Smedley v. Smith — 28 N.Y. St. Rep. 414

Majority

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Frederick G. Smedley, Assignee, Resp’t, v. George V. Smith et al., App’lts.

(New York Common Pleas, General Term,

Filed December 19, 1889.)

Headnote

1. Assignment for creditors—Assignors residing in other states.

Co-partners and others doing business in this state, but who reside in a, state whose laws forbid the making of a preferential assignment and declare the same void, may make a valid preferential assignment in this state.

2. Same—Void assignment conveys no title and does not prevent

MAKING OF A NEW ONE.

The assignment first delivered was not acknowledged by the assignors-nor was the assignee’s acceptance acknowledged by him. Held, that such assignment was absolutely void, and did not pass title or work a dissolution of the firm, so as to prevent the making of a valid assignment thereafter.

• Appeal from a judgment against defendants for $15,760.24, entered on the decision of the court on a trial .without a jury.

Arthur Furber, for app’lts: Wm. F Mao Mae, for resp’t.

The plaintiff is the general assignee of the-firm of W. I. Negus & Co., lately doing business in the city of New York. It was composed of William I. Negus and William B. 0. Carpenter, both of whom resided in New Jersey, where they owned real and personal property.

On the 14th of February, 1888, they executed an instrument, purporting to be an assignment of all their property to the plaintiff for the benefit of creditors. This instrument was delivered to the plaintiff and by him recorded on the next day, but was not acknowledged by the assignors nor by the assignee as required by law. To cure this defect, a new assignment dated on the 14th of February, 1888, was executed and acknowledged, and delivered to the plaintiff as assignee on the 17th of that month and was by him recorded the same day.

Both assignments contained preferences, which were forbidden by the laws of New Jersey. The assignee took possession of the property of the assignors under the first assignment, and held it .under the second until it was taken from him by the sheriff.

On the 16th of February, 1888, several attachments against the property of the assignors were issued to the sheriff, and others were afterwards issued to him, but, as found by the court, none of them were levied on the property in question until after the second assignment had been recorded and the plaintiff had taken possession.

The sheriff then levied on the property, took it into his possession, and afterwards, under indemnity from the defendants, sold the same. The plaintiff thereupon commenced this action against the sheriff for wrongfully seizing and converting the property, and subsequently, on the sheriff’s motion and the consent of the indemnitors, they were substituted as defendants in his stead.

The first question presented on this appeal is whether the ■/assignors, being residents of a state whose laws forbid the making

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of a preferential assignment and declare the same void, can make a valid preferential assignment in this state. The appellants contend that they cannot, for the reason that the law of the domicil of the assignors controls the disposition of personal property. While this is true as a general rule, there are exceptions to it, and such exceptions are well pointed out in Warner v. Jaffray, 96 N. Y., 254 , where Earl,-J., delivering the opinion of the court, says: “ It is the general rule that the transfer of personal property is to-be governed everywhere by the law of the owner’s domicil, and this rule proceeds on the fiction of law that the domicil draws to it the personal estate of the owner wherever it may happen to be. But this fiction is by no means of universal application, and yields whenever it is necessary for the purposes of justice that the actual situs of the thing should be examined, and always yields when the law and policy of the state where the property is located have prescribed a different rule of transfer from that of the state where the owner lives ; and to this effect are all the authorities.” (Citing a number.) It is expressly decided by this court in Grady v. Bowe, 11 Daly, 259 , that copartners residing out of this state could make a valid assignment of their property within this state according to the laws of this state. See also Eastern N. B. v. Hulshizer, 2 N. Y. State Rep., 92. And this is so although, as in this case, the preferences in the assignment make it obnoxious to-the law of the assignor’s domicil.

The appellant claims there is a distinction to be drawn between Grady v. Bowe and this case, in that, in the former it was an assignment of specific property situate in this state, and not of all of the assignors’ property; but we can see no difference in principle between the two cases. It was held under the act of I860' that inasmuch as the assignment was to be recorded in the county in which the debtors, resided, non-residents of the state could not make an assignment under that act. But the act of 1877 inserted a further provision for recording the assignment in the county in which the debtor carried on his business, and this language, wb think, evidently contemplates those cases where the assignors live out of the state, and is intended to apply to every transfer of property situate in the state of New York made for the benefit of creditors when the assignor has carried on his business within this-state.

The appellant further contends that the assignment of the 17th of February was ineffectual to pass any title to the assignee, in view of the assignment of their property by the instrument of the 14th of February, because by making the latter the copartnership was dissolved. This we think untenable, because the assignment executed on the 14th of February was notin conformity with the general assignment act of this state in that it was not acknowledged by the assignors, but only proved by a witness, and the acceptance of the trust by the assignee was not acknowledged by him as required by that act This rendered that assignment not only voidable, but absolutely void. Hardmann v. Bowen, 39 N. Y., 196 ; Britton v. Lorenz, 45 id., 51; Smith v. Boyd, 10 Daly, 149 . Being void, it could not operate to convey any title to the

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assignee, nor could it work -a dissolution of the firm, and there •was consequently no reason why the assignors could not make and execute a new assignment. Schwartz v. Soutter, 41 Hun, 323 ; 2 N. Y. State Rep., 633; affirmed 103 N. Y., 683 ; 4 N. Y. State Rep., 288; Juliand v. Rathbone, 39 N. Y., 369 .

The appellants also contend that the plaintiff could not prove title under the instrument executed on the 17th of February, because the allegations of the complaint were not sufficient for that purpose, but upon a careful review of the complaint we think that it sets forth all the allegations necessary to allow such .proof.

It was also contended on behalf of the appellants that the several defendants could in no event be held in more than the amount of their undertakings respectively. This question was not raised on the trial, and we think it now too late. But even if taken at the trial we do not think it could prevail in this action, for the defendants were substituted in place of the sheriff by order of this court, on their own consent, and with the consent of all the parties to the action, and the order entered upon that consent expressly provided that they should assume and be responsible for the acts of the sheriff on the levy and for his other acts in relation to the matter, which would make them liable to the same extent that the sheriff was; and from this •order there has been no appeal.

We, therefore, think the judgment should be affirmed, with costs.

Larremore, Oh. J., and Daly, J., concur.