Weiller agt. Schreiber.

To the sufficiency of these facts to justify the issue of an attachment there are various objections made, which will now be considered.

First-It is said that the cause of action is not one for which an attachment can issue.

Section 635 of the Code specifies the causes for which an attachment may issue. This particular attachment, it is conceded, must be sustained, if it can be, under the third subdivision of such section, which reads: "Any other injury to personal property, in consequence of negligence, fraud, or other wrongful act." The position of the defendant is, that conceding the facts as claimed by the plaintiff, there has been no "injury to personal property" in the sense intended by the provision we have quoted.

Mr. Throop, in his note to section 635, says: "The term 'injury to property' is defined in section 3343, subdivision 10, post." The subdivision of the section referred to provides, "An 'injury to property' is an actionable act, whereby the estate of another is lessened, other than a personal injury, or the breach of a contract."

If the affidavits submitted are sufficient to establish the fact that the plaintiff was induced to part with the personal property by the fraud of the deceased (and whether he was so influenced or not will be considered under the next point), it seems clear that "the estate of another is lessened," and so lessened by "an actionable act" (Bogart agt. Dart, 23 Hun, 395). Without any further discussion of this point, we proceed to discuss the next point made in behalf of the defendant, which is,

Second. That the affidavit fails to show that the deceased had assigned, disposed of or secreted, or was about to assign, dispose of or secrete his property with intent to defraud his creditors.

In the discussion of this objection, it is conceded that the facts shown by the affidavits must be sufficient to warrant the conclusion that the deceased had committed, or was about to

Weiller agt. Schreiber.

commit, one of the acts, which permit the issue of an attachment. It is also conceded that no belief or inference of the affiants will justify such a conclusion, nor the statement by them of facts on their information and belief, and not of their knowledge. What facts have been shown?

First. The credit was procured by a confessedly false statement. It needs no special knowledge of trade to infer that a statement made to a seller by the buyer, that the goods were to be used in business might procure a credit, when a declaration that they were needed to borrow money upon would prevent one. And yet this is the case which the affidavits prove. The goods were bought with the distinct understanding that they were to be placed in stock with other goods of the buyer, and so used, by mixing and compounding them, as to increase the value of the stock, and consequently his ability to pay. Instead of this the goods were not placed in stock, were not compounded or mixed with others, and were either pledged to raise money from parties, whose names were withheld, or were secreted, but in either case there was an actual concealment of their location. The subsequent conduct of the buyer throws light upon the intent with which the purchase was made. In the absence of any explanation, it must be assumed that the goods were purchased by means of a deliberate false statement made with the intent to defraud.

Second. The goods having been obtained by fraud were actually concealed. The buyer claimed that they were pledged, with others, to secure a loan of $2,500, and though he agreed with the plaintiff to permit the latter to redeem them, and retain them as security for his indebtedness, the amount of the prior pledge, and a further advance of $1,000 to the deceased, yet he declined to carry out such arrangement or to give any information as to the locality of the goods or the alleged pledges.

It was for the officer to whom the application for the attachment was made to draw the proper inference from these facts.

Weiller agt. Schreiber.

It having been shown by positive testimony that possession of the goods of the plaintiff was obtained by a false statement, that their whereabouts was concealed, that the names of the persons to whom they were pledged (assuming from the statements of the deceased that they were actually in pledge), were withheld, and that the deceased refused to consummate an arrangement and agreement which he made with the plaintiff, which it would have been to his interest to fulfill if he intended to carry on business and pay his debts, justify the conclusion that the deceased had either assigned, disposed of or secreted property, or intended so to do, with intent to defraud his creditors.

For the reasons which have been given the attachment must be sustained. It was not necessary for the plaintiff to establish that the deceased had disposed of all his property. It is enough (Code, sec. 636, sub. 2) if he "has assigned, disposed of or secreted, or is about to assign, dispose of or secrete property," with the intent to defraud his creditors. The facts shown, and which have been mentioned, justify the conclusion that he has so done. The contraction of a debt by a false statement, and the concealment of the goods so that an agreement, having for its object the security of the plaintiff, should not be performed, when its performance, if the deceased inter ded to be honest, would have clearly been to his interest, point only in one direction and that is in the direction of fraud. No explanation of the conduct of the deceased has been attempted. The case stands upon the affidavits on which the attachment issued, and the facts they establish was sufficient to justify its issue.

Herring agt. New York, Lake Erie and Western R. R. Co.

SUPREME COURT.

WILLIAM HERRING agt. THE NEW YORK, LAKE ERIE AND WESTERN RAILROAD COMPANY, THE FARMERS' LOAN AND TRUST COMPANY and HUGH J. JEWETT, receiver, &c., of the Erie Railway Company.

Creditor's action in equity-Legal remedies to be exhausted-Lien of creditor upon assets of a corporation—Receivership of a corporation pendente lite, its scope-Judgment sought to be impeached for fraud-Allegations of fraudPleading.

The complaint shows that the Atlantic and Great Western Railroad Company issued, in 1874, $1,000,000 of $1,000 bonds, maturing in 1904 (of which plaintiff owned thirty-six), on each of which was an agreement of the Erie Railway Company guaranteeing to the bearer “the due and punctual.payment of the interest thereon;" that no interest had been paid on these bonds since November, 1876; that the Atlantic and Great Western Company had become insolvent and its property and franchises had been sold under foreclosure, and the Erie Railway Company had been, in an action brought by the attorney-general in the name of the people, dissolved on the ground of insolvency; that the Erie Company's property had previously been sold to trustees on foreclosure; and afterwards, in pursuance of a plan and agreement, had been transferred to a new corporation, the New York, Lake Erie and Western Railroad Company, one of the defendants; and that at the time of the commencement of the Erie foreclosure action the Erie Company owned several millions of property not included in the mortgage foreclosed, which was sold under the foreclosure to the prejudice of the plaintiff and other unsecured creditors. The pleadings and judgments in both the foreclosure and people's Erie suits are set forth in the complaint. The plaintiff asserts that the Erie property, not included in the mortgage foreclosed, constituted a trust fund, to be applied to the payment of the interest on the Atlantic and Great Western bonds through the guaranty, and that the foreclosure proceedings, and all the proceedings in the people's suit, so far as they ratified the sale of the property not included under the mortgage, were fraudulent and void, and that the court rendering the judgments had no jurisdiction, and asks that all orders and decrees in those actions be set aside so far as they affect the property referred to, and that it be distributed among plaintiff, and those similarly situated, to the extent of the interest on these bonds: Held (on demurrer to complaint): 1. That plaintiff is not entitled to equitable relief because he has not exhausted his legal remedies against his debtors. 2. The alleged debtor corporations should have been made VOL. LXIII

63

Herring agt. New York, Lake Erie and Western R. R. Co.

parties to the action; and it is no sufficient answer that one is insolvent and the other dissolved, the default having arisen in 1876, and the Erie Company not having been dissolved until 1879. 3. The court had jurisdiction to render judgment in the people's suit and foreclosure action, and by the judgments in those actions the subject-matter presented in this action has been fully adjudicated; and as all these things appear by the plaintiff's complaint the conclusion follows that no cause of action is disclosed therein. 4. The receivership of Jewett in said two suits, as it existed before final judgment, was not of such a nature as to make it subject to the statutory provisions requiring notice to be given to creditors to present their claims, and it does not avail plaintiff, therefore, that no notice was given him in those actions.

Special Term, July, 1882.

DEMURRER to complaint.

Wm. W. McFarland and George F. Comstock, for demurrers. Gray & Davenport and Roscoe Conkling, for plaintiff, opposed.

VAN VORST, J.-The defendants have separately demurred to the plaintiff's complaint and have urged several grounds of demurrer. But from an examination of the complaint I do not think it necessary to go beyond the principal ground assigned, which is, that the complaint does not state facts sufficient to constitute a cause of action. The proper dispo sition of that question requires that I should state, with some detail, much of the pleading to which objection is made.

The plaintiff is the owner of thirty-six bonds, of the nominal value of $500 each, issued by the Atlantic and Great Western Railroad Company, in the year 1874, called western extension bonds, bearing interest at the rate of seven per centum per annum, payable semi-annually. The bonds themselves will mature on the 1st day of February, 1904. Upon each bond is written an agreement, made by the Erie Railway Company, which, at the time the bonds were issued and the agreement executed, was a corporation existing within this state. The agree ment is in these words: "The Erie Railroad Company hereby guarantees absolutely to the bearer of this bond, during its currency, the due and punctual payment of the interest thereon."