Commercial Bank v. Sherwood

Full title: COMMERCIAL BANK et al., Appellants, v . FREDERICK A. SHERWOOD, Respondent…

Court: Court of Appeals of the State of New York

Date published: Mar 27, 1900

162 N.Y. 310 (N.Y. 1900)

56 N.E. 834

Opinion

Argued February 7, 1900

Decided March 27, 1900

Walter S. Hubbell for appellants. William F. Cogswell and M.H. McMath for respondent.

GRAY, J.

It should first be understood what effect is to be given to the order of the Appellate Division, which allowed this appeal and then certified the two questions mentioned to this court. By subdivision two of section 191, of the Code of Civil Procedure, it was provided that no appeal should be taken to this court from a judgment of affirmance rendered in such an action as this, brought "to set aside a judgment, sale, transfer, conveyance, assignment or written instrument, as in fraud of the rights of creditors, * * * when the decision of the Appellate Division of the Supreme Court is unanimous, unless such Appellate Division shall certify that in its opinion a question of law is involved which ought to be reviewed by the Court of Appeals, or unless in case of its refusal to so certify, an appeal is allowed by a judge of the Court of Appeals." This restriction of our jurisdiction, by the legislative amendment of the Code section, was within the authority reserved by the constitutional amendment of 1894 to the state legislature, and was in furtherance of the general plan to relieve this court by limiting its labors to the review of questions of law; which, alone, should come before the court of last resort, as it is constituted in this state. But, in so restricting appeals, which, prior to the amendment of section 191, could be taken, as of right, to this court, the legislature excepted cases, where leave was given by the Appellate Division, or the appeal was allowed by this court. It will be noticed, in that respect, that the right to appeal, when conferred in either way, is quite other than the right which is given under section 190. There, when an appeal is allowed by the Appellate Division, questions are to be certified and they, only, are brought up; while under section 191, when the appeal is permitted to be taken, the effect is to remove the restriction of the section and, thus, to open the whole case for our review, so far as questions of law appear to be presented by the record. The provision of the one section goes to our jurisdiction to review; the other, while excepting classes of actions from the right of appeal, leaves the case, whose appeal is permitted, to our unrestricted review as to any questions of law involved. That those questions of law, however, do not include the legal question as to the sufficiency of the evidence to sustain a finding of fact, or a verdict not directed by the court, cannot be doubted, in view of the provisions of the 3d and 4th subdivisions of section 191; which impose conditions bearing upon all cases brought to this court under either section. By them our jurisdiction is "limited to a review of questions of law," (subd. 3) and we may not review a "unanimous decision of the Appellate Division of the Supreme Court that there is evidence supporting or tending to sustain a finding of fact or a verdict not directed by the court" (subd. 4). Where the order of the Appellate Division shows its affirmance to have been unanimous, of necessity, it follows that the members of the court sitting upon the appeal, so far as the determination below depended upon evidence, were agreed upon its existence and sufficiency.

This subject has been, in different phases, under our consideration recently, and we have held that the allowance of the appeal by the Appellate Division brings before us for determination every question of law that arose upon the trial. which we are not forbidden by the Constitution to review, and such a forbidden question is that which relates to the existence and the sufficiency of the evidence upon the trial. The permission to appeal, under subdivision 2 of section 191, in no way enlarges the jurisdiction of this court with respect to the questions that may be reviewed by it upon a hearing of the appeal. ( Reed v. McCord, 160 N.Y. 330; Young v. Fox, 155 ib. 615; Grannan v. Westchester Racing Ass'n, 153 ib. 449.)

Nor need questions of law be formulated and certified by the Appellate Division in its order granting leave to appeal. The provision of the statute simply requires that it certify "that, in its opinion, a question of law is involved which ought to be reviewed by the court of appeals." It is only under subdivision 2 of section 190 that questions must be certified to this court; a provision contemplating the existence of questions of law in determinations, not final in their nature, which may affect the ultimate judgment, as they are decided one way or the other, and as to which the Appellate Division is entitled to the opinion of this court, in the general interest that litigation shall not be needlessly protracted.

The questions now certified here were unnecessarily inserted in the order and the first one is not suggested by any finding of fact, nor does it present any question of law which we may review. The second question is involved in the exception to the dismissal of the complaint as to Sherwood and will be considered under that exception. By force of the order allowing the appeal to this court, the appellants are permitted to present such legal errors upon the trial and in the decision of this case as are raised by exceptions to rulings upon the admissibility of evidence, or to conclusions of law based upon the findings. They have insisted, very strenuously, upon the effect of the evidence; as showing that the transaction of sale with Sherwood was fraudulent and void and that he had failed to show that he was a bona fide purchaser. But those were questions depending upon the evidence and have been conclusively settled for this court. It has been established as a fact that the purchase by Sherwood of an interest in Bolton's plant and manufacturing stock was for the consideration of the discharge of Bolton's indebtedness to him and was absolute. We may not now review the facts of the transaction, nor its bona fides.

The exception taken by the plaintiffs to the conclusion of law, "that the complaint herein should be dismissed as against the defendant Frederick A. Sherwood, with costs," raises the principal question for our consideration. It is the claim of the appellants that the contract of sale was such that, being declared void as to Mrs. Bolton, it was void, also, as to Sherwood. I think the proposition to be untenable.

Bolton was at liberty to pay such of his creditors as he chose, even to the extent of transferring all of his property to the favored ones. The plaintiffs and Sherwood were general creditors, and, as between them, there were no superior equities. Each was entitled to get his debt preferred in payment, if he could, and, provided no deceit, or fraud, was practiced in doing so, the transaction would be valid. There is no fraud found on Sherwood's part and the transfer was made in payment of an indebtedness, validly owing to him and representing a fair consideration for a one-half interest in the debtor's property. The transaction, therefore, rested upon what the law regards as a valuable consideration. The rule of law was satisfied, if the creditor acted in good faith, in the sense that his purpose was to obtain satisfaction of his debt. That the debtor's intent may have been to prefer him and that he may have had notice of his object, are facts which have no effect upon the title acquired. ( Seymour v. Wilson, 19 N.Y. 417; Dudley v. Danforth, 61 ib. 626; Murphy v. Briggs, 89 ib. 447; Warren v. Wilder, 114 ib. 209; Knower v. C.N. Bank, 124 ib. 552.)

The appellants say that the interests of Sherwood and of Mrs. Bolton, under the bill of sale, were joint and not separate. The decision of the trial court would seem to be decidedly adverse to that contention; for, although there is no finding in precise terms that Sherwood agreed to, and did, purchase an undivided one-half interest in Bolton's property, every finding described the subject of the purchase as having been such. The agreement, which was simultaneously executed and which was referred to in the bill of sale, shows that Bolton's two creditors were arranging to obtain the payment of his separate debts to them through the purchase of his property; the consideration being the discharge of an indebtedness, which was distinct and separate as to each of the transferees and in no sense joint. Any doubt upon the subject, however, would seem to be removed by the nature of the bill of sale, which was to Frederick A. Sherwood and to Catharine Bolton, in their own right. By such a transfer they must be deemed to take as tenants in common and not by a joint interest. The statutory rule that "every estate granted, or devised, to two or more persons, in their own right, shall be deemed a tenancy in common, unless expressly declared to be in joint tenancy," (2 R.S. 727, § 44) I think should apply as well to a transfer of personal property as to real estate. It indicates a policy of the state with respect to ownership of property and should be given general application as a rule. That this provision of the Revised Statutes has been so viewed, in its relation to personal property, is shown in several cases. Judge DENIO, in Everitt v. Everitt, (29 N.Y. at p. 72), held that it applied to bequests of personalty to legatees and that they would take distributively, and not jointly, thereunder. Justices BARRETT and BRADLEY speaking for the General Terms of the Supreme Court, in the first and fifth departments, respectively, held the same doctrine. ( Lane v. Brown, 20 Hun at p. 387; Matter of Lapham, 37 ib. 15.) In the latter case, Justice BRADLEY observed that, in this country, the policy is in favor of severalty in the ownership of property, both real and personal, and that "such effect will ordinarily be given to rights and interests in respect to it; unless a purpose to vest or hold it jointly is fairly indicated, or required by construction." The transfer, in the present case, was to two of Bolton's creditors, in payment of a distinct indebtedness owing to each, and they took, not jointly, but in common; both under the statute and by a proper construction of the agreement. Each acquired an undivided one-half interest in the subject of the sale by a distinct title, whose validity could not be affected by title failing in the other, through participation in some fraud of the debtor, for inadequacy of consideration, or for other reasons. The effect of the judgment annulling the transfer to Mrs. Bolton was, simply, to leave the bill of sale standing alone as containing the transfer to Sherwood.

The only other question of law, which we are called upon to consider, is raised by an exception of the plaintiffs to the exclusion by the trial judge, upon the opening of the trial, of the offer in evidence of "the judgment roll in the action at issue upon the first trial before RUMSEY, J." Upon objection being made to its competency, the plaintiffs' counsel stated that the "purpose of the offer is to prove the judgment of the Supreme Court in favor of the plaintiffs and against the defendant Thomas Bolton, adjudging the transfer made by him on August 2d 1893, to the defendants Sherwood and Catharine Bolton, was made to hinder, delay and defraud these plaintiffs." The record does not further describe the judgment roll thus offered; but it appears from the appellants' brief that, upon a previous trial of the issues in this case, a judgment then recovered by these plaintiffs against Thomas Bolton, Catharine Bolton and Sherwood, on being appealed to the General Term of the Supreme Court, was affirmed as to Thomas Bolton, but was reversed as to Mrs. Bolton and Sherwood and that a new trial was ordered as to them. It is now claimed by the appellants that they were entitled to prove the judgment, which they recovered upon the former trial, as conclusive evidence of Thomas Bolton's fraud. Assuming that their offer of proof was sufficient to raise the question, it is very clear that the evidence was incompetent. The offer was of a judgment adjudging the transfer by Thomas Bolton to Sherwood and Catharine Bolton to have been made to defraud these plaintiffs. But, so far as Sherwood and Catherine Bolton were concerned, the judgment had been reversed and the effect of the reversal was to restore them and the plaintiffs to the same situation in which they were prior to the rendition of the judgment. There was no longer any judgment affecting Sherwood, or Mrs. Bolton, and when another trial came on, it was, as to them, as if the cause had never been decided by any court. Whatever its conclusiveness as to Thomas Bolton, it had no more effect as proof upon Sherwood, or Mrs. Bolton, than the introduction of so much blank paper. What was the judgment of the court, at one time, had ceased to be its judgment, by the decision of the Appellate Division, with respect to the transfer to them. It was wholly immaterial that it stood as to Bolton; for his fraud could not vitiate the sale, unless participated in by the vendees. The burden was upon the plaintiffs to show a want of good faith, or some inadequacy of consideration, on the part of Sherwood and of Mrs. Bolton and the offer of the judgment roll, whatever it was, proved nothing upon the subject, nor displaced the burden of proof.

I think the judgment should be affirmed, with costs.

PARKER, Ch. J., O'BRIEN, HAIGHT, LANDON, CULLEN and WERNER, JJ., concur.

Judgment affirmed.