Cruikshank v. Walsh

56 N.Y.S. 894, 39 A.D. 632

Opinion

HATCH, J.

The recklessness in commercial dealing which characterizes this cause makes it, in many of its aspects, the most extraordinary case to which our attention has been called. The action is brought by the plaintiff to set aside an assignment as having been made for the purpose of hindering and delaying creditors, and that the same is therefore fraudulent and void. The assignor is James McCaldin, who, together with his brothers, William and Joseph, had constituted the firm of McCaldin Bros. It is needful, in order that we may obtain a fair view of the case, to examine somewhat the history of this firm. The business was started in a very small way by William J. McCaldin in 1865. In September of that year, James McCaldin joined his brother from Ireland, and worked for him until 1867, when a partnership was formed. The business was selling coal and wood, and the substantial capital of the firm consisted in the energy and business capacity of the two brothers. The business continued to grow to considerable proportions. Joseph McCaldin, the other brother, then about 20 years of age, came to this country in 1876, and worked for the firm until 1878, when he became a member. He put no cash into the firm, except such of his earnings as he had not drawn; but he was given a credit at the time of his entry into the firm of $6,000, and a one-quarter interest in the firm business. William McCaldin withdrew from the firm in 1887 on account of ill health, and the business was thereafter conducted by James and Joseph as equal partners. During this period of time the firm had extended its coal and wood business; was the owner of a lumber yard, [896] several lighters, steamships, and tugboats; and carried on successfully these different branches; it also had a one-half interest in the Morse Iron Works,—all of which appeared to be prosperous and earning money, except the Morse Iron Works. While the value of the firm property over and above its liabilities is not given, yet it is quite clear that a large surplus existed. It is stated generally that in 1894 and 1895 the firm suffered some heavy losses on account of the conduct of James McCaldin in speculations, gambling, and the indorsement of accommodation paper; but a careful examination of the record, in our opinion, leads to the conclusion that no losses whatever were sustained by the firm, except a possible small loss by reason of James’ indorsements of the Abeel note, to "which attention will be hereafter called. The claim is that a large loss was suffered by reason of the investment in the Morse Iron Works; but it appears in the record that while the iron works was financially embarrassed, and was placed in the hands of a receiver, yet it paid at least 65 cents on the dollar. When its property was sold, it was purchased by an agent of the McCaldins, and the firm thereafter organized a stock company called the Eoss Iron Works, dividing the bulk of the stock between the members of the firm, and in the conduct of the business within a year thereafter declared and paid a dividend of 20 per cent. It is therefore evident that so far as the investment of the firm in the Morse Iron Works was concerned, if it be admitted that a loss was sustained under the management of Morse, it was immediately recovered upon the sale and reorganization. Hence it is apparent that, so far as the firm of McCaldin Bros, is concerned, it was prosperous in every branch of its business, suffered no losses, and, at the time when James McCaldin took title in trust to the steamboat Caroline Miller, its prosperity had suffered no diminution, and its earnings thereafter were larger than at any prior time in its history. Although James Mc-Caldin up to June, 1894, owned a half interest in all the business of the firm, and had no outstanding liabilities which were tangible, except as the same are made to appear by bis oral testimony, to be hereafter noticed, yet in that year it suddenly developed that, without any losses, James had become largely indebted to his brother Joseph and to other persbns, his property was swept away, he became suddenly insolvent, and in February, 1895, was forced to make an assignment for the benefit of creditors.

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Cruikshank v. Walsh, 56 N.Y.S. 894, 39 A.D. 632 (N.Y. Ct. App. 1899).

56 N.Y.S. 894 (Cruikshank v. Walsh) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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