
    Nichols et al. v. Wellings et al.
    
    
      (Supreme Court, General Term, First Department.
    
    November 30, 1891.)
    Assignment for Benefit of Creditors—Preferences.
    .The only evidence to support a preference in an assignment for the benefit of creditors in favor of the assignor’s wife was to the effect that the debt secured was made up of loans to him out of the surplus of moneys given her for housekeeping expenses. There was no evidence that he intended that such surplus should belong to her, and only in a single instance did he acknowledge any indebtedness on aocount of money so returned to Mm. Held, that the preference was without foundation, and the assignment in consequence void, as in hindrance and fraud of creditors.
    Appeal from special term,' New York county. Reversed.
    Action by James E. Nichols and others against John F.Wellings and others. After a trial by the court there was judgment for defendants, and plaintiffs appeal.
    Argued before Van Brunt, P. J., and Daniels, J.
    
      Henry D. Hotchkiss, for appellants. Hirsh & Rasquin, for respondent Davenport. John H. Kemble, for respondents Wellings and others.
   Daniels, J.

The plaintiffs are judgment creditors of John F. Wellings, one of the defendants, and after the return of executions issued upon the judgments and returned unsatisfied, this action was commenced to set aside the general assignment of the judgment debtor, and also a judgment confessed by him to the defendant Jeannette F. White, The assignment was made on the 25th of June, 1889, and the judgment was confessed on the 12th of July of the same year. The judgments upon which the executions were issued were recovered on the 23d and 24th of July of that year. By the assignment the wife of the assignor was preferred for the sum of $900. Other preferences were contained in the assignment, for which the judgment was confessed by the judgment debtor. The evidence given upon the trial left no ground for dispute as to the important facts, and, in support of the allegation that the assignment was made to hinder, delay, or defraud the creditors of the assignor, it was proved that while he was in business he delivered to his wife the sum of $10 each week to provide for the expenses of the household; and their testimony is that he from time to time borrowed money from her, amounting to the estimated sum of $900, for which the preference was given to her. There was no evidence upon the trial that the $10 delivered to the wife by the assignor each week was intended to be a gift of the surplus beyond the expenditures necessary for the maintenance of the household; but the utmost which the evidence proves is that this sum of $10 each week was delivered by the assignor to his wife to pay the expenses of maintaining the family. His evidence was such as to establish the fact that the money in this manner delivered to the wife remained the property of the assignor, for he entered into no agreement, either express or implied, that she should become the owner of the surplus, if any there should be; and, to constitute a gift, the evidence is required to establish the fact that it was intended by the donor that the title to the property alleged to be given shall be intended to vest in the donee; and that fact is required to be made out by evidence reasonably clear, and tending to establish it. Shuttleworth v. Winter, 55 N. Y. 624-629. And when it is remembered, as the court held the law to be in Manchester v. Tibbetts, 121 N. Y. 219-222, 24 N. E. Rep. 304, that dealings between a husband and wife, resulting in the appropriation of his property to her, are required to be closely scrutinized, the conclusion is inevitable that there was no such agreement proved by this evidence as gave the wife the title to the surplus remaining in her bands from this weekly allowance, but that surplus which formed the fund loaned to him remained as completely the property of the assignor as though he had delivered a larger amount than was necessary to an agent for the payment of a debt, where the surplus would most unquestionably belong to the debtor. There is also reason for believing that this was considered to be the result of these dealings, for the wife returned to her husband the money which she had on hand as that was requested by him, and apparently in no more than one instance did he acknowledge himself to be her debtor on account of the receipt of that money, and then it is stated that a note was made by him to her for the sum of $200, which, however, was not produced upon the trial. It is not necessary to inquire whether so much of the transaction as was included within the note constituted a valid claim against the assignor; for, even though the residue of the preference, amounting to the sum of $700, is unfounded, that, of itself, is sufficient to annul the assignment. Russell v. Winne, 37 N. Y. 591. And that so much of the preference was unfounded clearly results from this state of the evidence, and the effect of making that preference by the assignment would necessarily be to hinder, delay, or defraud the creditors of the assignor; and, where such an intention exists, there the law, under the express mandate of the statute, declares the entire instrument to be inoperative and void as against creditors.

The judgment confessed to the defendant Jeannette ¡F. White, for the benefit of herself and as the assignee of other preferred creditors, was entered to secure them against the contingency that the assignment itself should not be maintained, and that fact indicates the belief on the part of the preferred creditors that there was danger from some cause that the assignment might be declared invalid; and, to the same extent as the preference contained in the assignment was unfounded, this judgment is also attended with the same infirmity, for it has certainly been confessed for too large an amount, so far as it represents the preference given to the wife of the judgment debtor; and that of itself, without any actual intent to defraud the creditors, would require the judgment to be reduced by deducting so much of its amount as represents the unlawful preference given to the wife of the assignor; and if there were an actual intent to defraud the creditors by the assignment and this confession of judgment, or by the confession of the judgment alone, it would require to be entirely vacated and set aside for that reason. But whether the judgment may be maintained in part, so far as it is dependent upon actual pre-existing debts, it is not necessary should be now decided; for it is sufficient to entitle the plaintiff to another trial of the action that the assignment itself cannot, under this state of the evidence, be sustained. The judgment should be reversed, and a new trial ordered, with costs to the plaintiffs to abide the event.  