Murray v. Joseph

146 F. 260, 1906 U.S. Dist. LEXIS 164
CourtDistrict Court, S.D. New York
DecidedFebruary 21, 1906
StatusPublished

This text of 146 F. 260 (Murray v. Joseph) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Murray v. Joseph, 146 F. 260, 1906 U.S. Dist. LEXIS 164 (S.D.N.Y. 1906).

Opinion

HOLT, J.

(charging jury). This action is brought by the trustee in bankruptcy of the firm of Gilroy & Bloomfield against Abraham A. Joseph and Louis K. Gilroy; Gilroy having been a member of the firm of Gilroy & Bloomfield, and Joseph being a lawyer who acted in some professional capacity in the matters to which the suit relates. The charge in the complaint is, in substance, that Gilroy and Joseph entered into a conspiracy to transfer property belonging to the firm of Gilroy [261]*261& Bloomfield, for the purpose of hindering, delaying, and defrauding the creditors of the firm. In another part of the complaint it is alleged that Joseph aided and abetted Gilroy in making a transfer of property, and that the property was transferred by Gilroy to Joseph for the purpose of hindering, delaying, and defrauding the creditors of the firm. The property alleged to have been transferred is a certain amount of doth, which is alleged in the complaint to have been of the value of $4,.“>00, and certain payments in cash amounting to $1,250, so that the complaint demands judgment for $5,750, with interest on it from March 19, 1904, which is the date on which it is alleged that the conspiracy took place to transfer this property. A conspiracy is defined in the law as an agreement between two or more people to do an illegal or criminal act, or to accomplish a legal act by criminal or illegal means. The charge here is a conspiracy to transfer property in fraud of creditors. A transfer of property with intent to hinder, deby, or defraud creditors is an illegal act under the state law. if it takes place before any bankruptcy occurs, it is an illegal act. If it takes place rffter bankruptcy occurs, and it is done knowingly and intentionally, it is a criminal act tinder the bankruptcy law, as well as an illegal act. In either case a trustee in bankruptcy has authority under the bankrupt act to bring a civil action to recover for the transfer of property, whether it is done in fraud of creditors before the bankruptcy occurs, or whether it takes place after .the bankruptcy occurs. The plaintiff’s claim generally in this case is that Gilroy transferred this cloth and cash to Joseph with intent to hide it and conceal it from the creditors. Gilroy’s claim, as I understand it from his testimony, is that this was done to enable Joseph, as his attorney, to effect a settlement with his creditors. I suppose he would' claim that the property was intended to be applied in that way, to settle with his creditors, and if the settlement was not accomplished, and if the estate had to be settled in bankruptcy, the property was to be turned back to the trustee. Joseph’s claim, as I understand it, is, in substance, that this property was intended to be turned over to Mrs. Korn in payment of a debt, or .upon account of a debt, and that the only part which he took in the transaction was as attorney for Mrs. Korn. It appears in evidence in this case that Mrs. Korn was a creditor of this firm. If a debtor owes a just debt to a creditor, he can pay that debt at any time before bankruptcy occurs, and making such payment is not a crime nor an illegal act. It may be a preference, and if bankruptcy occurs subsequently, and the payment has taken place within four months, with knowledge of the insolvency, and with reasonable ground on the part of the person who gets the payment to suppose it was intended as a preference, the trustee in bankruptcy can require it to be paid back; but .there is nothing done which is illegal or criminal when a debtor pays a creditor, although he knows that by paying a particular creditor that creditor will get payment in full, and that the rest of his creditors will not. So that in this case, if you should come to the conclusion that all that Mr. Joseph was doing in this case was to endeavor to get Mrs. Korn’s debt paid, and that all he did in that respect took place before the bankruptcy occurred, then you should find a [262]*262verdict in his favor in this case. But after the bankruptcy occurred, after the petition was filed, and the order appointing the receiver was made, then neither the person against whom the petition was filed nor Joseph nor anybody else would have any right to take the property of the bankrupt, and apply it to the payment of a particular creditor. The bankrupt’s property under those circumstances belonged to the receiver, and was to be held by the receiver pending the adjudication in bankruptcy, and if the adjudication in bankruptcy took place, it was then to be applied ratably and equally to all the creditors, and not to some particular creditor to the prejudice of the others.

Now, in order to understand the bearings of the question which is presented to you, it is necessary to comprehend somewhat the general facts of this case, and if in stating those facts I state them in a way different from 3'mir own recollection of them, you must be guided by your own recollection; you are the judges of the facts.

It seems that this firm of Gilroy & Bloomfield were in business, and that along in January, I think in January or February, 1904, an arrangement was made by which Mrs. Korn put between $8,000 and $9,000 into the business. There was a man named Feinman who was a salesman in the employ of Gilroy & Bloomfield, who knew Mr. and Mrs. Korn, and he introduced' them to the members of the firm of Gilroy & ■ Bloomfield, and negotiations- were entered into which resulted in Mrs. Korn putting into the firm this sum of between $8,000 and $9,000, and Mr. Korn being employed there. He was to be paid a salary, and Mr. Gilroy says he was to be paid also a percentage of the profits of the business, and at the time that this transaction took place, or' subsequently, an assignment of certain accounts was made by the firm of Gilroy & Bloomfield to Mrs. Korn to secure this loan. Mr. Gilroy says that originally there was no agreement to give this assignment of accounts. He says she was to loan money in consideration apparently of the employment of her husband, and that the giving of the assignment was a subsequent suggestion.

The evidence of the other side is to the effect that it was all a part of the original arrangement, and that she was to have the assignment of these accounts as security for the repayment of this loan. At all events, it was subsequently executed, and a short time thereafter dissatisfaction seems to have arisen between the Korns in regard to- this loan. They consulted Mr. Joseph on the subject, as they had originally consulted him in regard to getting the assignment, and they were in consultation with him thereafter. They claimed that they had been defrauded or deceived, asserting that some of these accounts had been pledged to banks. Mr. Gilroy says that it was only intended to give them an equity in these accounts as security, and that that fact was explained to them. At all events, without going further into detail in that matter, dissatisfaction arose. Joseph was consulted, and he advised them to say nothing’; to let the business go on, and to draw out, on account of their claim, from the profits of the business as far as they could without making any attack. Then subsequently some altercation arose between Feinman and Bloomfield, Feinman [263]*263claiming that Bloomfield had been taking goods out of the business, and in that way affecting the interest of the Korns, which resulted in an altercation; so that generally, down, apparently, to about the middle of March, there was a condition of dissatisfaction and controversy there in this concern. Joseph says that he knew they were insolvent and that they were going to fail, and that things were getting worse and worse.

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Bluebook (online)
146 F. 260, 1906 U.S. Dist. LEXIS 164, Counsel Stack Legal Research, https://law.counselstack.com/opinion/murray-v-joseph-nysd-1906.