Putnam v. Hubbell (42 N.Y. 106, 1870)

Ingalls, J.

The referee, after finding the recovery of judgment by the plaintiff, and the issuing and return of execution thereon, the making of the assignment by Alfred Hubbell to Joseph Medbery and E.,Darwin Smith' for the benefit of his creditors, and the acceptance of the trust by the assignees, and the taking possession by them of a large amount of real and personal property and choses in action under such assignment, proceeds as follows: ‘‘ 12th. The fact that the said Alfred Hubbell being largely indebted' to the plaintiff and other persons, and unable to pay his debts, did, in the early part of the month of January, in the year 1849, and a shprt time before making the aforesaid assign ment, form a scheme to prevent his property from being fairly and promptly applied to the payment of his debts, and to delay, hinder and defraud the plaintiff and said other persons of their said debts against him. 13th. The fact that the defendant, Alriclt Hubbell, became a party to said, scheme of the said Alfred Hubbell, and in pursuance thereof, and with intent to delay, hinder and defraud the plaintiff and said other persons of their said debts, did, after the malting of said assignment and before the commencement of this action against the said Alriclt Hubbell, and principally during the year 1849, acquire title to several valuable parcels of real estate of the said Alfred Hubbell, situate in this State, for prices considerably below their actual value, and which parcels of real estate were owned by the said Alfred Hubbell at the time of his making said assignment, and the title to which passed under the same to the said Medbery and Smith. 14th. The fact that the defendant, Alrick Hubbell, has sold several pieces of said real estate of the said Alfred Hubbell, to which he, the said Alrick Hubbell, acquired title, as above stated, for large sums of money above those he paid for the same, and still owns and possesses other parcels thereof.” The referee fails to find any facts which indicate a fraudulent scheme on the part of Alfred Hubbell or Alrick Hubbell to hinder, delay or defraud the creditors of said Alfred. The mere finding that there was a scheme without stating in what it consisted, does not enable the court to determine anything in regard to it. It is hut a conclusion without facts to support it. The facts that Alfred Hubbell became largely indebted and unable to pay his debts, and made an assignment for the benefit of his creditors, and that he preferred some creditors in such assignment, dó not establish fraud. All these facts may exist without the slightest intention on the part of the debtor to defraud, hinder or delay his creditors. In what, then, did the scheme consist ? What did he do ? The report of the referee does not show. The assignment is unobjectionable on its face, and the assignees are reputable aud responsible men. I am unable to discover upon what ground the assignment could be set aside, or from what facts any fraudulent scheme could be inferred. In regard to the defendant, Alrick Hubbell, it is found that he became a party to such scheme, and that in pursuance thereof, he acquired title to several valuable parcels of land, at less than their actual value, which real estate was owned by Alfred Hubbell at the time he executed the assignment,- and the title to which passed to the assignees under said assignment, and that he sold said real estate at a price in advance of what he paid for the same. All such acts were justifiable in themselves, and should not be pronounced fraudulent, unless coupled with, other transactions of a fraudulent nature, connected with the sale and purchase of such real estate. The mere finding, that there was a fraudulent scheme, which neither the facts found by the referee,northe evidence sustains, amounts to nothing. The real estate of Alfred Hubbell was heavily incumbered by mortgages, and it is not pretended that they were without consideration, or otherwise fraudulent; and the real estate was sold under foreclosure of such mortgages, and purchased by Alrick Hubbell, at public sale, and paid for, so far as the evidence shows, out of his own money. The plaintiffs could have attended such sales, and prevented the sacrifice of which they complain, or purchased for their own benefit, but having chosen not to do so, and thereby allowed Alrick Hubbell to purchase, should be content. If any irregularity attended such sales, a direct application should have been made to the court to set the same aside, and order a resale. After Alrick Hubbell had fairly purchased such property, he had a right to dispose of it as he chose, even to giving it away. When the conclusion of a referee is wholly unsupported by evidence, this court will reverse. (Fellows v. Northrup, 39 N. Y., 117; Mason v. Lord, 40 N. Y., 477.) The judgment should be reversed, and a new trial ordered, with costs to abide the event.

Grover, J.

An appeal from the judgment to the Genera] Term is given in this class of cases upon both the law and fact. (Code, § 348.) Consequently it is the duty of that court to review questions of fact, and correct any error of the referee, in their determination, the same as questions of law. But no appeal upon questions of fact to this court is given therein. Such appeal is only given upon questions of law. Ilence questions of the latter character only can he reviewed here. From this consideration it is often insisted, and some countenance to the position has been given, in some opinions delivered here, that this court is in all cases concluded by the finding of the referee upon matters of fact, when the judgment has been affirmed and none of the findings of fact have been reversed by the General Term. This position is true as to such findings, in support of which any evidence was given authorizing them, irrespective of the evidence given in conflict therewith. This follows from want of power in the court to inquire into and determine the fact upon the weight of evidence, which clearly it cannot do, for the reason that no appeal can be taken to it upon questions of fact. But the finding of a fact, without any such evidence, presents a different question; a referee has no right to find a fact in favor of a party, in the absence of any proof tending to establish it, any more than a judge upon trial has under like circumstances to submit such question to a jury. If the judge should so submit it to the jury, he commits a legal error, which, upon the proper exception taken, may be corrected in this court. So where a referee finds a material fact, in the absence of proof tending to establish it, he commits a legal error which, upon the proper exception taken, may be reviewed in this court. Hence it follows in the present case, that such findings of fact by the referee, in support of which such evidence was given as would have authorized a judge to submit the question to a jury, had the case been so tried, must be assumed as true by this court; but such findings (if any) not so sustained are legally erroneous, and, if excepted to, may be here corrected. In the present case the assignees of Alfred Hubbell have appealed from the judgment, and insist that it is erroneous in declaring the assignment of Alfred Hubbell to them fraudulent and void as to his existing creditors. The judgment in this respect is correct, ii the fact found by the referee, that it was made by Hubbell with intent to hinder, delay, and defraud his creditors, is sustained. That is sufficient to avoid it as against the creditors, irrespective of the intention of the assignees in accepting the trust or their good faith in its execution. They are in no respect to be regarded as purchasers of the property from Hnbbell, and, consequently, the assignment to them cannot be sustained if Hubbell’s intention in making it was to defraud his creditors, although the assignees acted with entire honesty and good faith. The inquiry, then, is whether there is evidence tending to show a fraudulent intent in Hubbell in executing the assignment. An examination of the testimony in reference to this point has led me to the conclusion that there was such evidence. The absence of a schedule of the property assigned is a circumstance entitled to some consideration. The sale of his stock of goods to Bogers just previous to the execution of the assignment, and his continuing to conduct the business of dealing in the goods in the name of Bogers thereafter, is another circumstance tending to cast suspicion upon the l>ona fides of the assignment. The receipt by him of rent of some of the real estate assigned after the assignment is a like circumstance. The testimony justifies some suspicion as to the good faith of Hubbell in encumbering a portion of the real estate assigned, just previous to the assignment. These, together with some other circumstances, render it impossible for this court to say that the finding above specified was without any proper evidence sustaining it. We have seen that this court is not authorized to inquire into and determine the fact upon the weight of evidence. It follows that the judgment as to the assignees must be affirmed. This conclusion does not dispose of the case upon the appeal of Alrick Hubbell. The questions arising upon his appeal are of an entirely different character. He claims title to large portions of the real estate embraced in the assignment of Alfred Hubbell, which title was not acquired by him under the assignment, but by purchase upon execution, and mortgage foreclosure sales, made by virtue of judgments against and mortgages given by Alfred Hubbell prior to the assignment, and of one parcel purchased by another person and by him subsequently conveyed to Alrick. By the judgment, Alrick Hubbell is declared to hold all this real estate as trustee for the creditors of Alfred Hubbell, and, as such, accountable to them for the rents and profits thereof, and for all gains made upon such parcels as have been sold by him; in short, declaring that the creditors are entitled to this real estate, and that Alriek’s only beneficial interest therein is the right to be reimbursed for the sums paid upon its purchase for repairs, taxes,