Mack v. Davidson — 58 N.Y. Super. Ct. 75

Majority

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JACOB W. MACK, as Assignee, etc., Appellant v. ALEXANDER V. DAVIDSON, Sheriff etc., Respondent.

Headnote

Burthen, of proof—General assignment, attack on validity of on the ground of an improper and illegal preference—Unauthorized endorsement—Trial, conduct of, plaintiff s requests for a direction in his favor, when not waived by introduction of further evidence.

Where the validity of a general assignment for the benefit of creditors is attacked on the ground that the assignors endorsement on a preferred note (they being liable only by reason of the endorsement) was unauthorized, the burthen of proof to establish that the endorsement was unauthorized is on the attacking party, whether he be plaintiff or defendant.

Evidence which would sustain a finding that the endorsement was not shown to have been authorized is not enough to uphold a verdict invalidating the assignment. To invalidate the assignment it must be affirmatively shown that the endorsement was unauthorized.

Where at the close of defendant’s case the plaintiff’s counsel moves for a direction of a verdict in his favor which motion is denied and he excepts to such denial, he does not deprive himself of the benefit of

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his exception by endeavoring through the introduction of further evidence to have the case presented to the jury most favorably for his client.*

Note.—This must bo taken with the qualification that such further testimony does not disclose facts, or is not of such a nature as to require a submission to the jury.

Before Tbuax and Dug-bo, JJ.

Decided April 7, 1890.

Appeal from a judgment entered on the verdict of a jury.

This action is brought by the plaintiff as assignee under a general assignment for the benefit of creditors made by the firm of Bindskopf Brothers & Co., against the defendant, as sheriff of the city and county of New York, for the unlawful taking from the possession of plaintiff as such assignee divers goods and merchandise, part of the assigned property, and converting the same to his own use. The defendant justified under five executions issued to him upon judgments recovered against the assignors, alleging that at the time of the levy under such executions the goods levied on were the property of the assignors, or that they had an interest therein liable to levy and sale under execution, and also alleging that the assignment was made with intent to hinder, delay and defraud the creditors of the assignors of their claims, debts and demands, and that plaintiff had full notice thereof.

On the trial the seizure of the property was conceded, and also that at the time of the seizure plaintiff was in possession thereof under the assignment. It was also stipulated that the -value of the ‘ goods levied on at the date of the levy was $76,400. and that the verdict, if any, for the plaintiff should be for that sum with interest from December 8,1884.

The litigation was as to whether the assignment

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was fraudulent and void. All the grounds on which defendant claimed it to be fraudulent and void were ruled against him by the trial judge except one. That one was as to a preference in favor of one Max Nathan upon á note held by him for $25,000, made by James Thompson & Co., bearing the endorsement of Rindskopf, Bros. &Co., after it had been previously endorsed by R. Buchman. At the close of his charge the judge instructed the jury as follows : “if you find on all the facts of the case that it does not appear that Mr. R. Buchman was entitled to make the firms endorsement on the note in question, then you must find for the defendant. On the contrary if you find -that he was authorized, then you will find in favor of plaintiff for the sum of $81,791.53.” The jury rendered a verdict for defendant ; from the judgment entered on which this appeal is taken.

The other facts sufficiently appear in the opinion.

Stern & Meyers, attorneys and of counsel, for • appellant, in the questions considered'in the opinion, argued :—

I. The court erred in denying the plaintiff's motion for the direction of a verdict at the close of the whole case. In denying that motion it proceeded on the doctrines involved in the following portion of its charge : “ The burden of proof in this case is upon the defendant to show that the assignment is fraudulent, which is not to be presumed in law ; but when they show the firm name was given in some matter in which the firm was not interested, they have shown enough to invalidate the assignment.” * * * “ Such assent or authority under the evidence in this case is an affirmative fact which the plaintiff is to prove by facts in the evidence which may come from either side.” The law has recently been laid down adversely to this doctrine by the

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Court of Appeals in the case of Bernheimer v. Rindskopf, et al., decided by the Second Division in December, 1889. That was an action brought by a judgment creditor to set aside the general assignment involved in the case at bar, on the charge that the same was fraudulent. In that case, as in this, the attacking creditor to make out a case, relied upon the preference of the James Thompson note above referred to, and after having introduced at the trial evidence that the firm’s endorsement was placed uponthe note by Buchman for the accommodation of his daughter, or the firm of James Thompson & Co., and that the note was not entered in the books, and that the assignor’s firm was insolvent when the note was endorsed, the plaintiffs in that case rested. The defendant put in no evidence. After deliberation the court dismissed the complaint upon the merits, which disposition of the case was in last November finally affirmed in the Court of Appeals. In that case, as in this, the question of the burden of proof was the question before the court.

II. The introduction of evidence in rebuttal on behalf of the plaintiff after the denial by the court of plaintiff’s motion for the direction of a verdict did not affect the appellant’s rights. It is undoubtedly well settled that if the party having the burden of proof rests his case without adequate testimony, and the court denies a motion to dismiss, and the opposing party then introduces evidence which supplies the defects in the testimony offered by the other party, the appellate court will not sustain the, exception to the refusal to dismiss, because on all the evidence it would be clear that no injustice had been done. But such is not this case. After the denial by the court of plaintiff’s motion for the direction of a verdict and the taking of an exception thereto, the plaintiff introduced evidence to rebut the two points which the court said alone remained

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to be explained, namely, first, the coarse of dealing between the assignors and Buchman Bros. & Co.; and secondly, the validity of the preference of the James Thompson & Co. note. The evidence to rebut the first of these, to wit, the dealings with Buchman Bros. & Co., was so overwhelming that the court took that question away from the jury at the close of the case. The evidence in rebuttal upon the sole remaining question in the case, to wit, the validity of the preference of the James Thompson & Co. note, we think completely disproved the defendant’s contention in that regard. Certain it is that the plaintiff’s proof in rebuttal supplied no defect in the defendant’s proof.

Cochran & Clark, attorneys, and W. Boitrke Cochran of counsel, for respondent, on the questions considered in the opinion, argued:—

I. The only question in the case having been submitted to the jury on the plaintiff’s consent, and the jury finding for the defendant, the judgment should be affirmed. Ross v. Colby, 3 Hun, 546 ; Barrett v. Third Avenue R. R. Co., 45 N. Y. 628 -632; People v. Cook, 8 lb. 67-74; Appleby v. Astor Insurance Co., 54 lb. 253-261; Dillon v. Cockroft, 90 lb. 649-650. It may be claimed that the rights of the plaintiff were protected by the request for a direction of verdict; but it is plain that this direction cannot avail for the reason that no particular ground upon which such claim was based was pointed out to the court, it being a mere general motion, and there were a large number of issues presented by the evidence irrespective of the Thompson & Company note, involving the validity of the assignment, so that it would have been error for the court to have directed a verdict at that stage of the case. Whether the application was based upon some technical deficiency in the defendant’s proof, or whether it was based, as no

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doubt will be claimed here, upon the fact that the defendant had not produced any evidence overcoming the presumption in favor of the validity of the assignment does not appear, and the application cannot be availed of for the further reason that it does not appear that it was made at the close of the defendant’s case, or that it was made at any time prior to the charging of the jury. It appears to have been made, as far the record discloses, in the middle of the case, and therefore cannot avail for any purpose. Plaintiff waived his motion for a direction. But it is of no benefit to the plaintiff for another reason that he did not stand upon the same ; but, not being willing to risk the decision of the court thereon, or his rights upon appeal, proceeded to call witnesses in rebuttal, ostensibly, of course, to rebut facts which had been brought out by the defendant, or which he thought was necessary to make some question perfectly clear to the court and jury. Plaintiff never at the close of the whole case asked that a verdict be directed. It is clear, therefore, that the plaintiff, by putting in this testimony in rebuttal, and by acquiescing in the submission of the case to the jury, waived any rights that he had arising out of the request made to the court at an earlier stage of the case, for a direction. S. & S. Plank Road Company v. Thatcher, 11 N. Y. 102 -112 ; Tiffany v. St. John, 65 lb. 314-317 ; Painton v. Northern Central R. R. Company, 83 lb. 7, and cases cited above.

II. The decision of the Court of Appeals in the action to set aside the assignment is not conclusive here. That decision is not conclusive on this appeal, for that: 1st. The plaintiffs in that case were directly assailing the assignment, and they stood on their own case alone and did not introduce testimony. Here the defendant, having the physical possession

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of the property under legal process, was attacked and put in testimony. 2d. In the assignment case the court made findings to the effect that the preference of the note was valid and binding on the firm, and it also laid down the same proposition in its opinion, and this finding was binding in the Court of Appeals. Here the finding of the jury, on conflicting and different evidence, is the other way, and is equally binding on this court. 3d. The evidence in the assignment case is not the same as here. Nathan’s testimony was not the same in both cases, and Buchman, who gave the most valuable testimony for the defendant here, was not a witness in the assignment case at all. Furthermore, the same rule should not be applied as to the finding of a jury on the questions of this case, they having seen the witnesses and different witnesses from the trial judge, and especially as the issue here was narrowed to one question, whereas, Judge Van Brunt had several questions, and was judge of both the law and facts. 4th. The jury here decided the question on disputed and different testimony from that before the judge. 5th. In this case there is evidence that the firm did not authorize the endorsement, thus meeting the point of the opinion of the court of last resort.

III. The rule laid down in the opinion of the Second Division of the Court of Appeals, in the case of Bernheimer v. Rindskopf, should not be extended. Without desiring to criticise the opinion of the court in that case, we feel that it has gone to a very great extent, and it should not be applied except where the facts of the case really bring it within its provisions. The authorities are very clear to the effect that where a partner signs or endorses the firm name on a promissory note given for the debt of a third party, or the debt of the individual partner, in which the firm has no interest and derives no benefit, that the firm in such a case is prima facie not liable when the note

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is in the hands of a person having knowledge of the transaction. We cite only a few cases on this subject : Atlantic State Bank v. Savery, 82 N. Y. 102 ; Union Nat. Bk. v Underhill, 102 lb. 236 ; Calkins v. Smith, 48 lb. 614 ; Lafferty v. Burr, 1st Wend. 529 ; Foote v. Sabin, 19 Johns. 154 . Thecourt will observe that the complaint in this case was dismissed because of want of proof ; there was no evidence at all in the case upon the subject of the assent or non-assent of the other partners. Plaintiff’s claimed that the preference in the assignment was not any evidence as against the plaintiff of any liability, under the doctrine of—Moore v. Metropolitan National Bank, 55 N. Y, 41 ; Pringle v. Leverich, 97 lb., 181; Edwards v. Scoharie Bank, 47 lb. 46 ; affirmed in 114 lb. 620. The Court of Appeals affirmed that decision, and held that the burden of proof was upon the plaintiff to establish fraud in the assignment. Certainly, when the Court of Appeals says that the burden of proof is upon the plaintiff to establish fraud in the assignment, or fraud in any case where that is the issue, it does not mean that the fraud must really be established by witnesses called by the plaintiff; nor does it mean that in this case fraud in the assignment must be established by witnesses called on behalf of the defendant; it simply means that before a recovery can be had, there must be evidence in the case from which fraud can be presumed, or tending to establish fraud. And however that evidence is obtained, whether by witnesses of the plaintiff or that of the defendant, whether by direct or cross-examination, is of no materiality. The court here left only the question of the Thompson note to the jury. We did not agree with the court in such disposition of the case and desired other matters to be submitted, but the jury found upon a very careful charge the issue as to want of authority, in favor of the defendant. We, therefore, submit

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that this case is not within the provisions of the opinion in the case of Bernheimer v. Rindskopf ; the facts and the proof being entirely different, and there being no serious error committed upon the trial, and only questions of law being presented for review, this judgment should be affirmed,

It seems that after the defendant had called and examined several witnesses the plaintiff moved for a verdict and excepted to the denial of his motion. The court theretofore made a statement, whereupon witnesses were called for the plaintiff in rebuttal. Nothing appearing in the case to the contrary it is fair to presume that the defendant had rested when the motion was made, and that the motion was for such a verdict as the parties had provided for by their stipulation theretofore made. The exception is, therefore, available. It seems to have been well taken, for no evidence appears in the case from which the jury could infer that the indorsement upon the Thompson note was unauthorized. The evidence would sustain a finding that the endorsement was not shown to have been authorized, but this is not enough. The burden was upon tho defendant, having assailed the validity of the assignment, to show the endorsement unauthorized.

It is claimed by appellant that Buchman’s evidence was sufficient to warrant an inference that he was unauthorized to make the endorsement, and particular reliance seems to be placed on the fact that Buchman stated to Nathan, in response to the latter’s request for the firm endorsement, that “it could easily be done, no doubt of it,” and after this sent the note to Nathan without the firm endorsement, and only after pressure indorsed the note as appears in evidence. Whether this evidence would be sufficient to permit an inference that there was a lack of general authority it is unnecessary to determine. It

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would certainly not warrant an inference that Buchman had not obtained special authority to act as' he did. Buchman’s statement that he would not be sure' that Rosenthal was present, but thought he was, on the occasion when he claims to have been specially authorized to endorse the note, falls short of evidence, warranting an inference that Rosenthal was not present.

The rule that the burden of proof is upon the attacking creditor to show the invalidity of the assignment is applicable in this case as in Bernheimer v. Rindskopf, 116 N. Y. 428 . That in the one case the creditor is a plaintiff and in the other a defendant does affect the applicability of the rule. The defence in this action is an affirmative one. The appellant’s counsel makes a point as follows : “ the plaintiff by not insisting—and standing thereon—that there was no evidence which would justify the submission of- the case to the jury, is now estopped from claiming that there was no evidence to justify the finding,” andrefers to several cases as authority. None of these support his proposition. No estoppel arises under such circumstances. After plaintiff s exception to the denial of his motion for a verdict, he did not deprive himself of the benefit of his exception by endeavoring to have Ms case presented to the jury most favorably for his client.

The judgment should be reversed and a new trial ordered, with costs to abide the event.

Truax, J., concurred.

Cases cited

Barrett v. Third Avenue Railroad 45 N. Y. 628 N.Y. 1871-06-06 p. 79
Schenectady & Saratoga Plank Road Co. v. Thatcher 11 N. Y. 102 N.Y. p. 80
Foot v. Sabin 19 Johns. 154 N.Y. Sup. Ct. p. 82
Bernheimer v. Rindskopf 116 N. Y. 428 N.Y. 1889-11-26 p. 84