Davis v. Harrington — 28 N.Y. St. Rep. 909

Majority

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Benjamin H. Davis et al., Resp’ts, v. James D. Harrington et al., App’lts.

(Supreme Court, General Term, Fifth Department,

Filed December 30, 1889.)

Headnote

Assignment for creditors — Frauds preceding render assignment VOID.

■ Prior to the making of a general assignment the defendants disposed of a large quantity of their stock in payment of a fictitious debt, and purchased large quantities of diamonds which they pledged for much less than their value. Held, that' such acts were inseparable from the execution of the assignment and must be deemed a part of the general fraudulent purpose of the assignors and that the assignment was thereby rendered void.

Appeal from a judgment entered upon the decision of the Monroe equity term, setting aside a general assignment for the "benefit of creditors made by the defendant Harrington to the defendant Yost, on the ground that the same was made with intent to defraud creditors.

Henry M. Hill, for app’lts; David Hays, for resp’ts.

The principal contention in behalf of the ap-l pellants is that the findings of the learned trial judge, Nos. 6, 7; and 8, are unsupported by the evidence. These findings are in’ brief that shortly previous to the making of the assignment by the' defendant Harrington to the defendant Yost, and in preparation1 thereof, Harrington bought a large quantity of diamonds which he pledged for money borrowed to various persons at much less than1 their value; that Harrington also, just before making the assign-! ment, disposed of large quantities of his stock of goods to one* Myers, in payment of a pretended but fictitious debt from Har-j xington to Meyers; that the assignment was made by the defend-! ant Harrington and was received by the defendant Yost with the’ intent to hinder, delay and defraud Harrington’s creditors.

In respect to the sixth finding the argument is that the evidence ■does not show, as such finding alleges, that in ^Reparation of such assignment Harrington bought from other persons than the parties - to this action about $7,000 worth of diamonds. This finding, as contained in the printed record, is incorrectly given, the result doubtless of careless copying. Ón examination of the original judgment-roll, which we have caused' to be produced, it is ascertained that the gross amount of $7,000 includes the purchases from the plaintiff Davis, and is correct. This technical error in the finding, as printed in the case, is wholly unimportant, because even if it was so contained in the decision as filed, it was not excepted to by the appellants, nor was there any request to the learned judge to find differently upon the testimony.

We have made a protracted examination of the printed record and are not able to saj'-that the learned judge at the trial has failed to follow a clear preponderance of the evidence adduced upon the main questions.

A discussion of the evidence in detail would require more space than is commonly allotted to an opinion upon appeal from this class of cases. The plaintiffs assumed from the beginning

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the duty of satisfying the judicial mind, by a fair preponderance of the evidence, though not by demonstration, that fraud on the part of the assignor was designed and was actually perpetrated in his scheme to make large purchases of diamonds and to realize upon the same such moneys as he could obtain therefor, and then turn over to his assignee the mere shell of his property. The-claim that the assignor cannot be proceeded against by defrauded creditors, for the reason that whatever fraud had been accomplished was not in the assignment, but outside of it and preceding-it, thus bringing himself within the imaginary protection of the case of Loos v. Wilkinson, 110 N. Y., 195 ; 18 N. Y. State Rep.,. 110, is not tenable.

The defendant Harrington made a voluntary surrender of all of his tangible property and then resorted to the device of making-an assignment for the benefit of creditors, so that his fraud could not be unearthed. This, as we held in the case of Manning v. Beck, 7 N. Y. Supp., 215 ; 26 N. Y. State Rep., 483, was a fraud upon the act, chap. 503 of the Laws of 1887, and could be defeated by a judgment creditor’s action. The evidence before us establishes, with reasonable certainty, the assignor’s fraudulent intent at the time of making the assignment. The well ascertained facts established at the trial are inconsistent with an honest intent on the part of the debtor to devote his property at the time of the assignment to a fair distribution among his honest creditors. The acts immediately preceding and necessarily leading up to the assignment are inseparable from the execution of the assignment itself, and must be deemed a part of the general fraudulent purpose of the assignor.

The judgment appealed from should be affirmed, with costs.

Barker, P. J., and Dwight, J., concur.