19 Abb. Pr. 469

GREENLEAF a. MUMFORD.

Supreme Court, First District;

Special Term, October, 1865.

Attachment.—Fraudulent Assignment.

The drawing of checks without funds to meet them is/when unexplained, a badge of fraud, and coupled with the simultaneous transfer of a large sum to a friend, in a'clandestine manner, is conclusive, and leaves the sum so transferred liable to the attachments of creditors.

By an attachment issued as a provisional remedy under the Code of Procedure, the plaintiff in the action obtains such a lien upon the property attached as willxentitle him to the intervention of equity to remove or set aside fraudulent • obstacles to the enforcement of the lien; and for this purpose he may maintain an action to reach a fund fraudulently transferred by the debtor.

Although such an attachment must be signed by the judge granting it, it is not essential that the copy served should have a copy of the judge’s signature subscribed to it.*

The notice accompanying the attachment, to be served on a third person, may describe the property attached in general terms, without specifying its precise . nature and amount.

*470It is not necessary that the sheriff’s inventory of attached property should be made on the same day or immediately after the attachment is served.

Where property fraudulently conveyed to a third party for the benefit of the defendant is by him deposited with a bailee, it is not necessary to give notice of attachment to the former before levying on the property in the bailee’s hands.

Trial by the court.

The complaint in this case set out the sale and delivery, on the 12th August, 1865, by the plaintiffs, of twenty thousand dollars in gold to the defendant, Peter R. Mumford, for $28,200, payable on the delivery of the gold ; the receipt of the check for that amount, its presentment, and the refusal of the bank to pay it for want of funds; that Mumford was guilty of a fraud in the purchase of the gold, knowing well that he had no funds in the Mechanics’ Bank to meet his checkthat Mumford had sent to. the defendant, John Oakey, certified checks on the Tradesmen’s Bank to the amount of about $53,000, with the request that Oakey would hold, the same for his, Mumford’s, benefit; that Oakey drew the checks from the Tradesmen’s Bank and deposited the amount to his own credit in the Nassau National Bank, another of the defendants in this action, drew his checks therefor, and had the same certified by the Nassau National Bank, but had not parted with the checks, and that the money was still in the bank, and the checks with Oakey; that the plaintiffs commenced an action against Mumford on the 19th of August, 1865, for the recovery of the check of $28,200,.and on the same day issued an attachment, and had it levied on the property of Mumford in the Nassau National Bank, the $53,000 nominally to the credit .of Oakey being really held for the use of Mumford ; the recovery of judgment in that action; and that it was Mumford’s intention that the certified check should be delivered by Oakey to him, or used for his benefit.

That the defendant, Albert Speyer, claimed this money by virtue of an assignment made by Mumford to him, August 19, 1865; but that the attachment above mentioned was levied by the sheriff on the money before the execution and delivery of the assignment; that the deposit of the money and drawing of checks as above, stated was a contrivance of Mumford’s and Oakey’s to secure the money from the creditors of Mumford, and *471to prevent or defeat the levy of an attachment or execution thereon.

That it was pretended by Mumford, Oakey, and the Nassau National Bank, that the money belongs to Oakey, and is not subject to the claims of Mumford’s creditors.

The plaintiffs then demanded judgment, that the said money be decided to be Mumford’s money at the time of issuing and levying the said attachment, and for other relief.

The different defendants answered in various ways, all, however, substantially denying that the property was levied upon under the attachment.

Under motions and orders of the court, the sum in dispute was paid into court by Oakey, except $3,000, which Oakey claimed to reserve in payment of a debt due to himself.

On the trial, a motion was made' to dismiss the complaint as not showing facts sufficient to constitute a cause of action, which was denied. Proof was then given of the judgment in the other case, and that the attachment was duly issued and was served on the Nassau National Bank, between 12 and 1 o’clock on Saturday, the 19th of August, and on Oakey at a few minutes past 3 p.m. John Oakey in his testimony admitted that, he received the money for Mumford, it being intended to hold the same so as to make an arrangement with the creditors. It was also shown that the assignment to Speyer was delivered on the 19th of August, about 2.45 p.m., a short time before the attachment was served on Oakey, though after the attachment was served on the bank. This assignment was for the benefit of creditors.

Jenkins, Opdyke, and Ackerman, for the plaintiffs.

F. F. Marbury, opposed.

I. This is a contest between the defendant Speyers, who, as assignee, claims the fund for the benefit of all the creditors of Mumford, without partiality or preference; and the plaintiffs, who, under their attachment, and the judgment which Mumford offered to allow them to take against him, seek to appropriate to themselves nearly two-thirds of the fund (about, $30,000), to the detriment and exclusion of the other creditors who are equally deserving, being the vie*472tims of Mumford’s misconduct, just in the same way that the plaintiffs were.

Courts of equity will never violate or infringe this principle, that “ equality is equity,” if it be possible to maintain it. (Murray a. Riggs, 15 Johns., 583; Norton a. Coons, 6 N. Y., 40; Bower a. Harbeck, 9 Ib., 593; Murphy a. Harvey, 4 Edw., 132; Sconteu a. Bender, 3 How. Pr., 189; Bank of Rochester a. Emerson, 10 Paige, 359.)

The reason why courts of equity look with such jealousy and disfavor on preferential assignments for the benefit of'creditors, is that they violate this rule of equality. What would otherwise have been regarded as small vices in instruments of this character, have been seized on as fatal defects for this reason; because the court always, upon principle, sets its face • against unequal distributions of the estate of an insolvent debtor, as repugnant to the general sentiments of a court of conscience and equity.

The court will, therefore, uphold the assignment against the attachment, unless prevented from so doing by some clear and invincible impediment. It will not overlook or amend defects.

II. The plaintiffs, if they succeed, must do so on the strength of their own title. Their claim is strietissimi juris. They must bring themselves clearly, distinctly, and perfectly within the statute, in order to have a locus standi in court at all. They cannot carry off from the other creditors of Mumford this large sum of $30,000 without exhibiting a clear and incontestable right to it.

1. The statute is a new remedy, and operating as it does to transfer property from the debtor to the sheriff, should be construed strictly. (Orser a. Grossman, 11 How. Pr., 520 ; 4 E. D. Smith, 443.)

2. Before the statute the plaintiffs would have been obliged, m order to reach this fund, to have obtained a judgment, to have issued an execution and had it returned unsatisfied, and to have filed their bill, to reach the equitable assets and things in action of the defendant, for the appointment of a receiver to take the fund. All the requirements- and appointments of the law must be strictly, carefully, and literally performed, or the owner cannot be divested of his estate. (Tallman a. White, 2 Comst., 70 ; Dike a. Lewis, 2 Barb., 344; Waller a. Harris, *47320 Wend., 355 ; People a. Covell, 18 Ib., 598; People a. Sheriff of Broome Co., 19 Ib., 89; Silliman a. Wing, 7 Hill, 159.)

III. The statute defines and prescribes very clearly in what way a service on property incapable of manual delivery must be made in order to make it effectual. (See Code, § 227.) The plaintiff must show—1. A right to the attachment (§ 235); 2. That having the right, they obtained it in an attachment signed by a judge; 3. The service of a copy of it; 4. In addition thereto, a notice showing the property levied on; 5. This copy of the warrant of attachment and notice showing the property levied on must be served on the individual holding the property.

All and each of these things must have been done, or the plaintiff acquired no lien. For the statute being a new remedy must be construed strictly. (Orser a. Grossman, 11 How. Pr., 520; 4 E.D. Smith, 443; Skinner a. Stuart, 15 Abbotts' Pr., 391; S. C., 39 Barb., 207.) Without all these, the plaintiffs have no place in court. They break down on their own want of title.

IY. If plaintiffs had the right to attach, and the attachment, then these fatal objections to their title remain :

1. No copy of the warrant of attachment was served. The original, to have possessed any value, must have borne the signature of a judge authorized to grant it. The paper without this is nothing but a stationer’s blank, with some filling in by a lawyer’s clerk. The paper actually served on the 'Nassau National Bank had no signature of any judge upon it, nor any copy of any signature. It was not a copy of any attachment that could be of any force. The attachment of which it was a copy, if any such original existed, was of no force or effect. Barnard, J., in Cantrell a. Ferris, discharged an order of arrest because the copy served did not have the judge’s signature, and was therefore no copy, and refused to allow affidavits to be" read, whereon the notary’s signature had been omitted from the copies served.

2. There was no notice showing the property levied on; and this is a fatal defect. (Wilson a. Duncan, 11 Abbotts' Pr., 3 ; Orser a. Grossman, 11 How. Pr., 520; 4 E. D. Smith, 443; Kuhlman a. Orser, 5 Duer, 242 ; Wood a. Orser, 25 N. Y., 353.)

3. The Nassau National Bank was not the individual holding *474the fund or property. There was no money in the bank to Humford’s credit, and never was,—nothing to which the attachment by its own terms could apply. The fund was in Oakey’s name until he drew his checks and got them certified. When he did so, his balance was extinguished,—the certified checks being charged to him,—and it was as if he had drawn the bills. He held the obligations of the bank, and he was the person to be reached. The fund was to be reached through him, and the checks which he held, and only so. Until those checks were indorsed and presented no ®ne could get a dollar from the bank. The money in the end was obtained through the checks. In no other way could it have been reached.

4. The service on Oakey was not only too late, but it was nugatory for want of a notice showing the property levied on. (See cases supra on same point.)

The assignment was delivered at 2.45 p.m., August 19, 1865; the service on Oakey was at 4 minutes past 8.

V. As to the suggestion that the copy of the attachment may be amended under section 173, I have dnly to say that there is no motion to amend. (See § 173.) When such a motion is made, the court will impose such terms in allowing the amendment (if allowed at all) as'may be proper. One of those terms would be undoubtedly that it should be without prejudice to the rights of the assignee: it would not do to allow the amendment, in order to give one creditor a preference over others equally meritorious. (Bank of Rochester a. Emerson, 10 Paige, 359.) But there can be no amendment except upon motion. This is the case of amending pleadings on a trial. It is to be disposed of on the facts existing when the action was commenced.

Clerke, J.

1. Since the decision in Rinchey a. Stryker (28 N. Y., 45; S. C., 26 How. Pr., 75), I consider it no longer an open question whether, when an attachment is issued under the Code of Procedure, the plaintiff in the action obtains such a lien on the property attached as will entitle him to the intervention of the equitable jurisdiction \of the court to remove or set aside all fraudulent claims or transfers, or any other fraudulent obstacles in the way of the realization of the lien, in case the plaintiff *475should recover a judgment.* Undoubtedly, previous to that decision, a great diversity of opinion existed among the members of the bench and the bar relative to this right; many being of opinion that no such right existed until the plaintiff proceeded to judgment and execution, and thus exhausted his common-law remedies. Nothing, however, appears in Skinner a. Stuart (15 Abbott’s Pr., 391), sustaining this latter view. That was an action avowedly brought in pursuance of the provisions of the Code of Procedure, relative to the specific remedies afforded by those provisions for the realization of the property of the defendant in the possession of third parties, or for the recovery of money due to him. The plaintiff had not complied with the requirements of those provisions; and, even if he had, there was nothing in the case which authorized the interposition of the equitable or extraordinary jurisdiction of the court. It exhibited no fraud, collusion, or combination, obstructing the ordinary legal process.

2. This action, then, having been properly brought, and the court having the right to afford the remedy prayed for, if the facts entitle the plaintiff to it, was the transfer of the $53,000 to Oakey by Mumford, fraudulent and void ? and if it was, has the plaintiff obtained a specific lien upon it to the amount of his claim, to the exclusion of the assignee of Mumford, and his other creditors ? And first, as to the transfer of the $53,000 by Mumford to Oakey, I think the fraudulent intent cannot for a moment be doubted ? On the 12th day of August, 1865, he bought of A. L. Leyton & Co., Greenleaf, the plaintiff in this action, and many others, various sums of American gold coin; in the whole amounting to about $110,000 in gold, and in currency to about $150,000. For this gold he gave his checks to the several sellers on the Mechanics’ Bank. These checks were all dishonored. Undoubtedly, it was very possible, by unexpected failure, or dishonesty on the part of the persons with whom he dealt on the day in question, that he may have been rendered incapable of making good his account on that day; and the single circumstance that he had no' funds in the bank at the time when the checks were presented was not of itself *476conclusive evidence of fraud. Therefore, no criminal prosecution could he maintained against him founded on this single circumstance. The necessities of business’require that the drawing of checks in cases of this nature, when there are no funds in the banks in the early portion of business hours, should be tolerated if the bank is in the habit of certifying checks for the drawer. But in the case before us no explanations are given, and no excuse appears why Mumford did not make his account at the bank good. On the contrary, we find him about this time disposing of a large amount of money in a clandestine manner; .and, instead of depositing it in the Mechanics’ Bank, placing it elsewhere, and transferring $53,000 of it to his lawyer and friend, the defendant Oakey. Taking all these circumstances together, purchasing gold to this large amount (in currency) of $150,000 from various dealers, giving his checks to the several sellers, which were all dishonored, and then making a clandestine and surreptitious disposition of a large amount of money immediately thereafter, can leave no room for any doubt that the whole amount of this surreptitious transfer is to be deemed liable to any attachments which his creditors may have issued against it,' or any portion of it; and that, as in other cases, the maxim of the law applies, VigilanUbus, non dormientibus j-ura subveniimb—the'laws assist those who are vigilant, not those who sleep over their rights. As for example, the creditor who first levies an attachment, or an execution, has a preference over other creditors out of the property on which the levy is"made.

3. Has the attachment been executed in this case in such a manner as to give the plaintiff in. the action before us the preference which the law gives to the most vigilant ?

It is objected by the counsel for the assignee that no copy of the warrant of attachment was served, because a copy of the judge’s signature was not subscribed to it. The signature of the judge who grants the warrant is no doubt indispensable to its validity. Without it there would be no assurance to the officer who executes it that it is genuine. But I cannot conceive that the same reason exists for adding the signature to the copy. It is proper that the person who is in possession of property of the defendant, or who is indebted to him, should know the contents of the body of the warrant, and that it was *477issued, in order that he may be able to conform to what is required of him. The sheriff needs more than this; for, on seeing that the warrant has not the signature of the judge subscribed to it, he would at once discover that he had no authority to execute it; and if he attempted to do so, he would he a tort feasor.

The next objection relative to the execution of the warrant is, that the notice accompanying the warrant was defective. This notice informs the person on whom it is served that “ all the property of the defendant in the attachment, and his effects, rights and shares of stocks, with interest thereon, and dividends therefrom, and the debts and credits of the said defendant, now in possession of the said person, or under his control, will be liable to the attachment, and the said person is required to deliver all such property into the custody of the sheriff without delay, with a certificate thereof.” I have examined all the authorities referred to by the defendant’s counsel. In Orser a. Grossman (4 E. D. Smith, 443; S. C., 11 How. Pr., 520), there is no positive decision on the subject. The language of the court (the Court of Common Pleas) is: “ It is questionable whether a general notice that the sheriff attaches all the property in the hands of the debtor of the defendant in the attachment is a sufficient attachment under the Code;”' and they decide the case on another point. In Kuhlman a. Orser (5 Duer, 242); and Wilson a. Duncan (11 Abbotts’ Pr., 3), the Superior Court undoubtedly did decide that a general notice was not sufficient: in other words, that the precise property, its nature and amount, must be specified in the notice. I am not aware of any decision upon this subject, rendered by this court, in any district of this State.

I confess, in the absence of such a decision, I am not inclined to follow those in the Superior Court, to which I have above referred. To require so precise a specification in all cases would be impracticable, and would deprive many a creditor of the remedy which this process affords. Many plaintiffs are ignorant of the precise amount, and even nature, of the property belonging to their debtors in the hands of third parties, although they may have abundant reason to believe that there is some property in their hands at the time of issuing and serving the attachment. They may obtain the information, or compel it in *478the maimer provided by section 236 ; but this is after the attachment has been issued, and notice, of it served ; and in the mean time, if the reasoning in the cases referred to is correct, there is nothing to prevent the person on whom the notice is served from delivering the property to the defendant, or to prevent a debtor of the defendant from paying him the debt due. I do not think the Legislature intended to deprive creditors of the benefit of this provisional remedy, merely because they are ignorant of the precise nature and amount of a fraudulent or non-resident debtor’s property in the hands of third parties, within the jurisdiction of the court. No serious inconvenience can occur by the absence of this specification in the notice. The copy of the warrant, which the notice accompanies, always states the exact amount claimed; and I cannot see, therefore, what embarrassment the holder of the property can be subjected to by the generality of the notice. He knows what the property is, and its'amount; and by examining the warrant he can easily ascertain the amount of the claim. The plaintiff in the action requires only that amount with costs, and nothing more ; or if the holder surrenders the whole to the sheriff, and it exceeds the amount of the claim, he is exonerated from all further liability. The property is in the safe custody of the law.

In the case before us, the Nassau Bank could certainly have suffered no wrong or inconvenience from the want of this specification. The officers of the bank knew the exact amount deposited with them; and they knew equally well, from the warrant, the precise amount of the claim. In Kuhlman a. Orser, to which I have been referred, the court say that the sheriff is required by section 232 to make an inventory of the property; and if he has sufficient information to enable him to make an inventory, he has sufficient to enable him to give notice specifying the property. On the contrary, the provisions of the Code presume no such thing. He is not obliged to make an inventory forthwith. After serving notice of the attachment, he can require a certificate from the individual or corporation in possession of the defendant’s property; and if they refuse to furnish it, they can be required to do so by the order of the judge ; and obedience to such order may be enforced by attachment. In my opinion, the Legislature did not intend that the *479sheriff should make this inventory on the day, or immediately after the day, upon which he serves the attachment; nor did it require of him that he should have sufficient information at the time of the service to enable him to give a notice containing an exact specification of the property, for the reason that it provides a method by which he could procure this information after the attachment has been issued, and notice of it has been given to the holder of the defendant’s property.

I consider, therefore, that the notice served in this case was sufficient.

As to the objection that the notice was defective in being served only on the Nassau Bank before the execution and delivery of the assignment, the law requires that the notice should be left with the debtor, corporation, or individual holding such property. In this case, the Nassau Bank held the property. The sum of $53,000 was actually deposited in its vaults at the time ; and I have shown that this money, at the said time, belonged to the defendant Mumford, because the transfer which he endeavored to make of it was fraudulent, and therefore void.

Judgment for the plaintiff, in conformity with the prayer of the complaint.

Greenleaf v. Mumford
19 Abb. Pr. 469

Case Details

Name
Greenleaf v. Mumford
Decision Date
Oct 1, 1865
Citations

19 Abb. Pr. 469

Jurisdiction
New York

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