Summary
In Hine v. Bowe (114 N.Y. 350) a firm executed to the plaintiff a bill of sale of the firm property at an agreed price, and the plaintiff executed an instrument in return by which he agreed to cancel his indebtedness against the defendant and pay other debts of the firm not exceeding the sum named.
Summary of this case from Young v. StoneOpinion
Argued March 25, 1889
Decided June 4, 1889
Michael H. Cardozo for appellant. William H. Arnoux for respondents. Otto Horwitz for an attaching creditor.
The question presented at the trial was, whether the sale made to the plaintiff Hine was in fraud of the creditors of Epstein Hine. The two instruments constituting the bill of sale and stating the manner in which payment should be made may be taken together, and, for all practical purposes, treated as parts of the same contract. ( Stow v. Tifft, 15 Johns. 458; Rogers v. Smith, 47 N.Y. 324; Knowles v. Toone, 96 id. 534.) It appears that the bill of sale embraced all the partnership property of the firm making it. It is contended that the transfer appears upon the face of the instruments to have been fraudulent as against the creditors of Epstein Hine. This contention is founded upon the fact that the right is reserved to them to direct what claims shall have preference for the purpose of the payment of $750. That would render it void as against such creditors if the transaction, as thus represented, was an assignment in trust for the benefit of the creditors of the parties who made such transfer. ( Sheldon v. Dodge, 4 Denio, 217.) But the contract, as evidenced by the terms of these two instruments, does not necessarily require the construction that any such trust was created. The question upon this proposition is not one of intent of the parties otherwise than as the interpretation of the language there used may require. They may be construed to import an absolute sale at a stipulated price, to be paid in the manner therein provided. And, in that view, the sum to be applied in satisfaction of the debt due the purchaser, and to be paid to other creditors of the firm, would constitute the consideration of the sale rather than an application of the proceeds of the property to their payment. The $750 payable for the benefit of the firm, as it should direct, was a part of the measure of consideration, and if it had been payable directly to the firm, the effect would have been no different. ( Dunham v. Whitehead, 21 N.Y. 131; Brown v. Guthrie, 110 id. 435.) It appears that Epstein Hine owed the plaintiff the debt, which he agreed to cancel. He was at liberty to purchase the property for the purpose of obtaining the payment of the debt due him, notwithstanding the firm was insolvent. This the law permits a creditor to do. ( Dudley v. Danforth, 61 N.Y. 626; Auburn Exchange Bank v. Fitch, 48 Barb. 344.) And when the sale is absolutely and in good faith made to him, no reason appears why the debtor may not as well direct payment of the surplus of the consideration by the purchaser upon his debts, or such debts as he may direct, as to take the money and pay it on them himself. ( Royer Wheel Co. v. Fielding, 101 N.Y. 504.) But appearances do not always represent the intent of parties to transactions relating to the disposition of property when the rights of creditors of the parties making the transfer are involved. An assignment may be intended to create a trust, although it may not necessarily so appear by its terms. And in such case, as to creditors, it will, in its legal effect and consequences, be treated accordingly. ( Britton v. Lorenz, 45 N.Y. 51; affirming, 3 Daly, 23.) Whether that was the nature of the transaction of transfer between Epstein Hine and such plaintiff in this instance, was dependent upon the intent of the parties to it, which upon the evidence was properly a question of fact for the jury. With a view to that question, the defendant's counsel requested the court to charge the jury that if the firm was at the time insolvent, and by the bill of sale intended to make an assignment for the benefit of creditors, it was void, etc. The exception to the refusal was not well taken, because the request did not embrace, within its terms, any suggestion that the plaintiff Hine was in any sense in privity with Epstein Hine in respect to such intent. This was essential, as the nature of the transfer did not rest wholly upon the instrument executed by the firm, but partly, at least, on that made by such plaintiff. And he could not be prejudiced by an intent on their part to create a trust, which the terms of the instrument did not import, unless he was in some manner chargeable with participation in the purpose to do so. Following that was another request to charge the jury that "no particular form is requisite to constitute an assignment for the benefit of creditors, and if the jury find that the instruments in question were intended as a general assignment for the benefit of creditors, the jury must believe that they were intended to pass the entire property of an insolvent firm." This was refused and exception taken. When the rights of creditors of the assignor are involved the court will inquire into the intent of the parties to the transaction for the purpose of characterizing the transfer and its effect. But the court was in this instance required to submit to the jury a mere abstract proposition, unconnected with any suggestion giving it application to the case or to any question of fact requiring the consideration of the jury. As a rule, the court is not required to submit a mere abstract proposition to the jury. ( Moody v. Osgood, 54 N.Y. 488.) The question for them was not whether or not any particular form was essential to such an assignment. The application of the proposition was dependent upon the finding that the instruments were intended as an assignment in trust for the benefit of creditors. The proper instruction to which the defendant would have been entitled, if requested, was substantially that the form of those instruments was not in the way of such construction and effect, if they so found the fact, and in that event they should so treat them and find for the defendant. The further request to charge that if the jury found that the firm did not part with the property absolutely, or if Epstein Hine, or either of them, was to receive any substantial advantage or employment in consideration of the transfer, the defendant should have a verdict, requires no consideration, because it had been substantially charged by the court, and the repetition of the charge in that respect could not be required. The court had charged the jury that their verdict should be for the defendant if they found that Epstein C.F. Hine, or either of them, had any interest in the property attempted to be transferred by them, after the execution of the instruments; and that if the transaction contained any device to cover up property for their benefit or to secure to them, directly or indirectly, any benefit, the transaction was fraudulent and the verdict should be for the defendant. This seems to cover the subject of the last-mentioned request.
The defendant's counsel contends, that the conclusion was warranted that one or more of the debts which the purchaser undertook to pay, were the individual debts of one member of the firm, and that such question should have been submitted to the jury, and, as the consequence of their so finding, the transfer of the property would have been void as against the defendant. It is true that the creditors of an insolvent firm had the right to require that the partnership property be directed to the payment of the firm liabilities. ( Wilson v. Robertson, 21 N.Y. 587; Menagh v. Whitwell, 52 id. 146.) The evidence does not fairly justify the inference that any portion of the consideration of the purchase, was by the agreement appropriated to the payment of any individual debt of one of the members of the firm of Epstein Hine. So much of the debt due the plaintiff Hine as was originally that of Charles F. Hine, became the liability of the firm by virtue of the articles of partnership when the firm of Epstein Hine was formed. And the reference in the plaintiff's agreement to a debt as one to be paid to Messrs. Elsen, was descriptive of a debt for which Epstein alone was primarily liable, as it was produced by a loan furnished to him, but the firm was liable as indorser to the holder of the paper which represented it. And while the firm was not liable to the Elsens, as between it and the holder, the debt may have been treated as that of the firm. And it seems to have been paid by the plaintiff Hine at the bank where the paper so indorsed was discounted. The manner in which the debt was described, did not qualify the relation of the firm as indorser to it. And the provision for its payment may be deemed as made to relieve the firm from its liability, which such relation permitted it to do.
In the view taken, no other question seems to require consideration.
The judgment should be affirmed.
All concur, except POTTER and VANN, JJ., dissenting.
Judgment affirmed.