James T. Easton, Resp’t, v. Charles W. Cardwell, impleaded with Henry S. Hawkins, Appl’t.
(City Court of Brooklyn, General Term,
Filed December 27, 1886.)
Aeeest — Order of — Wiiat a fraudulent disposition of property— Code Cry. Pro. , § 550, subd. 2.
Where defendants gave a note to plaintiff for a debt and agreed to assign to plaintiff as collateral security for the note a bond and mortgage held by defendants, but put off the delivery by falsely pretending it was at the register’s office being recorded and meanwhile collected before maturity the money due th'ereon and paid another debt. Held, that defendants disposed of their property to defraud their creditors, and that the order of arrest was properly granted under Code Civ. Pro., § 550, subd. 2.
Appeal from an order entered at the special term denying a motion to vacate on order of arrest granted in this action.
Defendants were builders, and made a contract witb Easton to do all tlie plumbing of certain houses which they were engaged in erecting. When Easton’s work was completed, they owed him $671.25 ; he demanded his money but did not get it; defendants informed him that they sold one of the houses and had taken a mortgage thereon to secure him, and would transfer this mortgage and. the bond to him to secure the payment of their note which they offered for the indebtedness; he at first declined, but was finally persuaded to accept the note and the security. Cardwell, as an excuse for the absence of the mortgage, told plaintiff that it was being recorded, and he would get it and bring it to him with a proper assignment of the bond and mortgage, and a written promise substantially embodying the agreement was delivered to the plaintiff ; subsequently plaintiff sent for the bond and mortgage and assignment, and was put off from time to time with falsehoods; finally the note became due, and was* dishonored, and inquiry developed the fact that in the meantime defendants had parted with the title to all the houses; that judgments had been recovered against them, and the bond and mortgage promised to him had been discounted before it was due by the mortgagor for Cardwell, and the money received thereupon handed over to his father. Plaintiff was thus defrauded out of his debt which is represented only by a worthless judgment.
James Troy, for resp’t; Samuel P. Potter, for appl’t.
REYNOLDS J.
On the 10th day of Oct. 1884, the defendants were indebted to plaintiff in the sum of $671. 25, which was then due. On being pressed for payment, the defendant Card-well, as an inducement to plaintiff to take a note at thirty days for the amount, agreed to assign to plaintiff as collateral security for the note, a bond and mortgage held by defendants for $650, which Cardwell said would be soon paid, and the difference *874in tbe amounts paid in cash. The-note was accordingly given, and a written memorandum very inartificially drawn, by which defendants agreed to deliver to plaintiff the mortgage in question as soon as it was received from the registers office, as collateral security for the note. The writing speaks of the mortgage only, but the evidence'on the part of the plaintiff shows that the delivery of the bond and mortgage were both contemplated, and of this there can be no doubt. While the plaintiff, relying upon defendant’s promise, was waiting for the delivery of the bond and mortgage, the defendant procured the mortgagor to pay the same before its maturity, by allowing a discount of $75, and applied the money thus realized, to the payment of another note on which the father of defendant Cardwell ,was an indorser.
The court at special term held that in doing this, the appellant, defendant Gardwell, who appears to have been the active party in this transaction, disposed of his property with intent to defraud the plaintiff, one of his creditors, and accordingly sustained the order of arrest. We think this conclusion is well sustained by the evidence. Defendant obtained from plaintiff an extension of time, upon the promise to turn over the bond and mortgage to him, and although they applied the proceeds of it to the payment of another debt, it was a gross fraud upon the plaintiff who had acquired a right to hold it as security, or if paid, to have the money applied to his claim. It was not like the simple case of a debtor applying his property to pay one creditor, in preference to another; it was the violation of a legal and honest obligation.
. The order should be affirmed with $10 costs and the disbursembnts.
VAN Wyck, J., concurs.