Page images

ceived for the said property; but the said defendant refused to pay the same or any part thereof, and has never paid the same or any part thereof to this deponcnt, but has converted the same to his own use.

FORM No. 941. The same; in action on a foreign judgment.73 [Substitute in Form 927, with allegations showing the sources of deponent's knowledge and information.] - II. That the said bank, between the day of , 19 , and the day of

, 19 , both inclusive, delivered, or caused to be delivered, to said firm of , at

, aforesaid be of the , of the par value of dollars each, with coupons attached thereto, to be sold on commission for the account of said bank; that said accounted to said bank for all of them, except eighteen bonds which were duly demanded of them by said bank, but which said firm refused to return to said bank; that said firm also, upon request of said bank, refused to account to and with said bank for the value thereof, but kept and converted them to their own use; that said bank thereupon and thereafter commenced suit against the said [name of defendant], as defendant, in the Court of the county of

in the State of

, to recover damages for the conversion of the said bonds and process therein, was duly served personally on the said

, who appeared in said action, and defended the same upon its merits. [Here followed allegations of the removal of the cause into the United States Circuit Court.] And that thereafter, and after a trial by jury upon the merits thereof, on or about the day of , 19 , the said bank duly recovered judgment against the said

in said action, in said Court, then and there having jurisdiction, both of the

73 Adapted from Baxter v. Drake, 85 N. Y. 502, 61 How. Pr. 365, 1 Civ. Pro. Rep. 225, where an order of arrest, granted upon this affidavit, and another by the plaintiff's attorney stating substantially the same facts alleged in the complaint, was sus tained. The complaint seems also to have been sustained. See note in 20 Abb. N. C. 221.

This allowance of arrest on facts relating to the original cause of ac. tion, in an action brought after recovery of a foreign judgment, was much contested before it was settled by this case and by N. Y. Code Civ, Pro., $ 552.

See also Leach v. Linde, 73 Hun, 246, 25 N. Y. Supp. 1042; aff'd, 142 N. Y. 628.

It is not material whether the New York action be founded upon the foreign judgment or upon the original cause of action. Pitt v. Freed, 78 Hun, 614, 28 N. Y. Supp. 863.

N. Y. Code Civ. Pro., & 1940, provides that, for the purpose of obtain. ing an order of arrest in an action against joint debtors, of the joint debtor not served in the previous ac. tion, the action is regarded as founded on the contract on which the original judgment was recovered.

parties and of the subject-matter thereof, for the sum of dollars exclusive of and over and above plaintiff's costs of suit in that behalf as damages for the said conversion [here followed an allegation of affirmance on error]; and the said judgment is unreversed and unsatisfied [here followed an allegation of the assignment of the cause of action and claim for damages, and of the judgment].

FORM No. 942. Fraud in contracting or incurring the liability.74 [Substitute in Form 927.] — II. Deponent alleges that said defendant has been guilty of a fraud in contracting the said indebtedness. [Here state facts relied on to show fraud, as thus:] The said defendant, at the time of obtaining said money, at an interview on or about the day of

falsely and

74 The complaint in Morrison v. Watson, 23 Wkly. Dig. 236, setting up these facts, it was held, that the action was one to recover money loaned, and was therefore within N. Y. Code Civ. Pro., 8 635; providing for the issuing of an attachment; that it was not deprived of its legal character as an action upon contract by the averments made in the complaint that the money loaned was obtained by fraudulent representations 125 Hun, 395. See note 9 under this Àrticle, p. 1269]; that the object of these allegations was to meet the objection that the action had been brought prematurely, and to render the debt immediately due, if sup. ported by proof, and that they were sufficient for that purpose. Distinguishing Wittner v. Von Minden, 27 Hun, 234.1

For other Forms, see Nos. 935, 936.

To sustain an order of arrest for fraud in incurring an obligation, three things must appear: 1. That the defendant has made representa, tions which were false. 2. That he knew them to be false. 3. That the plaintiff relied upon, and was in point of fact, deceived by them.

1. It must appear that the defendant has made representations which were false.

The mere omission of a purchaser of goods to disclose his insolvency to the vendor, is not a fraud for which the sale may be avoided.

When no inquiries are made of the vendee on the subject, and he makes no false statements, nor resorts to any artifice to mislead the vendor, it is not in general fraudulent in him to remain silent in respect to his pecuniary condition.

An honest, though abortive purpose to continue business, and pay for the goods, is consistent with the vendee's knowledge of his own insolvency; and the purchase is not fraudulent when made with such intent, though founded in delusive and unreasonable expectations. Nichols v. Pinner, 18 N. Y. 295. Compare Mitchell 0. Worden, 20 Barb. 253, in which it was held that the law does not in ordinary cases impose upon a purchaser of property the duty of disclosing to the seller, at or before the sale, the state of his pecuniary circumstances, however desperate they may be, and known to him to be ; and this, although there has been a long course of dealing between the parties, in the course of which credit has been given to the purchaser, and he has punctually performed his engagements, and his insolvency has occurred during those dealings. So that although a purchaser at the time of making an additional purchase from one with whom he had been in the habit of dealing, is insolvent, and well knows his insolvency, and intention. ally conceals it from the vendors by simply withholding his knowledge on the subject, without otherwise saying

fraudulently represented to this plaintiff that he was solvent, and that his assets exceeded his liabilities $ ; and that the money which he was about to borrow from plaintiff would be used in pushing his business ; 75 that relying upon these statements, and only on account thereof and not otherwise, this plaintiff loaned

or doing anything to mislead, and he For the application of these rules, still retains possession of property see, as to false representations genand is pursuing his business as be- erally, Elwell v. Russell, 29 App. Div. fore, he is not thereby guilty of a 436, 51 N. Y. Supp. 964; Whitcomb fraud entitling the vendor to avoid 0. Salsman, 16 How. Pr. 533; Byrd the sale. But it is in that case sug- v. Hall, 1 Abb. Ct. of App. Dec. 285; gested that the rule would be other. Morris v. Talcott, 96 N. Y. 100, rev'g wise if he had performed an open and 29 Hun, 426; Thorpe v. Waddingham, notorious act of insolvency, such as 3 Daly, 275; Gaffney V. Burton, 12 breaking up his business and making. How. Pr. 516; Marsh v. Falker, 40 a general assignment for the benefit N. Y. 562; Solomon v. Crosby, N. Y. of creditors; in which case he would Daily Reg., Jan. 20, 1883; Dieckerbe bound to communicate the fact to hoff v. Brown (Md., 1886), 2 Atl. Rep. them, if they were in ignorance 728; Prichard v. Owen, 6 Wkly. Dig. thereof. In short, it is not enough 247; Wazner v. De Baun, 1 E. Ď. that the plaintiff has been deceived; Smith, 261, 1 Code Rep. (N. S.) 280; the defendant must have intentionally Draper v. Beers, 17 Abb. Pr. 163; deceived him, to justify an arrest. Van Kleek v. Leroy, 4 Abb. Pr. Such a deception may, however, some (N. S.) 431, aff'g 37 Barb. 544; Hathtimes be practiced without a direct away v. Johnson, 55 N. Y. 93. false representation. The intention As to false representations of solto deceive may be shown by other vency. Lanikin v. Oppenheim, 86 Hun, circumstances. See Morrison v. Gar 27, 33 N. Y. Supp. 267; Anderson v. ner, 7 Abb. Pr. 425; Brown v. Mont Callahan, 4 Wkly. Dig. 51; Freeman gomery, 20 N. Y. 287.

v. Leland, 2 Abb. Pr. 479; Scudder v. 2. It must appear that the defendant Barnes, 16 How. Pr. 534; Birchell v. knew the representations to be false. Straus, 8 Abb. Pr. 53. When the affidavit fails to show this, As to concealment of insolvency. it is insufficient, and the order of ar Nichols v. Pinner, 18 N. Y. 295; rest will be set aside. Gaffney v. Bur. Pinckney v. Darling, 3 App. Div. 553, ton, 12 How. Pr. 516. See Freeman 38 N. Y. Supp. 411, aff'd, 158 N. Y. 1. Leland, 2 Abb. Pr. 479; Young v. 728; Phenix Iron Co. v. Hopatcong, Covell, 8 Johns. 23, 5 Am. Dec. 316; 127 N. Y. 206; Talcott v. Henderson, Addington 1. Allen, 11 Wend. 374. 31 Ohio St. 162, 27 Am. Rep. 501, and

3. The plaintiff must have, in fact, note; Byrd v. Hall, 1 Abb. Ct. of App. relied upon, and been deceived by the Dec. 285; Wright v. Brown, 67 N. Y. plaintiff's representations. This is 1; Hennequin v. Taylor, 24 N. Y. 139; the very gravamen of the charge, the Johnson v. Monell, 2 Abb. Ct. of App. deceit or fraud practiced upon the Dec. 470, Keyes, 655; Anon., 07 N. Y. plaintiff. See Cox o. Dwyer, 17 N. Y. 598, aff'g 8 Hun, 502; Sheldon v. Supp. 713; Freeman v. Leland, 2 Abb. Clews, 13 Abb. N. C. 40; Manning v. Pr. 479; Wanzer v. De Baun, 1 E. D. Solis, 50 Barb. 224; Levy v. Salomon, Smith, 261, 1 Code Rep. (N. S.) 280. 102 N. Y. 741; Fitch v. McMahon, 103 Compare Vol. I, ante, pp. 420-433. N. Y. 690, 5 Cent. Rep. 618; Morris

For illustrations of the principles v. Talcott, 96 N. Y. 100. upon which orders of arrest may be 75 An affidavit stating false repregranted under this provision, see Bean sentations, and adding that they were r. Renway, 17 How. Pr. 90; s. c. as made to induce credit, is not sufficient. Pean r. Wells, 28. Barb. 466; Free A recital of the interview should be min r. Leland, 2 Abb. Pr. 479; Bell given to show that they were made 7. Mali, 11 How. Pr. 254; Union Bank for that purpose. Phelps v. Maxwell, t'. Mott, 6 Abb. Pr. 315.

2 Abb. N. C. 459.

the said money and took from the said defendant his promissory notes for $ each, with interest payable on the note on the inst., and each of the other notes payable months apart; that the said representations, as to the said defendant's solvency, were false and untrue, and were made with a preconceived design and intent of defrauding this plaintiff, and as a matter of fact at said time, the said defendant was insolvent, and his liabilities exceeded his assets more than $ 76 [State means of knowledge; or name informant and reason why his affidavit is not presented.]

FORM No. 943. Absconding, or intent to defraud creditors by transfer or secreting of

property.77 [Substitute in Form 927.) - II. That said work and materials were done and furnished in the month of , and upon the defendant's promise to pay for the same as soon as completed.

76 The false representations should be set forth, and the respects in which they are false pointed out. A gen eral allegation of falsity will not suffice. Draper v. Beers, 17 Abb. Pr. 163; Thorpe v. Waddingham, 3 Daly, 275. For example of allegations sufliciently specific, see Hecht v. Levy, 20 Hun, 53; Cummings v. Woolley, 16 Abb. Pr. 297 note.

77 For other affidavits suitable to various cases of fraud on creditors, see Forms 828-833.

This Form is sustained by Potter 1. Sullivan, 16 Abb. Pr. 295 note.

An affidavit simply stating, in the words of the Code, that the defendant has removed or disposed of his property, or is about to do so, with the intent to defraud his creditors, is quite insufficient. The affidavits must state the facts and circumstances which justify such a conclusion, so that the court may be able to draw it from the evidence detailed in the affidavit. See Smith v. Luce, 14 Wend. 237, and cases there cited in note a; Ex parte Robinson, 21 Wend. 672; Frost 0. Willard, 9 Barb. 440; Castellanos v. Jones, 5 N. Y. 164. Compare Donnelly v. Corbett, 7 N. Y. 500; Van Alstyne v. Edwine, 11 N. Y. 331.

It has been held that the mere fact that defendant is about to depart, al though he owes debts to a large amount, is not enough. It must ap

pear that he has removed or disposed of his property, or is about to do so, secretly. It is the secrecy which evinces the fraudulent intent. Anon., 2 Code Rep. 51. This, however, must be taken with qualifications. Compare Courter 1. McNamara, 9 How. Pr. 255.

The following cases on the question what circumstances in transfers of property show an intent to defraud creditors, may aid the petitioner in drawing or testing affidavits.

Compare, also, cases for attachment on the same ground, p. 1195, note.

In the following the order was sustained:

Bailey v. Prince, 5 N. Y. Supp. 896 (chattel mortgage to defendant's brother foreclosed, and under suspicious circumstances, and no attempt to show bona fides).

Wells v. Selling, 53 How. Pr. 35 (transfer in payment of pretended debt to relative).

McButt v. Hirsch, 4 Abb. Pr. 441 (an omission to deliver all the property embraced in a voluntary assignment for benefit of creditors, and a sale of part of it).

Kern v. Rachow, 34 N. Y. Super. Ct. 239, 12 Abb. Pr. (N. S.) 352 (sale of property for much less than its value, just before the maturity of the debt, to be paid for conditionally).


That at the time the same were completed, and theretofore, the defendant was carrying on business at No. in , as a grocer; and on the day of

, after said debt became payable, the defendant promised the plaintiff that he would pay the same on the day of , 19 , on which day deponent called on him at his store for payment; but he put deponent off, telling him to call again in three days, viz., on the day of , and get his money.

That on said last-mentioned day deponent called again as requested, and found one M. N. in possession of said store, who then stated to this deponent that on the preceding day the defendant had sold the store and all the goods therein to said M. N., for which M. N. had paid him dollars; and said M. N. exhibited to deponent the bill of sale thereof, executed by the defendant.

That defendant was not then present at said store, but kept away therefrom, and, as this deponent is informed by said M. N., has not been there since said sale.

Brooklyn Daily Union v. Hayward, 11 Abb. Pr. (N. S.) 235 (destruction of premises, heavily insured, by fire after removal of goods therefrom and just before the maturity of the debt, unexplained).

Untermeyer v. Hutter, 26 Hun, 147 (concealment or carrying away of property just before or just after making an assignment for creditors).

Courter v. McNamara, 9 How. Pr. 255 (where defendant admitted that he had money in his house, but declared that he was going to leave the State and take it with him).

Hinck v. Dessar, 3 N. Y. St. Rep. 349, 24 Wkly. Dig. 500 (sale of unusual amount of stock at auction, fol. lowed by confession of judgment and seizure of the balance under execution).

Hanover Vulcanite Co. v. Nathanson, 38 Hun, 488 (sale by partner of partnership assets and appropriation of the proceeds, pending an action to dissolve, and while under an injunction restraining interference with the firm property).

Arnold v. Shapiro, 29 Hun, 478 (fraudulent disposition of goods will aroid the credit).

In the following cases the circumstances were held insufficient to sus. tain the order:

Sherill Roper Air Engine Co. v. Harwood, 30 Hun, 9 (where partner with knowledge of firm's insolvency paid individual debts with firm assets).

Scott v. Reed, 2 How. Pr. (N. S.) 521 (mere withdrawal by partner of a sum from the business because it had suffere I loss).

S pies v. Joel, 1 Duer, 669 (preferential assignment with no probability of a surplus).

Isaacs v. Gorham, 1 Hilt. 479 (withdrawal from bank of funds of defendant's wife deposited therein as collat. eral security to the plaintiff's note).

Hoyt v. Godfrey, 88 N. Y. 669, 15 Wkly. Dig. 45 (cancellation by debtor on eve of general assignment of an old account against an insolvent, and giving of mortgage to secure debt to mother).

Pacific Mut. Ins. Co. v. Machado, 16 Abb. Pr. 451 (misappropriation by defendant's assignee for creditors, of the estate, with the latter's knowledge).

Moller v. Aznar, 11 Abb. Pr. (N. S.) 233 (affidavits not specifying the property about to be removed).

Transfer of partnership assets to a stock company, and offer of stock as collateral. Kessler ». Levy, 11 Misc. 275, 32 N. Y. Supp. 260.

« PreviousContinue »