
    JULIUS EINSTEIN, Plaintiff and Respondent, v. THOMAS C. CHAPMAN, as Assignee of William Rothman, and WILLIAM ROTHMAN, Defendants and Appellants.
    ASSIGNMENT FOR THE BENEFIT OF CREDITORS.
    Action by a Judgment Creditor to set aside same.
    The change of possession required by the statute must be not only actual hut continued, or it will be presumed fraudulent.
    In the case of Tilson v. Terwilliger, 50 IF. T. 273, immediate delivery was made and actual possession retained by the purchaser about a year before the property came again into the hands of the vendor to be kept by him for the purchaser. It was held that the possession was not continued as required by the statute, and therefore the sale was presumptively void as against a creditor of the vendor.
    When it appears, as in this case, that the possession was not continued or retained by the purchaser, the burthen of proof to establish that the assignment was made in good faith and without intent to defraud creditm-s, rests upon the defendants.
    
      Held, that the evidence in this case was insufficient to remove ■ the legal presumption of fraud which arose from the change of possession from the assignee to his assignor, which the statute raises imperatively. ■
    Before Sedgwick and Sanford, JJ.
    
      Decided March 5, 1877.
    This is an appeal from a judgment rendered at special term, March 20, 1876, after a trial of issues of fact before the court without a jury.
    The action was brought by the plaintiff, a judgment creditor of the defendant Rothman, upon whose judgment an execution had been duly issued and returned unsatisfied, to set aside an assignment for the benefit of creditors, executed by the judgment debtor to the defendant Chapman, under date of December 23, 1874.
    Upon the trial, the plaintiff produced from the files of the office of the clerk of the city and county of New York, and read in evidence such assignment, dated December 23, 1874, and recorded in said county clerk’s office, December 30, 1874; also the record of a judgment recovered in the marine court of the city of New York by Einstein, the plaintiff, against Eothman, one of the defendants, January 12, 1875, for $384.78. The docket of said judgment in the office of the said county clerk, and the due issuing and return unsatisfied of an execution thereon‘were admitted. The plaintiff then proved by the defendant Rothman, that on and prior to December 23, 1874, he was engaged in business, as a dealer in leather and shoe findings, at No. ISO Canal street, in said city. That up to February 1,1875, he continued to carry on the business at the same place, making purchases and sales, from time to time, as before, and without changing the signs upon the building otherwise than by adding the letters “Agt.” to his name, “William Rothman,” on a wooden sign in front. Upon the witness’s cross-examination it appeared that for about a week from and after December 29, 1874, the store was closed by Chapman, who had the keys, and that, after January 1, 1875, witness was again put in possession of the store by Chapman, and thereafter carried on the business-claiming to act as his agent.
    The plaintiff then rested his case. Defendant’s counsel moved to dismiss the complaint. The motion was denied, and counsel for defendants excepted.
    Evidence was then adduced on the part of the defendants, tending to show that on December 19, 1874, Rothman, being then indebted in the sum of $2,000 or thereabouts to the firm of Everit & Chapman, whereof the defendant Chapman was a member, addressed a note to Chapman dated on that day, advising him that owing to hard times and losses he had been compelled to suspend payment, and that a meeting of his creditors to confer as to a possible settlement of his affairs would be held at the office of his attorneys on thp 23rd inst. The meeting was held, and Chapman attended. Ten or twelve out of about nineteen creditors were present, or were represented. It appeared that Rothman’s indebtedness was about $10,000 and his assets about $3,000. Propositions for a compromise and settlement were then made, and were entertained by some of the creditors present, and an assignment was also proposed and agreed upon. After the execution of the assignment Chapman took the keys, kept the store closed for about a week, and then, at the instance of some of the creditors, who said it would be well for Rothman to go right on, allowed him to go into the premises and carry on the business as before, accounting weekly for all receipts and expenditures.
    On February 15, Chapman sold out, at public auction, the entire stock, fixtures, implements, book accounts, and good will of the establishment, in one lot. The property was struck down to one Ahrens, Rothman’s father-in-law, for $725. Chapman received ’ from him that amount, and delivered to him a bill of sale. Rothman continued to carry on the business. It further ' appeared, that, during the first week in January, 1875, a composition deed, in which were embodied terms and conditions of compromise, which had been proposed and considered at the meeting of creditors, held on December 23, 1874, was signed by the firm of Ever.it & Chapman, of which firm the defendant, 'Chapman, was a member, and by all the creditors of Rothman except the plaintiff and one other, who has since released and discharged his claim. By the terms of this instrument, which bears date December 31, 1874, the creditors agreed to accept thirty cents on the dollar of their respective claims, in full settlement and satisfaction thereof, payable in two equal installments by the promissory notes of Rothman, indorsed by Frederick Ahrens and John Jahn, at sixty and ninety days respectively, after the date of such agreement. In and by the said instrument, the said creditors covenanted that Rothman might dispose of his property, at his own free will and pleasure, for and towards the payment of said thirty per cent. The paper was signed by Chapman’s partner, in the name of Chapman & Everit, and other signatures were obtained by Chapman himself. The notes therein specified were delivered soon after the agreement was signed, and were duly paid. Chapman testified that the assignment papers were delivered to him a day or two after December 29, 1874.
    Upon áll the evidence, the court found, among other things, that the said assignment was not accompanied by an immediate delivery, followed by an actual and continued change of possession; and that it was not made. to appear that said assignment was made in good faith, without any intent to defraud the creditors of said Rothman. Also, that the said assignment was made by Rothman, with intent to hinder, delay, and defraud his creditors, and particularly the plaintiff, and is fraudulent and void.
    Judgment was rendered accordingly, and both defendants appealed.
    
      Nehbras & Pitshke, for appellant, Chapman.
    
      Martin S. Meyer, for appellant, Rothman.
    
      Bushnell & Albright, attorneys for respondent; S. Jones, of counsel.
   By the Court.—Sanford, J.

Defendants’ exception to the ruling of the court, in refusing to dismiss the complaint at theo close of the testimony on the part of the plaintiff, was not well taken. If an immediate delivery of the assigned property, and an actual change of its possession can be inferred from the facts that, upon the execution and delivery of the assignment, the keys passed into the possession of the assignee, and the store was closed for about a week thereafter, it nevertheless appears that the assignor, except during that period, continued to carry on the business, after the assignment, making purchases and sales, as before, without other outward and visible indications of a change of ownership, than the mere addition of the letters “ Agt.” to his name, upon one of the signs in front of the building.

This evidence was sufficient, under numerous decisions of this court, to justify a finding that the alleged transfer was not accompanied by an immediate delivery and followed by an actual and continued change of possession, and was, by virtue of the statute (2 R. S. 136), therefore, presumptively fraudulent against the creditors of the assignor (Randall v. Parker, 3 Sandf. 69 ; Topping v. Lynch, 2 Robt. 484; McCarthy v. McQuade, 1 Sweeny, 387). The change of possession, required by the statute, must be not only actual, but continued, or it will be presumed fraudulent. In Tilson v. Terwilliger, 56 N. Y. 273, immediate delivery was made and actual possession ‘ was retained by the plaintiff, for about a year after his alleged purchase, but the property was then returned by Mm to the possession of his vendor, to be kept for him, as he testified ; but the court held that, notwithstanding such immediate delivery and actual change of possession, and although much time elapsed before the chattel came again to the hands of the vendor, the change of possession was not continued, according to the statutory requirement, and the sale was, therefore, presumptively void, as against a creditor of the vendor.

Under these authorities, we think the defendant’s motion for a dismissal of the complaint was properly denied.

The evidence for the defense not only confirmed and corroborated that advanced on behalf of the plaintiff, with respect to the brief continuance of any change of possession, but tended'strongly to show that such change, if any, actual or constructive, was merely colorable, and not made in good faith. Of course, if the ruling above considered was correct, the burthen of proof was upon the defendants to make it appear that the assignment was made in good faith and without intent to defraud (2 R. S. 136). The evidence offered by the defense failed to satisfy the court in this regard, and the result was a finding of fact adverse to the honafides of the transaction.

We have carefully examined the evidence bearing upon this question, and deem it insufficient to outweigh the legal presumption of fraud, which the statute renders imperative. Without attempting to analyze it minutely, it may be said that it tends to induce the belief, that the assignment in question was but part of a collusive scheme to coerce a compromise between an insolvent debtor and certain of his creditors whose assent to a composition could not readily be procured ; that it was not made for the purpose of realizing upon the assets, and converting them into money for distribution among creditors generally, but that it was intended to cover and screen the debtor’s continued possession of the assigned estate, during the period requisite for the successful negotiation and consummation of the compromise proposed.

On the whole case, we think the material findings of fact are sustained by the evidence, and that the conclusions of law, upon which the judgment was rendered, were properly deduced therefrom.

The judgment must, therefore, be affirmed, with costs of the appeal.

Sedgwick, J., concurred.  