
    Frederick N. Lawrence and LeRoy M. Wiley, assignees, &c. plaintiffs and respondents, vs. The Bank of the Republic, defendants and appellants.
    1. A bank, with whom assignees in trust for the benefit of creditors have deposited, as such, moneys which are proceeds of the assigned property, cannot, generally, in an action by the depositors to recover such moneys, set off a claim it has against the assignors of the plaintiffs. _
    2. But if such bank be a judgment creditor of the assignors of the plaintiffs, and has exhausted its remedy against them by execution, it becomes thereby entitled to attack the validity of the assignment, and may, in an action by the assignees to recover the proceeds of the assigned property deposited with it, set up, by way of counter-claim, the invalidity of such assignment, by showing it to be fraudulent as against creditors, and their right to be paid out of the proceeds of the assigned property while in the hands of the assignees.
    3. The equitable right of the bank to have the proceeds of the assigned property applied in satisfaction of its judgment, is so immediately connected with the subject of the action, that it constitutes the materials of a counter-claim, within the meaning of the Code; and it is erroneous to exclude evidence of such defense.
    4. The proceeds of property fraudulently assigned, while in the hands of the assignees, are held by them - as trustees for those creditors of the assignors who are intended to be defrauded by the assignment, and have exhausted their remedy by execution. They are, while undistributed, subject to all the equitable rights of such creditors.
    
      6. Any creditor who has exhausted his remedies at law can attack the validity of an assignment, on the ground of fraud, and by a judgment which avoids the assignment, reach any property remaining in the hands of the assignees, or which is subject to their control.
    6. Where the facts set úp in the answer as a counter-claim are neither demurred nor replied to, they are to be taken as true, and the defendant will be entitled to relief thereon.
    (Before Robertson, Ch. J., and Monell and Moncrief, JJ.)
    Heard January 11, 1865;
    decided March 4, 1865.
    Appeal from a judgment rendered on the verdict of a jury. The plaintiffs brought this action as assignees of the firm of Lanes, Boyce & Co., for the benefit of their creditors, for certain moneys, the proceeds of the assigned estate, deposited by the plaintiffs, as such assignees, with the defendants, in 1,861. They made their demand therefor by drawing their check, as assignees, for the amount, by an attorney, in fact, (Mr. Bowdoin,) on the 2d February, 1863, which check the defendants refused to pay. The assignment was made March 4, 1861. The defendants were creditors of Lanes, Boyce & Co. for $128,028.54, and on the 4th September, 1861, commenced an action in the Supreme Court to recover such debt, and on the same day issued an attachment against their property to the sheriff of New York, on the ground that the debtors had assigned their property to the plaintiffs, with intent to defraud creditors. The process was executed by service on the present plaintiffs as well as the defendants in that action, and the deposit in question duly attached. The issues in this action were tried before a justice of this court, and a jury. The plaintiffs read the admissions in the answer of the defendants, and rested their case; whereupon the counsel for the defendants moved to dismiss the complaint upon the ground that the check drawn on the defendants, as stated and set forth therein, appears thereby to have , been drawn and signed by an attorney, in fact, of the plaintiffs, and there was no evidence produced, on the part of the plaintiffs, to show that such attorney had any authority to draw or sign said check. The justice denied the motion, and the counsel for the defendants excepted to his decision. The defendants then offered to prove the foregoing' facts, which were set up as a defense in their answer; and also that the assignment of “ Lanes, Boyce and Co.” to the plaintiffs was made with intent to defraud their creditors .; that when the deposit was made, and the check presented, the defendants were ignorant of such fraud; that judgment was recovered by the bank against Lanes, Boyce & Co. 1st of' October, 1861, and execution issued on the 14th of that month; and that the judgment was still wholly unsatisfied. ' The counsel for the plaintiffs objected to this .evidence, and the learned justice sustained each of said several objections, and rejected each of the offers so separately made, constituting the whole defense contained in the answer, and the counsel for the defendants excepted to each of. such, several decisions. Such justice then directed the. jury to find a verdict for the plaintiffs. To which direction, the counsel for the defendants excepted. A verdict having been rendered in favor, of the plaintiffs for #8768.41, judgment was duly, entered thereon, and from that judgment the defendants appealed.
    
      T. H. Rodman, for the appellants.
    I. The assignment being void, the fund in question was the property of “ Lanes, Boyce & Go.” and subject to the process of their creditors, precisely; as if the assignment had never been made. . (Rinchey v. Stryker, 26 How. Pr. 75, 83. Hall v. Stryker, in Court of Appeals, (MSS. decision.) Kelly, Sheriff, v. Lane, Supreme Court, 1st District, (MSS. decision.) The defendants’ attachment was levied upon that fund, and a lien thereon created, prior to the plaintiffs’ demand for the money. The defendants are not mere creditors^ but creditors having a specific lien, and the sheriff had a like lien. That lien could not be defeated by the action of the fraudulent assignee, either in this suit or otherwise. According to the principle established by the Court of Appeals, the fraudulent assignee stands precisely in the shoes of his assignor, as respects the right of creditors to reach the property assigned.
    II. The Supreme Court, in Kelly r. Lane, (ubi sup,) established the sheriff’s right to maintain a suit in equity to set aside such an assignment as fraudulent, and to enforce the lien of an attachment levied on moneys being proceeds of part of the assigned property deposited by the same plaintiffs in.the United States Trust Company, in their names as assignees. (See opinion of Justice Leonard.) If the sheriff could maintain such an action, the plaintiff could, under section 238 of the Code, maintain one. (Id.) It necessarily follows, that the creditor, who has thus attached the property of the fraudulent debtor, can, when sued by the fraudulent assignee to recover it, assert this lien. If it were otherwise, the creditor would be compelled to pay over the money or deliver up the property of his debtor in his possession on the demand of a fraudulent assignee in law, the same as the debtor himself, and thus abandon his right both of lien and set-off.
    
    III. The assignment being void, the defendants, irrespective of the lien of the attachment, had a right to set off their debt against Lanes, Boyce & Co., of which the assignees could not deprive them by bringing this action. This right existed before the Code, and has been affirmed and extended by it. (Code, § 150.)
    IV. If it be contended that the defendants, by accepting the deposit from the plaintiffs as assignees, are estopped from impeaching the validity of the assignment, or the right of the plaintiffs to the fund, we answer :
    1. A party is never estopped by an act done, or admission made in ignorance of his rights. The defendant offered to prove, that when the deposit was made, and the check was presented, it was ignorant of the fraud. (Child v. Chappell, 5 Seld. 257.) 2. Nor is he estopped unless the act was done, or the declaration made, with intent to influence the conduct of the other party, and had that .effect. (Carpenter v. Stilwell, 1 Kern. 73, 79.) 3. The doctrine of estoppel can no more be applied than if the suit had been brought by the debtors, Lanes, Boyce & Co. For the plaintiffs stand precisely in the same position as to creditors, by reason of fraud in the assignment. 4. A party is not under an estoppel after the title of his adversary has ceased; and it ceased here as soon as the fraud was proved. As soon as the defendants obtained judgment, and their execution was returned, they were in a position to attack the assignment for fraud, and when that was done successfully, the title of the plaintiffs ceased. (Jackson v. Rowland, 6 Wend. 666. Lawrence v. Miller, 1 Sandf. 516.)
    
      J. Larocque, for the respondents.
    I. A bank which opens an account with a dealer in a representative capacity as assignee or trustee of an estate, and receives deposits from him, is not at liberty to withhold payment of the amount, in which it has thus become indebted, on pretense of the invalidity of the title of its depositor, as such assignee or trustee, much less to seek to appropriate the amount to itself, on pretense that the instrument creating the representative title is fraudulent and void as against third persons, although good as between the assignors and assignees. It must, at least, first repay the debt which it was permitted to contract on the "faith of its recognition of the trustees’ title. Even then it would be questionable whether its recognition, by dealing with the trustees would not debar it from taking such an objection,
    II. The indebtedness in this case is one by contract on the part of the defendants, in consideration of the dealing and deposits, to pay to the plaintiffs. There has been no failure of consideration—the contract was a valid one, and the defendants must perform it.
    1. It is no answer to the claim for such performance, that the depositor did not come honestly by the money, the receipt of which by the bank formed the consideration for its contract, even if such an allegation could be supported, especially when no ope else claims a better title to it, as against the bank.
    2. Nor does it make the case any better, if it be true that the debtor of the bank has been dishonestly deprived of the money which formed the consideration for the bank’s contract, by the plaintiffs. The simple question is, whether the bank made such a contract with the plaintiffs ? (Duncan v. Bates, Sup. Court, spec. term, first dist. per Ingraham, J. Nov. 1858. MSS. affd. by gen. term, Jan. 1859. U. S. Trust Co. v. Wiley 
      
      & Lawrence, Sup. Court, spec. term, first district, per Mason, J. March, 1863. MSS. affd. at gen.term. Atkinson v. Manks, 1 Cowen, 691, 706. 2 Story’s Eq. Jur. § 817, b. Sherman v. Partridge, 4 Duer, 646.)
    III. It makes no difference whether the bank did or did not 'know, when it made the contract, the circumstances on which it now alleges that the plaintiffs had dishonestly come by the money which formed the consideration for the contract. It made the contract, and has sustained no legal prejudice by its ignorance. It should perform its contract, before it applies' to be heard.
    IV. The argument on the part of the appellant rested entirely upon the money deposited being the property of the assignors, in consequence of the alleged fraudulent nature of the transfer, upon the bank thereby having a so called equitable right of offset, and its having acquired a lien upon the money deposited as property of the assignors, and the like. The short answer to all this (apart from others which might be made if the premises were true) is, that the suit is not to recover the precise money deposited or lent. That deposit was the mere considereration for the bank’s contract to pay the plaintiffs, (as assignees,) on demand, the balance of account appearing in the pass book from time to time. No lien under process against the assignors could be acquired on that contract, nor can any offset of a claim against the assignors be made against it.
    V. The motion to dismiss the complaint was properly denied. The power of the attorney in fact for one of the plaintiffs, to sign the check was not in issue;
   Robertson, Ch. J.

The only grounds upon which the defendants resist the payment to the plaintiffs of the debt due by them for money lent, (Com. Bank of Albany v. Hughes, 17 Wend. 94; 2 Seld. 412,) which is termed d deposit with them as a bank, are three-fold.

Eirst. That such moneys, so deposited or lent, are still the property of the firm of Lanes, Boyce & Oo.; and the defendants have a right to set off the debt due to them from that firm, against liability for such moneys.

Secondly. That the defendants are judgment creditors of Lanes, Boyce & Co. who, by having exhausted their remedy by execution, are in a position to attack the bona fides of the assignment by that firm to the plaintiffs, and are entitled to have, it avoided, by way of affirmative relief) as claimed in their answer, in order to reach the property fraudulently assigned, its proceeds, either in the hands of the assignees, or in the shape of the debt from the defendants themselves.

Thirdly. That they are bound to respond to the sheriff for such moneys, under the attachment issued in their favor against the property of Lanes, Boyce & Co. and not to the plaintiffs.

These three grounds must be viewed separately, in considering the rights of the parties. It is also not to be lost sight of, that the action is not for moneys having an earmark, which could not be appropriated without a conversion, but simply for money lent. It is true that if such moneys had been the fruit of a felonious or fraudulent appropriation of any person’s property,' the true owner might follow such proceeds into the hands of any one into which they might come, (Bank of America v. Pollock, 4 Edw. 215,) thus making the party by whom such property was so appropriated, in fact, the agent of the original owner. The moneys in question, however, could in no sense, after the assignment of “Lanes, Boyce & Co.” be termed their property, except so far as by law they plight be pursued and reached by their creditors.

The answer in this case contains the whole of all the affidavits on which the attachment under which the defendants claim was issued, with all their allegations of mere probative facts, averring that all such allegations are true. After setting forth the issuing of. such attachment, and its service on the defendants, it further alleges other matters to show that the assignment by Lanes, Boyce & Co. was fraudulent. But it only claims that the defendants have a right to apply the balance of the moneys deposited by the plaintiffs with them as part payment of their judgment against the members of the firm of Lanes, Boyce & Co. and to apply such judgment by way of off-set or counter-claim.

In reference to the first of the modes in which the defendants so seek to take advantage of their claim against Lanes, Boyce & Co. it is clear that they could not set off their claim against that of the plaintiffs in this action. They could only make that set-off where such firm had a right to the moneys claimed. The assignment cut off all such right, until it was adjudged to be void as against creditors. For that purpose certain steps must be taken by the latter, such as obtaining judgment and exhausting all ordinary remedies by execution, before they could be placed in a situation to attach such assignment and remove it as a barrier to reaching the proceeds of the assigned estate in the hands of assignees.

The second of such modes presents a more embarrassing question. The Code authorizes a defendant to set up new matter constituting a counter-claim connected with the subject of the action. (§ 150, subd. 1.) Such counter-claim has been held to be more broad and comprehensive than a set-off or recoupment, while including both. (Vassear v. Livingston, 3 Kernan, 256. Pattison v. Richards, 22 Barb. 146.) It has been held in this court to include every relief to which a defendant would be entitled in a separate action at law or in equity, or in a cross action. (Gleason v. Moen, 2 Duer, 642.) It is also fully settled that a defense purely equitable may be set up against a claim strictly legal, (Foot v. Sprague, 12 How. 355; Hunt v. Farmers’ Loan and Trust Co., 8 id. 418,) and cannot be taken advantage of in any other way. (Id.) Such defenses include every thing for which relief must formerly have been sought in a court of equity. (Dobsen v. Pearce, 2 Kernan, 156.) And although counter-claims, which are not merely defenses, but admit of affirmative relief beyond dismissing the plaintiffs’ complaint, are not lost by not being set up, nothing prevents their being set up if connected with the subject of the action. The Code expressly provides for giving by judgment to the defendant, “any affirmative relief to which he may be entitled.” {Code, § 274, subd. 2.) This undoubtedly was meant to provide, in case of a counter-claim, for affirmative relief beyond dismissing the plaintiffs' complaint.

Fraud in the assignment to the plaintiffs, whereby, upon an assault thereupon by creditors of the assignors, who had exhausted their remedy at law, they would hold the assigned property in trust for such creditors, clearly constituted a cause of action connected with the subject of the present one, which consisted of a liability to refund proceeds of such fraudulently assigned property lent to the defendants. There would be no obstacle to the commencement by the latter, as such creditors, of an action to set aside such assignment, and have all the proceeds of the assigned property in the hands of the plaintiffs, including, of course, the moneys deposited with the former, applied to' the payment of their claim, and incidentally to enjoin them from prosecuting such an action as the present. The Code evidently intended to prevent circuity of action, by allowing defendants to resist an action brought for moneys, which they might substantially recover back in another form. It uses the most general terms when it merely requires the cause of action in a counter-claim to be connected with the subject, of the action.” Such a phrase, in order to prevent multiplicity of litigation, should be liberally construed. (See McNamara v. McNamara, 9 Abb. 18.)

Some little difficulty arises upon the question whether the defendants have, by a proper demand of affirmative relief, irrevocably elected to pursue their remedy in this action, by setting aside the assignment in question, and procuring a judgment to that effect, which shall also direct the application of the moneys sued for in satisfaction pro tanto of their claim. Of course, where affirmative relief as a counter-claim is sought, although the Code does not expressly require that it'should be asked for, it would seem more proper that it should be so in some way (Bridge v. Payson, 5 Sandf. 210,) but how far that which is sought must be specified in detail, is not so clear. If the matter, which constituted such counter-claim, were the subject of a cross action, as well as of such counterclaim, on a motion to drive the defendants to their election of remedies, before taking issue on a trial, the character of the relief sought in the action in which it was set up as a defense might be very material. (Farmers’ Loan Co. v. Hunt, 1 Code Rep. N. S. 1.) The positive rule of the Code in regard to complaints when answered, (§ 275; Marquat v. Marquat, 2 Kernan, 336,) might perhaps be applied to answers setting up new matter upon which to found affirmative relief, where they had been replied to. But there is no reply in this case. The attachment could never be any thing inore than a defense, the counter-claim rests on the judgment alone. Perhaps, as the defendants may have a right to have the assignment in question declared void, upon the facts stated in their answer, they may avail themselves of those facts as creating an equity to have the moneys in their hands applied in satisfaction of their claim, and thus create an equitable defense out of the same, which would not need to be tried by a jury. At all events, there was no demurrer to the answer, nor was any specific objection taken on the trial, to the want of a proper demand of affirmative relief, and the defect must therefore be considered as cured.

The great objection to the plaintiffs’ right of recovery is that all the facts stated as a counter-claim in the answer, were neither demurred to nor controverted, and were consequently ■admitted, and no issue of fact was raised upon them to be tried, and the defendants became entitled to all the relief which such facts required should be given. The judgment itself is incomplete without some disposition of the issue raised by the statement of such counter-claim in the answer, and either that must be corrected or a new trial had to dispose of it.

But for the purpose of determining whether any jury trial is necessary, it will be proper to examine the nature of the defense.

So far as the right of the sheriff to' prosecute for the debt due the plaintiffs is concerned, it must depend entirely on the statutory provisions of the Code, (§§ 227 to 243,) respecting attachments. Those provisions are very precise and special, but are not to be extended beyond the evil and remedy pointed out by it, by construction. An attachment is evidently a means of seizing and impounding, for the purpose of finally satisfying the judgment of the plaintiff when obtained, certain described property of the debtor. The warrant issued is to be, in general terms, to attach and safely keep, .enough of the property of the defendant, within his county, to satisfy the plaintiffs’ demand. (§ 231.) The sheriff is required to proceed as required by law in case of absent debtors, and to keep the property seized by him and the proceeds of any sold, to answer the judgment. (§ 232.) He is further authorized, subject to the direction of the court, to collect and receive into his possession all debts, credits and effects of the defendant, and for that purpose to take the necessary legal proceedings, either in his own name or that of the defendants, as may be necessary. (§ 232.) This, so far as such debts, credits or effects are concerned, would make the sheriff their legal trustee or receiver; and as such he is to sue, claiming title through the defendant. The interest of the defendant in the stock of any association or corporation, with any interest or profits thereon, and all other property of his in this state, is also made liable to be levied upon and sold. (§ 234.) Such attachment is to be executed upon such rights or shares by leaving a certified copy of such warrant, with a notice of the property levied on, with the head of such association or its managing agent, and upon debts or other property incapable of manual delivery, by leaving a like copy and notice with the debtor or individual holding such property. (§ 235.) Such officer, debtor or individual is required to furnish the sheriff, on request, with a certificate designating the number of shares of the debtor in the stock of such association and any dividend or incumbrance thereon, or the property held by such association or individual, for the benefit of the defendant, or the debt owing to him. (§ 236.) The sheriff’s power to collect notes and other evidences of debt and' the debts attached under the warrant of attachment, and to prosecute bonds taken by him, is continued until the judgment is paid. (§ 237, subd. 4.) The power of a sheriff in cases of attachment against absent debtors is very nearly similar. (2 R. S. 188, 4th ed.) He is required to attach all personal property, including money and bank notes, and to take into his custody all books of account, vouchers and papers relating to the property, debts, credits and effects of such debtor. (Id. § 7.) He is also authorized to collect, receive and take into his possession the debts, credits and effects of such debtor, and commence such suits and take such legal procedings in the name of such debtor, as may be necessary for that purpose, to be continued by trustees afterwards. (Id. § 8.)

The provisions just recited in regard to attachments in actions and against absent debtors, add to property leviable upon under an execution, debts, credits and effects of the defendant or debtor, provide for the mode of levy by notice to the debtor, and for discovery by him of the amount due, and enable the sheriff or officer to reduce them into possession by actions either in his own name or that of the defendant. The plaintiff is empowered to prosecute the actions so authorized to.be brought by the sheriff in case of attachments against a defendant, upon giving an undertaking to indemnify the sheriff from all damages, costs and expenses on account thereof, (Code, §239,) which undertaking (by the next section) is not to be delivered up to the defendant in case he recover judgment, so that it becomes entirely a personal indemnity to the officer for any liability incurred in such action.

It is very evident that the first of such two last mentioned sections (§239) was intended to be confined to actions brought by the sheriff, under section 232, and probably to those brought in his own name, as the indemnity is against all damages, costs and expenses on account thereof, which he never could incur except in suits brought by himself. The prosecution by the plaintiff, mentioned in such section, was evidently the mere conducting and supervision of the proceedings, not the bringing of a suit in his name, as it is contrasted with such bringing of the suit, and has the alternative of “ under his direction ” added, which alone would not give him power to determine in whose name the suit should be brought. It is clear, therefore, that such actions are only to he brought in the name of the defendant, or the. officer of the law, under section 237, by whomsoever they are to be conducted when brought. The law did not intend the plaintiff in such action to be the party by whom the debts were to be collected, or give him any power or right, except through the sheriff as the officer of the law, to collect and apply the property of the debtor to the satisfaction of his judgment when obtained. In regard to any property of the debtor which the sheriff was by such- statutory provisions authorized to attach, seize, reduce into possession and collect, of course no fraudulent assignment thereof could stand in the way of such attachment, seizure or collection by action or otherwise. The principle settled in the Court of Appeals in Rinchey v. Stryker, (26 How. Pr. 75,) and previously in this court in Thayer v. Willet, (5 Bosw. 344,) goes to that- extent. The only question is whethey in regard to property which never had been owned by the debtor, and debts which never had been due to him, or claims which, even if the attachment had not been issued, never could have been collected by him; and which previously had only been capable of being reached by a judgment creditor’s action, or by a receiver appointed therein, the sheriff virtually takes the place of the creditor whose claim is not yet reduced to judgment, and can proceed to collect such claim by attempting to set aside, as fraudulent, the instrument under which such property was acquired.

It is by no means clear in what form, or on what principle, the proceeds of goods, fraudulently assigned, in the hands of assignees, can be so reached. To reach' dioses in action, not leviable upon at law, an equitable execution might be issued, by a bill in equity, whose lien attached from the time of filing it. (Butler v. Stoddard, 7 Paige, 163.) A bill to remove obstructions to the levy of an execution upon goods liable thereto, it seems, would also relate backwards, and take effect' as a lien from the time of issuing such execution. (Id.) The remedy of a creditor is, however, extended, on certain conditions, to all the property, and things in action, of a debtor, by the Revised Statutes and the Code, (2 B. S. 173, § 28 ; Code, § 297.) The latter, however, requires an action to he brought, when a debt is denied or property is adversely claimed, (§ 299.) But money which is either the proceeds of goods sold by a fraudulent assignee, or has been collected by him from the assignor’s debtor, cannot be said to be the assignor’s property, which it never was, nor was the title to it acquired by such assignment. Even setting aside the assignment as fraudulent, would not make such money the debtor’s property, or entitle him to it. Goods sold by the assignee, or debts discharged by him, before any action to set aside the assignment, cannot be reclaimed by creditors. Until that time, a good title to the former passed by such sale, and the release of the latter was effectual until that time. The right to follow, therefore, the proceeds of such goods or debt while in the assignee’s hands, can only be created by converting him into a trustee thereof for creditors, who intercept such.proceeds before distribution under the assignment. Upon that principle alone, is he to be protected for payments by him in good faith before any action commenced. (Barney v. Griffin, 4 Sandf. Ch. 552. Wakeman v. Grover, 4 Paige, 23. Averill v. Loucks, 6 Barb. 470.) A fraudulent grantee of lands is not accountable for rents and profits received by him before a receiver is appointed. (Robinson v. Stewart, 10 N. Y. Rep. 189.) The earlier cases, (Hendricks v. Robinson, 2 John. Ch. 283; S. C. 17 John. 438; Hadden v. Spader, 20 id. 554; S. C. 5 John. Ch. 280; Bayard v. Hoffman, 4 id. 450; McDermutt v. Strong, Id. 687,) seem to have proceeded upon the principle of converting a fraudulent assignee into a trustee whenever the property assigned was not subject to an execution at law or to be reached in equity, as the debtor’s property, after the exhaustion of the legal remedy. (Donovan v. Finn, Hopk. 59.) The provisions of the Bevised Statutes before mentioned (2 R. S. 173, § 28) in regard to reaching property of judgment debtors, are held only to apply to strict creditors’ bills, based on the exhaustion of the remedy at law, and not to the powers of a court to reach property fraudulently assigned. (Chautauque Co. Bank v. White, 6 N. Y. Rep. 236.) The pursuing creditor does not seem to lose his right of reaching such proceeds by waiting until such conversion by the assignee has taken place. (Knauth v. Bassett, 34 Barb. 31.)

It would be difficult to conceive how a sheriff, or a debtor, could be plaintiff in an action to set aside a fraudulent assignment, or rather to convert the assignee into a trustee for an alleged creditor, in order to reach the proceeds of assigned goods before the creditor has established his claim, when the latter could not do it himself. (Mills v. Block, 30 Barb. 549.) It is true, it has been held that under the Revised Statutes, upon an attachment against an absconding debtor, a creditor could file a bill to remove fraudulent obstructions, but it must be on behalf of all the creditors. (Falconer v. Freeman, 4 Sandf. Ch. 565.) But the provisions of the Code, before referred to, confine the right of the sheriff to the collection of debts due to the defendant also. I do not perceive how, by any artificial reasoning, a debt due to his assignees for the loan of the proceeds of goods sold or moneys collected, can be said or considered to be in any manner a debt due to him, or any part of his credits or effects, until the assignment is set aside or proceedings are taken by some one entitled to set it aside. As to him, such debt belongs to the assignees. The result of permitting the sheriff to commence an action in which he would be obliged to set forth the assignment and its fraud, as the foundation of his claim, since he could not recover the debt upon a mere allegation that it was due to the defendant in the attachment suit, might lead to a long litigation in which all the equities of the assignees would require to be settled, and yet, after all, the plaintiff in such suit might not ultimately recover therein. If goods or debts of the defendant were alone concerned, no such equities need be settled, and the sheriff, after collecting the debts, could return the proceeds to him.

I am aware that in the case of Skinner v. Stuart, (15 Abb. Pr. 391,) it was incidentally stated that upon complying with the terms of section 232, a plaintiff who had obtained an attachment might sue in his own name, but it was not necessary for the decision of that case, and the learned judge who made the remark did not explain what the object of requiring an undertaking to indemnify the sheriff could be, where the latter could not, by any possibility, be damnified. In the more recent case in the Supreme Court of this district, of Kelly v. Lane and others, (N. Y. Transcript, Dec. 27, 1864,) no such doctrine is insisted upon, although it was held, on other grounds, that the sheriff might maintain the suit.

In the case last cited, in which the assignors of the present plaintiffs were defendants, the prevailing opinion seems to disregard the words of the statute, “ debts, credits and effects of the debtor,” and reads them as if they were “ that which remains the property of the debtor, so far as creditors are concerned.” It assumes that the property sought to he seized was the debtor’s, and being so, the assignment formed no barrier to its possession by creditors, and that the sheriff represents the creditor, who, until his debt was established, could not reach such property by a principle analogous to that by which a court of equity removes obstructions to the operation of an execution. But it has already been shown that such a principle is entirely different from that by which courts of equity reach the proceeds of property fraudulently assigned ; that the money lent was not the debtor’s ; and that the debt claimed was not due to him. The dissenting opinion in that case, held the sheriff could bring no such suit, because, (1.) He had no interest in the subject matter of the action to entitle him to be plaintiff therein. (2.) He was not trustee of an express trust. (3.) Under section 232 of the Code, the debt attached did not belong to the judgment debtor, but to the assignees ; and (4) No such right could be exercised until the assignment had judicially been declared void, which could not he done until judgment, which had not been obtained. Such opinion relied upon the previous decision of a general term of the same court that a depositary or borrower of moneys belonging to assignees, however fraudulent, could not file a hill of interpleader between such assignees and creditors. It seems difficult to reconcile the two decisions, and loth as I am to differ with a co-ordinate tribunal of equal jurisdiction, upon a question of such importance, I cannot help subscribing to the superior cogency of the reasoning in the dissenting opinion in that case, Considering that the court overlooked the fact that the money lent never was the debtor’s, so that by no legal feature could a liability to return it by a borrower be said to be a debt to him, or any part of his effects, I must, however reluctantly, follow what appears to me the plain language of the statute.

I am, therefore, in favor of setting aside the verdict and judgment, with costs to abide the event.

Monell, J.

The ground upon which I put my decision in overruling the defense at the trial, was that the facts stated in the answer did not constitute a counter-claim. It was mainly urged by the defendants’ counsel, both at the trial and on the argument of the exceptions in the general term, that the defendants had acquired a lien upon the fund in their hands, belonging to the plaintiff as assignees, by virtue of their attachment against the property of Lanes, Boyce & Co. It was not urged, or at least much urged, that irrespective of the attachment, the defendants, as judgment creditors of the .plaintiffs’ assignors, having exhausted their remedies at law for the collection of their debt, were in a position to question the validity of the assignment, and to obtain satisfaction out of the assigned property or its proceeds, not distributed or disposed of by the assignees.

My opinion as to the effect of the attachment remains unchanged, and I am, therefore, contented with the result arrived at by my brother Moncrief, and with the reasons furnished by him for it, that the defendants did not get any lien upon the fund under their attachment.

An examination which I have made, however, of the other branch of the defense, has satisfied me that I was in error in excluding it upon the trial,

The defendants have obtained a judgment against Lanes, Boyce & Co. the plaintiffs’ assignors, and have procured an execution to be returned upon it unsatisfied. The debt due by the bank to the plaintiffs arose from a deposit made by the latter with the bank, of the proceeds of the assigned property. Such proceeds were held by the plaintiffs as trustees for the creditors of Lanes, Boyce & Co. and were subject to all the equitable rights of such creditors. Any creditor, having exhausted his remedies at law, could attack the validity of the assignment, on the ground of fraud, and reach by a judgment avoiding the assignment, any property remaining in' the hands of the assigees, or which was subject to their control.

There cannot be a doubt, that a judgment creditor could go into equity and reach the proceeds of the assigned property ; and there is nothing so inconsistent in the relation of the defendants, as debtors to the plaintiffs and creditors of Lanes, Boyce & Co. as can deprive them of such right.

It must be conceded, I think, that the defendants could have become the actors, and could have impleaded the assignees, and thereby have reached the property of their fraudulent judgment debtor ; and it is immaterial whether the fund was in their own hands or in the hands of a stranger.

A judgment and execution creditor can always follow property fraudulently assigned ; and until it has passed from the assignee, in execution of the trust, it is subject to the decree of the court declaring the assignment void.

If the bank had paid the money to the plaintiffs, the former could immediately have enjoined the latter from disposing of it; and the court by its decree could have compelled its application to the defendants’ judgment against Lanes, Boyce & Co.; and I can see no reason why the bank cannot refuse to pay the money and set up as a counter-claim to the plaintiffs’ action, the same facts, which if stated in a complaint by them as plaintiffs, against the assignees as defendants, would be regarded as a good cause of action.

The Code, in blending actions and allowing equitable defenses to be made to strictly legal causes of action, has, doubtless, opened a wide field of investigation in a single action; and it will always be difficult to apply principles so diverse as those of law and equity, upon a single trial. The causes of action require different modes of trial; the legal part by a jury and the equitable by the court without a jury.

Nevertheless, notwithstanding these real, not conjectural, difficulties, a defendant may interpose a as many defenses and counter-claims as he may have, whether they be such as have been heretofore denominated legal or equitable, or both.”' (Code, § 150.)

The facts stated in the defendants’ answer arose out of transactions connected with the subject of the plaintiffs’ action. The action is to recover a debt due by the defendants to the plaintiffs. But such debt (and it must be so regarded between these parties,) is in reality a deposit with the defendants of the proceeds of the assigned property. In the hands of the plaintiffs, it is trust money to be applied in execution of the assignment, but subject at all times while remaining in their possession, to the equitable rights of creditors. The plaintiffs have no interest except to discharge their duty as assignees faithfully ; and when they are interrupted by the court, their responsibility ends.

The equitable right, therefore, of the defendants to have this money applied in satisfaction of their judgment, is so immediately connected with the subject of the action, that 1 cannot entertain a doubt, that it constitutes a counter-claim within the meaning of the Code. Very probably the. court will be somewhat embarrassed in trying the issues, for the reasons I have already stated; but as the plaintiffs’ case is admitted by the answer, and the counter-claim is the only subject of contention, I presume the issue will have to go to the special term for trial without a jury.

Entertaining these views, I concur in sustaining the exceptions and in granting a new trial, upon the sole ground however, that the defense set up in the answer constitutes a counter-claim, and should not have been excluded.

Moncrief, J.

The refusal to dismiss the complaint upon the plaintiffs resting their case was erroneous. The complaint alleges, and the answer admits by not denying, that the plaintiffs drew their bank check in writing, addressed to the defendants, * * * the said plaintiffs caused the same to be presented to the defendants, and set out the check in its words and figures, signed by both the plaintiffs, “ Leroy M. Wiley, by G-. R. J. Bowdoin, his atty.” There is nothing in the law to prevent Mr. Wiley adopting as his signature that which is written for him by another. The objection might be taken, with some force, upon presentation at the bank, that the check was not signed by each of the assignees, the signature of one being by some person to it not known to be authorized to sign for him. The learned counsel for the defendant, while it is retained in the case, takes no notice of this exception in his points, nor was it alluded to upon the argument. The great and only question remaining in the case is, whether the defendants, having obtained an attachment against the assignors of the plaintiffs, could and did take steps and proceedings thereunder, that they can interpose as a defense to this action, being for moneys deposited with the defendants by them as assignees, that the assignment to them was fraudulent and void, and have such moneys appropriated to the payment of the claim of the defendants.

The theory of the answer proceeds upon the assumption that “ the sheriff having left a certified copy of the attachment with the defendants,” created a lien upon the moneys deposited generally, not specially with them. This is construed in the answer to be “ attaching the said moneys, as it is subsequently averred that a notice was also served “ showing the property levied on and the points assume and proceed upon the same theory. There are several tests of the soundness of this view : 1st. The warrant under which the sheriff acted directed him to seize the property of the defendants named therein ; and as it was not shown to be, and cannot be assumed, that $9000 of money is incapable of manual delivery, his further duty was to safely keep it.” (Code, § 232.) If such a levy and seizure was made, it ought not to be true, as the answer alleges, that the sheriff has not been able to find any property of the defendants in said judgment, to levy upon and seize, under said execution, for the reason that the execution takes that which the sheriff under his warrant has attached. ' 2d. If the sheriff did give notice to the president, showing the property levied on, and it was capable of being taken into possession, he clearly would be liable to an action at the suit of these plaintiffs, and the thing'attachéd, in the eye of the law, must be in possession of the sheriff. (Wood v. Orser, 25 N. Y. Rep. 353.) 3d. Assuming that the money on deposit, and sought to be reached by the attachment, was incapable of manual delivery, it must be admitted to be so for the sole reason that the plaintiffs had no specific money on deposit, and then it must follow, as a legal consequence, that no seizure could have been had, and notice of the property levied upon could not have been given. 4th. Whether the money was capable or incapable of manual delivery, if acts of the sheriff were such, under his attachment, as to make him liable as a trespasser, then the law assumes that he has actual or constructive possession, and his duty to the plaintiff is prescribed by the Clode. The remedy for the defendants is proceedings against the sheriff. He alone, until judgment and execution in fkvor of the plaintiff in the attachment suit, has the right to the possession of the property levied upon. The sheriff could not have made a levy upon the money deposited with the defendants ; the plaintiffs, from the day of making the several deposits, ceased to have any specific property in the Bank of the Eepublic ; the relation of debtor and creditor was created ; the bank was not the bailee of property entrusted to them to be returned in specie, upon demand. (6 N. Y. Rep. 76. Story on Bailm. § 95, et seq.) If property of the plaintiffs was in possession of the defendants, it tiecessarily must' have been either in gold, silver, bank bills or treasury notes of the value of $8051.41; and in the absence of any averment, in the answer, that such an amount in either character of money is “ incapable of manual delivery,” we must assume that the sheriff, when he levied upon it, saw it and could have taken it, ,and would have safely kept it. (See Wood v. Orser, 25 N. Y. Hep. 353.) That money in specie may be attached, there is no doubt. (Drake on Attach. §244. Handy v. Dobbin, 12 John. 220. Turner v. Fendell, 1 Cranch, 117. Sheldon v. Root, 16 Pick. 567.) That a levy, an actual seizure of personal property of this description, is necessary to create a lien, see Drake on Attach. 2d ed. § 255, et seq. ; 6 Hill, 363; 15 Abb. 244, note ; and 12 id. 379, and cases there cited.

Ch. J. Bosworth, in his opinion, (upon the motion to strike out the answer as frivolous,) assumed that specific property had been seized under the attachment.. He says : Instead of attaching property fraudulently transferred,- the sheriff has attached its proceeds.” (Story on Bailm. § 125.) In Hall v. Stryker, and Thayer v. Willet, the goods were seized by the sheriff. Story on Bailments, § 129, says : The creditor in the suit has no property or interest whatever in the goods attached, and can maintain no action for any wrong or injury done to them by any person, * ■ * His sole remedy is against the officer.” .

If the sheriff has attached any property, having the legal right to the custody thereof, he can maintain ah action for it, either to reduce it to possession, or for injury done to it, in replevin, (9 Mass. R. 112 ; 16 id. 465 ;) trover, (9 id. 104;) or trespass, (1 Pick. 232, 389.)

As the defendant in the attachment suit still retains the residuary interest in the property seized, it follows that his creditor cannot interpose the defense set up in this action, and that the several exceptions taken at the trial are untenable. I dissent from the views entertained by my brethren relative to a counter-claim or set-off having been interposed as a defense, save as predicated upon the supposed lien, by virtue of the attachment, and differ as to the legal effect thereof, if set up in this action; but as a new trial is inevitable, I have not deemed it useful to write a dissenting opinion.

New trial granted.

Note. This case was reversed on appeal from the judgment rendered at general term, by the Court of Appeals, solely upon the ground that the defendants had not obtained an equitable lien on the funds in their hands, by commencing an action to set aside the assignmént, which, it seems, might have been a cross action. (35 N. Y. Rep. 320.)—Reporter. 
      
      Since the delivery of the foregoing, the doctrine contained in such dissenting opinion has been reiterated by the same learned justice, in another case, and announced by him as the doctrine of the court whose bench he adorns.
     