Bagley v. . Bowe , 6 N.Y. St. Rep. 842 ( 1887 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The trial judge directed a verdict for the defendant on the ground that the assignment of February 3, 1881, made by Dart, one of the firm of Swezey Dart, to the plaintiff, was void, as having been made with intent to hinder, delay and defraud creditors. The assignment in form was a general assignment for the benefit of the creditors of the firm of Swezey Dart and the individual creditors of Dart, and was executed by Dart in the firm name and also as an individual. It purported to transfer and assign to the plaintiff all the property of the firm, "real, personal and mixed, not exempt from attachment by law," for the benefit of the firm creditors, and also the individual property of Dart for the benefit of his individual creditors. The General Term affirmed the judgment, and the sole point now presented is whether the question of fraud should have been submitted to the jury.

In support of the judgment it is claimed that the assignment was void on its face, but it is also insisted that the evidence of fraud, extrinsic to the instrument, was so conclusive that the court was justified in withholding the case from the jury, and in ruling, as matter of law, that fraud in fact was established. The provisions in the instrument of assignment upon which the defendant relies to establish its invalidity relate to the powers conferred upon the assignee, first, "to compound, compromise and release" debts owing to the assignor, and, second, to "execute, acknowledge and deliver in the name of the said parties of the first part (assignors), as such copartners, or in the name of the said Joseph Dart, individually, for such consideration, in money or other thing as he may deem sufficient, all such deeds, bills of sale or other conveyances, in writing, under seal or otherwise, and all such releases, contracts and other instruments in writing or under seal as in his discretion may from time to time be necessary to carry into effect the intent and purpose of this instrument." The validity of a provision in a general assignment for the benefit of creditors, authorizing the assignee to compound or compromise debts owing to the assignor, has been recently affirmed in this court, and is no longer an open question. (Coyne v. Weaver,84 N.Y. 386.) The stress of the argument against the validity of the instrument of assignment is placed on the clause conferring upon the assignee the power to execute deeds, bills of sale, or other conveyances in writing, "for such consideration in money or other thing" as he may deem sufficient. This clause, it is insisted, authorizes the assignee to sell or dispose of the assigned property upon credit, or upon any consideration, whether in money or property. If this is the true construction of the provision, there can be no doubt of its invalidity. The law justifies and upholds trusts created by insolvent debtors of their property, through general assignments for the benefit of their creditors, only when they provide for the immediate and unconditional surrender and application of the assigned property to the payment of their debts, and any attempt to confer upon the assignee the power to delay the collection and conversion of the assets into money, is held to be unlawful and to vitiate the assignment. It has, therefore, been held that an authority contained in the assignment to sell the assigned property on "credit," or for "cash or upon credit" as in the judgment of the assignee may appear best, or to convert the property into "money or available means," renders the assignment fraudulent and void. (Nicholson v. Leavitt, 6 N.Y. 510; Burdick v. Post, id. 522, Brigham v. Tillinghast, 13 id. 215.) Construing the clause in question, in view of the general rule of construction of written instruments, that a construction will be preferred which will uphold, rather than one which will destroy them (a rule applicable as well to insolvent assignments as to other instruments), and the further rule that in construing a particular clause, the whole context may be considered, we are of opinion that the clause in question should not be deemed to confer authority to sell the assigned property on credit, or to exchange it for other property. The language of the whole paragraph seems more appropriate to a mere power of attorney than to an instrument of transfer or conveyance. It authorizes the assignee to execute deeds, bills of sale, etc., "in the name of the parties of the first part" (the assignors), a power which they would very rarely, if ever, find it necessary to exercise. But the power is in express terms limited to instruments which the assignee may deem necessary or requisite "to carry into effect the intent and purpose of this instrument." Looking at the preceding parts of the assignment it is found that the granting clause is followed by a declaration of the trusts upon which the assignee is to take the property, the first of which is "to take possession of and sell the same at public or private sale, and to convert the same into money," and next to "apply the proceeds thereof," after deducting necessary costs, charges and expenses, to the payment of the debts of the assignors, in the order specified. This explicit authority and direction to sell the assigned property and convert the same into money, cannot be reconciled with the subsequent power to execute in the names of the assignors, deeds, bills of sale and other conveyances, "for such consideration in money or other thing" as the assignee may deem sufficient, provided the latter clause, as is claimed by the defendant, authorizes the assignee to dispose of the assigned property on credit, or to exchange it. But we are of opinion that this supposed inconsistency does not in fact exist. It is not difficult to imagine cases where in the adjustment of property interests held in common by the assignors and third persons, mutual releases and transfers might become necessary, setting apart in severalty to each owner his interest in the common property, or where in the process of conversion it might become necessary for the assignee to execute instruments, upon a consideration other than the payment of money, affecting the assigned estate, but not involving any sale or exchange. It is not improbable that the draughtsman inserted this clause without any very definite purpose, following some precedent. But however this may be, the provision is quite too vague to overcome the explicit direction in the prior clause, requiring in substance that the property should be sold for money, and especially in view of the expressed purpose of the latter clause, that the power thereby given was "to carry into effect the intent and purpose" of the instrument.

Two extraneous matters are relied upon to establish the existence of fraud in fact, first, that the assignor, Dart, intended to withhold from the assignee and the creditors ninety-six bales of twine owned by the firm of Swezey Dart, upon the false and fraudulent pretense that they belonged to the Wilton Company, of which his mother-in-law was the proprietor, and, second, the matter of the "Peerless" trademark, belonging to the firm, used to designate warps manufactured for and sold by the firm. The question whether the judge was authorized to take from the jury the question of fraudulent intent arising upon the extrinsic facts is to be determined in view of the settled rule that to justify the court in directing a verdict in any case upon the facts the evidence must be undisputed, or so certain and convincing that no reasonable mind could come to but one conclusion. If there is ground for opposite inferences, and a conclusion either way would not shock the sense of a reasonable man, then the case is for the jury, although the judge may entertain a clear and decided conviction that the truth is on this or that side of the controversy. The trial court or the General Term is authorized to set aside a verdict and direct the issue to be retried before another jury, if in its judgment the verdict is against the weight or preponderance of evidence, but in a case which of right is triable by jury the court cannot take from that tribunal the ultimate decision of the fact, unless the fact is either uncontradicted or the contradiction is illusory, or where, to use a current word, the answering evidence is a "scintilla" merely.^*

* * * * * * * The judgment should be reversed and a new trial ordered.

All concur.

Judgment reversed.

^* The omitted portion of the opinion is taken up with a discussion of the evidence, the court reaching the conclusion that it did not justify the withdrawal of the case from the jury.