Kings County Bank v. Courtney — 53 N.Y. St. Rep. 324

Majority

p. 324

The Kings County Bank, App’lt, v. John Courtney, Sheriff, et al., Resp’ts.

(Supreme Court, General Term, Second Department,

Filed May 8, 1893.)

Headnote

1. Execution—Preference—Secret partnership.

Plaintiff advised one of its debtors to form a partnership with her daughter under her own name, which was done, but the partnership' kept secret, so that others who sold to her had no knowledge thereof. Held, that the partnership was a dormant one, and that the fact of its existence did not give plaintiff a precedence over other creditors who obtained a levy by execution before it commenced proceedings by attachment which resulted in judgment against the mother and daughter as partners.

2. Bill op sale—Given as security must be piled.

A bill of sale given as security for loans made and to be made must be filed as a chattel mortgage ; otherwise it is void as against creditors and subsequent purchasers in good faith.

3. Execution—Dormant.

After the issue of execution an agreement was made between the debtor and creditor that on payment of a certain amount the execution should be withdrawn. Payment of the sheriff’s fees on the basis of half the amount specified having bqen made, the creditor’s attorneys told him to hold the levy until otherwise instructed. Held, that such direction was not a part of the settlement and was unjust to the debtor, and the execution was dormant.

Appeal by plaintiff and defendants Phelps, Dodge & Oo. from judgment rendered in favor of defendants Thomas Wildes and the Tremont National Bank of Boston.

Action to determine the rights of the parties as creditors of Gulia Branders to a certain fund in the hands of the sheriff.

Norman S. Dike, for pl’ff., app’lt; Edmund Coffin, Jr., for Phelps, Dodge & Co., app’lts; W. J. Courtney, for the sheriff; John P. Hudson, for Thomas Wildes, resp’t; Henry R. Wills, for Tremont Nat. Bk., resp't.

The plaintiff has no rights above the other claimants by reason of a partnership between Gulia Branders and

p. 325

her daughter Maria. The mother was carrying- on a business, manufacturing lead pipe, under the name of the “ Brooklyn Lead Pipe and Trip Works.” The ostensible name in which the business was carried on was “ Gk Branders, proprietor.” On the 2nd of June, 1890, Giulia Branders made a bill of sale to the plaintiff of certain of the personal property of the business. On the 7th of August, 1891, Grulia Branders entered into a partnership agreement for three years with her daughter, Maria. The agreement provided that the business should be conducted in the name of the mother as proprietor, and that the account in the bank should be kept in the mother’s name; but with a right on the part of„ the daughter to sign her mother’s name to checks with the addition of the initials of her own name. The partnership agreement was not publicly known. It was known to the plaintiff, bank, but no notice was given by the bank of the partnership between mother and daughter. It was proven also that the bank requested that the partnership be formed, which was well enough, but the keeping it secret so as to obtain an advantage over other creditors was not well done. The partnership was at least a dormant one under North v. Bloss, 30 N. Y., 374 . It was not necessary for persons who sold the apparent owner, Mrs. Branders, to make her daughter a defendant with her. The bill of sale was properly found of no force as against judgment creditors. The form of the instrument is subject to the real purpose of the paper. This is found to be that the bill of sale was given as security for the loans then at its date made by the plaintiff and to be made thereafter. Chapter 279, Laws of 1833, applies to it, and it should have been filed as directed by that statute, otherwise it was void as against creditors and subsequent purchasers in good faith.

The statute of frauds against bills of sale of personal property by a vendor of goods who does not give immediate possession applies. The'bill of sale is presumed void, and there is an entire absence of proof of good faith that the paper was made in good faith and without an intent to defraud creditors. As the proof is so strong that the bill of sale was not intended as an absolute transfer of title, but was by way of mortgage, this question need not be discussed. With the partnership and the bill of 'sale in operation, the plaintiff is not entitled to precedence over these creditors, who get their levy on the property by means of execution delivered before the plaintiff commenced the proceedings by attachment which finally resulted in judgment against the mother and daughter as partners.

Phelps, Dodge & Co. issued their execution and made levy on the 17th of February, 1892.

The Tremont Bank on February 19, 1892, which subsequently matured in a judgment. The trial court has found that the execution of Phelps, Dodge & Co. became dormant and lost its precedence thereby. The case shows that after the Phelps, Dodge & Co. execution was levied, Mrs. Branders applied to that firm to take $2,000 on account and withdraw the sheriff from her works. Aii arrangement was made that $2,000 was to be paid and the execution and levy withdrawn and .released. Notice was given to

p. 326

the sheriff by Phelps, Dodge & Co.’s attorney on the 19th of February, 1892. The agent of Mrs. Branders who carried the letter to the sheriff gave a check to him for his fees which was unpaid. On the 20th of February, the sheriff wrote Phelps, Dodge & Co. that he had received his fees on the basis of $1,000 payment and asking for a continuation of the execution. On the 23d of February, 1892, Phelps, Dodge & Co. wrote the sheriff to hold the levy until instructed to the contrary. There was no proof of fraud beyond a general statement of her responsibility. Notes were to be given for the balance of the debt, which presumably were given. The subsequent direction to hold the levy was not a part of the settlement and was unjust as to the judgment debtor.

The execution was properly found to be dormant, and the judg ment should be affirmed, with costs.

Dykmaít, J., concurs; Pratt, J., not sitting.