Opinion
December Term, 1899.
Judgment reversed, new trial ordered, costs to appellant to abide event.
We think from the evidence that the plaintiffs fairly sustained the burden placed upon them of showing that the bill of sale sought to be set aside was given to hinder, delay and defraud creditors. As to the value of the property transferred, it will be noticed that the allegation of the complaint is that the property was worth upwards of $2,000, and this is not denied by the answers; so that even if we conclude that the consideration of $1,500 named in the bill of sale was actually advanced, it was an inadequate price for the property. The defendants at the trial sought to show — notwithstanding the express words of the bill of sale that John was to "pay all indebtedness now existing" — that it was agreed when the transfer took place that William, after satisfying his claim, was to pay to the creditors what was due them from the assets remaining. Had such an agreement been contained in the bill of sale, it would in effect have been a general assignment for the benefit of creditors, and not complying with the statute permitting such assignments, would have been void. Regarding the transaction not as a general assignment for the benefit of creditors, we may infer from the conduct of the parties that the plan adopted was really one to permit J.H. Mohlman Co. to obtain the amount due them to the exclusion of other creditors, and reserve the balance for William Voigt in payment of alleged loans. There is in evidence no memorandum or receipt or bank book of either of the defendants, which, if produced, would have been of great value in support of their claim that the loans were made. There is besides an inherent improbability in their statements. It seems improbable, when working for his brother at such a small salary, that William would have available $450 to make the first loan claimed. Similarly, that John, after selling out his business in 1896, when, in his own words, he "paid all my creditors," should still be indebted to William — especially at a time when William was still in debt for the new grocery store on One Hundred and Second street, which he had purchased partly on John's credit — that he should go abroad with his family for three months and return penniless, and at once obtain from William $400 with which to enter business again. It will be noticed that John's credit was the better, for his name was signed to the notes which William was to pay. And it is significant that, just before the transfer, the account in the Yorkville Bank was closed and the bank books unaccountably disappeared, although the record of deposits would indicate an even and prosperous business, with receipts averaging at least $1,100 for months prior to the time deposits ceased. We have besides the testimony of two witnesses, opposed to that of John Voigt, that before the transfer he stated to one in December, 1896, that he had no liabilities, and in December, 1897, to the other that his only indebtedness was to the plaintiffs and to J.H. Mohlman Co. One of these witnesses is a reporter of a mercantile agency, having no direct interest involved, who had made previous visits to the store, but whom the defendant said he did not even recognize. The reporter's testimony that the stock alone was worth about $2,000 is another proof that the consideration named in the bill of sale was inadequate. And that the sum stated of $1,500 was accurate, if any amount was due, is rendered doubtful by the plaintiff's testimony that William mentioned $1,000 as the total sum borrowed. Our conclusion that the plan was one to defraud creditors is founded not only on what had taken place prior to the making of the bill of sale, its terms and the circumstances at the time it was given, but also by the subsequent conduct of the defendants. Within a short time we find John in possession of a store at Ninetieth street, conducting it in the name of his brother, but alone familiar with its management, rendering no account whatever, and withdrawing from it such money as he pleased. We think that the only inference deducible from the evidence is that the giving of the bill of sale was a scheme to hinder, delay and defraud creditors, and that it was error for the court below to dismiss the complaint. The judgment should, therefore, be reversed and a new trial ordered, with costs to the appellants to abide the event. Van Brunt, P.J., Barrett, Rumsey and Patterson, JJ., concurred.