Beattys v. Straiton

Miller, J. :

Before proceeding to discuss the questions which we consider decisive of this appeal, it may not be amiss to call attention to the fact that the appellants’ brief has been of no assistance to "the court because the statements of fact do not have any folio references to the record, and wé have been unable-hr find in. tlie record support for some of them.

There is a suggestion in the brief of the respondent that the: instrument adjudged fraudulent and void amounted to an unlawful preference within the Bankruptcy Act; but it is quite apparent', that that question has not been litigated. The plaintiff’s theory, 1 stated at the commencement of the trial, was that the assignment ^ was voluntary and was made when the said' Martin Y. Cook .was j insolvent and was, therefore, fraudulent and void as to. creditors.

The case was tried upon that theory, and the judgment so adjudges. Mo attempt whatever was made to prove actual fraud or an intent to create an unlawful preference. The plaintiff rested upon proof of the adjudication of bankruptcy and of the fact that the financial condition of the bankrupt had remained the same for upwards of a month preceding that time.

The learned counsel for the respondent ingeniously argues that the legacy to Christine Straiton, charged upon the bequest to Martin Y. Cook and Arthur E. Helmricli, created no lien upon the assets of the copartnership, for the reason that the testator had an equitable interest only; that, by continuing the firm business, the" survivors did not accept the bequest or become liable to pay the charge thereon; that, therefore, when the instrument in question was made Martin Y. Cook was under, no obligation to pay the legacy of §5,000 to his sister, and that she had no interest, lien, claim or charge upon the firm assets or business which she could assign. Mo doubt the legal title to copartnership assets passes to the survivors. But that does not preclude us from giving effect to the.will of the testator. While the surviving partners took title for the purpose of liquidating the copartnership, it is quite evident that they accepted the bequest and continued the business, not as survivors but as successors to the old firm. Moreover, it appears that the bequest was of individual property as well as of the testator’s interest in the copartnership. While the record is meagre -of facts showing the condition of the business at the death of said testator and the purpose of the survivors in continuing it, it seems to me that its continuance for three years, in the absence of any evidence to the contrary, requires the inference that the legacy was accepted and that tlier.eby the obligation to pay the charge upon it was incurred. If so, there was ample consideration for the agreement of September 29, 1900. Irrespective of the literal words of the agreement, its plain purpose was to secure the payment of that obligation. A method of paying it was provided for, upon the completion of which a release was to be given.

But in any view of the case the Statute of Limitations is a bar to the maintenance of the action. At least as early as December 17,1900, the plaintiff was chargeable with knowledge of the assignment and of the consideration for it. But it is claimed that he did not know that the said Martin Y. Cook was insolvent on the 29th day of September, 1900, although he knew that there was an adjudication of bankruptcy in the United States District Court on' the 15th of October, 1900. The plaintiff knew every fact upon which he relied to maintain this action except the' fact that the financial condition of said Cook remained unchanged for at least a month prior to the adjudication in bankruptcy, and we think he was chargeable with that knowledge as matter of fact, if not as matter of law. The respondent is quite right in saying that he was not required to bring and probably would hot have been justified in bringing an action on mere surmise or suspicion, and that the statute does not begin to run until knowledge of the facts.necessary to maintain the action is acquired. (Erickson v. Quinn, 47 N. Y. 410.) But surely a voh untary assignment on September t.wenty-nintli, if it was voluntary, followed by an actual adjudication of bankruptcy on October .fifteenth should give rise to more than a suspicion of insolvency on the twenty.-ninth. While an adjudication of bankruptcy on a given date would not create any presumption as to insolvency on a given date prior thereto, proof of an assignment, followed by such an adjudication within two weeks, would at least be sufficient, if unexplained, to justify a finding of insolvency at the time of the assignment. While knowledge is necessary to set the statute running, a liarty cannot close his eyes to facts upon which any reasonable man would act. It is claimed that the plaintiff did not acquire knowledge of the' said Cook’s insolvency until the latter testified in. May, 1903, in the action brought by William Cook, as trustee; but in his verified answer, interposed in that action, he made precisely the same claim which he now asserts in this action, and there is no pretense that he had any more knowledge when he verified that answer in March, 1903, than he had or was cjiargeable with on the 17th of December, 1900. The said testimony had not then been given. . ,

Upon the facts disclosed by this record then the action was barred on the 17th of December, 1906j two years, four months and fourteen days before it was brought, unless some part of that time is to be excluded pursuant to section 412 of the Code of Civil Procedure. With respect to the action in which this plaintiff’s counterclaim was interposed, all we. know is that it was pending on March 24, 1903, when the answer was verified, and that it terminated June 26,1903. It can hardly be supposed that the action was pending more than two years before the answer was interposed, but the respondent contends that the burden was upon the defendants to establish the bar of the Statute of Limitations, and that for aught that appears in this redord, the said action may have been pending during allx the time from December 17, 1900, to June 20, 1903. Section 382 of the Code of Civil Procedure provides that such an action as this must be brought within six years. Section 412 provides an exception, and it does not seem necessary to cite authority upon the proposition that one who claims under an excejition must bring himself within it.

The judgment should be reversed on the law and the facts, and a new trial granted, with costs to appellants to abide the event.

Ingraham, P. J., and McLaughlin, J., concurred; Dowling and Laughlin, JJ., dissented.