App. Div.] THIRD DEPARTMENT, July Term, 1898. On the morning of the ninth of July, the plaintiff, as assignee, went to his son's store to take possession under the assignment, and found that the defendant, the sheriff of the county, had broken into the store, and was in possession under a warrant of attachment issued in an action, wherein the firm of White & Co. were the plaintiffs and his son Olin was the defendant. The sheriff thereafter proceeded to sell under his warrant of attachment, and under the execution issued in the judgment obtained in the action by White & Co. against Olin H. Wright. The sheriff realized upon the sale the sum of $2,031, which the defendant testifies was the amount of the judgment, costs and sheriff's fees, and the costs and expenses of the sale; there was a balance realized from the sale of $1.40 over and above the amount necessary to discharge the judgment and other expenses referred to, which the defendant turned over to the plaintiff in this action. After the sale the sheriff turned over the balance of the property to the plaintiff as assignee; the assignee commenced this action. against the defendant for conversion, and recovered a judgment against him for $4,000 damages and $169.41 costs, and it is from such judgment and order denying a motion for a new trial that this appeal is taken. After the defendant turned over the assigned property to the plaintiff, Olin H. Wright, the assignor and his wife conducted the business for the plaintiff as assignee, conducting the sales, which were made at retail, apparently in the ordinary course of business, and as they had done before the assignment. Olin occupied a bench in the store and repaired watches and jewelry; this was a part of the business carried on by him before the assignment, in connection with the jewelry business. Olin received from his father a salary of twenty dollars a week for acting as clerk and managing for him. Olin's wife assisted him in conducting the business, and they testified that what Olin made. upon the bench mending watches and jewelry, he turned over to her as her compensation, the theory being that while she acted as saleswoman it enabled Olin to work at the bench, and that the proceeds of his work there went to pay her for her services. This continued until about the 13th of December, 1896, when the plaintiff transferred what was left of the property to his son, Ellsworth D. Wright, THIRD DEPARTMENT, JULY TERM, 1898. [Vol. 32. for the sum of $1,404.66; of that amount $404.66, it is claimed, was paid in cash, and a note of $1,000 taken for the balance, and of that $1,000, $900 appears to have been paid at the time of the trial of this action; $500 of it being paid by canceling the individual note of the plaintiff which his son Ellsworth D. Wright held against him, and the balance was apparently paid from the proceeds of the business. No attempt was made by the plaintiff to show the actual value of the property transferred to Ellsworth D. Wright, and we are left to ascertain it from the inventory, deducting therefrom the amount sold prior to the sale to Ellsworth. As before stated, the actual value of the assignor's assets was alleged to be $13,551.92; the plaintiff claims that the actual value of the property sold by the sheriff was $3,868.33. The plaintiff testifies that he received the sum of $1,797.18 while he had charge of the store, which would make in the aggregate the sum of $5,665.51 to be deducted from the actual assets, leaving, apparently, the sum of $7,886.41. Of the actual assets, property of the value of $2,492 was property outside of the store, and which does not appear to have been sold to Ellsworth D. Wright, and which should, therefore, be deducted from the above sum, leaving a balance of $5,394.41 in value, apparently, which was transferred to Ellsworth D. Wright for $1,404.66. After the sale to Ellsworth D. Wright, Olin H. and his wife still continued to conduct the business as before. Ellsworth, it appears, was not a business man, but was a tutor engaged in Cornell University. The only time he appears to have rendered any assistance in conducting the business was during the holiday season, between Christmas and New Years. In the meantime it appears that the attorney who drew up the assignment was engaged in buying up the claims of creditors against the estate, representing that friends of Mr. Wright were disposed to aid him as far as limited means would permit, and as an inducement to a firm of creditors to accept thirty-three cents on the dollar for their claim, the probability of "litigation which is liable to be lengthy and make it doubtful as to how much the assigned estate will be able to pay, or how soon its affairs may be settled." The attorney purchasing such claims, upon being examined, said: App. Div.] THIRD DEPARTMENT, JULY TERM, 1898. "Of those which I have purchased I think every dollar was furnished to me by Florence Wright, something in the neighborhood of $400. Florence Wright was the name of Olin's wife. Olin claims that the money to buy up these claims was his wife's money, but it appeared upon the wife's examination that the only means she possessed were notes to the amount of about $200, which she held against her husband at the time of the assignment, and the money she received from him from time to time after the assignment for services rendered by her in the assigned business. A portion of the money, at least, to buy up these claims was given by Olin to the attorney himself. He testifies: “I did not hand Tarbell all of the money to do this with. I couldn't tell how much. I should say a hundred or $200. That I have handed him through my wife in money to buy up claims against myself. I physically have handed it over. This money I paid my wife is the proceeds of my labor upon the bench." Chas. H. Blood, for the appellant. George S. Tarbell and S. D. Halliday, for the respondent. HERRICK, J.: An assignment for the benefit of creditors must be interpreted like other instruments, according to the intent of the parties, and, if possible, such a construction given it as will sustain rather than defeat it. (Roberts & Co. v. Buckley, 145 N. Y. 215.) When, however, the distribution of the estate is to be made unequally among the creditors, and some are preferred to others in payment, the assignment is not viewed by the court with any favor, and is only tolerated and upheld when all conditions are met for the prevention of fraud. (Mills v. Parkhurst, 126 N. Y. 89.) And when it also appears that all the persons to be preferred in this unequal distribution of the estate are the relatives of the assignor, the assignment should be viewed with still less favor by the court, and the whole transaction rigidly scrutinized, to see that the provisions of the statute have not been availed of to defeat its spirit and benefit the assignor and his family at the expense of creditors. While it has been held that relationship between assignor and assignee, and a preference given to the latter as a creditor, prove nothing by themselves, but are consistent with honesty and inno THIRD DEPARTMENT, JULY TERM, 1898. [Vol. 32. cence, yet it was also held that other circumstances indicative of fraud may invest them with a new character and purpose, and transform them from equivocal and ambiguous facts into positive badges of fraud. (Shultz v. Hoagland, 85 N. Y. 464.) Here we have much more than the assignee being a relative and a preferred creditor; all the other preferred creditors are likewise relatives, and the person to whom the property was finally transferred is also a relative. Many of the suspicious circumstances in this case are transactions that occurred after the assignment; and while an assignment is valid or invalid at the time of its execution, and cannot be made either by subsequent unconnected acts, yet subsequent acts may reflect light back upon the original intent and help us to discern that correctly. (Shultz v. Hoagland, 85 N. Y. 464; McNaney v. Hall, 86 Hun, 415.) The use that is made of the assignment, and the acts of the parties under it, furnish data to judge of the motive and intent with which it was executed. (Forbes v. Waller, 25 N. Y. 430.) And coupling these after occurrences with what took place before and at the time of the assignment, I cannot resist the conclusion that this assignment was made with the intent to hinder, delay and defraud the creditors of the assignor. The assignor considered himself solvent; his reasons for making an assignment, as stated by him in brief, were that he thought more could be realized from his property in that way than if his creditors entered up judgments against him, and his property was sold out upon execution; yet, so far as appears from the evidence, only one of his creditors was pressing, and while he could not then raise the money to pay such claim, still it could have been adjusted, and time secured for its payment by giving his notes, indorsed by his father, extending over a series of months, with an agreement to renew them if he was unable to meet them at maturity; his father expressed his willingness to indorse if he desired him to do so; he agreed to furnish such notes, specified the times when he would. have them prepared, which promises he did not keep, and avows that he did not mean to keep them when he made them; he makes an assignment to his father, whom together with other of his relatives he makes preferred creditors; he remains in possession and PEOPLE EX REL. N. Y. C. & H. R. R. R. CO. v. ROBERTS. 113 conduct of the business, except when excluded by the sheriff, and Considering the circumstances under which this sale was made, it was incumbent, I think, upon the parties to it to show that the price was adequate; and if the apparent value of the remainder of the estate was not the real value I think it was incumbent upon the plaintiff to show that fact. For these reasons I think the assignment should be held fraudulent and void, and it follows that the order and judgment appealed from should be reversed. All concurred; MERWIN, J., concurred in result. Judgment and order reversed and a new trial granted, costs to abide the event. 32 113 THE PEOPLE OF THE STATE OF NEW YORK ex rel. THE NEW YORK Taxation of a railroad corporation meaning of the words "gross earnings" in chapter 908 of 1896 — they cover capital invested for business purposes in the stock and bonds of other corporations. By the term "gross earnings from its transportation or transmission business,” as used in section 184 of chapter 908 of the Laws of 1896, it is intended that a corporation embraced within the provisions of that act shall pay to the State a tax upon all receipts arising from or growing out of the employment of its capital, whether that capital is employed in the transportation or transmission business or otherwise. 157a 677 |