. St. Rep. 462

Majority

p. 462

Alfred H. Smith et al., Resp’ts, v. Mary L. Payne et al., App’lts.

(New York Superior Court, General Term,

Filed February 3, 1889.)

Headnote

Assignment—Right to assail judgments bests in assignee and not in CBEDITOBS.

While an assignment for the benefit of creditors remains in force, the-right to assail prior judgments and executions recovered against an assignor, on the ground that they are fraudulent as against creditors, rests, not in the creditors themselves, hut in the assignee.

Appeal from an order made at special term, continuing-an injunction pendente lite.

L. Laflin Kellogg, for app’lts; Franklin Bien, for resp’ts.

The plaintiffs. allege that the defendants, William H. Payne and Frederick D. Steck, were indebted to them and others, in various amounts; that they, the plaintiffs, commenced various actions to recover such amounts, and that they obtained "attachments against said defendants, William H. Payne and Frederick D. Steck, which attachments were duly issued to the sheriff of the city and county of New York; that prior to the commencement of said actions, and to the issuing of said attachments, the said defendants, William H. Payne and Frederick D. Steck, confessed judgments to the defendants, May L. Payne, Augusta L. Bamber and Louise Nellie; that executions were issued on said judgments to the sheriff of the city and county of New York; who thereupon levied upon all the property of the said defendants, William H. Payne and Frederick D. Steck; that thereafter said Payne and Steck, made and executed -a general assignment to one Arthur H. Smith; that said judgments were fraudulently confessed, and that said assignment was made with the intent to hinder, delay and defraud the creditors of said William H. Payne and Frederick D. Steck, and that the executions issued on said fraudulent judgments are liens, and said assignment is an incumbrance on the property of said Payne and Steck prior to the liens of the attachments, as aforesaid, in behalf of the plaintiffs; that the sheriff is about to pay to the said judgment-creditors the money ,made by him on the executions issued on said fraudulent

p. 463

judgments, and the relief demanded is that the said defendants, May L. Payne, Augusta L. Barnber and Louise Nellie, be enjoined from receiving, and the said sheriff be ■enjoined from paying to them the money made on said executions “until the plaintiffs herein are enabled to obtain their judgments on the claims brought by them, on which attachments were issued, as aforesaid, in order to determine the validity of the judgments upon which the executions were issued to the sheriff in favor of the defendants, as aforesaid.”

It is to be noticed that the general assignee is not made a party to this action, and that as far as this action is concerned said general assignment remains in full force and effect.

The defendants, the judgment-creditors above named, deny the allegations of fraud but admit the general assignment. We do not, however, consider it necessary to determine on this appeal the questions of fraud or the confessions of judgment. We cannot determine the questions of fraud as to the assignment, because the assignee is not a party to this action.

On the argument of this appeal the plaintiffs relied on the case of Bates v. Plonsky ( 28 Hun, 112 ). That case differs from the case now before us in a very material respect. In that case, as in this, there were judgments, executions and an assignment, which were all alleged to be fraudulent and void, but in that case the assignee was made a party, and part of the relief asked was that it be adjudged that the plaintiffs had a lien prior to the claim of the assignee. But even that case was limited by the same court in the subsequent case of Bowe v. Arnold ( 31 Hun, 256 ).

We are of the opinion that the plaintiffs are not in a position to assail the prior judgments and executions as long as the general assignment remains in force. They .have alleged the making and recording of the assignment, and have made the assignment itself a part of their moving papers. As long as that assignment remains in force, the right to assail the judgments and executions on the ground that they are fraudulent against creditors rests not in the creditors themselves, but in the assignee (Loos v. Wilkinson, 110 N. Y., 195 -209; 18 N. Y. State Rep., 110, and cases there cited), and the assignee is liable for a negligent omission to assail fraudulent transfer made by the assignor prior to the assignment. In re. Cornell, 110 N. Y., 351 ; 18 N. Y. State Rep., 200.

The order appealed from is reversed, with costs, and the injunction is vacated, with ten dollars costs.

Sedgwick, Ch. J., and Ingraham, J., concur.