Wilder and Hastings, qui tam, &c. against Winne and I. Fondey

Wilder and Hastings, qui tam, &c. against Winne and I. Fondey. It a judgment. bn valid in its cAhtoc ion, i.«. bmia fide, ⅝⅛ jttiuu, though execution bo bikcn out uni! unforced with lay ami hinder '¡r lmvn' uin! rirri'i, yd u ulmit with-¡"thn ,tunar Dir the preven- 1 ion of fniuds, (xfi.i.t, 10, r/t. dd, 1 II. !>. 7‘*,) and the plninlilfr not, I hrreiore, liable to the ponaHy iinpo-1 ml by tint 'lib portion oí tlint Mill uto, ( 1 l'. h. 7li, 7.J ít in Irtwiul lor a dobfor m lailiti" r.irriihr Inner1-, to pi' D p nnr (vnlilni to aii'itlici nr 1» T>t oior nnr* "C f Of ‘Tc h' or hr or»)) |n-<"j i pr a j Md”'! n «od , <(r-\ up I,;li'-| \vr-e. Drain’, for the penalty of ⅞ 12,00(), upon the 4th section 0f |¡,(. statute, for the prevention of frauds, (sess, 10, ch. 44, 1 R. L. 76,) tried at the Albany circuit, in September, '«O-*»* m*. Tlio. <!<',<*,(¡vnvíion that i\w pkiint.ifts suc'.d omt Sir.- . , . p'i.en ronde.y, lor ;» dvbt duo to thoin, on tho 15fh diiy oí ()ct0f,cr 18 .ííí, in this coin i ; and ;il. February torn. 1824, obtained judgment for ⅜5'12,07. That at the time of com-uicncing the suit, and until the 3d of February, I.S2/J, <V. Fondey possessed and owned divers goods and chattels of dillorent kinds, s¡xí(*í I y thorn, at umwm, oí I ho valuó ()f*(¡ 000, which were, liable, to the plaintiffs’ execution. 11 ' ' 3 Rut that in tlu'. previous term oí October, 1823, the do.fondants entered up a judgment, by eonlcssion, in this court, against S. Fondey, lor $12,014 45, debt and costs. The first count then charged that this last judgmten was devised, Arc. between the parties, of Iraud, &c. to delay, hinder and defraud the plaintiffs of their action, demand and damages, &e. ; and that the defendants, on the ‘Id ol January, 1.824, &e. put' in use the judgment, as true and simple, &c. The second count was the same, in substance, with the addition, that the defendants, on (lie I si of November, 1828, sued outa teM.fi. J'a. on their judgment, endorsed for $(¡017, 48, with interest, &e. ; that on the. 23d oí January, 1824, the alterin'seized the goods of»V. Fondey, and sold them at auction; and that this execution was devised and contrived, &c. and put in use, No. (as before of the judgment. ) The judgments, the execution and levy, as set forth in the declaration, were proved on the trial ; and it appeared that the defendants’ execution, having a preference over one issued on the plaintiffs’ judgment, the latter was returned nulla bona,. It also appeared that the defendants’judgment was entered after •S'. Fondey had become insolvent. 'The evidence was very satisfactory that the. judgment of the defendants was bona fide ; and that no part of it was paid when the execution issued. It farther appeared, that the sale of N. Fondey's goods, on the. execution, which was made at (leñera, (Ontario county,) January 30/A, 18.24, amounted to about $030 ; the property being ehielly bid in for the defendants. Thai alter this sale, the defendants, * by a re-sale of the goods, and otherwise, received enough and more than enough of •S'. Fondey, to satisfy t heir judgment; while the other creditors of S. Fondey got nothing. That the goods purchased in by the defendants at (leñera, were sent to Albany ; and on a re-s.de at auction, brought $1573,45. That a small part ol the. defendants’judgment was to secure fu-nire advances. Various circumstances were given in evidence as to the manner in which the sale was conducted, and how the defendants afterwards obtained satisfaction of their judgment, which it is'not material to state, as the decision of the cause here turned on the charge of the judge. He recapitulated the evidence to the jury, and charged strongly in favor of the bona fides of the defendants’ judgment. He told the jury that the object of the statute was to punish frauds, committed to delay and hinder creditors’ recovering their just debts, and that such fraud might have beenhommitted by a fraudulent use of the defendants’judgment against S. Fondey, to delay and hinder creditors, &c. admitting the judgment was legal. Hence, the intent of the defendants in enforcing their judgment, was a material question to be decided by the jury ; for their liability depended on the fact of their being actuated by a fraudulent intent. This was required to be satisfactorily made out, before the defendants could be charged with the heavy penalty demanded of them. That if the jury thought there was room for a reasonable doubt whether the defendants intended to commit a fraud against the creditors of S'. Fondey, they ought to find a verdict in their favor ; but if they were satisfied that the defendants did intend to commit such fraud, they should find for the plaintiffs. The jury found for the plaintiffs. A. Van Vechten, for the defendants, now moved for &" new trial, on the ground (among others) that the judge mis-directed the jury. S. A. Foot, contra. [MAJORITY — Savage, Ch. Justice.] Curia, per Savage, Ch. Justice. It is contended that the judge erred in stating to the jury, that the defendants could commit a fraud upon the creditors of S. Fondey, although their judgment was legal ; and that the statute is applicable to those bonds, judgments, &c. only, which were fraudulent in their original concoction. I cannot find any adjudged case in this court, where the subject in question has been considered or decided. The English statute of 13 Eliz. ch. 5, is substantially like ours. That act was passed for the avoiding of feigned, covinous, and fraudulent feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments and executions, devised to the intent to hinder, delay or defraud creditors and others of their just and lawful actions ; and enacts that all and every feoffment, &e. and every bond, suit, judgment and execution, for any intent or purpose before declared, shall be utterly void. It also, like our statute, gives an action qui tam. The same principles must, of course, be applicable to both statutes. The case of Holbird v. Anderson, (5 T. R. 235,) was not an action for a penalty, but it involved the inquiry as to what acts are void as being fraudulent within the 13 Eliz. The facts were, that one Shepherd had a judgment against Charter, who was also indebted to Holbird, the plaintiff. Charter, knowing that execution was about to issue on Shepherd’s judgment, confessed a judgment to the plaintiff, on which execution was delivered to the sheriff, two hours before Shepherd's. The sheriff levied upon Shepherd's .execution, and returned the plaintiff’s nulla bona ; upon which he brought an action for a false return. It was contended for the defendant, that the warrant of attorney to confess judgment was void by the statute ; being with intent to hinder or delay Shepherd's execution. Lord Kenyon said, there was no fraud in the case. The plaintiff was preferred by his debtor, not to benefit the latter, but to secure the payment of a just debt, in which he could see no illegality or injustice. The warrant of attorney, he adds, was given upon good consideration ; and the words bona fide, in the act, only apply to cases where possession is not delivered, or where it is merely colorable. Butter, J. alluded to the case of executors, who confess judgments to some creditors, after suits against them by others, and which judgments cover all the assets. It is perfectly well settled in this state, as it is also in England, in cases not coming within the bankrupt acts of that country, that a debtor, in failing circumstances, may prefer one creditor or set of creditors; and this may bte done by assignment, judgment, or otherwise ; and such assignment or judgment is not fraudulent, unless itbeintendr ed, in whole or in part, for the future benefit of the debtor. (5 T. R. 235, 424, 530. 8 id. 528. 2 John. Ch. Rep. 306, 7. 3 id. 446, 453.) In the late case of Mackie & Cairns, (5 Cowen, 547,) in the court for the correction of errors, this doctrine was fully considered and recognized. The authorities cited from the English Term Reports and Johnson’’s Chancery Reports, also shew that a security to indemnify for future advances is valid. If, therefore, the fact be admitted, that the bond on which the judgment of the defendants was entered, was executed as a collateral security for goods, for liabilities, and for contemplated future advances, surely it was free from any suspicion of fraud. The judgment was entered after the failure of S. Fondey was known ; and the execution was issued purposely to obtain payment in preference to other creditors. Undoubtedly it had the effect to delay or hinder the plaintiffs in the collection of their demand. Every assignment or preference given by a failing debtor, has that effect as to the creditors who are not preferred. It then becomes necessary to enquire wdiether the issuing of an execution upon a valid judgment, done to defeat other creditors, renders the plaintiffs in the judgment liable to the penalty in the 4lh section of the statute for the prevention of frauds. The case of Meux, qui tam, v. Howell, (4 East, 1,) is full to this point. That was an action on the statute, (13 Eliz. ch. 5, s. 3,) from which our 4th section, (1 R. L. 76,) was in substance taken. Many of the expressions are precisely the same in both. The declaration charged the defendants with putting in use a fraudulent judgment against J. Norton, the plaintiffs being his creditors, contra forrnam statuti. The plaintiffs were landlords of Norton, and had distrained for rent. They had also an account against him for beer. The defendants, being also his creditors, sued him, and he was surrendered by his bail. They finally took from him a judgment for the benefit of all the creditors. Execution was issued, and Notion’s goods sold. A tender was made to the plaintiffs as for their rent; but they would not re-ceiyc it, being less than the rent distrained for. The question upon the argument was, whether the judgment against Norton was not, under these circumstances, fraudulent within the statute. Lord Ellenborough said, “ it is not every feoffment, judgment, &c. which will have the effect of delaying or hindering creditors of their debts, that is, therefore, fraudulent within the statute ; for such is the effect, fro tanto, of every assignment that can be made by any one who has creditors. Every assignment of a man’s property, however good and honest the consideration, must diminish the fund out of which satisfaction is to be made to his creditors. But the feoffment, judgment, &c. must be devised of malice, fraud, &c.” In conclusion, he said, “ unless we were to go the length of saying, that every assignment to a creditor is fraudulent as to the rest of his creditors, and prohibited to be made, this was not fraudulent. It has none of the qualities of fraud within the act, which was meant to prevent deeds, &c. fraudulent in their concoction, and not merely such as in their effect might delay or hinder other creditors.” Grose, J. remarked, if the judgment be given bona fide, and upon good consideration, it is not within the act. In that case, it was admitted that the distress wras not affected by the execution, and Lord Ellenborough observed, that, as to the plaintiffs’ book debt, they had taken no inchoate steps to recover it. In that respect, the case now before the court, differs from Meux, q. t. v. Howell. So far, the claim of Meux was weaker than that of the present plaintiffs. But, in this very particular, the case of Holbird v. Anderson, was much stronger with the plaintiff than the present. After a full examination of this case, I am satisfied of the correctness of the general proposition, that if a judgment, &c. be bona fide in its concoction, and upon good consideration, it is not within the act for the prevention of frauds. We are not called upon to say what remedy the plaintiffs may have against the defendants, for the property or money in their hands belonging to S. Fondey. It is sufficient for us to say, that, in our opinion, the defendants are not liable in this action, if the judgment was bona fide, and uPon good consideration. If the facts stated in the case be undisputed ; that it was given to secure a debt due to the defendants, and to indemnify them against their advances and liabilities, the judgment was not fraudulent. There are good and legal considerations to support it. I may be allowed to express my regret, with the late chancellor Kent, that such preferences are allowed to failing debtors ; but the law is too well settled to be altered by any thing but legislative enactment. In my opinion it was incorrect, to leave to the jury to decide upon the intent with which the execution was issued. It must necessarily have been to delay the plaintiffs ; the property not being sufficient to pay both. A new trial should, therefore, be granted, with costs to abide the event. New trial granted.