Hall v. . Stryker

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 598 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 599 The only question discussed in the opinion of the general term, upon rendering the judgment of the Supreme Court, which is appealed from, was, whether, upon the assumption that the attachment was regular and operative against Hall, the sheriff could justify the seizure of property which Hall had conveyed to the plaintiff before such seizure, upon showing that the conveyance was fraudulent against the creditors of Hall. Having come to the conclusion that property fraudulently conveyed could not be taken under such process, it was unnecessary for that court to consider the questions which arose upon the validity of the attachment. Having arrived at a different opinion upon the point on which the case was there determined, we are obliged to pass upon some of the other exceptions. Waiving any discussion of the effect of that process, if it should be found to have been issued upon insufficient grounds, we come directly to the consideration of the alleged defect in the affidavits which were laid before the justice. It was sufficiently proved by them that an indebtedness had existed in favor of Cameron against Hall, and the point of the objection was, that it was not shown that the cause of action upon such indebtedness had been transferred, so as to become vested in Dewitt C. Hay, who sued out the attachment. It is suggested, with some probability, that a clerical mistake had occurred, by which the word "to" after the word "assignment" had been changed from the word "from." If the sentence had been written in the way which the supposition assumed to have been intended, the transfer would have been more precisely and circumstantially set forth; but we must read it as it actually appears in the paper. The allegation in the affidavit, as it stands, is positive, that the deponent, when he applied for the attachment, was the owner and holder of the demand which Cameron formerly had against Hall, the character of which is briefly set out in the preceding part of the *Page 600 affidavit, and it appearing to be a demand arising upon contract, and, therefore, assignable in its nature. The affidavit proceeds with an attempt to state the manner in which the demand became vested in the deponent; and the statement is, that he is such owner and holder under an assignment made by Cameron to Frank Hay, the date of which is given. It is not to be understood as an allegation, that the deponent took his title by means of that assignment alone, but only that he derived it from, or held it under that instrument. It is the same form of expression which is commonly used to indicate the source of title of a person to any specific, real or personal estate. He is said to hold under a deed which is designated, or a person who is named, without a detail of the mesne conveyances. The import of the whole statement is, that "Hall owed Cameron such a sum. Cameron assigned the demand to Frank Hay, and I am now the holder and owner of the demand under that assignment, that is, by title derived from Frank Hay." It would, perhaps, have been more satisfactory if the conveyance by which the title had passed from Frank to the applicant had been stated; but this was a matter submitted to the judicial discretion of the justice, and he held it sufficient. If the affidavits, after setting out a cause of action, had stated only that it had been vested in the plaintiff, who had become the holder and owner of it, I am satisfied that it would have conferred jurisdiction upon the justice to issue the attachment. The statute, by requiring the application for such process to be passed upon by a judicial officer, assumes that a judgment, in its nature judicial, is to be exercised, and unless the affidavits are wholly defective upon some point which is necessary to be established, the process cannot be impeached as void for want of jurisdiction in the magistrate issuing it. (VanAlstyne v. Erwin, 1 Kern., 331.) The point upon which the case was decided at the general term is one of considerable importance. Conveyances made with intent to defraud creditors, pass the title as between the parties, and are void only against the creditors of the party making the conveyance. As against them such conveyances *Page 601 are utterly void. It is, moreover, a general rule of law that creditors at large cannot challenge such a conveyance. As they cannot, without process against the debtor, interfere with the possession of his goods, if he had made no conveyance of them, so the fact of his having made a conveyance, with intent to defraud them, gives them no greater rights. The transfer being void as to them, the law considers the property quoad them, as still the property of their debtor, and if they would seek its application towards the satisfaction of their debts, they must resort to the same legal remedies which would be necessary if it were really the property of the debtor. But when the creditor has procured legal process, such as the law allows a creditor to have against the property of his debtor, he has acquired the standing of a creditor in respect to all the property of his debtor; and that which he has conveyed with the intent forbidden by the law (the conveyance being void), is as much his, in the judgment of the law, and as fully subject to the process, as if the conveyance had not been made. Under certain circumstances, the law has, upon motives of policy, allowed an ex parte determination as to the existence of the debt, and permitted process to issue against the debtor's property upon such determination, providing, however, for sufficient security to the debtor, if upon a regular trial the alleged creditor shall fail to establish the existence of the demand. One of the cases in which this summary procedure may be taken is where the debtor has assigned any of his property with intent to defraud his creditors. Suppose he has assigned, as Hall did in this case, the whole of his goods, it cannot be doubted that the creditor would be entitled to the attachment on establishing the fraud. It is one of the cases expressly provided for in the statute. It might be the baldest cover, a mere gift executed by delivery with a declared purpose to cheat his creditors, yet the title would pass as between the parties, and the remedy which the law has provided would be utterly ineffectual if the property could not be seized on the attachment. The argument principally urged in the opinions of the *Page 602 Supreme Court, and by the plaintiff's counsel, is that there can be no proper adjudication of the fact of indebtedness upon an exparte hearing in the absence of the parties to be affected by the determination. I think this is an objection which, if at all founded, lies against the statute. As regards the debtor, confessedly, the debt is allowed to be established on the exparte hearing, to the extent of authorizing the seizure of his property. As regards the alleged fraudulent assignee, it is objected that he is allowed no standing in court, and cannot be heard or allowed to produce evidence upon the question of the existence of the indebtedness when the issues come on to be tried, and it is urged that thus a question vital to his title is determined conclusively, on a trial to which he is not a party, and in which he cannot regularly intervene. The property which has been assigned to him should not, it is said, be appropriated to the plaintiff's alleged debt, unless the fact of such debt is judicially established; and it cannot be established, so as to affect him in a suit to which he is a stranger. This argument assumes, and I think properly assumes, that in his action against the sheriff, or the party who has promoted the seizure, the attachment, if regularly issued, is conclusive, and that he can only litigate the question of the validity of the transfer to himself. That question is open to him. If his purchase was unaffected by fraud, he need not wait for the determination of the principal case, but may resort to the same remedies which any party is entitled to, whose property is wrongfully taken or converted. In such an action, though he cannot controvert the process upon any ground except the want of jurisdiction in the officer issuing it, the question of the indebtedness of his vendor will necessarily arise, as fraud cannot be predicated of a conveyance made by a party who is free from debt; and in this way the existence of the debt upon which the attachment may be granted will generally be brought in question. But he is not left solely to an action, for he is entitled to a summary inquiry as to the ownership of the property, and if it is found to be his, or in other words, if his title is found to be free from fraud, he may have it immediately *Page 603 returned to him, with the expenses of the proceedings. (Code, § 233; R.S., 5th ed., vol. 3, p. 80, §§ 10-12.) A case may happen, it is true, where the conveyance was made with intent to defraud the creditors of the party making it, and yet on the trial it may turn out that the plaintiff will fail to recover in the attachment suit; and the provision for security does not extend to the indemnity of a fraudulent purchaser whose goods have been seized. This may have been a casus cmissus in the act, or it may be that the legislature did not think it sound policy to indemnify such a purchaser against the temporary inconvenience of having the property withheld from him during the pendency of the suit against the defendant in the attachment. The possibility of such a state of things as I have supposed does not prove to my mind that a creditor, clothed with due process of attachment against his debtor, and thus invested with the legal character of a creditor, may not lawfully cause to be seized property which that debtor had fraudulently conveyed. That he may seize it seems to me to follow from the sentence of nullity which the statute of frauds pronounces against such conveyances, quoad the creditors of the party conveying. The specific objection, that the purchaser has no day in court to controvert the creditor's debt, would apply with the same force where the seizure was under an execution issued on a judgment. In that case the judgment would be conclusive as to the judgment creditor's debt, though there, as in this case, the fraudulent grantee would have no opportunity to try the question of its existence. (Candee v. Lord, 2 Comst., 269.) This was the unanimous opinion of the judges of this court in the case cited, though the judgment turned upon another point. The opinion of Judge GARDINER and the points presented by the appellant's counsel in that case fully explain the views upon that question which I now entertain. But the defendant's counsel in the present case offered to prove the existence of the attaching creditor's debt, and the evidence was excluded. I consider such proof unnecessary, but the offer to give it would seem to meet the main difficulty *Page 604 which has been suggested by the defendant's counsel. In Damon v. Bryant (2 Pick., 411), the court in Massachusetts considered that the seizure of the goods of a fraudulent purchaser under an execution against his vendor, could not be justified without such proof. This, I think, was contrary to the law as understood in this State, but if sound, it would not aid the plaintiff in his case. The opinion which I entertain was pronounced against in the Supreme Court, in Clute v. Fitch (25 Barb., 428). The case is, however, too recent to be regarded as a binding authority, and, besides, the court considered that the sale which was there drawn in question, was perfectly bona fide, which consideration was sufficient alone to warrant the judgment. The cases referred to in the Supreme Court, which hold that a sheriff justifying, under a fieri facias, the seizure of property which the defendant had conveyed before the levy, must produce the judgment upon which the execution issued, do not appear to me to have a strong bearing upon the present case. (Parker v. Walrod, 16 Wend., 514, and cases referred to by the chancellor.) A fi. fa. issues at the instance of the party, without any actual authority of the court other than the judgment. But an attachment is process actually awarded by the officer signing it. In the former case it seems proper that the judgment should be produced where goods of a third person, who has a formal title from the debtor, are seized. Such third person cannot move to set aside the execution, and it is, therefore, reasonable that the creditor should show the judgment, in order to put himself in a position to contest the sale. But the reason does not hold where the process does not presuppose any judgment upon which it is based, but emanates directly from an officer authorized to take proof of the debt. The case of Frisbey v. Thayer (25 Wend., 396) does not seem to me to have any application to this case. A landlord caused goods to be seized under a distress warrant, which the tenant had mortgaged in actual good faith to a party under whom the defendant acted. The mortgage was executed while the property was on the demised premises, where they remained *Page 605 for some time after the giving of the mortgage; but the seizure for rent was made off the premises but within thirty days after the removal. The action was trover by the officer who served the distress warrant. The court refused to charge that the mortgage was void, for want of an immediate change of possession. The points decided were, that the statute requiring a possession to accompany sale and mortgage did not apply when the property was seized on a distress warrant, and that the act authorizing a landlord to pursue goods removed from demised premises for thirty days after the removal, applied only to such as belonged to the tenant at the time of the removal, and not to such as he had previously sold or mortgaged. The remedy by distress was one which the law gave to a party himself, and his warrant was not in the nature of process issued by courts or officers upon proof of the creditor's debt. A landlord did not present himself in the character of a creditor within the meaning of the act. His rights were peculiar, arising out of the law of landlord and tenant, and were not, as the court held, of the same nature as those of common creditors seeking to enforce process for their debts. I am of opinion, upon the whole case, that the attachment was a justification to the officer, provided he could maintain by proof that the property seized belonged to Robert Hall as against his creditors; and that the judgment of the Supreme Court should be reversed.