Bostwick v. . Menck

The finding that the four notes given by Beiser to Menck, the payment of which was preferred in the assignment, were fictitious, made the assignment fraudulent and void as to the creditors of Beiser, and sustains the judgment in this respect The rulings as to the competency of evidence upon the other issues affecting the validity of the assignment did not prejudice the appellant, as the assignment must be adjudged void as to creditors, irrespective of these issues; the exceptions taken to these rulings need not, therefore, be examined. The appointment of the plaintiff as receiver of Beiser, made in the supplemental proceedings under the Code, vested in him the legal title to all the personal property of Beiser. (Porter v. Williams,9 N.Y., 142; Barker v. Torrance, 31 id., 631.) Such appointment conferred upon him the further right to prosecute such action, to set aside all transfers of property made by Beiser to defraud his creditors, as the creditors themselves could have maintained. (See cases supra.) As to these principles, the counsel for the parties do not differ; but the question in this case is whether the plaintiff, as receiver, can recover the entire amount of property so transferred, although such amount shall largely exceed the judgments of creditors in whose behalf he has been appointed receiver, or whether his right of recovery is restricted to an amount sufficient to satisfy such creditors, together with the costs and expenses of the proceedings. This is an important question in the present case, as all the demands of creditors in whose behalf the plaintiff is acting, amounts only to a few hundred dollars, while the judgment appealed from amounts to about fifteen thousand dollars. The Code, § 298, provides that only one receiver of the property of the same judgment debtor shall be appointed. From this it is sought to deduce an argument that all the property transferred by the debtor in fraud of the rights of creditors may be recovered in the same action, however much the recovery may exceed the amount of the debts, for the collection of which the receiver has been appointed. It is insisted that the receiver has the right and that it is his duty to recover all the assets transferred by the debtor in fraud of the rights of creditors and hold the same for distribution to those entitled, under the order of the court. But the question is as to the right of the receiver to collect the property. He acquires no right to the property by succession to the rights of the debtor, for the reason that the transfer is valid as against the debtor, and cannot be set aside by him as the debtor's successor; no rights other than those of the debtor are acquired. He does not acquire the legal title to such property by his appointment. That is confined to property then owned by the debtor, and the fraudulent transferree of property acquires a good title thereto as against the debtor, and all other persons except the creditors of the transferror; the only right of the receiver is, therefore, as trustee of the creditors. The latter have the right to set aside the transfer and to recover the property from the fraudulent holder, and the receiver is, by law, invested with all the rights of all the creditors represented by him in this respect. It is clear that the right of the receiver representing the creditors, and acting in their behalf, is no greater than that of the creditors. What, then, are the legal and equitable rights of a creditor as to property fraudulently transferred? Manifestly only to treat as void and set aside such transfer, so far as shall be necessary to satisfy his debt and costs. He has no right to interfere with the transfer beyond this. When his debt and costs are paid, the transfer is as valid as to him as to other persons. If this be the extent of the rights of a single creditor, and all that can be conferred upon a receiver appointed by law to act as his trustee, it is clear that the right is not enlarged by the appointment of the same person as receiver for several creditors. The receiver is then trustee for all, clothed with power to set aside transfers, fraudulent as against the demands represented by him, only to an extent sufficient to satisfy such demands and costs. When this is done, his duties, and, consequently, his powers and right to act further in behalf of the creditors, cease as to property that has been transfered by the debtor. As to property owned by the debtor at the time of the appointment, we have seen that the rule is different; that, as to such property the appointment vests the legal title to the whole in the receiver, and he may, consequently, assert his title thereto without regard to the amount of the judgments upon which he has been appointed. If the judgment is only $100, and the debtor has choses in action to the amount of $10,000, the receiver may collect the entire amount unless the debtor shall, by application to the court, stay his proceedings. Those having in their hands property owned by a judgment debtor at the time of the appointment of a receiver of his property must account to the receiver therefor; they have no adverse interests of their own to protect. Not so as to those who have acquired title good as against the debtor and all others, except creditors. They have the right to retain the property until the superior right of creditors to divest them of it is shown; this right of creditors they have the right to litigate in respect to each creditor. It may happen that when a receiver has been appointed in behalf of several creditors, one may have estopped himself from questioning the validity of a transfer by a debtor. The receiver could not set aside the transfer in behalf of such a creditor, and could not, therefore, recover in his behalf, but only in behalf of those not estopped. But the same person may be appointed receiver after he shall have commenced an action by virtue of a previous appointment; in such a case he must commence a new suit to enforce the right so acquired. There is no greater incongruity in this than in the commencement of separate suits by several creditors against a fraudulent assignee to enforce their respective rights. My conclusion is, though formerly different, that the plaintiff was only entitled to judgment for the amount of the Dolan judgment upon which he showed he had been appointed receiver, and the expenses of that proceeding and costs. This renders it unnecessary to examine the exceptions taken upon the accounting before the referee, as the judgment will not be affected by any such question. The judgment appealed from must be reversed and a new trial ordered, unless the plaintiff shall stipulate to take judgment for the amount of the Dolan judgment and costs incurred upon the supplemental proceedings thereon, with costs, and, in that event, affirmed for that amount and reversed as to the residue.