
    Clark v. MacDonald et al., (two cases.)
    
      (Supreme Court, General Term, Third Department.
    
    November 30, 1891.)
    1. Fraudulent Conveyance—Retiring Partner—Debts op Firm.
    A retiring partner sold her interest in the firm to the other partner, and after-wards executed a voluntary conveyance of her property to her daughter, apparently as a gift, but really as a means of protecting the property from the demands of creditors of the firm. The remaining partner assumed payment of all the debts of the firm. Held, whether or not the firm or the partner assuming payment of its debts was solvent after the grantor’s retirement, that she was bound for the payment of those debts, and could not execute a voluntary conveyance of her property which would be valid as against the creditors of the firm.
    2. Same—Intent as to Particular Creditor,
    An assignment made with intent to defraud creditors cannot stand as against any creditor who is thereby defrauded, whether the intent was specially to defraud him or not, and whether or not such creditor may have a right to sue some other person for the debt.
    Appeals from judgments on report of referee. Affirmed.
    Action by Lydia A. Clark against Maria MacDonald, Carrie S. MacDonald, and others, to set aside a voluntary conveyance. From judgments for plaintiff, defendants appeal.
    Argued before Learned, P. J., and Landon and Mayham, JJ.
    H . G. Maxwell, (John L. Henning, of counsel,) for appellants. W. L. Van Denbergh and C. S. Nisbet, for respondent.
   Learned, P. J.

These are appeals by defendants from judgments on the report of a referee. The actions arise out of the transactions which were the subject of controversy in McDonald v. McDonald, (Sup.) 11 N. Y. Supp. 248; and these actions, like that, were brought by a judgment creditor to set asL.e conveyances alleged to he fraudulent. The plain tiff sought to recover the Main-Street property, as to which the referee reported in favor of defendant, the Spring-Street property, the annuity contract, and the bank-stock, as to all of which the referee reported in plaintiff’s favor. The conveyances were made by Maria MacDonald, the judgment debtor, to her daughter Carrie S. MacDonald. Carrie S. MacDonald made certain conveyances of this property to one Lillie S. Stevenson. But there is no attempt on these appeals to claim that Lillie S. Stevenson acquired any better title than Carrie S. MacDonald had. We need only refer to what was said by this court in the former-case as to the attempted conveyances by Carrie S. to Lillie S. Stevenson. The testimony given by Lillie S. Stevenson in the former case was read in this. The referee came to the same conclusion in regard to her pretended title with that of Mr. Justice Fish in the former case; and his conclusion is unquestionably correct.

The only question of importance, then, is whether these transfers and conveyances to Carrie S. were valid against the plaintiff. In 1871 the firm of I. C. Shuler & Co. was composed of Isaac C. Shuler, Maria MacDonald, and Augustus Clark. It so continued till 1888, when Clark’s interest in the business, being three-tenths, was bought by Maria MacDonald and Shuler, and they gave thereupon a note of $5,000 to the plaintiff’s (Clark’s) wife, on which note the judgment in the first suit was recovered. The judgment in the second suit was also on notes amounting to $1,075, made by said Maria MacDonald and said Shuler. In 1888, Maria MacDonald sold out to Shuler. He agreed to pay her an annuity of $800 a year for three years, (which is the annuity contract,) and Shuler agreed to pay all the partnership debts. The referee refused to find that the firm was then solvent, and that Shuler had considerable property outside of the firm. The three notes above mentioned are stated in the referee’s opinion to be firm notes of I. C. Shuler & Co. The counsel for the appellants seek to distinguish these cases from that above referred to, on the ground that these were firm debts; that Maria MacDonald had reasonably provided for their payment by her transfer of her interests in the firm to Shuler, and by his agreement to pay these debts; that she had thus become a quasi surety, and Shuler the principal debtor; and that, under these circumstances, the voluntary transfer of her property to her daughter should not be held fraudulent. Of course, unless the firm was in fact solvent, or Shuler had property outside, there was nothing in the agreement which gave plaintiff any protection; and, in any event, plaintiff acquired no .additional security. When Maria MacDonald went out of the firm, Shuler and the firm property were already liable; and his agreement to pay the firm debts was only a matter between himself and the outgoing partner. Even if .Shuler had at that time property outside of the firm, that property was already liable for his debts. So that in no way did Maria MacDonald, when she went out of the firm, increase the plaintiff’s security. It is further evident that the prosperity of the firm had fallen off largely before this time.

It is well settled, under our statute, that in such cases the question of fraudulent intent is generally one of fact. The referee finds as fact in this case that the several transfers were made with intent to hinder, delay, and defraud plaintiff, and were accepted by Carrie S. with the distinct understanding that she was to hold and manage the same for said Maria MacDonald. And we see no reason to doubt the correctness of this conclusion. The transfers were without consideration, and they transferred all the property of Maria MacDonald. Carrie S. herself says she took this property to manage it for her mother, and is managing it for her. This is-plainly not the case of a gift to a child, reasonable in amount compared with the property of the parent. The appellants claim that, even if Maria MacDonald transferred this property to Carrie S. with intent to defraud some creditors, yet the transfers were not void as to the plaintiff, because she was (as-they claim) secured by Shuler’s agreement to pay the firm debts. We have already seen that she ■was not in fact secured by this agreement, and that it was of no benefit to 'her. But, in any event, the statute does not say that an assignment made with intent to defraud creditors shall be void as to those whom the assignor intended to defraud, or as to those who have no security whatever. That would be a very lame statute. The statute is that the assignment is void “as against the person so hindered, delayed, or defrauded.” 2 Bev. St. marg. ■p. 137, § 1. If one makes an assignment with intent to defraud creditors, it is void as to a defrauded creditor, although he was not in the mind of the assignor. The creditor thus actually defrauded by the act of the debtor is not to be deprived of his rights, to reach what is truly the debtor’s property, by an assertion on the part of the debtor that he supposed that that creditor -could collect his debt in some other way, and that he was only endeavoring to defraud some other creditors. The appellants in this case say: “True, "these transfers were made with intent to defraud creditors; but Maria MacDonald was not thinking of this plaintiff, and, indeed, supposed that Shuler would pay her. Therefore, although the plaintiff is actually defrauded and unable to collect her debt, yet the fraudulent assignee shall keep the property from this insolvent debtor.” An assignment with intent to defraud eredit-ors cannot stand as against any creditor who is thereby defrauded, whether the intent was specially to defraud him or not, and whether or not he may have a right to sue some other person for the debt; for the thing assigned in - such a case is not rightfully the property of the assignee, but, as against creditors of the assignor, is still the property of the assignor. Of course, the fact that Shuler had agreed to pay these debts was a circumstance, with all ■ the other circumstances, to be considered on the question whether the transfers to Carrie S. were made with intent to defraud creditors. But on this question of fact, on the intent of Maria MacDonald and Carrie S., we think "the referee found correctly. He could hardly have found otherwise.

The appellants urge that, as the plaintiff did not succeed in respect to the Main-Street property, the referee should not have allowed costs against them in each action. No appeal is taken by the plaintiff in respect to the judgment as to this Main-Street property; yet there are circumstances which cast suspicion on the conveyance of that property. It was without consideration. The deed was not recorded for four years. Taxes, etc., were paid out of Maria’s money. Fortunately for the defendants, the referee decided that the • conveyance was not with intent to defraud creditors. But we think that the defendants’ success in that respect does not make their position so meritorious that they should escape paying costs. Judgment affirmed in both cases, with costs against defendants personally. All concur.  