Hooper v. Baillie — 29 N.Y. St. Rep. 52

Majority

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Nathaniel Hooper et al., Resp’ts, v. Walter S. Baillie et al., Imp’ld, App'lts.^[1]

(Court of Appeals, Second Division,

Filed January 31, 1890.)

Headnote

1. Assignment fob creditors—Firm: assignment signed by one partner,

A general assignment of the assets of a general partnership for the benefit of creditors may be legally executed in the name of the firm by one of the partners if done with the oral assent of all the partners.

2. Same—Consent by other partners.

The evidence as to consent of the other partners consisted solely of proof that one on being previously consulted stated that if they must assign he supposed they must, and that the other, a non-resident, cabled his consent and afterwards recognized the assignment. Held, that a finding that the partners did not consent to the assignment was without evidence to support it and an error of law under § 993 of the Code.

Appeal from a judgment of the general term of the first judicial department, affirming a judgment entered on the decision of a special term.

On and prior to May 17, 1884, Charles McCulloch Beecher, Frank R. Johnson and Walter S. Baillie were partners, under the name of C. McCulloch Beecher & Co. They were engaged in business as commission merchants at the city of New York, and had a branch house at the city of Rio de Janeiro. Beecher resided at Brooklyn and Johnson at the city of New York, and they had charge of the business in the city last mentioned, Baillie resided and had charge of the business at Rio de Janeiro. The property of the firm was all personal, some of which was at New York, but the greater part of it was at Rio de Janeiro. On the date mentioned the firm was insolvent and Beecher executed, in its name, a general assignment for the benefit of creditors, by which all of its property was assigned to the defendant, Henry P. Bartlett, in trust to convert into money and first pay in full two creditors, after which all others were to be paid ratably. November 17, 1884, the plaintiffs recovered a judgment against the partners, on which an execution was returned wholly unsatisfied. June 6, 1885, this action to set aside the assignment as fraudulent was begun by personal service of the summons and complaint on all of the defendants except Beecher, who was not served nor has he appeared in the action.

Charles E. Tracy, for app’lts; Franklin Bien, for resp’ts.

It is alleged in the complaint “ that the said assignment is null and void upon its face,” but why it is so is not averred. It is argued in behalf of the respondents that it is so void because (1) the names of all of the partners are not disclosed in it, and (2) that it appears not to have been executed by all of the partners. The partners had no property except firm property, all of which was personal A general assignment re.

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lating solely to the property of a general partnership, all of which is personal, executed solely for the bénefit of creditors of an insolvent firm, and reciting that it is made “ between the firm, (stating its name) party of the first part,” to which the firm name is subscribed by one of the partners, who declares in the certificate of acknowledgment “ that he executed the same as and for said firm (giving its name), and under its authority and instructions of the members of said firm,” is not void on its face by reason of the manner of its execution.

The assignment .not being void on its face, the burden was on the plaintiffs to prove that it was void for reasons outside of the record. They alleged in their complaint as a reason for setting it aside, which is the only ground averred, except the one first considered, “ that the said assignment was made by the defendants, Charles McCulloch Beecher, Frank B. Johnson and Walter S. Baillie, with the intent to delay, hinder and defraud their creditors. That it was not accompanied by immediate and continued change of the possession of the property, but that the same was allowed to remain under the control of the said assignors of the defendant, Henry Paine Bartlett” The defendants in their answer denied that the assignment was made with intent to defraud creditors. On the trial the plaintiffs called as a witness the as-' signee and one of the assignors, both of whom testified that the ■ assignment was made in good faith, and we find no evidence to { the contrary. At the close of the evidence, the defendants requested the court to find the issue of fact so joined in their favor, but the court refused to determine the issue, to which refusal the defendants excepted pursuant to § 992 of the Code of Civil Pro-' cedure, and they insist that under § 993, the refusal was error. The court found as a conclusion of law “that the said general assignment, dated May 17, 1884, was and is fraudulent and void as against the plaintiffs in this action,” which seems to have been based on the finding of fact that the assignment was made without the authority or assent of Johnson and Baillie. This finding of fact was excepted to by the defendants pursuant to § 992, and they now urge that it is without any evidence tending to sustain it, and is reviewable as a question of law. As before stated, the complaint contained no intimation that the assignment was to be attacked on the ground that it was not authorized by Johnson and Baillie, but on the contrary it is twice averred that it was made by all of the partners. But, assuming that such an issue was presented by the pleadings, the burden of establishing it was, as before stated, on the plaintiffs. They called Mr. Johnson who'testified “ I was at home when the assignment was made. I had a conversation with Mr. Beecher with reference to the making of this assignment prior to its being made; he told me two days before the failure if we did not get remittances from Brazil we would have to make an assignment; I said to him it is pretty tough, and if we must do it, then we must. I had no conversation with him after that with reference to this assignment; I do not remember any other conversation, but I won’t swear it , was the only conversation I had with him.’1.

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The plaintiffs called the assignee, who testified: “ I think I saw a cable from Walter S. Baillie, dated about May 16, 1884, to the firm of G. McCulloch Beecher & Co. * * * I don’t know the contents verbatim; as near as I recollect, Mr. Baillie assented to the assignment without qualification; I cannot use the words of the cable, but that is my remembrance.” This cablegram was dated the day previous to the date of the assignment. The plaintiffs put in evidence a letter from Baillie to the assignee, dated June 28, 1884, which contains the following:

“ Dear Sir.—Your favor of the 24th ult., duly received on the 26th inst., addressed to the writer, to which we have to reply with all the information in our power.

“ First. Let us correct you on your first remark, that ‘ we had already been advised by cable Messrs. C. McCulloch Beecher & Co., New York and Fio, have assigned to me all their business for the benefit of their creditors.’ So far as the writer is concerned, he confirmed in his cable of 16th ult. confirmation assignment, available assets of the New York firm only, it being quite out of his power to do more than this. Brazilian law being most clear in stating the absolute necessity of first settling all claims on the spot before the remittance of any monies, abroad. This once accomplished, we will remit you as rapidly as possible all that remains over, subject only to the deduction of actual liquidated expenses.”

They also'.put in evidence a letter from Baillie to C. McCulloch Beecher & Co., dated May 24, 1884:

“ Since our respects of the 17th inst., we, on 20th, received your cable announcing your failure and the appointment of Mr. ÍL P. Bartlett as assignee. * * * At once, on receipt of news of your suspension, we consulted our lawyer as to our course to pursue, and he informed us that, by Brazilian law, all local debts must be settled before any remittances can be sent to New York towards settling with United States creditors, and that, so far as this branch is concerned, our assets more than covering our local liabilities, we are simply liquidating in obedience to instructions from our head office.”

After this, Baillie converted the assets in Brazil into money, and after paying the Brazilian creditors, as required by the law of that country, remitted the surplus to the assignee. This is all of the evidence bearing upon the question of whether Johnson and Baillie consented to the execution of the assignment, and it does not tend to sustain the finding that they did not assent, had such an issue been raised by the pleadings ; besides, the trial court found “ That said Frank R Johnson never objected to or questioned said assignment either before or after its execution, and that said Walter S. Baillie, after the execution of said assignment, collected the assets of his said firm in Brazil, and after paying the indebtedness of said firm to its creditors in Brazil, transmitted the balance to the assignee, the defendant, Henry Paine Bartlett.”

A general assignment of the assets of a general partnership for the benefit of creditors may be legally executed in the

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name of the firm by one of the partners, if done with the oral assent of all of the partners. Klumpp v. Gardner, 114 N. Y., 153 ; 22 N. Y. State Rep., 672. The case at bar is not like Sutherland v. Bradner, 116 N. Y., 410 ; 26 N. Y. State Rep., 854, in which an attempt was made to validate an assignment by amendment after a creditor had acquired a lien on the assigned property.

The judgment should be reversed and a new trial of the issues joined in the pleadings, or of such as may be made by amended pleadings, granted, with costs to abide theevent.

All concur.