
    Abegg et al. v. Bishop et al.
    
    
      (Supreme Court, General Term, First Department.
    
    November 18, 1892.)
    Assignment for Benefit of Creditors—Preferences—Knowledge of Fraud by Preferred Creditor.
    Where a debtor, while contemplating an assignment, transfers to one of his creditors a portion of his property with intent to evade Laws 1887, c. 503, forbidding preferences in assignments in excess of one third of the debtor’s actual assets, the transfer is fraudulent and void, whether the transferee had knowledge of the fraudulent intent or not. Berger v. Varrelmann, 37 N. E. Rep. 1065,137 N. Y. 381; Manning v. Beck, 39 N. E. Rep. 90,139 N. Y. 1, distinguished.
    Appeal from special term, New York county.
    Action by Henry Abegg, Henry H. Daeniker, and Adolph Rusch against John W. Bishop, Philip W. Crawford, Henry Grasse, Jesse A. Tilge, and others. Defendants had judgment, and plaintiffs appeal. Reversed.
    Argued before Van Brunt, P. J., and O’Brien and Lawrence, JJ.
    
      Blumenstiel & Hirsch, (Emanuel Blumenstiel, of counsel,) for appellants. J. A. Welch, for respondent Tilge. Maurice Rapp, for respondent Grasse.
   Van Brunt, P. J.

This action w,as brought to set aside a general assignment made by the defendants Bishop So Crawford to the defendant Grasse, and also a transfer of outstanding accounts executed and delivered by the defendants Bishop & Crawford to the defendant Tilge. It was claimed that the general assignment and the transfer of accounts were executed contemporaneously, and as part and parcel of the same transaction, and with intent to violate chapter 503 of the Laws of 1887, forbidding preferences except to the extent of one third of the actual assets of a debtor, and that, therefore, the assignment as well as the transfer is tainted with fraud, and must fall. It appears from the evidence that the transfer of accounts was executed and delivered on the 10th of January, 1890, and that the assignment was not executed until the following day. But it further appears that the assignment had been determined upon, on the day of the execution of the transfer. It is true that the learned court below refused to find that the transfer was made in contemplation of and as part and parcel of the making of the general assignment. But it is apparent that this refusal may have been based upon the assumption that, if the assignee of the accounts know nothing about the contemplated assignment, it was entirely immaterial whether such assignment was contemplated or not by the assignors at the time of the making of the transfer of accounts. I think this view of the law was entirely incorrect, as I shall attempt hereafter to show, although it seems to receive some countenance from what is said in the cases of Berger v. Varrelmann, 127 N. Y. 281, 27 N. E. Rep. 1065, and Manning v. Beck, 129 N. Y. 1, 29 N. E. Rep. 90, the decision in which latter ease was to some extent founded upon what was supposed to have been decided in the first case cited. It seems to me that it is too plain for argument that where a party resorts to tricks and devices to escape a statutory limitation, everything which is done or performed to carry out this design is fraudulent, and is voidable at the instance of a judgment creditor. Therefore if a party, for the purpose of evading the restrictions of the statute above referred to, resorts to the device of a transfer of accounts, and then the making of a general assignment, thereby giving preferences to a greater extent than the statute would allow, intending and endeavoring so to do, his intent in the performance of these various acts is a fraudulent one; and a transfer to anybody except for value, by a party with a fraudulent intent, is void, as against his creditors; and that, too, whether the transferee was cognizant of the fraudulent intent or not. If, in the cases cited, a contrary rule has been held, viz., that in order to invalidate a transfer given merely as security, it is necessary not only to show that the transferrer had a fraudulent intent, but that the transferee was cognizant thereof, then no force seems to have been given to the statute of frauds, as it is contained in the Revised Statutes, (volume 2, p. 137.) Section 1 is as follows: “Every conveyance or assignment, in writing or otherwise, of any estate or interest in lands, or any goods or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suit commenced, decree or judgment suffered, with a like intent, as against the person so hindered, delayed, or defrauded, shall be void. ”

All that is necessary in order to make a transfer of property or the suffering of a decree or judgment void, is that it shall have been made or suffered with intent to hinder, delay, or defraud creditors. How, in ease a party contemplating making an assignment, for the purpose of evading the restrictions of the assignment law, knowingly makes transfers of his property as security to creditors in excess of that which is allowed by the assignment law, and thereby attempts to evade the provisions of the statute, such transfer is made with intent to hinder, delay, and defraud his creditors; and therefore, under the express words of the statute, it is void, whether the transferee has knowledge of such intent or not. The only saving clause specified in the statute is that contained in section 5, where it is provided that “the provisions of this chapter shall not be construed in any manner to impair the title of a purchaser for a valuable consideration, unless it shall appear that" such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. ” Therefore the question of the intent of the transferee is only of importance where he is a purchaser for value, and then, even, he is not protected if he knew of the intent of the transferrer. Therefore the confession of a judgment, or the transfer of accounts for security, if made with intent to evade the statute, is necessarily void; and if a general assignment for the alleged benefit of creditors is also made as part and parcel of this scheme, that must also necessarily fall.

It is entirely erroneous to suppose that the case of Berger v. Varrelmann is an authority for the. proposition that an intent to evade the statute by the confession of a judgment, and then making an assignment, does not invalidate the assignment. In the opinion of the minority of the court that position is expressly held, and nothing to the contrary can be found in the prevailing opinion. It must be borne in mind, in considering the question involved in that case, that the action was not brought to set aside the assignment on the ground of fraud; but, on the contrary, was brought in aid of the assignment because of fraud on the assignment, such fraud consisting of the confession of a judgment to Varrelmann by which preferences were given beyond the amount allowed by law. In such an action, brought for the purpose of putting in the hands of an assignee funds which had been fraudulently abstracted from the estate, it was clearly improper to give the relief of vacating the assignment as well as the judgment. It is a familiar principle that where a series of acts are done, all tending to one end, and there is a fraudulent purpose connected with any one of them, such fraud permeates the whole transaction; and the fraudulent intent vitiates each and every of them. Now, in the case at bar, if this transfer of accounts to Tilge was made in contemplation of the proposed assignment, and for the purpose of evading the limitations of the law, it is entirely immaterial whether Tilge & Co. were Iona fide creditors, and received the transfer in good faith, or not. If their transferrers had a fraudulent intent, it invalidated the transaction. Without expressing any opinion upon what conclusions are to be drawn from the facts as they were developed upon the trial, it appears to me that the finding in regard to the relation of these transactions to each other was made by the learned judge below under a misapprehension of the law, and that, therefore, there should be a new trial in order that this evidence should be weighed unfettered by what it was supposed was decided in the cases in the court of appeals above cit°ed. The judgment should be reversed, and a new trial ordered, with costs to the finally successful party to abide the final event. All concur.  