This action was brought to set aside four judgments recovered against Tbe Evening Express Printing Company, together with tbe executions issued thereon, and tbe sales made thereunder, and to
It was further found that an action was brought by the attorney general of the State in the name of the people against the company on the 10th day of March, 1882, to wind up the affairs of the corporation on the ground of its insolvency, and an injunction was issued restraining all creditors of the company from beginning actions or from taking further steps to levy, seize upon or sell the property of the company; that the same attorneys appeared for the attorney general in this action that appeared for George Ellwanger in his action against the company; that the injunction order was served upon the City Bank and the defendants Hart and Miller; that upon an order to show cause why the injunction order should not be continued, an order was entered continuing the same until the Special Term, to be held in Rochester, on the 27th day of March, 1882; that on the tenth day of April thereafter final judgment was entered in that action in which the plaintiff was appointed the receiver of the corporation ; that prior thereto and on the eighth day of April, the defendants the City Bank, Hart, Miller and Ellwanger entered into an agreement in writing reciting the fact that it was claimed that the first three judgments obtained against the company were invalid, and in consideration of the promise that the defendant George Ellwanger would not personally contest the validity of the executions issued upon those judgments, they agree that a sale of the property levied upon should take place under the executions, and that there should be a pro rata distribution of the proceeds of the sale in the payment of their judgments; that the sale took place in accordance with such agreement, and that at the time of making this agreement the defendant Ellwanger was aware and understood the facts under which the City Bank and the defendants Hart and Miller had obtained their judgments, and that there was a large number of other creditors of The Express Printing Company at the time to whom a large amount was owing.
The trial court found that the transaction was in violation of 1
The statute under which a recovery is sought in this action provides that “ whenever any incorporated company shall have refused the payment of any of its notes, or other evidences of debt in specie or lawful money of the United States, it shall not be lawful for such company or any of its officers to assign or transfer any of the property or dioses in action of such company to any officer or stockholder of such company, directly or indirectly, for the payment of any debt; and it shall not be lawful to make any transfer or assignment, in contemplation of the insolvency of such company, to any person or persons whatever, and every such transfer and assignment to such officer, stockholder or other person, or in trust for them or their benefit, shall be utterly void.”
It is claimed that the arrangement under which these judgments were obtained, and the agreement between the judgment-creditors under which the property was sold, operated as a transfer of the property of the corporation to these parties by the officers thereof in contemplation of insolvency, in order to give them a preference over the other creditors of the corporation. (Kingsley v. The First National Bank of Bath, 31 Hun, 329.)
It will consequently be observed that the vital question of fact in the case is as to whether or not the agreement between Upton and Tracy, the secretary and treasurer, was as found by the court. For the purpose of establishing this fact the evideuce of Upton was read which had been taken upon a proceeding before Referee Foote.
But it is urged that his evidence was competent under the common law. The rule at common law is, in substance, that if a witness has been examined in a legal proceeding between the same parties, involving the same questions, so that the counsel for either party could have the right to examine and cross-examine, then the evidence of such a deceased witness may be used. (1 Phillips on Ev., 400 ; n. 110.) So far as appears from the record of the proceedings before Foote, the defendants Hart and Ellwanger were not parties to that proceeding, and consequently cannot be bound by the testimony given thereon. But it is claimed that the proceeding instituted on hehalf of the City Bank was for their benefit in part, they having contributed the funds in part through the City Bank to continue the issue of the paper, that therefore they were parties in interest, if not parties appearing upon the record. If, for the sake of the argument, we concede that they were in fact parties to the proceeding, still there is a difficulty about this evidence being competent as against them. In order to make it competent it must be given in a legal proceeding between the same parties, involving the same questions, so that counsel for either party may have the right to examine and cross-examine. As we have seen, the claim presented on behalf of the bank against the receiver was for money advanced to carry on the paper after the levy had been made. The question at-issue upon this trial, and upon which this evidence was received, is as to whether or not there was a fraudulent conspiracy between Upton, representing the City Bank, and the defendant Hart, with a director, the secretary and treasurer of the company, by which these judgments should be obtained surreptitiously, to the end that the property of the corporation should be transferred to them through a levy under an execution. The questions involved are not- the same, but are entirely different, one having no bearing upon the other. It, therefore, does not appear to us that the evidence was competent under the Code or the common law rule.
Again, it appears that the defendant Hart subsequently presented a claim against the receiver of the City Bank for his share of the funds contributed through the bank to carry on the paper, and that this claim was referred by the court to Mr. Benton, and upon the
In the case of Blanchard v. Hodgkins (62 Me., 120) it was held that the statement of a witness made at a prior hearing of the same case which the party was at liberty to contradict, he being entitled to be sworn as a witness in the case, might be received as tending to show an implied admission that the bargain was as stated by the witness. But at common law we do not understand that the' testimony of -witnesses given on behalf of a party upon one trial could afterwards be used against the party by whom it was adduced on another trial. (See 2 'Wharton’s Law of Evidence, § 1139, and authorities there cited.)
In the case of Wilkins v. Stidger (22 Cal., 231), it was held that a party to an action is not bound by or held to admit as true in another action, statements made by his witnesses during the trial of a cause, because he does not deny or contradict them at the time.
In the case of Ayres v. Wattson (57 Pa. St., 360), it was held that a party who calls a witness is not estopped by a statement by the witness which is immaterial to the issue and which cannot affect the result.
As to the evidence under consideration, it was read on behalf of the defendant Hart upon the hearing of a controversy between himself and the receiver of the City Bank. The plaintiff in this action was not a party to or in any wise interested in that proceeding. It was consequently between other parties. The claim made by Hart against the receiver of the City Bank was, as we have stated, for moneys advanced through it to continue the printing of the paper. The issue involved was different and had no connection with the question of the conspiracy complained of in this action. It furthermore appears that it was not read as evidence in chief for Hart, but was read to contradict evidence that Upton had given upon that hearing. It consequently does not appear to us that there was such an adoption or assertion that it was true, as to make it competent, evidence against the defendant Hart in this action.
It is claimed, however, that if the evidence of Upton was improperly received, still there should not be a reversal, for the reason that there is other evidence to sustain the finding. The other evidence upon the subject was given by Tracy. He was a stockholder, a director and the secretary and treasurer of the corporation at the time it was dissolved by the judgment of this court. He was, therefore, an interested party, within the rule that requires the submission of his evidence to the jury or the court charged with the duty of determining the facts. His credibility being involved, this court on review cannot say, as matter of law, that his evidence should be taken as true.
The plaintiff has appealed from so much of the judgment as dismisses the complaint against Hobert F. Atkinson, the receiver of the City Bank. The case was not served upon the attorneys for Atkinson, and consequently this appeal must be determined upon the judgment-roll. The court has found as facts that the property
“ Section 383. Within three years. 4. An action against an executor, administrator or receiver, or against the trustee of an insolvent debtor, appointed as prescribed by law, in a special proceeding instituted in a court or before a judge, brought to recover a chattel or damages for taking, detaining or injuring personal property by the defendant, or the person whom he represents.” (Sec. 383, sub. 4.)
On referring to the pleadings, it appears to us that this action is for something more than damages, for taking, detaining or injuring personal property. It is an action brought to set aside and declare void the judgments referred to, with the executions issued thereon and the sale made thereunder. The judgments, executions and sale are all regular, so far as the record discloses, and it is only because of facts alleged to exist dehors the record that their invalidity can be established. The power to go back of the record and to decree these judgments to be void is vested in a court of equity, and it was necessary that at least the sale should be adjudged fraudulent and void as a prerequisite to the granting of the other relief prayed for. The statute to which we have alluded does not prohibit a creditor from bringing action against an insolvent corporation and prosecuting the same to judgment, or from issuing execution when judgment is obtained and selling sufficient property to satisfy the same. It is the transfer of the property by the officers of the corporation m contemplation of insolvency, or acts which in effect accomplish that result, which is prohibited. The action is, therefore, one in equity, to have the judgments referred to with the executions and sale adjudged void, and to recover the value of the property of the
But even if it were an action at law to recover damages for taking, detaining or injuring personal property, pm-e and simple, we should still be of the opinion that’the statute of hmitations had not run at the time this action was commenced. As we have seen, the three years had only run from the time of the sale of the property on the executions. Three years had not expired after the appointment of Atkinson as receiver. The cause of action against him as receiver could not well accrue until his appointment. To hold that actions under this subdivision of the section might accrue before the appointment of the receiver would, in many instances, make the appointment of a receiver a bar to a right of recovery. As, for instance, in an action to recover damages for an injury to property, the limitation is six years. (Sec. 382, sub. 3.) After three years has expired and whilst there still remains three years within which to bring the action, a receiver is appointed of the property of the person charged with the injury to the property. So also in the case of a trustee of an insolvent debtor, which is included in the same subdivision. An insolvent debtor has but to make an assignment to a trustee for the benefit of creditors in order to cut, off and forever bar all claims upon which three years has already run after the right of action thereon accrued. It does not appear to us that such a result was intended or that such a construction should be given to these provisions. The three years within which the action must be brought as against the receiver means three years after the cause of action accrued against him as such. This subdivision of the Code is new and so far as our examination has extended, no authority has been found in which this precise question has been passed upon.
In the case of Losee v. Bullard (79 N. Y., 404-406), the action was brought against a trustee of a manufacturing corporation. .Rappalo, J., in delivering the opinion of the court, says: “ This action should have been brought within three years from the time the cause of, action against him accrued.”
In the case of Duckworth v. Roach (8 Daly, 159,) it was held that a cause of action against the trustees of a corporation for failure
Judgment reversed and new trial ordered, costs to abide event.