
    William H. Warmer, Assignee, Resp’t, v. Clarence H. Lake, Sheriff, App’lt.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed April 6, 1891.)
    
    Tbaudulent conveyance—What will constitute.
    A merchant in failing circumstances made a bill of sale of all his stock, fixtures and book accounts to his father, taking from him notes running from two months to three years from date, and immediately left the state. Two months thereafter the father made an assignment for the benefit of creditors, including such notes, the property assigned being little more than that covered by the bill of sale. The son testified that his father was to take the goods and pay the debts in the order they came due, and that after the debts were paid, the balance of the notes was, to be paid to him. Held, that as the effect of the arrangement was to delay creditors in the collection of their debts it was in fraud of their rights and therefore-void.
    Appeal by the defendant from a judgment in favor of the-plaintiff, entered on the verdict of a jury at the circuit, and from an order denying the defendant’s motion for a new trial on a case; and exceptions.
    
      A. Moot, for app’lt; M. Shire, for resp’t.
   Dwight, P. J.

The action was for the alleged wrongful conversion of a stock of goods claimed by the plaintiff, as assignee for the benefit of creditors of one Benjamin F. Williams. The goods were seized and sold by the defendant as sheriff of Chautauqua county, by virtue of executions in favor of the judgment creditors of one Charles F. Williams, and as the property of the latter. The final question, of fact and law, was whether at the time of the levy and sale the goods in question were the property of the plaintiff as such assignee, or of Charles F. Williams the judgment debtor.

On the 9th day of November, 1887, the goods were the property of Charles F. Williams, and were in his possession as the stock in trade of his business as a country merchant at Hamlet, in Chautauqua county. He was at that time largely indebted; his notes had gone and were going to protest; his creditors were pressing him for payment, and he was unable to pay his debts as they became due. On the day mentioned, he made a bill of sale to his father, Benjamin F. Williams, of the entire stock of goods and fixtures of his business, valued in the bill of sale at $6,500, and of his book accounts, estimated at $3,000. The bill of sale recited that notes were to be given for the entire purchase price, and specified the several amounts and days of payment óf such notes, nineteen in number, which were to run for periods of from two months to three years from their date; and it -purported to give immediate possession of the property to the vendee. The next-day after this transaction Charles F. Williams took all the property he had left, consisting of $275 in money, and went to the state of Georgia, where he has remained ever since. Two months-after the transaction, Benjamin F. Williams made the general assignment for the benefit of creditors to the plaintiff, under which the latter claims title to the stock of goods in question, in trust, to pay the debts of his assignor, including the notes for $9,500 given by the latter to Charles F. Williams for the goods themselves. The inventory of assets, verified by the assignor, shows no other property than what remained of the same stock of goods and accounts after the sales and collections of two months, $18 in money and a house and lot in Buffalo, valued in the schedule at $1,600, and incumbered by a mortgage of $800, and a judgment of $274.

Many other facts and circumstances, of more or less significance as badges of fraud, are in evidence, but we regard their production as a work of supererogation in view of the facts established without contradiction and by evidence introduced by the plaintiff in respect to the real character of the transaction between the debtor Charles F. Williams and the plaintiff’s assignor, which is evidenced in part by the bill of sale. The testimony of Charles F. Williams was taken in the State of Georgia on an open commission issued to that state on the application of the plaintiff, and he was examined orally by counsel representing both parties. He testified in answer to a question by counsel for the defendant: “ My father in consideration of my transfer to him agreed to accept these goods in trust for the payment of my debts; if you want to call it ‘trustee,’ that was the purpose for which I transferred the goods to him.”

This statement he modified by the succeeding answer to the counsel for the plaintiff: “ My father had a title to the goods at the time; I gave him a title to the goods then and there; I sold him the gpods for the express purpose of paying my debts.”

By Mr. Moot: * * * “ I did not make him a trustee.”

By Mr. Shire: “He was to pay my debts with this property.” * * *

By Mr. Moot: “I think, perhaps, it might have been three weeks before I sold out, that I had the first conversation with my father. * * *. I can’t tell all that was then said; the substance was that I wanted he should take the goods and pay the debts, and he said if it would be all right he would do it * * * There was more or less talk for a couple of days before the bill of sale was made; the bill of sale was made the day he took possession; about November 7th, 8th or 9th; he remarked that if I should leave it to Mm he would do the best he could; this was the substance of what he said.”

These statements were in effect reiterated by the witness several times in the course of his testimony, with the addition that after the debts were paid the balance of the notes were to be paid in cash to him; and that debts were to be paid in the order in which they fell due.

This testimony, of itself, we think discloses a transaction which was in direct contravention of the statute of frauds. That statute declares that every assignment of any interest in goods or things in action made with the intent to hinder, delay or defraud creditors of their lawful suits, damages, debts or demands, as against the persons so hindered, delayed, etc., shall be void. 2 R. S., 137, § 1. This statute applies equally to assignments in trust and to absolute sales and transfers of property; equally to the case of an actual intent to defraud the creditor of his just dues, and to the case where such intent is absent, but the.necessary effect óf the sale or transfer is to postpone the creditor even for. one day in the enforcement of his demand. Nicholson v. Leavitt, 2 Seld., 510; Brigham v. Tillinghast, 13 N. Y., 215 ; McConnell v. Sherwood, 84 id., 522. For the words of the statute which characterize the intent which renders the transfer void are in the alternative; and an intent to hinder or delay is as fatal as the intent to defraud; and the law presumes that the grantor intends the result which must pecessarily follow his act.

That the necessary result of the transfer in this case, whether considered as a trust or as an absolute sale, if it were upheld, would be to hinder and delay the creditors of the vendor in the legal enforcement of their demands against him is apparent. If effect were to be given to the arrangement described in his testimony, creditors must wait the process of disposing of the goods and collecting the accounts transferred; and even then must be content to receive satisfaction of their demands in the order in which those demands fell due. This is nob in accordance with the rights of creditors. They are nob to be compelled to wait till their debtor can pay in cash. They are entitled to the benefit of their “ lawful suits ” for the enforcement of their demands against his property, and that, not in the order in which their demands fall due, but according to their vigilance in instituting such lawful suits and obtaining the process of the courts for their satisfaction or security. Moreover, even if it were possible for the creditor to enforce performance of the agreement of the transferee of this property for the payment of their claims, the terms of credit given to him for the payment of his notes must necessarily result in delay varying from two months to, possibly, three years, before payment could be enforced.

But it seems unnecessary to argue or illustrate further the proposition that the transfer by the debtor, in this case, of his entire property, except the small sum which he retained for his own use, upon the agreement disclosed by his own testimony was, within the letter and spirit of the statute,' in fraud of the rights of his creditors.

We think there was no question for the jury in this case, and that the court erred in denying the defendant's motion for a non-suit and for the direction of a verdict in his favor.

The judgment and order appealed from must be reversed and a new trial granted, with costs to abide the event

So ordered.

Macombeb, J., concurs; Corbett, J., not sitting.  