
    Charles S. Hine et al., Resp’ts, v. Peter Bowe, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed October 27, 1887.)
    
    
      1. Bill of sale—Instrument in form a bill of sale may be shown TO BE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS.
    An instrument in form a bill of sale transferring the whole of a debtor’s property though absolute upon its face, may be shown to have been intended only as an instrument to operate as a general assignment for the benefit of creditors with preferences.
    8. Same—What will be considered as such.
    An instrument by which parties transfer the whole of their property to another, part of the consideration being that the vendee shall pay certain debts therein set forth, not, however, providing that any part of the property transferred shall be used for that purpose, is a bill of sale and not an assignment for the benefit of creditors.
    3. Same—What to be considered in determining question.
    
      Held, that in the determination of the question the intent of both parties must be considered.
    4. Partnership—Question of—When fob the jury.
    
      Held that where agreements and other papers in evidence tended to show that parties intended to, and did, create a partnership relation between themselves, the limitation of the interest of one of the parties to a guaran teed weekly sum was not so decisive of the question of the existence of a partnership inter se as to warrant the withdrawal of the question from the jury.
    Appeal from a judgment entered upon the verdict of a jury and from an order denying a motion for a new trial.
    
      Michael H. Cardozo, for app’lt; William H. Arnoux, for resp’ts.
   Patterson, J.

—This is an appeal from a judgment entered upon a verdict in favor of the plaintiff. There are two causes of action set forth in the complaint—one for the conversion of tobacco and cigars alleged to belong to the plaintiffs, and the other for a trespass upon premises in the possession of the plaintiffs, and the prevention of the use by the plaintiffs of such premises and of tools and machinery situated therein, and used by them in their business; such trespass and prevention continuing for a period of about two months.

The answer sets up as specific defenses that the defendant being sheriff of the city and county of New York, under process issued out of the court of common pleas against Max Epstein and Charles F. Hine, levied upon and attached the goods referred to in the complaint, and that the goods so levied upon and attached were taken by the sheriff as, and that they were the property of Epstein & Hine; that in order to take the said goods, the defendant as sheriff, entered upon the premises, as he was by law obliged to do, and that the entry, levy and taking constituted the alleged trespass and conversion in the complaint mentioned.

The answer then states that the plaintiffs claim to be the owners of the goods levied upon and taken by the defendant, by virtue of an alleged bill of sale or conveyance to one of them from Max Epstein and Charles F. Hine made on or about the 12th day of June, 1882; that such bill of sale was made by the sellers with the intent to hinder, delay and defraud creditors, and that the plaintiff Charles S. Hine took the bill of sale with previous notice of the fraudulent intent of Epstein & Hine; that there was no immediate change of possession, and that the transaction was a device to cheat the creditors of Epstein & Hine.

Evidence was given upon all the matters of defense suggested in the answer, and an examination of the record discloses that the real question involved on this appeal relates to the validity of the transfer made by Epstein & Hine to the plaintiff Charles S. Hine of the property and assets claimed to have passed bjr the bill of sale, and to the effect of the transaction by which the plaintiff Charles S. Hine was clothed with the legal title to all that property. It appears in evidence that Epstein & Hine, on the 12th day of June, 1882, were in embarrassed circumstances, and that on that day Charles S. Hine, one of the plaintiffs, took a bill of sale of everything constituting the assets belonging to the firm of Epstein & Hine, namely, stocks, tobacco, cigars, fixtures and accounts considered good, accounts and notes considered doubtful, amounting in all to $16,204.14.

Upon looking into the record, we find that simultaneously with taking the bill of sale, Charles S. Hine executed a paper which recites that “in consideration of the sale to him by Epstein & Hine, he agreed to cancel their indebtedness to him of borrowed money, amounting to $9,850, and to pay the sum of $3,300 borrowed by them from Mrs. Moseman, and also to pay four items “which are entitled to preference,” namely, $280.43, to Jacob Henkel; $1,424, to L. 0. and J. Elson; $300, to 0. A. Thaxton & Son; $300, to Mary J. Hine, and such other sums for wages, merchandise recently purchased, and other claims as Epstein & Hine may direct to be paid, as entitled to preference not exceeding $'T50.”

It, therefore, appears from this paper that Charles S. Hine’s debt was to be paid by the transfer to him of property, and that other debts of Epstein & Hine were to be paid by Charles S. Hine, as to some of which debts Epstein & Hine were subsequently to specify to whom payment should be made, and that the ground upon which Charles S. Hine contracted to pay them was, that they were entitled to preference in the payment of the debts of Epstein & Hine. Under this state of facts, the appellant claims that the transaction of the 12th of June, as evidenced by the papers, was merely intended as an assignment by Epstein & Hine to Charles S. Hine, of property of that firm for the benefit of their creditors, and that Charles S. Hine was made a trustee of the property to pay the debts of Epstein & Hine to himself and the other persons entitled to preference as creditors of that firm. It is urged on the other hand by the respondents that the transaction was an out and out sale, and that what Charles S. Hine agreed to do with respect to the payment was only a method of applying the purchase money.

At the close of the case counsel for the defendant re-. quested the court to charge the jury in the following words:

If the jury find that the firm of Epstein & Hine was insolvent on June 12, 1882, and by the bill of sale and agreement or receipt intended to make an assignment for the. benefit of creditors, it is void, in that it is not a compliance with the general assignment act of 1877.”

The court refused so to charge and this ruling is assigned as a ground of error. There was evidence in the case given by Charles S. Hine.upon his cross-examination to the effect that early in June, 1882, he was desirous of having secured to him an indebtedness due to him by Epstein & Hine, and that he met both members of that firm at the office of Mr. Bitch, a lawyer, on the 5th of June, 1882, and asked them for a statement of their. affairs. Thereupon the witness proceeded to say (as by the printed case), as follows: “The next thing that took place was, I told Mr. Bitch I should like to have my debts secured, and Mr. Bitch, after hearing what had been said, suggested two or three ways for them to secure me and the other preferred creditors; one was either to make an assignment or to confess judgment or to make a bill of sale, and Mr. Bitch advised me if I would do it, to cancel my indebtedness, to let them make a bill of sale to me of all they had, for me to take a bill of sale and agree to pay off these preferred creditors and pay Mrs. Moseman and to pay all the other creditors.” After an hour’s consultation, it was finally decided that they should make me a bill of sale of all their property provided I would take it.”

An instrument in the form of a bill of sale transferring the whole of a debtor’s property, though absolute upon its face may be shown to have been intended only as an instrument to operate as a general assignment for the benefit of creditors, with preferences. Britton v. Lorenz, 3 Daly, 23; affirmed 45 N. Y., 51. If the instrument is shown to have been so intended it is void as against our statute. But in the cases in which the point has been decided it appears that the very assets passing by the bill of sale or the proceeds thereof were to be applied to the payment of the debts of the sellers, or in other words that the property passed as trust property, to be held specifically in trust and to be applied to payment and satisfaction of creditors. Thus in Britton v. Lorenz (supra), there was a finding that the bill of sale was made and executed to the defendant in trust, to convert the goods and other property into money and out of the proceeds thereof to pay debts. In Wallace v. Wain wright (87 Penn., 263), the question arose under the Pennsylvania statute, which is similar to ours, except that preferences are not allowed in that state. There a debtor executed to an attorney for some of his creditors, an assignment of various claims and judgments, and by the assignment it was stated that it was made in payment of certain specific creditors and the judgments and claims assigned were named in a schedule annexed to the assignment. It was held upon these facts that the instrument was a mere assignment for the benefit of creditors and was void for non-compliance with the general assignment act of Pennsylvania.

It will be seen from the facts in the cases cited, that they differ materially from those arising on this appeal, and that the point here presented was not directly involved in those cases. Here there is evidence tending to show a purpose of making an out and out sale and that the indebtedness due to Charles S. Hine was to be extinguished and that he was to pay other sums as the consideration of a purchase not out of the proceeds of the property sold but absolutely and without reference to the source from which the money to make the payments should be derived, and that constitutes so clear a distinction that under the particular state of facts appearing in this case the intent of the sellers only in executing the bill of sale cannot be the fair test of the purpose of the transaction. We, of course, do not mean to hold that the intent of an assignor alone is not sufficient to invalidate an assignment but in this case the real question is broader. It is with what intent were the two papers delivered, for the agreement of Charles S. Hine is a necessary part of the transaction. Did he know of or participate in a fraudulent purpose of Epstein & Hine?

The learned judge was asked to submit to the jury only a question of the intent of Epstein & Hine; but in the form in which the transaction was made and under the obligation which Charles S. Hine assumed, to pay certain creditors of Epstein and Hine as a method of applying the purchase money, the question of intent would depend as much upon his purpose as upon that of Epstein & Hine and so the proposition which the learned judge was asked to charge was partial and incomplete in its terms and had it been charged, the jury would have been misled. Looking into the charge we find that the jury was fully instructed upon the essential question, namely was the transaction one made with intent to hinder, delay or defraud the creditors of Epstein & Hine and that if that were the fact the transfer was fraudulent and void and consequently did not pass any title to the property to Charles S. Hine.' Having left the question to the jury iii the form in which he did, we think there is no error in the case. The other matters urged as grounds of error by the learned counsel for the appellant all depend upon the validity of the bill of sale with the exception of the claim that no partnership between the plaintiffs was proven and that the complaint should have been dismissed on that ground. The refusal to non-suit on that ground was right. The agreements and other papers in evidence show that the plaintiffs intended to and did create a partnership relation between themselves, and that was done evidently to give Plant the power and authority of a partner in conducting the business of the firm. The limitation of his interest to a guaranteed weekly sum was not so decisive of the question of the existence of a partnership inter se as to authorize the withdrawal of the case from the jury.

The whole case was properly submitted to the jury on the real question involved, and as we can find no error in the charge nor in the rulings of the learned judge on evidence, the judgment must be affirmed with costs. The order denying the motion for a new trial is also affirmed.

Brady and Bartlett, JJ., concur.  