Cohen v. Irion

7 N.Y.S. 106, 26 N.Y. St. Rep. 1

• Court: New York Supreme Court
• Decided: September 15, 1889
• Status: Published

Opinions

Hardin, P. J.

Upon the evidence, the referee was warranted in finding

that the firm of Beltz & Reusswig was insolvent at the time it was dissolved, March 1, 1880, and that the firm of Beltz & Reusswig owed from $4,000 to $5,000 more than its assets. Upon the dissolution of that firm, Beltz took the assets and “ the whole business, and agreed to pay the firm debts. ” When Henry Beltz purchased an interest of his father in the property, he held a note given by the old firm of Beltz & Reusswig for $1,350, which he surrendered to his father as part of the purchase price for an undivided half interest in the firm assets. The verbal arrangement was made between the father and son for the partnership to exist between them, and after they entered into business a large number of the debts of the old firm of Beltz & Reusswig were paid. It is quite evident that when the son sold to the father, the 10th of June, 1884, his interest in the firm existing up to that time, the firm was in a state of insolvency, and that fact was known to the father and the son. Inasmuch as there was no value in the interest which the son held in the copartnership at that time, there was no good consideration for the notes, amounting to $2,500, which the father executed to the son. The evidence warrants the finding that the father and the son knew of the embarrassed and insolvent condition of the parties at that time. The father continued in business until the 21st of February, 1885, when he made a general assignment; preferring, among other debts, the two notes which he had given to his son, amounting to $2,500. He thus made an attempt to prefer a fictitious debt. The evidence supports the finding of the referee “that on June 10, 1884, the interest of Henry G. Beltz in Beltz & Son was of no pecuniary value, and that the notes given to him by his father for $1,250, and interest, each, and preferred in the assignment of February 21,1885, were without consideration; and that George Beltz was insolvent at the time of giving said notes to his son. ” Bishop on Insolvent Debtors says, in section 232, p. 215, viz.: “An assignment by an insolvent debtor which undertakes to provide for the payment of debts not owing by the assignor, or for amounts in excess of sums justly due by him, is fraudulent and void, for the manifest reason that the provision for such fictitious debts must have the effect either to defraud the bona fide creditors of the assignor, or to delay and embarrass them in the collection of their debts;” and he cites numerous authorities upholding the proposition. See, also, Mead v. Phillips, 1 Sandf. Ch. 83; Webb v. Daggett, 2 Barb. 9; Bank v. Webb, 36 Barb. 291.

Whether the assignment was fraudulent in fact or not was a question of fact for the referee. In Jacobs v. Remsen, 36 N. Y. 669,it was said: “Whether an assignment made by an insolvent debtor, in trust for the benefit of his creditors, is fraudulent in fact, the finding of a referee or of a jury, upon conflicting evidence, that it is not fraudulent, cannot be legally disturbed by the supreme court.” To the same effect in Ball v. Loomis, 29 N. Y. 412. Upon the question of whether the assignment was fraudulent in fact or not, the acts of the assignor prior to, and in contemplation of, making the assignment, bear upon the question of intent, (Peck v. Crouse, 46 Barb. 151;) and, when such an inquiry is opened, the law permits great latitude, (Hubbard v. Briggs, 31 N. Y. 538.)

It is insisted in behalf of the appellant that an error was committed upon the trial in allowing the complaint to be amended so as to allege large purchases by the assignor of the plaintiffs with the preconceived design not to pay for the same; and that an error was committed by the referee in receiving evidence, under such an amended, complaint, of the facts tending to show that the assignor purchased between the 10th of J une, 1884, and the 21st of February, 1885, when he assigned, a large quantity of goods, amounting to $10,-500, for which purchases the plaintiffs brought their actions, and recovered judgments; and in finding such facts in regard thereto as are stated in the sixth finding by the referee. While the plaintiffs were not in a situation to rely upon such fraud for the purpose of avoiding the assignment, (Kennedy v. Thorp, 51 N. Y. 174,) the acts and declarations of the assignor before and at the time of the assignment were legitimate facts upon the question of his intent in making the assignment, and giving the preferences therein mentioned, (McEntee v. Steam-Boat Co., 45 N. Y. 35; Peck v. Crouse, 46 Barb. 151.)

Upon the whole evidence before the referee, he has found as a matter of fact that the general assignment executed by George Beltz, February 21,1885, was “a part of a plan to hinder, delay, and defraud creditors of George Beltz, including the plaintiffs in this action, and to hinder,delay, and defraud them;” and thereafter he found as a conclusion of law that the assignment “referred to in the complaint herein was and is fraudulent and void against these plaintiffs, and should be set aside.” We think the referee was authorized by the evidence before him to find as a matter of fact that the assignment was made with intent to hinder and delay creditors, and was fraudulent and void. We think his conclusion of law upon the facts found is correct. Judgment affirmed, with costs.

Merwin, J., concurs.