Opinion
Argued December 22, 1893
Decided January 16, 1894
Charles D. Ridgway for appellant. Frederic R. Kellogg for respondent.
The plaintiff, as receiver of the New York Book Company, a manufacturing corporation, brought this action to set aside the transfer of certain property made to the defendants by the corporation in contemplation of insolvency, and in violation of the statute (1 R.S. ch. 18, title 4, § 4), and has thus far succeeded. The answer put in issue the plaintiff's character as receiver and his right to sue as such, and also the charge that the transfer was made in contemplation of insolvency. In a separate defense it was alleged that subsequent to the transfer, and before the appointment of the plaintiff as receiver, third parties, under a judgment and execution against the corporation, sold the property transferred to defendants as the property of the corporation, and under such sale acquired the title thereto, and hence the plaintiff never took any interest therein. The learned trial judge, upon sufficient evidence, found that at the time of the transfer the corporation was insolvent to the knowledge of the directors and managers who made it, and that it was in violation of the statute and void. He refused to find that the property was sold upon execution, in favor of the parties mentioned in the answer, or that the plaintiff's title and right to maintain the action were in any way affected thereby, and to this refusal the defendants excepted and the only question of law presented by the appeal arises upon these exceptions. The plaintiff sought to set aside a fraudulent transfer of the property of the corporation, and to compel payment by the defendants of its value. While the action was in form one in equity, it had all the characteristics of an action at law for conversion. Assuming, as the trial court found, that all the property of the insolvent corporation vested in the plaintiff as receiver, and that the transfer was void, there is no reason why the plaintiff could not have maintained an action at law for the recovery of the property from the defendants or its value. The separate defense pleaded by the defendants, and upon which their counsel now relies, was that the property belonged to a third person by virtue of the execution sale, but the defendants do not in any way connect themselves with this title, or claim any right under it. It is not clear that the facts stated under any circumstances constitute a defense. The general rule is that in actions of trespass or trover, an answer of title in a stranger, without an allegation connecting defendant with such title, is no defense. ( Stowell v. Otis, 71 N.Y. 36; Duncan v. Spear, 11 Wend. 54; Rogers v. Arnold, 12 id. 30; King v. Orser, 4 Duer, 431; Hoyt v. Van Alstyne, 15 Barb. 568; Gerber v. Monie, 56 id. 652.) And while this rule has been modified by statute in actions for the recovery of a specific chattel (Code, § 1723), the legislature has not in terms, at least, abolished it as to other actions. But there is no finding that the sheriff sold the property under the execution, in hostility to the transfer, and the court refused to so find. The sale was upon a judgment of $100, and the amount bid was one dollar. The facts and circumstances disclosed at the trial were such that the trial court was justified in holding that the sale was subject to the transfer to defendants. In other words, the sale did not touch the fraudulent transfer, but left the defendants in the possession and enjoyment of the property, so that at best all the purchaser attempted to acquire was an intangible equity which was not the subject of sale on execution. But perhaps the plainest answer to the defendants' contention is to be found in the evidence in regard to the sale itself. The burden of proof was upon them to establish all the facts stated in the separate answer. They not only failed to show that the sheriff ever made a valid levy upon or sale of the property, but the contrary conclusion was a fair inference from the evidence. It did not appear that the sheriff ever made an actual levy under the execution, and no such fact has been found. The proofs warranted the court in finding that at the time that the auctioneer made the sale for the sheriff, the property was not present or within the view of the persons attending the sale. A sale upon execution of personal property affords no protection to a party defending under it unless he shows first a levy, that is, such exercise of right and dominion by the officer over the property as would subject him to an action of trespass by the owner, in case the levy was not justified, and, secondly, a sale with the property actually present and within the view of the bidders or persons attending the sale. (Code, § 1428; Roth v. Wells, 29 N.Y. 471; Hathaway v. Howell, 54 id. 97.) So that even if the defendants' answer, setting up title in a stranger under a sale upon execution, could be held good as against the plaintiff's claim without any allegation connecting themselves with such title, the facts upon which the defense rested were not established.
The judgment is right and should be affirmed, with costs.
All concur, except BARTLETT, J., not sitting.
Judgment affirmed.