Hyperlawhypertext legal database McGinn v. Koehler 47 N.Y. Super. Ct. 420

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McGinn v. Koehler

47 N.Y. Super. Ct. 420 15 Jones & S. 420 Court N.Y. Super. Ct. Decision date 1881-06-13 English

Contents

Majority

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JOHN McGINN, Respondent, v. DAVID W. KOEHLER, Appellant.

Headnote

I. Bankruptcy.
1. Assignee in.
(a) Actions against, springing out of the taking by the marshal from the possession of a third party, under a warrant in bankruptcy proceedings, property of which he claims to be the owner, but which the marshal claims constitute assets belonging to, and distributable as, part of the bankruptcy assets.
1. Defenses of assignee.
1. That the property was transferred by the bankrupt to said third person in fraud of creditors or on a forbidden preference, or in violation of a provision of the bankrupt act.
2. That he did not aid in or instigate the acts of the mar
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shal, but acting as assignee he merely received the property from the marshal Iona fide, and that no demand for its return had been made.[1]
2. Liability of assignee.
1. Semble: He is liable for such acts of the marshal not justified by the warrant held by said marshal, as were done by bis aid and instigation.
Before Sedgwick, Ch. J., and Freedman, J.
Decided June 13, 1881.
Appeal by defendant from judgment entered upon verdict of jury.
The complaint averred that the defendant entered upon certain premises, which were in the lawful possession of plaintiff, ejected him by force and violence therefrom, and took, carried away and converted to his own use, property of the plaintiff of the value of $3,000, &c.
The answer contained a general denial and further averred that the defendant was the assignee in bankruptcy of one Bray, that within six months before the filing of the petition in bankruptcy, Bray fraudulently, and in fraud of creditors, procured certain judgments to be entered against him in favor of plaintiff, and that on the sale, under executions upon such judgments, the plaintiff bought the property in question, with the intent and design to evade the bankruptcy act and in fraud of the creditors, of Bray. On the trial it was shown that the plaintiff had bought part of the property in question at execution sales under judgment obtained by him against the bankrupt Bray. The counsel of defendant proceeded to examine the
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plaintiff as to the notes upon which he obtained the judgments.
This was objected to, as attempting to assail the title to the leasehold property, without showing the parties to be in a position to attack it, and the objection was sustained. Defendant’s counsel afterwards offered competent evidence of the petition and the further proceedings in bankruptcy against Bray, and the assignment in bankruptcy to the defendant as assignee, for the purpose, as he said, of showing defendant’s title to the property in question. This was objected to and the objection sustained.
Frederick SmytTie, attorney, and David McClure, of counsel, for appellant, as bearing on the questions considered in the opinion, urged:
I. The testimony excluded was the affirmative defense pleaded by the defendant in his answer ; it was offered to show that Martin Bray, who had held the lease of the premises in question, being insolvent, was duly adjudged a bankrupt February 28, 1873 ; that the United States marshal entered into the possession of the premises thereunder prior to March 31, 1873, and was in actual possession thereof on that date; that on that day the estate and property of the said bankrupt was assigned by Register Dayton to the defendant as assignee ; that the plaintiff was not in possession at that time, and that the said marshal alone was ; that the possession of the premises in question and the property in question was received by the defendant, as such assignee, from the said marshal; that his possession thereafter was that of an officer of the court, as such assignee. If permitted to prove these facts, the defendant’s defense would have been complete, and no recovery could have been had by the plaintiff. The court, by its action in excluding this testimony, and each part of it, practically denied the defendant his right to a hear
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ing and justification of Ms acts. It was not permitted to the defendant to show that his action was any other than that of an individual, and the shield which the law throws around its officials and servants was denied to him. In all of the actions against assignees reported the courts have upheld the principle of their right to show that their acts were done as assignees (see Esman v. Apgar, 76 N. Y. 362 ). The bankrupt act ( U. S. Stat. at L. 522, § 14), among other things, provides that as soon as the assignee is appointed and qualified, the register shall, by an instrument under his hand, assign and convey to the assignee all the estate, real and personal, of the bankrupt, with all his deeds, books and papers relating thereto, and that such assignment shall relate back to the commencement of said proceedings in bankruptcy, and thereupon, by operation of law, the title to all such property shall vest in said assignee. Upon the defendant’s appointment as assignee of Martin Bray, it was his duty as such assignee to take possession of all property of which the bankrupt appeared to be the owner (Esman v. Apgar, 76 N. Y. 361 ; Buchanan v. Smith, 16 Wall. 301 ). Whether the acts done were done as assignee, is to be determined by the evidence (Esman v. Apgar, 76 N. Y. 363 ). It' was the defendant’s right, in order to protect himself from liability as a trespasser, to show that he came to the possession of the property for a lawful purpose and in perfect good faith, by delivery from the wrong-doer (Ely v. Ehle, 3 N. Y. 509 ). And the defendant must plead his cause of justification or excuse. The receipt of the possession and property by defendant from the United States marshal protected him from being held liable as trespasser or for conversion, as well as his official position as assignee, and even if the marshal obtained the possession wrongfully. Trespass will not lie against a person receiving goods illegally taken by the sheriff,
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and by him delivered, because he obtained the possession lawfully (Barrett v. Warren, 3 Hill, 350 , and.cases cited).
II. There was error in the court’s refusal to dismiss the complaint at end of testimony. The defendant was not liable in damages for conversion of any of the goods of plaintiff unless upon demand made therefor, and the demand must be alleged (Gurney v. Kenny, 2 E. D. Smith, 133 ; Barrett v. Warren, 3 Hill, 350 ; Whitney v. Slauson, 30 Barb. 276 , and cases there cited; see Wells v. Kelsey, 38 Id. 242 ; Lockwood v. Bull, 1 Cow. 330 ; Fuller v. Lewis, 13 How. Pr. 220 ). The proof was of failure to make demand. '
John McGinn, in person, attorney, and Albert Mathews, of counsel, for respondent, urged:
I. The attempt to justify the wrongful acts of defendant, by “ offers to show ” that on the day of the first trespass complained of (March 31,1873) the defendant was appointed assignee in bankruptcy of Martin Bray, and that defendant’s acts of violence were done by virtue of that instrument, was properly over-ruled. As such assignee he had no right vi et armis to take the execution of the law into his own hands. The plaintiff being legal owner, and actually in possession of the property in question, (a small portion thereof under a ' judicial sale and the major part thereof from private purchase) he could not be forcibly ousted therefrom, or deprived thereof, except by due process of law. The defendant was a naked trespasser, and the acts of his agents rendered him liable for all their doings in the premises (Brown v. Gilmore, 16 How. Pr. 527 ; Leighton v. Harwood, 12 Nat. Bankr. Reg. 360 ; In re Holland, Id. 403; Gates v. American, 14 Id. 141 ; Cooke v. Whipple, 55 N. Y. 166 , 167; Whele v. Butler, 61 Id. 248 ; Ottis v. Williams, 70 Id. 208 ; Deutch v. Reilly, 57 How. Pr. 75 ; Snuth v. Mason, 14 Wall.
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430 ; Marshall v. Knox, 16 Id. 556 ; O’Brien v. Weld, 2 Otto, 83). (1) The “ offer to show ” fraud in the judgment would not, in itself, have been broad enough, even if otherwise admissible. Guilty collusion alone (under the bankrupt act) will invalidate a preference obtained by a creditor under judicial process (Wilson v. City Bank, 17 Wall. 473 ; Clark v. Ireland, 21 Id. 360 ; Michaels v. Post, Id. 427).
II. The attempt to discriminate between those acts of defendant alleged to have been done under cover of. the United States marshal, and those of the defendant done through his other agents, like the endeavor to justify the latter as done by defendant as assigneeunder the alleged authority of the former, was a shallow subterfuge, and properly overruled. The marshal himself does not appear to have had any semblance of authority. ' The pretended authority of both the marshal and defendant appears to have begun contemporaneously with the date of the alleged assignment (March 31, 1873); and in point of fact, either Sewards (the agent of the defendant), or defendant personally, directed the entire series of trespasses from the beginning, both before and after the date of the pretended authority under which the defendant attempted to justify his misconduct. Proof that the-marshal, without semblance of lawful authority, and without pretense of process of law, had forcibly seized the plaintiff’s property and delivered it to the defendant (even if admitted in evidence), would have-been proof of conspiracy, and rather matter of aggravation than of defense. They were alike co-trespassers ab initio, and jointly and severally responsible. Nay, the defendant undeservedly escaped a heavier verdict, by the mistaken clemency of the court, in charging the jury that they need not mulct him in damages for the unlawful acts of the marshal in the premises (Doyle v. Sharpe, 74 N. Y. 157 -159). (1) The
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court charged the jury not only that the defendant was “not liable for the wrongful acts committed by the marshal with which he had nothing to do,” but also that “the marshal was alone responsible for his own wrong-doings” and the defendant “was not to be charged with anything properly chargeable against the marshal.” (2) The entire charge of the court was more favorable to the defendant than was warranted by the evidence (Aldridge v. Sturtevant, 1 Hall, 210 ; Schile v. Brockhane, 80 N. Y. 614 ). (3) The acts of the defendant being wanton and unjustifiable, the plaintiff was even entitled to a verdict for exemplary damages ¡(Walker v. Wilson, 8 Bosw. 586 ).
III. The “offer to show” that the United States marshal got possession of the plaintiff’s property, and •delivered possession thereof to the plaintiff, was •also properly overruled. There was no valid “offer” to prove that the property seized was not plaintiff’s property in fact. The mere matter of possession was immaterial, and not in itself enough to justify defendant’s acts. Whatever possession the marshal had ¡gotten was already conclusively shown to be in itself tortious and unlawful. The “ offer,” to have been, .available for any purpose, should have been made to prove some facts showing a lawful possession of the property by the United States marshal.
IV. The defendant, as the mere assignee in bankruptcy of Bray, having forcibly taken from the plaintiff the property in question, to which plaintiff claimed title, had not the same rights of defense for his acts of violence as a judgment creditor, seizing property under lawful process by an officer duly authorized, to assail the title of the plaintiff, derived from the sale under execution against Bray, upon a judgment against him, as respects even that small portion of the property taken which had originally belonged to Bray (Brown v. Gilmore, 16 How. Pr. 527 ;
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Elias v. Warden, 17 Wall. 248 ; In re Collins, 12 Nat. Bankr. Reg. 382 ; In re Holland, 12 Id. 403 ; Thurber v. Blanch, 50 N. Y. 86 ; Cooke v. Whipple, 55 Id. 166, 167 ; Whele v. Butler, 61 Id. 248 ; Woodin v. Frazee, 38 Super. Ct. 193).

Section 5128 of the bankruptcy act declares that the therein specified unlawful preferences shall be void and the assignee may recover property obtained by the preference or the value of it, from the person receiving it. .

The next section, 5129, declares that any payment or transfer, made to violate the bankruptcy act or to evade any of its provisions, shall be void and the assignee may recover the property or the value thereof as assets of the bankrupt. The formal operation of these sections, by which the transfer from the bankrupt is avoided, at least on the election of the assignee, leaves the property transferred in the bankrupt, and the property would therefore pass to the assignee by virtue of the assignment to him, as well as by the specific intent of the two sections.

And section 5046 declares, that all property conveyed by the bankrupt in fraud of his creditors shall in virtue of the adjudication of bankruptcy and the appointment of his assignee at once vest in such assignee.

Upon the defendant proving that he was duly appointed assignee in bankruptcy of Bray, and further showing that the property was transferred by Bray to the plaintiff, in fraud of creditors or on preference, or in violation of a provision of the bankruptcy act, it would result that title to the property here referred to at the time it was taken from the plaintiff by the defendant was in the defendant and not in the plaintiff. Plaintiff could not rightfully recover the value of such part of the property as he unlawfully received from Bray, the bankrupt (Sharpe v. Doyle, 102 U. S.

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[12 Otto] 686; reverting Doyle v. Sharpe, 74 N. Y. 154 ).

The case cited is important on this point. The plaintiff below had sued the defendant for trespass, in taking his property. The defendant pleaded that he was United States marshal, and as such, by virtue of a warrant duly issued to him in bankruptcy proceedings, against certain involuntary bankrupts, had taken possession of the property, and that the property had been theretofore transferred to the plaintiff by the bankrupts in fraud of the bankrupt law.

The warrant was such as is provided by section 5024, viz. : “if it shall appear that there is probable cause for believing that the debtor is about to leave the district or to remove or conceal his goods and chattels or his evidence of property, or to make any fraudulent conveyance or disposition thereof, the court may issue a warrant to the marshal of the district, commanding him to arrest, &c., the debtor, and forthwith to take possession* provisionally of. all the property and effects of the debtor, and safely keep the same until further order of the court.” The question was, whether it was the intent of the act, that the warrant issued under the special circumstances, should take any property that had already gone from the possession of the bankrupts into the possession of third person, even through a fraudulent transfer. The justice delivering the opinion of the court, said the decision depended upon the authority conferred on the marshal by the provisional warrant of seizure. It was held that the marshal might, by the proper construction of the act, take property that had been transferred by the bankrupt in fraud of the' bankruptcy act, and in an action against him might prove that the plaintiff was not the lawful owner of the property by showing that it had been so transferred.

The opinion says the marshal must “of course

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prove that the plaintiffs were not the lawful owners of them. In other words, that the right of the assignee in bankruptcy, whose right he represented in that suit, was superior to that of plaintiff’s,” and elsewhere that the marshal would “ill perform that duty if he should accept the statement of every man in whose custody he found property, which he believed would belong to the assignee when appointed, as a sufficient reason for failing to take possession of it.” The opinion ends with the conclusive statement that “to hold that the plaintiffs, by reason of their bare assertion of ownership connected with possession, must recover of the marshal the value of the property, and that the assignee could then have sued the plaintiff and recovered it from them, is a mode of doing justice that does not commend itself to our judgment, even if the assignee could be sure to find a responsible defendant when they come to sue.” The reporter makes a head-note of Sharpe v. Doyle, “that the goods were subject to seizure under the warrant, if they were the property of the person against whom the proceedings in bankruptcy was taken.” The general tone of the opinion seems to recognize the theory that the marshal might show that title passed or might pass to the assignee. There is some doubt on this point however. The opinion, at one part, states that “ the case was tried by a jury, the defendant’s plea being that the goods were the property of the bankrupts.” Another part states that the defendant asserted a right to them, under the laws of the United States, on the ground that the pretended. purchase was a fraud upon the bankrupt law and passed no title ; that the ownership was by virtue of the. bankruptcy proceedings in the assignee.” If such be the power of a marshal before an assignee is appointed or it is even certain that an assignee will be appointed, a fortiori, can the assignee as defendant contest the title of property, transferred in fraud of creditors
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or of the bankrupt act. I am, therefore, of opinion that the defendant should have been permitted to give proofs that he was assignee and that the property had been fraudulently transferred to the plaintiff.

This does not include all the property in controversy according to plaintiff’s claim, but it of course calls for a new trial.

I am of opinion, that in case the act of the marshal in taking the goods was unlawful, because there was no defect in plaintiff’s title, and the defendant, acting as assignee, merely received the goods from the marshal, bona fide, an action for them or their value would not lie, unless a demand for their return was made by the plain tiff. It would be otherwise, however, if the original taking by the marshal was at the personal instigation of the defendant.

On the new trial, it would be best not to give evidence of such acts of the marshal or his deputies, not justified by the warrant, that the testimony does not affirmatively establish were done by the aid or instigation of the defendant.

Judgment reversed, new trial ordered, with costs of appeal to appellant to abide event.

Freedman, J., concurred.

Cases cited