McCreery v. Gordon

45 N.Y. Sup. Ct. 467

• Court: New York Supreme Court
• Decided: January 15, 1886
• Status: Published

Opinions

Davis, P. J.: .

This action was brought by the plaintiffs to have a sale of personal property, made by the defendant Robert Gordon to the defendant Donald Gordon, adjudged fraudulent and void as against the creditors of Robert Gordon, and to require the defendant Wolf, as assignee of Donald Gordon, to account for the value of the property thus sold, which had come into his hands as such assignee, and to pay the amount of the plaintiffs’ judgment out of the proceeds of such property and the balance to a receiver to be appointed by the court. TJpon the trial, an interlocutory judgment in favor of the plaintiffs was ordered for an accounting on the part of the defendant Wolf, as suck assignee, and the payment by him of the proceeds of the property to the plaintiffs of their costs and judgment, and the residue, if any, to the receiver. The complaint alleges, in substance, that the defendant Robert Gordon was a merchant doing business in Oswego; that the defendant Donald Gordon was also a merchant doing business in the city of Rochester; that on the 2d of October, 1883, the defendant Robert Gordon sold and transferred by bill of sale, to Donald Gordon, his stock of goods and other property in consideration of the sum of $10,000 — $1,000 in cash and the balance in the purchaser’s notes, payable in three, six and nine and twelve months thereafter; that on the next day the defendant Robert Gordon made a general assignment of all his property to one Richard J. Oliphant, of the city of Oswego, exclusive of the property embraced in the bill of sale to Donald Gordon; that Donald Gordon, after the bill of sale to him, commenced to carry on the business in the stores formerly occupied by Robert Gordon, and continued to carry on the same until December 20, 1883, on which day Donald Gordon made a general assignment of all his property to the defendant Wolf for the benefit of his creditors. Richard J. Oliphant, the assignee of Robert Gordon, is not made a party to the action. A motion was made at the trial for a dismissal of the complaint on the ground that Oliphant had not been made a party, or that the proceedings in the action be suspended until said Oliphant should be brought in as a party. The motion was denied and an exception duly taken.

It is insisted by the appellants’ counsel .that the denial of this motion was a fatal error, upon the ground that Oliphant, the assignee of Robert Gordon, is a necessary party to the action, because by the assignment he took title to or some interest in the property which had been sold by Robert Gordon to Donald Gordon. There are several answers to this argument:

First. That the facts appear upon the face of the complaint that are now claimed to show that Oliphant is a necessary party to the action, and no demurrer was interposed to the complaint on that ground, or objection taken in the answer for defect of parties. The omission to demur or to allege the defect in the pleadings is a waiver under the provisions of the Code, and it was too late for the defendants to raise the point at the trial.

Second. The complaint alleges, and the answer admits, that the property sold by Robert Gordon to Donald, prior to the assignment to Oliphant, was not included in the assignment.

This admission on the part of the defendants precludes them from objecting that Oliphant was not made a party, inasmuch as they have, after that admission, no right to insist that the title to the property sought to be reached by the plaintiffs was transferred to or vested in Oliphant.

W e think the court did right in denying the motion to dismiss or to suspend the proceedings until the assignee Oliphant should be brought in as a party.

The plaintiffs were seeking to attack the validity of the sale by Robert Gordon to Donald Gordon and to reach the property sold or its proceeds in the hands of Wolf, the assignee of Donald Gordon. To do this they were bound to establish, by satisfactory evidence, that that sale was a fraudulent one as against the creditors of Robert Gordon. It was contended, on the part of the defendants, that the sale was made in good faith and for a full consideration and without any intent to defraud. As one fact tending to prove that that sale was fraudulent, it was shown by plaintiffs that $1,000 only was paid upon the purchase and the rest was paid in the unsecured notes of Donald Gordon at three, six, nine and twelve months, and that Donald Gordon, within a short time after the sale, had failed and made an assignment of' his property to Wolí. And on the part of the defendants, as tending to prove that the notes, though unsecured, were given in good faith by Donald Gordon, it was offered to show that in the assignment which he made to Wolf those notes were preferred, so that their payment was in fact secured. This offer was excluded, and an exception taken. We think this was error. The defendants had the right to disarm the fact that Robert took unsecured notes from Donald Gordon, who soon thereafter became insolvent, of whatever force it had as tending to show fraud, by showing that the notes were made good and were secured by the preference of the assignment of Donald Gordon.

The plaintiffs produced no other evidence on the question of fraud than that of Robert Gordon. We think a careful examination of his testimony fails to show that the fraud, as found by the court, was sufficiently established. He swore that the sale was made in good faith, without any intent to defraud; that the price paid was the fair and full value of the goods sold, although they were valued at their cost-price at a much higher sum. By producing him as them witness the plaintiffs gave him credit as a witness ; and when the whole of his testimony, on cross and direct-examination, in relation to the sale, is taken into consideration, we think it extremely doubtful whether the findings based upon that testimony were sufficient to establish the alleged frauds. The fact that the purchaser of the goods failed in business three months after his purchase, was not of itself sufficient to uphold the finding of fraud. But if it were, that fact would have been greatly qualified by proof that he preferred the indebtedness upon such purchase in his assignment. The mere fact that at the time of the sale Robert Gordon was insolvent would not of itself vitiate the sale, nor would his subsequent employment, as manager of the stores, where the business was carried on by the purchaser, as it stands explained in his testimony, justify the finding of fraud. There was shown to be a change of possession and a continuation of the business by Donald, for the period of several months after the sale, and until his failure. We are not satisfied that upon the evidence the plaintiffs should have had judgment.

The motion for a new trial should be granted, with costs to abide event.

Brady, J., concurred.

Beady, J.:

.It should be noted that the sale of which complaint is made was suggested by a gentleman connected with the firm of H. B. Clafiin & Co., to whom the vendor was advised to apply for advice, and that he expressly denies any intention to defraud.