Dalrymple v. . Hillenbrand

Andrews, J. Assuming that the adjudication in bankruptcy operated as a dissolution of the firm of Altenbrand Bros., and that thereafter no authority was given by Louis to Henry Altenbrand to execute the note in suit in the name of the firm, the finding of the referee that the note was made by the firm cannot be supported. But this finding was immaterial, and does not affect the right of the plaintiff to recover. The defendant, by indorsing the note, impliedly contracted that it was made by the copartnership firm in whose name it was executed, and he cannot deny the fact when sued upon the indorsement. (Erwin v. Downs, 15 N. Y., 575; Remsen v. Graves, 41 id., 471; Turnbull v. Bowyer, 40 id., 456.) The principal question made upon this appeal is, that the note is void by force of section 83 of the bankrupt act of March 2, 1867. That section declares that “ any contract, covenant or security made or given by a bankrupt, or other person, with or in trust for any creditor for securing the payment of any money, as a consideration for or with intent to induce the creditor to forbear opposing the application for discharge of the bankrupt, shall be void.” The referee finds that the defendant indorsed the note at the request of the makers, who delivered it to Chamberlain Bros., and that it was by that firm transferred to the plaintiff for value before due. Altenbrand Bros, were indebted to Chamberlain Bros, for malt purchased in December, 1871, and on the 16th day of *10 February, 1872, Altenbrand Bros, were adjudged bankrupts in proceedings taken on the petition of other creditors of the firm, filed January 15, 1872. When the note in question was given, the proceedings in bankruptcy were pending. If the note was given upon the consideration, or with the intent specified in the section of the bankrupt act referred to, it was void in the hands of the plaintiff, although he is a bona fide holder of the instrument, as no reservation or exception is made in favor of innocent holders of negotiable securities made in violation of the law. It is unnecessary to determine the question. Whether the note was given upon the consideration, or with the intent specified in this section, was a question of fact, upon which there was evidence given npon the trial, but there is no finding of the referee in respect to it. The referee was requested by the defendant to find that fact in his favor, and he refused. To this refusal there is an exception, but it is well settled that an exception to a refusal of a referee to find a fact in issue, presents no question for review in this court, unless the fact which he was requested to find was conclusively proved. (Van Slyke v. Hyatt, 46 N. Y., 260; Lefler v. Field, 47 id., 408; Morgan v. Mulligan, 50 id., 665; Rogers v. Wheeler, 52 id., 263.) This cannot be said in respect to the fact in question. The note was given on account of the debt to Chamberlain Bros. The bankruptcy proceedings against Altenbrand Bros, were taken adversely to them by creditors, and at a time when they were endeavoring to effect a compromise of their debts. Chamberlain Bros, afterwards procured the adjudication to be made upon the petition which was filed without their privity, and there is no evidence that they sought to coerce Altenbrand Bros, to give the note in suit by refusing to sign the compromise and threatening to prosecute the proceedings in bankruptcy. That there was any promise or intent to forbear opposing the discharge of the bankrupts is denied by the agents who acted for them, and this intention is not a necessary inference from their conduct. *11 The position taken that the giving by Altenbrand Bros, of their note indorsed by the defendant, for the debt to Chamberlain Bros., was a fraudulent preference within the bankrupt act, is not tenable. The law provides for an equal distribution of the estate of a bankrupt among his creditors, and an attempt to appropriate it in violation of the principle of equality among creditors, is a violation of the act. But the transaction in question was not an appropriation of the assets of Altenbrand Bros, to the use of Chamberlain Bros. They secured an advantage, because the bankrupts were willing and were able to procure the defendant’s indorsement for their benefit, but it was not an advantage secured out of the estate of the bankrupt. Their assets were not diminished; there was no pledge or transfer of any part of their property, and their liabilities were not increased. The counsel for the defendant, on the argument, insisted that the note was used by Altenbrand Bros, in violation of a condition imposed by the defendant when his indorsement was made, that a compromise should be first obtained with all their creditors, and it was also insisted that the note was given by the makers to Chamberlain Bros, upon a secret agreement in fraud of the compromise, which had been entered into by them with the other creditors. There are two answers to these positions: first, neither of these defences were pleaded; and, second, admitting the facts charged to be true, they are not available to defeat a recovery by the plaintiff, who stands upon the record as a bona fide purchaser of the note before maturity. It was shown, affirmatively, that he paid full value for it, and it was not shown that he had notice of the unauthorized use of the paper, or of any fraud committed by Chamberlain Bros, in respect to the compromise. The burden of proving notice was upon the defendant. (Byles on Bills, 118.) There were exceptions taken to the rulings of the referee in admitting and rejecting evidence, many of which are unimportant in view of the disposition made of the main question in the case. *12 We have carefully considered them, and are of opinion that no error was committed- by the referee which calls for a reversal of the judgment. The judgment should be affirmed. All concur. Judgment affirmed.