Milliken v. Dart , 33 N.Y. Sup. Ct. 24 ( 1881 )

Davis, P. J.:

In the first of the above entitled appeals the motion to vacate the attachment was made at chambers, before the judge who granted the same, and the motion was denied. The reasons for denying the same, assigned by the learned judge in his memorandum, are as follows:

“ The assignment gives the assignee power to compromise all claims in words; and also to sell on credit by giving power to execute bills of sale on terms other than money, and is within the cases making such powers avoid the assignment.”

In the second case the motion was made at chambers held by another justice, and lie refused to hear the motion upon the merits, upon the ground that the question had been disposed of by the former Special Term.

The attachments were granted upon affidavits showing that the defendants'in the action had made and executed a general assignment to one John A. Bagley, for the benefit of their creditors, of all their property as co-partners, and that in the same instrument, the defendant Dart had assigned all his individual property for the same purpose. It is neither claimed nor shown that the assignment was made, either by the firm or by Dart, with any actual or personal intent to defraud their or his creditors, but that the assignment itself under the authorities is invalid and void as against creditors, because it contains some provisions alleged to be not authorized by law. There is no doubt about the validity of the assignment as between the assignors and the assignee; but the first question to be considered is, whether the making of such an assignment, which carries to the assignee the title to the whole of the property of the assignors as against the latter, is alone sufficient evidence under the provisions of section 636 of the Code of Civil Procedure, to show that the assignors have assigned, disposed of, or secreted their property with intent to defraud their creditors. This depends upon the construction to be given to the language of the section which, amongst other things, provides that a warrant of attachment may be issued when it is shown to the satisfaction of the judge granting the same, that the defendant has assigned, disposed of or secreted his property with intent to defraud his creditors. The only evidence of intent in this case is that to be inferred from the supposed fact that the assignment, a copy of which was annexed to the affidavit, contains provisions upon which the court would adjudge it invalid as against creditors.

Ve think the Code requires an actual, personal intent to defraud, and the manifestation of that intent in a different form than the mere execution, in good faith, of an assignment which transfers all the property of the debtor to an assignee for the benefit of creditors; and that the intent to defraud is not sufficiently shown by the mere fact that such assignment contains some invalid provision of which the creditors may take advantage to defeat it. The leaking of.an assignment may, of course, in some cases be a portion of the evb dence of the intent to defraud, or a part of the scheme carried out by the debtor with that design; but there must be something more to establish the intent required by the Code, where the assignment is made in good faith, and without any actual intent to defraud, than the mere fact that an invalid provision is contained in the assignment. Where there is nothing in the case but that fact, an attachment, if. granted, cannot be upheld.

It has been settled by the Court of Appeals in Thurber v. Blanck (50 N. Y., 80), and by this court in Smith v. Longmire (24 Hun, 257), that an attachment cannot be levied on property in the hands of an assignee under a general assignment of all the property of the debtor, notwithstanding the assignment is fraudulent in law.

In this case it was satisfactorily shown by the appellant that' no intent to defraud, in fact, existed. Sweezey, one of the members of the firm, had committed forgeries to a large amount and fled the country. His criminal conduct had rendered it necessary that steps should be taken by the other partner to protect the creditors of the firm, and his own creditors, from the consequences of the absconding debtor’s crime, and with that view alone he executed the assignment prepared by counsel, which contains the provisions supposed to render it void. There is nothing in the provisions of the Code which authorizes an attachment upon that condition of things alone. We think, upon this ground, the motion to vacate the attachment should have been granted.

Another ground for sustaining the attachment is urged here, which does not seem to have been considered by the court below. That is, in substance, that the defendant Hart, one of the assignors, has since the making of the assignment used and claimed to own a trade-mark which should have been assigned. In respect of that it is enough to say, that if the trade-mark was assignable property, it is assigned by the assignment, and the title to it is wholly vested in the assignee. A subsequent use of it by Hart, under a claim that it is not assignable, is no evidence of a disposition of property with intent to defraud. If his claim be correct, the property is tangible and in reach of his creditors, and not disposed of. If the claim be not well founded, the assignee may take jiossession and dispose of it for the benefit of the creditors. It is, to say the least, a disputable question, whether property in a trade-rnark is the subject of attachment or levy under execution. (See Hegeman v. Hegeman, 8 Daly, 6.) But it is not necessary to consider that question, as nothing is shown in respect to the use of the trademark, that in our judgment indicates the fraudulent intent required by the provisions of the Code under which these attachments were issued.

The result is, that the orders in both cases are reversed and the attachments vacated, with ten dollars costs of the appeal, besides disbursements in each case.

Beady and Daniels, JJ., concurred.

Orders reversed and attachments vacated, with ten dollars costs and disbursements in each case.