Briggs v. Merrill

Johnson, J. This is a motion for a judgment upon a verdict in favor of the plaintiff, ordered by the justice at the circuit, subject to the opinion of the court at general term. In the course of the trial, the defendant objected to certain evidence offered by the plaintiff, and excepted to the ruling of the justice admitting it. He also excepted to the ruling and decision ordering a verdict in the plaintiff’s favor, subject to the opinion of this court. In this condition of things it was erroneous to order a verdict subject to the opinion of the court, as the defendant is thereby deprived of the opportunity of having his exceptions considered. Such a ruling, under such circumstances, is a mistrial, and a new trial should be ordered on account of the error, unless the exceptions are waived by the defendant. The plaintiff moves for judgment on his verdict, submitting the case and his points without argument. The defendant opposes the motion by submitting his points, without argument. In his points, no reference whatever is made to the exceptions upon the trial, but the motion is opposed wholly upon the merits. This being the case, the defendant 'must be deemed to have waived his exceptions taken at the trial, and consented that the court might decide the motion upon the merits, irrespective of his exceptions. The case upon the facts is," I think, novel and quite peculiar. The action was for the wrongful taking and conversion by the defendant, of the plaintiff’s property. The defendant justified the taking, by virtue of an execution issued upon a judgment in his favor for fill.10, in a justice’s court, against Henry S. Briggs and Alexander M. Briggs, two brothers of the plaintiff. The property was sold by the constable, and bid in by the defendant at such sale. It appeared in evidence that the property in question had been the property of H. S. and A. M. Briggs, and that they sold it to the plaintiff after the action in the justice’s court had been commenced against them by the — 397 — defendant. On this sale and purchase between the plaintiff and his brothers, the plaintiff turned out as part of the purchase price, a promissory note for $50, which he held against Henry S. Briggs, and which he had held for about two years. For the balance of the purchase price, which was $100, he gave bis promissory note, payable eight months from date. The defendant claimed that this sale and purchase by the plaintiff, of the property in question, was made for the purpose of hindering, delaying and defrauding the creditors of H. S. and A. M. Briggs, and gave evidence tending to show that such was the case; showing, among other things, that about the time the action was commenced in the justice’s court, they turned out all the property they then had and owned to their father, except the wagon and harness in question, which the plaintiff bought after the action was commenced; and that they were in failing and insolvent circumstances at the time. Other facts and circumstances were shown, tending to establish the fraudulent character of the transaction. The constable’s sale of the property in question was on the 23d of March, and this action was commenced soon thereafter. The complaint was verified by the plaintiff’ March 31,1868. The sale by the constable satisfied the defendant’s judgment in part only. After the sale, and after this action had been commenced, the defendant undertook, by proceedings supplementary to execution, to discover other property belonging to the defendants in that judgment, which he might have applied in satisfaction of the balance due thereon. On those proceedings, the defendants were examined, and the plaintiff’s note of $100, given on the purchase of the property in question, was discovered in their possession. The referee appointed by the county judge, in the supplementary proceedings, reported the discovery of this note to such judge, on the 10th of April, 1868, and on the same day the judge made an order requiring the referee to keep such note and deliver it over to the — 398 — receiver to be thereafter appointed, to be applied in satisfaction of the defendant’s judgment. A receiver was appointed in those proceedings on the 17th of April following. The same person who had been appointed referee, was appointed receiver, and had the note in his possession upon this trial. So far as appears, nothing had been done with the note, by the receiver, at the time of the trial. The value of the wagon and harness i.n question was agreed upon by the parties at $166. Upon this state of facts, the justice, at the circuit, held and ruled that the defendant could not keep both the .wagon and harness and the note. That by taking the note, given upon the purchase of the property by the plaintiff, by virtue of his proceedings supplementary to execution, for the purpose of having it applied to the satisfaction of the judgment, the defendant had ratified the plaintiff’s purchase, and affirmed its validity, he knowing at the time such note was discovered by the referee, that it was given in part payment of the property in question; and ordered the jury to find a verdict for the plaintiff for the value of the property as agreed upon, subject to the opinion of the court at general term. This ruling at the circuit proceeded, necessarily, upon the assumption that the purchase of the property by .the plaintiff had been shown to be fraudulent and void as against the creditors of H. S., and A. M. Briggs, but that the defendant by taking the note given for the purchase price, in the subsequent legal proceedings, had thereby ratified and sanctioned the plaintiff’s purchase, and precluded himself from insisting upon the fraudulent character of such purchase as a defense to the action. This motion for judgment by the plaintiff proceeds, also, upon the same assumption. This ruling, and direction of the learned justice at the circuit, was clearly erroneous. It is impossible to make the taking of that note by legal process operate as a ratification by the defendant of that fraudulent sale and purchase, and an admission of its validity, or a — 399 — waiver of the fraud. The trade as between the plaintiff and his brothers, the judgment debtors, was a valid transaction. As between them, the title to the wagon and harness vested in the plaintiff, and the note belonged to the debtors. But the note having been given in part performance of a bargain entered into for the purpose of defrauding the creditors of the vendors of the property in question, its collection could not be enforced by the receiver, or by the defendant. It was still an executory part of that fraudulent arrangement, and the law will not assist in its enforcement. This was expressly held in Nellis v. Clark, (20 Wend. 24,) which decision was affirmed in the Court of Appeals. (4 Hill, 424.) The principle established is that neithér the payee nor any holder, who is not an innocent bona fide holder for value, before the note becomes due, can enforce its collection, against the maker. The law will not aid in carrying out any portion of the fraudulent bargain, but will leave all the parties who are chargeable with notice, to rely upon the option of the maker for the performance of the apparent obligation. The receiver does not stand in the situation of an innocent bona fide holder for value. He acquires title by legal process, and not in the regular course of dealing in commercial paper. Heither the receiver nor the defendant, for whose benefit the note was sought to be obtained, paid any value for it. The note being of no legal value, as against the maker, in the hands of the receiver, or of the defendant, could not operate in law as a ratification or sanction of the bargain up.on which it was given, or estop the defendant in this action from insisting that the bargain was void as to him, by reason of the fraud in which it was conceived and carried out, and that the plaintiff acquired no title to the property, as against his claims as judgment creditor of the vendors. But even had the note been a valid security, and collectable in the hands of the receiver, the discovery and delivery of it into his hands, — 400 — could not by any possibility, in my judgment, have produced the legal results adjudged by the rilling at the circuit. Had it been a chose in possession, instead of a chose in action, I do not see why the defendant might not have taken it by virtue of his execution or proceedings supplementary, without relinquishing his right to take the-property in question. As between the parties to that bargain, the trade would have been good as against all the world except the creditors of one of the contracting parties. As between themselves, each would have acquired a complete and perfect title to the property received by him in the transaction, as against the other. But as regards a creditor of one of the parties, the title of him who takes from the debtor does not vest, as against such creditor, and the creditor may levy upon the property and contest the title. The transaction is void as to creditors, and the title still remains in the debtor as to them. The creditor may therefore take it in satisfaction of his debt by regular process, as has always been held, if he can establish the fraud. As to the property which the debtor receives from the other party to the fraudulent contract or exchange, it is his to all intents and purposes, as against the other party and all the world. The other party to the transaction could never reclaim it by any legal proceeding, as the law would afford him no aid, and would not hear him allege that he had parted with it to aid in defrauding another. In every such case the party bargaining with a debtor, with such intent, does it at the peril of having that which he receives tqken from him by the creditors of the debtor whom he is attempting to defraud, without having any remedy to recover what he parts with in carrying out the bargain. The law will leave him in the snare his own devices have laid. The property thus received by the debtor being his exclusively, the law devotes it to the payment of his debts, whenever it can be reached by legal proceedings on the part of his creditors. The law will not allow — 401 — him to retain it, and use it, in defiance of his creditors, because he acquired it by a fraudulent attempt to deprive them of their rights. It gives no such aid and comfort,, or protection, to any party to a transaction entered into for such a purpose. [Fourth Department, General Term, at Syracuse, November 14, 1870. It follows that the motion for judgment in the plaintiff’s favor, upon the verdict, must be denied, and judgment ordered for the defendant for his costs of the action. Talcott, J., concurred. Mullin, P. J., did not sit; the action having been tried before him, at the circuit. Johnson and Talcott, Justices.]