ants of their responsibility to take care of it work on the 29th day of June remained in while it lay in the harbor of New York, and the custody and possession of the defendants, was not yet taken out of the boat, and until whose duty it was to exercise ordinary care it was removed, either by the plaintiff or de- to preserve and protect it from injury, and to fendants, they were liable for the proper con- allow the consignees a reasonable time withdition of the cargo; and that, if it was dam- in which to inspect it and take it away; and, aged by rain while lying in New York, the in case they neglected to receive or take it defendants were liable. Exceptions were within such time, then it was the duty of the taken to these charges, and also to the re- defendants to discharge it in store or warefusal of the court to charge that "after bulk house, where it would still be protected from bad been broken, and part of it removed, the elements. It consequently appears to us and after a reasonable time had then elapsed that the defendants have no ground of comto unload or remove the remainder of the plaint as to the urges made, and that the cargo, the liability of the carrier, as wuch, judgment should be affirmed, with costs. All ceased." It does not appear to us that concur. these charges, when read and considered to

(116 N. Y. 428) gether, present any ground for error which calls for a reversal of the judgment. The BERNHEIMER et al. v. RINDSKOPF et al. rule doubtless is that the common carrier of Court of Appeals of New York, Second Divis

ion. Nov. 26, 1889.) freight by boat must, in order to relieve bimself from liability, deliver the goods at the ASSIGNMENT FOR BENEFIT OF CREDITORS – PREF

ERENCES-PARTNERSHIP. place designated, in good condition. Un

1. In an action to set aside an assignment by a doubtedly there may be a constructive deliv-partnership as in fraud of certain firm creditors, ery which would terminate his responsibility the burden is on plaintiffs to prove their allegation as a carrier, but it must be such as would in that a note preferred in the assignment was in. law be recognized as a delivery. If the con- own private interest, without the consent of his

dorsed by one partner in the firm's name for his signee neglect to accept or to receive the copartners. goods, the carrier is not thereby justified in 2. The note was originally indorsed by one of abandoning them, or in negligently exposing the partners individually, for his own private inthem to injury. If they are not accepted and who sustained intimate business relations with the

, received when notice is given of their arrival, promisors. The firm renewed its indorsement at he may relieve himself from responsibility by a time when it was insolvent, and the old note was placing the goods in a warehouse for and on extended for one year. Held that, in the absence

surrendered by the holder, and the time of payment account of the consignee; but so long as he of evidence that the holder knew of the firm's inhas the custody a duty devolves upon him to solvency when the indorsement was renewed, a take care of the property, and preserve it preference of the note in the assignment was not

fraudulent. from injury. Tarbell v. Shipping Co., 110 3. Nor was the validity of the assignment afN. Y. 170-182, 17 N. E. Rep. 721; Hathorn fected by the fact that it described the note as havv. Ely, 28 N. Y. 78; Fisk v. Newton, 1 ing been discounted by the holder, and that it diDenio, 45; Price v. Powell, 3 N. Y. 322: rected an absolute payment, whereas the liabuity

was only contingent. Fenuer v. Railroad Co., 41 N. Y. 505. As to whether or not the consignees pro

Appeal from supreme court, general term, ceeded with reasonable diligence to unload first department. the cargu was, as the trial court stated, a A. Blumenstiel, for appellants. Nathanquestion, under the circumstances of the iel Myers, for respondents. case, for the jury. In order to remove the

BROWN, J. This action was brought by malt from the boat, it had to be bagged and the plaintiffs, who are judgment creditors of caried way. Whether this could be done the firm of Rindskopf Bros. & Co., to set with safety, in a rainy day, was a question aside a general assignment made by that firm of fact. It appears that Sunday and one to the defendant Jacob W. Mark, September holiday had intervened, and that one or two 19, 1884, on the ground that it was made to days had been rainy, so that we think a find- hinder, delay, and defraud creditors. It is ing that the consignees had not unreasonably alleged that this result was sought to be acdelayed the unloading of the boat is justified complished by preferring, in the assignment, by the evidence. On the 6th day of July, as numerous claims, some of which were fictiwe have seen, the cargo was found so damp tious, and for none of which the firm was as to cause it to be rejected by the inspector liable. The defendants' introduced no evi. of the par.ies. The consignees had the right dence on the trial, and the court found as to have the malt inspected as it was taken l'acts that none of the preferences were fictifrom the boat before accepting it. The en- tious, or for an amount for which said firm tire cargo could not well be inspected at the was not justly liable, and were not made for same time, for that which was on top may the purpose of reserving any portion of the have been dry and in good order, while that property for the benefit of the assignors, or in the bottom of the boat might have been for the purpose of hindering, delaying, or dewet and spoiled. The inspector stood by and frauding their creditors. The burden of esexamined it as it was taken from the boat, tablishing, by competent and sufficient testiand it was only such as passed his inspection mony, the allegations of the complaint, restthat was accepted by the consignees. That which reinained in the boat at the close of

1 Affirming 41 Hun, 646, memo

ed upon the plaintiffs, and, the findings of|ing such consent rests on the holder of the the trial court having been affirmed by the note. The respondents do not deny these general term, the judgment must be sus- legal propositions, but they do deny their aptained in this court, unless the evidence will plication to this action. They would be apadmit of no other inference except that which plicable, and full effect would be given to plaintiffs claim for it.

them, if Nathan was suing the firm on the The first and main ground upon which the note, and the firm liability was denied. But assignment is assailed is that the preference the issue here is a very different one from to Max Nathan for the sum of $25,000, the what it would be in an action by Nathan amount of a promissory note made by James against the firm. The plaintiffs, and not the Thompson & Co., and indorsed in the name firm, are attacking the validity of the note. of Rindskopf Bros. & Co., is not based on a. As between Nathan and the firm, the firm firm liability valid as against firm creditors. liability and the validity of the indorsement It appears that in December, 1881, upon the is admitted. Nathan is not called upon to application of the defendant Buchman, a prove anything. He is not a party to the member of the assigning firm, and for the suit, and is not before the court in any cabenefit of his daughter, Mr. Nathan loaned parity, and cannot be heard. The issue is $25,000 to James Thompson & Co., and re- solely between the plaintiffs and the assignee. ceived therefor their note, indorsed by Buch- The attack is upon the assignee's title to the man, payable one year after date. This note firm property, and to his right to administer was renewed in Jannary, 1883, and about upon it under the trust-deed. The trust-deed the time of its maturity, in 1884, Nathan re- is alleged to be fraudulent because of the adfused to renew it, unless it was indorsed by mission and direction to pay a fictitious debt. the firm of Rindskopf Bros. & Co.; and there. The admission of the validity of the indorseupon Mr. Buchman, in Nathan's presence, ment is the fraudulent act which plaintiffs indorsed on the renewal note the name of claim destroys the assignee's title to the said tirm, and Nathan surrendered the old property. In substance, plaintiffs allege that note, and accepted the renewal for one year. the assignee is not entitled to retain the firm At that time Rindskopf Bros. & Co. were in-property and dispose of it in accordance with solvent, but Nathan was not aware of that the terms of the assignment, for the reason fact. The firm did not then contemplate an that the purpose to which he is directed to assignment, but hoped to be able to pay their apply it is a fraudulent one, and the fraud is debts in full. The plaintiffs attack the valid- | alleged to consist in directing the payment ity of the preference of this note in the as- of a debt for which the firm was not liable, signment on three grounds: First, that the and which is in fact a debt or liability of an assignors were not liable on the note unless individual member of the firm. Obviously, all the members of the firm authorized and upon such an issue, the burden is upon the consented to the indorsement, and that the plaintiffs to

to establish their complaint. burden was on the defendants to establish au-Among all the cases cited in the appellants' thority in Buchman to make the indorsement; brief, there is not a single authority holding second, that, assuming that the firm author- that in an action of this character the burden ized the indursement, it was in effect an ap- is on the assignee to prove the validity of the propriation of partnership property to the assignment or the liability of the tirm for the payment of the debt of an individual partner, debts the assignee is directed to pay. None, made when the firm was insolvent, and hence I think, can be found. The assignment is a fraud upon the firm creditors; third, that valid upon its face, and the presumption as there was a fraudulent misstatement in the to its entire validity must prevail until the deed of assignment of the nature of the lia-contrary appears by evidence; and in this acbility of the assignors upon the note.

tion an inference cannot be drawn that the I shall briefly discuss these questions in the firm are not liable on the note from proof of order in which they are stated.

the fact that it does not represent a firm The plaintiffs have cited a multitude of au- debt, because non constat it may have been thorities to show that a holder of a note of a indorsed with the consent and by direction firm, given by one partner for his private of all the members of the firm, and that fact debt, or for a matter outside of the firm bus. must be negatived before the assignee is put iness, and known to be such by the holder, upon his defense.

upon his defense. In the absence of all evimust, in an action upon the note against the dence on that question, the only proof before firm, prove that the other partners who did the court was the acknowledgment of the not sign consented to be bound by the con- debt in the assignment, and the presumption tract. Such is undoubtedly the law. Each of the validity of that instrument required partner is the agent of the firm only as to the court to assume the consent of the firm matters within the scope of the partnership to the indorsement. Fraud cannot be prebusiness, and if one partner gives a partner- sumed. It must be proven, and, if there is ship note for his own debt, without the con- left room for the inference of an honest insent of his copartners, it is void in the hands tent, the proof of fraud is wanting. Schultz of any party having knowledge of the pur- v. Hoagland, 85 N. Y. 469; Baird v. Mayor, pose for which it was given. Such a note 96 N. Y. 567; Kingsley v. City of Brooklyn, does not bind the other partners without 78 N. Y. 215; Bank v. Talcott, 22 Barb. 550; their consent, and the burden of establish- Crook v. Rindskopf, 105 N. Y. 476, 12 N. E.

Rep. 174. The evidence on this branch of settled. Ransom v. Van Deventer, 41 Barb. the case, so far from affording the appellants 307; Wilson v. Robertson, 21 N. Y. 587. ground for an exception, would not have sus But the question here is, do the facts tained a finding that the indorsement was bring this case conclusively within that rule? without the firm's consent. On that question There is no principle of law which forbids a the plaintiffs introduced no evidence. partnership from entering into obiigations

But it is argued the note may have been outside of the scope of the partnership busiindorsed with the consent of all the partners, ness, provided it is done with an honest purand be a valid contract between them and pose, and with the consent of all the memthe holder. Still as it was made when the bers of the firm. And partnership property firm was insolvent, and to secure a liability may be transferred to pay a joint debt for of an individual partner, it is in law fraudu- which the firm is liable outside of the partlent against the firm creditors. Menagh v. nership business, and the joint creditors will Whitwell, 52 N.Y. 146, is the principal au- obtain a good title to the property. Saunders thority cited to sustain this claim. That ac- v. Reilly, 105 N. Y. 12–18, 12 N. E. Rep. tion was one for the conversion of property 170. And when there is a good consideraagainst the sheriff of Ontario county, and tion to support a contract of the firm outside arose out of sales of firm property under ex- of the scope of the firm business, I take it a ecutions in favor of firm creditors. The firm creditor, having no lien upon the firm plaintiff made title to four-fifths of the prop- property, has no legal ground for complaint erty through a sale of the interest of two of if firm property is appropriated to pay such the partners under chattel mortgages giyen obligation, even though the firm was insolvby said partners to their individual creditors ent at the time it entered into the contract. when the firm was insolvent. Before the The contract being legal, and there being no executions were issued to the sheriff, the re-actual fraud, it may be enforced against the maining partner sold and transferred his in- firm, and hence it is not fraudulent in law if terest in the firm property to a person not a firm property is applied to pay the debt. member of the firin. The plaintiff had judg-We must, in considering this branch of the ment, which was affirmed at the general case, assume the firm to be liable on the note term. It was sought in this court to sustain when the assignment was made; and we are the judgment on the theory that as the eq- thus brought to the question whether the uities of firm creditors can only be worked proof as to the circumstances under which out against firm property through the eq- that liability was contracted were such as to uities of the partners, that as all the mem- establish against firm creditors fraud, either bers of the firm had severally conveyed to in law or in fact. If the proof bad shown different persons their respective interest in that Nathan knew of the insolvency of the the firm property before the levy by the sher- firm at the time he renewed the note, and iff, the equities of the partners to have the that an assignment was then impending, or property applied to pay firm debts had been had there been no consideration for the inreleased or waived, and with them had gone dorsement, a different conclusion would have the equity of the creditors that was depend- been permitted. But there was no evidence ent upon them, and consequently the pur- that Nathan knew the firm was insolvent, chaser from the individual partners had be- and it appeared that, upon accepting the recome vested with the corpus of the property. newal note, he surrendered the old note, and This claim was asserted on the authority of extended the time for the payment of the debt Coover's Appeal, 29 Pa. St. 9. The absurd for one year. This made him a holder for results which would follow such a rule were value, and constituted a good consideration shown by the opinions of Judges RAPALLO for the new note. Bank v. Place, 86 N. Y. and ALLEN, and this court held that the pur- 444. In Menagh v. Whitwell, supra, and all chaser took only the interests of each partner kindred cases, there was substantially a after the firm debts were paid and the eq. donation of firm property to pay the debt of uities between the partners adjusted, and an individual partner, without any conthat the corpus of the property, notwith- sideration moving to the firm. Here there standing the transfer by the several partners was a consideration, and in this very essenof their individual interest, still remained tial fact the case under consideration differs firm property, and subject to levy on execu- from all the cases cited by the appellants in tion against it by firm creditors. In that which the principle cited has been applied. case the firm were not liable to the mort- All of them are cases where the assignment gagees through whom plaintiff made his title, itself preferred debts of individual partners, and there was no transfer of firm property to or where the property was transferred directpay a debt of the firm, and it is not an au- ly to pay individual debts. The conclusion thority in a case where the firm has made it that indorsing the notes was fraudulent in self liable for the debt which the firm prop- law, as against the creditors of the firm, is erty was appropriated to pay. The rule that not, therefore, permitted. It further apit is a fraud upon firm creditors for a mem-peared that the business relations between ber of a firm to take firm property, and apply Rindskopf Bros. & Co. and Thompson & Co. it to his individual debt, or for an insolvent were more or less intimate, and we cannot firm to apply firm property to the payment say that the assignors did not receive a beneof the debt of any individual partner, is well I fit from the renewal of the note and the ex

tension of the payment of the debt for a year. I alleged owner, upon which an attachment has been The failure of Thompson & Co. and of Buch- levied in plaintiff's favor, and that the amount of man to pay the note in question might have the claim is due from the owner to plaintiff.

2. Where the trial court has found that the precipitated the failure of Rindskopf Bros. & sheriff attached the “claim" of D. & Co., and all Co., which the evidence shows they at that their property in defendant's hands, the levy as time hoped to avoid. The trial court was en- fendant in payment of a draft due D. & Co., held

found is sufficient, though the check given to detitled to give weight to such considerations in for collection, was not taken into actual custody, determining the intent of the assignors, and as required by Code Civil Proc. N. Y. § 649, when the evidence was sufficient to negative the attaching notes or instruments for the payment of inference of a fraudulent purpose on their lection of the draft, was not capable of manual de

money, as the “claim,” though resulting from colpart in making the indorsement. I think, livery. therefore, the exception to the findings of the 3. Findings of fact by the trial court are not court that the preference of the Thompson cepted to in the court below.

reviewable on appeal unless they have been exnote was for a debt for which the firm was

4. Where a draft is given by the drawer to an justly liable, and was not fraudulent, and to agent to forward to a third person for collection, it the refusal to find that the firm received no is subject, in the hands of the third person, to levy consideration for such indorsement, cannot be for a debt due from the drawer.

5. The finding that the draft was delivered by sustained.

the drawer to an agent for collection is not inconNor is the objection well taken that there sistent with the finding that it was so delivered, to was a fraudulent misstatement of the nature be forwarded by the agent to a third party for col

lection by him. of the liability on the indorsement of the note. The preference in the assignment was as fol Appeal from judgment of the supreme lows: “Max Nathan, of said city of New court in the first judicial department, affirmYork. For the sum of $99,900.86, * * * ing judgment entered on decision of the court $25,000 thereof for the amount of a certain in favor of the plaintiffs. The action was promissory note for that amount made by the brought by leave of that court to recover, for firm of James Thompson & Co., dated Janu-application upon a judgment recovered by ary 21st, 1884, payable twelve months after plaintiff Naser against Deneken & Co., the its said date, indorsed by said assignors, and amount of a claim alleged to have been coldiscounted by and held by said Max Nathan,” lected by the defendant for Deneken & Co., Criticism is made upon the word “dis- and upon which it is also alleged that an atcounted,” and that the direction to pay is tachment, issued in the action in which such absolute, whereas the liability was contin- judgment was recovered, had been levied. gent. There is no attempt made to make it It appears that Deneken & Co. drew on Naser appear that the note was for the accommoda- a draft, as follows: "London, 19th June, , tion of the assignors, and the statement of 1880. At sight pay this first of exchange, the liability was not calculated to mislead. second and third not, to our order, eight hunOn the face of the note Thompson & Co. dred and seventeen pounds, nine shillings, were the real debtors, and upon payment the sterling, value in ourselves, which place to assignee would be entitled to take and en- account, as advised by DENEKEN & Co., 7 force the note against that firm.

Beaver street, New York. To James Naser.” Numerous other preferences in the assign- The draft was indorsed, “Pay Messrs. Mcment are claimed to be fraudulent, and at Culloch & Co., or order, value on account. considerable length and with great earnest- DENEKEN & Co.;” and was handed to McCulness have been pressed upon the attention of loch & Co., who indorsed upon it, “Pay the the court by the learned counsel for the ap- First National Bank of New York, or order. pellants. The questions presented are main- McCULLOCH & Co.," and sent it to, and it ly ones of fact. We have considered them was received by, the defendant; and afterall fully, but find nothing which would justi- wards the drawee delivered to the defendant, fy the reversal of the judgment. Upon those and it received in payment of the draft, his matters we concur in the opinion of the certified check for $3,986, and immediately learned judge who heard the case at special thereafter the sheriff levied the attachment. term. The judgment should be affirmed, The judgment in that action was afterwards with costs. All concur.

recovered against Deneken & Co. for up

wards of $10,000, and, after the defendant (116 N. Y. 492)

had refused to deliver or pay to the sheriff NASER et al. v. FIRST NAT. BANK.1 the amount of such claim to apply upon the (Court of Appeals of New York, Second Divi- execution issued on such judgment, this acsion. Nov. 26, 1889.)

tion was commenced. The plaintiffs recovATTACHMENT_DRAFTS RECEIVED FOR COLLECTION.

ered. 1. In an action brought by leave of the court by

Fisher A. Baker, for appellant. Samuel plaintiff in the name of himself and the sheriff, Untermyer, for respondents. under Code Civil Proc. N. Y. SS 655, 677, to subject the amount of a claim held by defendant for collection, which has been attached in defendant's

BRADLEY, J., (after stating the facts as hands,' to the satisfaction of a judgment recov- above.) The motion to dismiss the complaint ered against the owner of the claim, the complaint upon the ground that it failed to state facts is suiticient if it alleges that defendant has in its sufficient to constitute à cause of action was possession the amount of a claim belonging to the

properly denied. It alleges that the defendAffirming 42 Hun, 658, mem.

ant had in its possession and control the

claim or demand against Naser, belonging to would then become the debtors of their prin-
Deneken & Co., and that by their directions cipal on that account.
it had been sent through their agents, Mc There is some conflict of authority on the
Culloch & Co., to the defendant; that it re- subject of the relation, to the holder of busi-
ceived for Deneken & Co. the amount of it, ness paper, of a party to whom it is trans-
and that immediately thereafter the attach- mitted by the individual or bank employed by
ment was levied. The facts are sufficiently him to collect it. In some of the states it is
alleged that they owned the claim, and that held that it is within the implied authority of
the amount of it was due them from the de- the collecting agent, when the paper is to be
fendant; and all other facts requisite to the collected at some place remote from that of
cause of action were also alleged. Code, SS the business of the collecting agent, so em-
655, 677.

ployed, for him to employ a subagent in the
The objection, made, so far as appears, for locality where the party from whom payment
the first time on this review, that no suffi- is sought may be, to make the collection on
cient levy of the attachment was made to account of the holder; but in this state it is
support the action, is not well taken. This quite well settled that no such authority from
objection seems to have been made upon the the owner of the paper to the party employed
ground that the officer sought to levy it upon by him is implied, and that without some un-
the check which Naser gave the bank in pay- derstanding to that effect, or qualifying his
ment of the draft; and that, as it was not liability in that respect, he is deemed to make
taken into the custody of the sheriff, no ef- such selection and ernployment of another on
fectual levy was made. If such were the his own account, to transact the business of
fact, and it were available to the defendant, collection. He assumes the responsibility,
the objection might be urged with some and is alone chargeable to his principal for
force, as the statute provides that a levy un- the conduct in the premises of the person or
der a warrant of attachment must be made bank so engaged by him, and to whom he
upon a promissory note, or other instrument transmits the paper for collection; and their
for the payment of money, by taking the relation is that of principal and agent, with
same into the sheriff's actual custody, (Code, the duties and responsibilities incident to

649;) but this question is disposed of by the such relation, (Allen v. Bank, 22 Wend. 215;
finding of the trial court that the sheriff at- Montgomery Co. Bank v. Albany City Bank,
tached the claim referred to of Deneken & 7 N. Y.459; Ayrault v. Bank, 47 N. Y.570;)
Co., and all their property in the possession and such is the doctrine of the United States
of the defendant; and as the claim, resulting supreme court on the subject, (Hoover v.
from the collection by the defendant of the Wise, 91 U. S. 308; Exchange Nat. Bank v.
draft, was not capable of manual delivery, Third Nat. Bank, 112 U. S. 276, 5 Sup. Ct.
the fact of levy as found was sufficient, (Id. ;) Rep. 141;) and, so far as Bank v. Smith, 3
and as there was no exception taken to such Hill, 560, is not in harmony with that view,
finding, it is not the subject of review here. it was disapproved in Montgomery Co. Bank
An exception was essential to raise a question v. Albany City Bank, supra. But it does not
of law, and may have been effectual for that follow that the correspondent of the collect-
purpose if there was no evidence tending to ing agent, unless he has made advances to the
support the finding. Id. 98 993, 994; Sickles latter in good faith upon the paper, can, as
v. Flanagan, 79 N. Y. 224; Bedlow v. Dry- against the owner, retain the proceeds of it.
Dock Co., 112 N. Y. 263, 19 N. E. Rep. 800. The latter may revoke the agency he has con-

The evident design was to levy the attach- ferred, and seek the paper or its proceeds in
ment upon the alleged claim due Deneken & the hands of such correspondent, or he may
Co., arising from the payment of the draft to follow it and reach them until it or they have
the defendant. The main question for con- found their way into the hands of a bona fide
sideration is whether the relation between holder for value, who has taken it froin the
those parties was such that the payment to party clothed with the apparent title. This is
the defendant made the latter a debtor of an equitable rigbt, not necessarily resting in
Deneken & Co., by whom the draft was drawn, privity of contract with the party from whom
indorsed, and delivered to McCulloch & Co., such relief is sought. The occasion for it
in London. They indorsed and transmitted usually arises froin the insolvency of his col-
it to the defendant in New York, where the lecting agent, or some other cause, rendering
drawee resided. If it be assumed, as con- such remedy desirable for his protection.
tended by the defendant's counsel, that Mc-Warner v. Lee, 6 N. Y. 144; Commercial
Culloch & Co. were employed by the drawer Bank v. Marine Bank, 1 Abb. Dec. 405; Dick-
to collect the draft, and that such was the un-erson v. Wason, 47 N. Y. 439; Bank v. King,
qualitied contractual relation between them, 57 Pa. St. 202.
there was no privity of contract between the In the present case there was no disaffirm-
defendant and Deneken & Co. In such case ance by Deneken & Co. of the agency of Mc-
McCulloch & Co. would be the defendant's Culloch & Co., nor were any steps taken by
principal, and to them it would be respon- the former to charge the defendant with the
sible, (Colvin v. Holbrook, 2 N. Y. 126; Cos- duty or liability to pay directly to them the
tigan v. Newland, 12 Barb. 456;) and the proceeds of the draft. But whether, in such
payment to the defendant would be treated case, a claim in the hands of the defendant,
as payment to McCulloch & Co., and they subject to levy of the attachment, would re-

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