McNaney v. Hall

The purpose of this action was twofold : 1. To set aside a general assignment for the benefit of creditors made by the defendant Francis G. Hall to the defendant Taber; and, 2. To set aside certain deeds, assignments, bills of sale and other transfers and conveyances made by the defendant Francis G. Hall to the defendant Samuel S. Hamlin. The ground upon which the plaintiff sought to set aside the general assignment' and the other conveyances mentioned, was that they were made with an intent to hinder, delay and defraud the creditors of the defendant Hall.

On August 21, 1884, the plaintiff’s assignor recovered a judgment against the defendant Hall for $1,050.21. An execution was issued thereon which ivas returned wholly unsatisfied. Subsequently, and in March, 1889, the judgment, which was the basis of this action, was duly assigned to the plaintiff.

For several years prior to July 21, 1884, the defendant Hall was engaged in business as a private banker at the city of Elmira. On that day he suspended payment at his bank and closed the doors, claiming that he was unable to continue business and meet his obligations. At that time he was the owner of a large amount of valuable real and personal property, and was indebted to a large number of persons in an amount which exceeded the value of such property.

After his suspension the depositors and other creditors of the defendant Hall called upon him for a settlement of their claims. He made a list of his property, and placed an estimate of value opposite each piece, which he showed his creditors as a true list and a correct statement of their value. The list did not specify all his property, and the values were exaggerated. In his negotiations with the creditors he offered them the property mentioned in the list at the prices designated, in payment of their claims, and-to some of them stated that he had no other property, and could pay in no other way; and that if they would not take the property at the prices, they would get nothing, and would get nothing if they sued.

After these transfers were made, and on the 1st of August, 1884, the defendant Hall made a general assignment to the defendant Taber of all his property, not exempt by law, for the benefit of his creditors. The assignment contained no preferences except as to the wages and salaries of his employees.

The defendant Taber accepted the trust under such assignment, qualified as such assignee, took possession of the estate and entered upon the discharge of his duties, and continued to act as such assignee until the commencement of this action. The defendant Hall having omitted to make and file any inventory or schedule of the assigned estate, one was made and filed by the assignee. By inadvertence or mistake on the part of the assignee, and without fraud or fraudulent intent, the inventory or schedules were defective in omitting therefrom the property transferred by the -defendant Hall to Iiamlin and others as collateral security.

The foregoing, briefly stated, are the facts found by the referee. He also found that the general assignment for the benefit of creditors and the transfers and conveyances made to the defendant Hamlin were made and accepted in good faith, and without any intent to hinder, delay or defraud the creditors of the defendant Hall, and held that the defendants were entitled to a judgment dis

The important issues in this case were whether the general assignment made by Hall, and the transfei’s and conveyances made to Hamlin as collateral security for the debts held by him against Hall, were made with an intent to hinder, delay or defraud his creditors.

We deem it unnecessary to state in detail all the various acts, circumstances and transactions which are relied upon by the appellant as evidence that the assignment and transfers in question were made with a fraudulent intent. The evidence disclosed a variety of circumstances and many transactions from which, if unexplained, an inference of fraud might perhaps have been drawn. The defendants have, however, introduced evidence which has explained the circumstances and transactions thus relied upon, in a manner which, if believed, would show that the purpose-of the transfers in question was an honest one, and that they were made in good faith.

While the evidence shows that Hall transferred to Hamlin a large amount of real and personal property,'yet it also discloses that he was largely indebted to Hamlin. These transfers were as security only, so that if the property transferred exceeded in value the amount of Hamlin’s debt, the creditors of Hall would have the benefit of any surplus there might be. It was at least natural that Hall should have secured his indebtedness to Hamlin, who was a relative, and had been his friend from his youth up, and advanced to him these large sums of money. If his purpose in making these transfers was an honest one, and it was intended thereby to secure the debts owing Hamlin, and that was its only purpose, he had a right to thus secure him, and the transaction was valid. (Citizens’ Bank v. Williams, 128 N. Y. 77 ; Williams v. Whedon, 109 id. 333 337; Remington Paper Co. v. O’Dougherty, 36 Hun, 79 ; affd., 99 N. Y. 673 ; Knapp v. McGowan, 96 id. 75, 86; Dorr v. Beck, 76 Hun, 540 ; Sumner v. Skinner, 80 id. 201; Murphy v. Briggs, 89 N. Y. 446 , 452.)

The fact that Hall agreed to take charge of the property and to manage it for Hamlin w*as perhaps a circumstance to be considered by the referee in determining the question of fraudulent intent. But when it is remembered tf'at Hamlin was an old man, who was infirm, unabie to assume the care and labor incident to looking after

Again, it is contended that the amount of the property transferred was large. This is true, but the debts it was given to secure were also large. The property transferred was. not so greatly in excess of the debts to be secured as to constitute a circumstance of much weight bearing upon the question of fraud. Indeed, the referee has found that the value of the property transferred was in fact less than the amount of the debts owing by Hall to Hamlin.

Moreover, if the general assignment was valid, this action, under the allegations of the complaint, could not be maintained by the plaintiff to set aside the transfers and conveyances made to Hamlin. Under such circumstances, the action could only be maintained by the assignee, as the right to assail those conveyances on the ground of fraud was vested in him alone. (Spring v. Short, 90 N. Y. 538 ; Crouse v. Frothingham, 97 id. 105, 113; Loos v. Wilkinson, 110 id. 195, 209; Prentiss v. Bowden, 145 id. 342.)

When we consider the question of the validity of the general assignment, we find that the evidence renders it quite clear that, at the time of his suspension, the defendant Hall did not intend to make a general assignment for the benefit of his creditors, but believed that he could adjust his debts by distributing among his creditors all the property owned by him at excessive prices, and that he could borrow sufficient money to pay the remainder after his property had been so distributed. This course was industriously and effectively pursued by him until his creditors, by attachments issued and threatened, rendered an assignment practically necessary.

.But it is said that when the inventory was filed, the property transferred to Hamlin as collateral security and property transferred to some of his other creditors as collateral and some other small items of property were omitted from the schedule, and, hence, the referee should have found that the general assignment was made with an intent to hinder, delay and defraud his creditors. The evidence discloses that the schedules were made by the assignee and

It is also said that the transfers of property to pay a portion of his creditors, and of other portions of his property to secure other of his creditors, including the defendant Hamlin, his wife, his brother, the Chemung Canal Bank and Charles J. Langdon, were evidence that the assignment was made with an intent to defraud his creditors. Each of these transfers was a circumstance to be considered by the referee in determining this question of intent, and yet, when it is found that in each of those cases the defendant Hall was in fact indebted to the creditors secured, and that the property transferred as collateral for such debt was not greatly disproportionate to the debt sought to be secured, the referee might

The apipellant also contends that the exhibition by Hall of án incorrect list of his assets, his representations concerning it, and his threats to creditors, were evidence of an intent to defraud his creditors by the assignment which was subsequently made. It may be assumed, we think, that this was a circumstance which the learned referee was authorized to consider in determining that question, but it was neither controlling nor conclusive evidence of fraud.

Upon all the evidence in the case the referee has found that the general assignment made by the defendant ITall, and the transfers by him to the defendant Hamlin, were made in good faith for a valuable consideration, and without any intent to hinder, delay or defraud the creditors of the defendant Hall.

A patient and careful examination of the great volume of evidence contained in the appeal boobs in this case has led us to the conclusion that these findings of the referee are sustained by the evidence. The evidence in the case was conflicting, and it is quite possible that different inferences might have been drawn and different conclusions reached from the testimony of the witnesses and the transactions and circumstances developed by the evidence. This was clearly a case where the questions at issue were of fact for the referee, and the findings were not so plainly against the weight of evidence, nor did the proof so clearly preponderate in favor of a contrary result that it can be said with reasonable certainty that the referee erred in his conclusion. Where a review of the facts by an appellate tribunal is proper it is under no obligation to arbitrarily adopt the conclusions of the trial court; yet, great consideration will be accorded to its opinions, especially where there is evidence on both sides, and the mind of the court has been called upon to weigh conflicting statements and inferences, and to decide upon the credibility of opposing witnesses. In reviewing the determination of a trial court in such a case, the appellate court is not warranted in reversing upon the sole ground that, in its opinion, the trial court should have readied a different conclusion. To justify such a course, it should appear that the findings of the trial court

We are of the opinion that under the doctrine of the authorities cited the findings of the referee should be upheld.

The appellant, however, contends that a former judgment in an action in which John P. Purtell and another were plaintiffs and Francis G. Hall and Samuel G. Taber were defendants, was a bar or conclusive evidence against the defendants Hall and Taber. That action was brought by the plaintiffs therein against the defendants for the sole purpose of setting aside the general assignment of Hall to the defendant Taber. The judgment adjudged the assignment to be fraudulent and void, and set it aside only as against the plaintiffs in that action. That action was by the plaintiffs therein alone, and not in behalf of other creditors. The plaintiff in this action was not a party to that action nor a privy of the plaintiff therein, and, hence, was in no way bound by the judgment. Indeed, he wras not a creditor of Hall until March, 1889, when he purchased the judgment upon which he bases his right to maintain this action. We think the judgment in that action was not an estoppel or conclusive evidence against either of the defendants in this action, and the referee properly so held. (Shipman v. Rollins, 98 N. Y. 311 , 330; Moore v. City of Albany, Id. 396, 409 ; Masten v. Olcott, 101 id. 152, 160 ; Quinby v. Carhart, 133 id. 579.)

While an examination of the recpiests to find proffered by the plaintiff and those j>roffered by the defendants shows that in some instances the learned referee has made findings upon such requests that are perhaps somewhat inconsistent, still, we find nothing in those findings which materially affects the questions at issue in the case, and, therefore, furnish no reason to disturb the judgment.

We have examined the various rulings to which our attention has been called by the appellant, but have discovered no error in them that would justify a reversal Nor do we deem it necessary to dis

We are of the opinion that the findings of the referee in this case are fully sustained by the evidence; that no exceptions were taken which would justify a reversal, and that the judgment herein should be affirmed.

Hardin, P. J., and Merwin, J., concurred.

Judgment affirmed, with costs.