Opinion
Argued December 5, 1913
Decided December 30, 1913
W.H. Van Benschoten and John H. Halpin for William H. Aymar, appellant. Hector W. Thomas, William D. Hart and Lewis Squires for Frederick S. Cowperthwait, trustees, et al., appellants.
Samuel Evans Maires for respondent.
These are two judgment creditors' actions tried together to set aside as fraudulent certain transfers of stock by the defendant Frank H. Cowperthwait to his son, the defendant Frederick S. Cowperthwait, as trustee. The trial court found that the transfers were made with the intent and purpose on the part of the Cowperthwaits to hinder, delay and defraud the creditors of Frank. We have reached the conclusion that there was at least some evidence tending to prove the fraudulent intent of both. A serious question arising upon the exclusion of evidence might have been presented by their appeal but for the admissions in their answers.
The alleged fraudulent transfers were made on June 29th, 1904. At that time the defendant Aymar held as collateral security for a debt of Frank forty-nine shares of the common stock of the Brooklyn Chair Company and thirty shares of the common stock of the Brooklyn Factory and Power Company. On May 25th, 1905, Frank received fifty other shares of the common stock of the Brooklyn Factory and Power Company, which were no part of the stocks theretofore transferred by him to his son, and on that day he transferred and delivered to the defendant Aymar twenty-five of said shares as additional collateral security for the payment of his debt. On the 5th of November, 1906, Aymar returned to Frank the certificates for the thirty and twenty-five shares respectively of the power company's stock. Frank caused them and a certificate for five shares, which stood in the name of Frederick personally and formed no part of those fraudulently transferred, to be canceled, and two certificates for thirty shares each to be issued in the name of Frederick as trustee. The substituted certificates were thereupon delivered to Aymar. On the 17th of December, 1906, Aymar returned the certificate for the forty-nine shares of the Brooklyn Chair Company, and Frank caused it and a certificate for one share belonging to him, which was no part of the shares fraudulently transferred, to be canceled and a new certificate for fifty shares to be issued in the name of Frederick as trustee. The substituted certificate was, on December 28th, 1906, delivered to Aymar. The trial court did not specifically find for what purpose the certificates were returned by Aymar to Frank, but the uncontradicted evidence, in part documentary, establishes the fact to be that they were returned for the special purpose of having them transferred on the books of the company to Frederick as trustee, and with the distinct understanding that the substituted certificates, with the addition of the one and five shares respectively, should, when issued, be at once delivered back to Aymar, as was done. The trial court found that, on said November 5th, 1906, and December 28th, 1906, Frank "pledged and lodged with and delivered to" Aymar the said certificates so standing in the name of Frederick as trustee and indorsed by him as trustee in blank, "for the alleged purpose of collaterally securing the payment to said William H. Aymar of an antecedent indebtedness owing by said Frank H. Cowperthwait to said William H. Aymar;" that the original certificates held by Aymar were not surrendered, returned or delivered by him to the defendant Frank "for any special limited or temporary purpose of said William H. Aymar, or for the benefit of said William H. Aymar," but were so surrendered, returned and delivered upon a naked request and solely for the special purpose, use and benefit of Frank; that the substituted certificates were received by Aymar without any inquiry, complaint, objection or demur and were accepted by him "with full knowledge and notice of the fraudulent intent and purpose of the defendant, Frank H. Cowperthwait, and of his said son, the defendant, Frederick S. Cowperthwait, trustee, to hinder, delay and defraud the creditors," etc. There is no evidence whatever to show that Aymar had actual knowledge of the fraudulent intent and purpose of the Cowperthwaits or that he himself had any intent or purpose to defraud the creditors of Frank. That the original pledge to him was beyond attack is conceded.
The judgment against Aymar has thus far been supported on the theory that he lost his lien by the return of the certificates to the Cowperthwaits; that the delivery to him of the substituted certificates with the new shares added constituted a new pledge and that, in accepting it, he was chargeable with knowledge of the fraudulent intent of the Cowperthwaits because it appeared upon the face of the new certificates that they were issued to Frederick as trustee. The general rule, undoubtedly, is that the pledgee of chattels loses his lien by returning them to the pledgor. But that rule has exceptions supported by authorities which were discussed by Mr. Justice JENKS on the first appeal in the Aymar suit to the Appellate Division. ( 137 App. Div. 94.) The record on that appeal did not disclose the purpose for which, or the understanding on which, the certificates were returned by Aymar to Frank. In Casey v. Cavaroc ( 96 U.S. 467, 478) Mr. Justice BRADLEY said: "If the thing, however, is delivered back to the owner for a temporary purpose only, and it is agreed to be redelivered by him, the pledgee may recover it against the owner, if he refuse to restore it to the pledgee, after the purpose is fulfilled. Sharratt v. Vaughan, 2 Taunt. 266; Story Bailm. sect. 299. So, if it be delivered back to the owner in a new character; as, for example, as a special bailee or agent. In such case, the pledgee will still be entitled to the pledge, not only as against the owner, but also as against third persons. 14 Pick. 497." If we were to assume that the return of the certificates to the Cowperthwaits was solely for the purposes of the latter and that they were not thereby in any sense constituted the special bailees or agents of Aymar, still the certificates were returned for a temporary purpose only, to be exchanged for substituted certificates which were to be forthwith delivered to Aymar. There can be no doubt but that, as between the parties, Aymar could have compelled the delivery to him of the substituted certificates which represented the identical shares originally pledged and the additional shares. No creditor was harmed by the temporary possession of the Cowperthwaits and, even assuming that Aymar temporarily lost his lien, no other lien attached in the interval.
Moreover, even if the delivery of the substituted certificates to Aymar constituted a new and independent pledge, there is no evidence to impugn it, and the preexisting indebtedness of Frank constituted ample consideration to support it. ( Lehrenkrauss v. Bonnell, 199 N.Y. 240.) Considering that transaction as wholly independent of the original pledge, Aymar was chargeable with knowledge that the shares belonged to a trust estate, and undoubtedly took them subject to the right both of the trustee and of the cestuis que trustent to reclaim possession. But the plaintiff does not represent the latter.
The judgments should be affirmed, with costs as to all of the appellants except the appellant Aymar, and, as to him, the judgment of the Appellate Division and of the Special Term should be reversed and a new trial granted, with costs to abide the event.
CULLEN, Ch. J., HISCOCK, CHASE, COLLIN, CUDDEBACK and HOGAN, JJ., concur.
Judgments accordingly.