Fay v. Grant

This action was brought by the plaintiff as assignee of Marshall, Lefferts & Co., under a general assignment for the benefit of creditors, to recover possession ot personal property taken by the sheriff on attachment, in five suits against Lefferts & Co., by the defendants, Lissberger and Schultz, upon an indemnity given by them to the sheriff. The defense was that the assignment was fraudulent. The charges of fraud were submitted to the jury, and no complaint is made as to the manner in which these questions were presented to the jury, and the only exceptions which raise the questions argued upon this appeal, arise upon the denial of the motion to dismiss the complaint upon the termination of the plaintiff’s case, and upon the refusal of the learned judge to charge the requests of the defendant.

Various other questions are argued upon the points of the defendant, but they do not appear to have been raised by

The grounds upon which the defendants claimed a dismissal were, that the evidence showed a withdrawal of moneys for the personal use of the assignors after the assignment had been determined, and in contemplation thereof, and a withholding of money from the assignee, which withdrawal and withholding is entirely unexplained.

It appears that immediately prior to the making of the assignment, the co-partners drew $557.30 from the funds of the firm, because they had nothing to live upon. It was testified to by the assignors, that in making this disposition of the money they had no intention to cheat their crditors, and that the amount was less than one per cent of the actual assets of the firm, and that as soon as the assignee learned of this appropriation of the money, he made a demand upon the assignors, and the same was returned. The question presented is, whether as matter of law upon the evidence in this case, fraud was established. It is said by all the cases cited, that fraud is a matter of fact, although from certain facts a presumption of fraud must necessarily arise. Under circumstances like those in the case at bar, it was held in Shultz v. Hoagland ( 85 N. Y., 464 ), that unless a fraudulent intent is established, at the time of the execution of the assignment, it cannot be set aside, and that facts which are, when taken together and aggregated, consistent with an honest intent, cannot form the basis of an allegation of fraud. Acting upon the rule as thus laid down, the learned judge correctly decided that this was not a question of law upon which he could pass, but that it should be submitted to the jury for their consideration.

He submitted the question clearly and distinctly to the jury, and the question presented to them was whether this amount was dishonestly and with the fraudulent purpose of benefiting the assignors at the expense of the creditors, retained by the assignors. And they were instructed that if they found that there was a fraudulent purpose in this-particular that it would vitiate the entire assignment. The jury found no such fraudulent intent; and that this money was taken in entire good faith by the assignors. And upon this finding we cannot say as matter of law that from the simple facts proven, a fraudulent intent necessarily followed the taking of this money for the purposes to which the assignors have testified-

These questions of fraud are peculiarly such as should be passed upon by the jury, and if any inference consistent; with good faith can be drawn from the testimony, it is the duty of the court to submit such a question to the jury If this question had been tried before the court without a jury, and the court had found upon the evidence that such fraudulent intent existed, it may be that such a finding

The only other question presented by the exceptions is to the refusal of the request to charge that as a number of promissory notes forming a part of the claim preferred in favor of the plaintiff in the assignment, were not paid and retired from the banks that held and owned the same, until the maturity of the notes, several months after the execution of the assignment and as a prompt compliance of the assignee with the directions contained in the assignment in so far as he was therein directed to pay, would of necessity have resulted in an improper diversion of the funds, and the unqualified direction in the assignment to make such disposition of the funds of the estate was, therefore, invalid and rendered the assignment void in law.

This proposition is claimed to be established by the evidence showing that certain notes which had been delivered by Lefferts to Fay for borrowed money had been discounted by Fay in several banks, which fact was not known to the assignors at the time of making the assignment. This clearly was no fraud upon the creditors. It was intended to prefer the claim of Fay, and simply because the notes given to him for security, and which he had endorsed upon being discounted in the banks, were not in his possession at the time the assignment was made did not indicate a fraudulent intent, nor was a fraudulent, preference established thereby; and the court, therefore, was justified in refusing to charge that simply because Fay had parted with the notes upon which he was liable to the persons who had discounted them, and that too without the-knowledge of the assignors, that' the assignment thereby became fraudulent.

It was further claimed, in support of the motion for a new trial, that the assignors, although knowingly insolvent for years, in anticipation of the assignment, bought an extra quantity of goods immediately prior to the assignment, and this was not explained. There was disputed evidence upon this point. Explanations were given by the assignors in regard to these purchases, and different deductions were drawn from the transactions in regard to the purchases made by the assignors during the period anterior to the insolvency. The question was laid before the jury, as to whether the purchases were made with any fradulent intent or with the ultimate purpose of making an assignment •with preferences, whereby the goods might be disposed of for the purpose of paying their preferred creditors; and the jury found that the evidence did not justify any such conclusion, and we see no reason for disturbing their finding.

There was some question raised upon the point, in re

All the questions involved were simply questions of fact; the evidence was of that character as to which different •conclusions might be drawn, and as the question of intent is the question which underlies the whole transaction, and as a fraudulent intent must be made out, the jury were justified in coming to. the conclusion which they did. The labor in the the examination of this case has been greatly magnified by the totally inadequate index; not a single ■exhibit being indexed.

We are of the opinion that there were no errors appearing in the record which call for a reversal, and that the judgment and order must be affirmed, with costs.

Bartlett, J. concurre.