source: Caselaw Access Project

author: Bosworth, J.

license: Public Domain

text:
    Griffin, Respondent, v. Cranston, impleaded with Judson, et al., Appellants.
    In an action by a judgment and execution creditor of one of two partners, to set aside a transfer of his interest in the property of the firm to his co-partner, as being a fraud upon the individual creditors of the transferring partner, the question, whether such transfer is made with intent to defraud is one of fact, and not of law.
    When such an action has been tried by the Court without a jury, and the transfer has been set aside as a fraud upon such individual creditors, and the defendant appeals, and the case, as settled, purports in terms, to contain a statement " of the facts and conclusions of law” found by the Court, and no conclusions of law are stated, except such as are affirmed in the judgment or order entered on the decision of the Court; then the conclusions of law so affirmed, should be regarded as the Court’s conclusions of law upon the particular facts so stated to have been found. The only conclusions stated in such a judgment or order, which can be, properly, treated as conclusions of fact, and as intended to have been so stated, are such, as when found at all, must, from their nature, have been necessarily found as facts.
    The Court, on the trial of such an action, should, by its decision, dispose of all questions of right and liability. An order entered on the decision of the action, which disposes of only some of the questions raised by the issues, and orders a reference, expressly reserving the determination of other questions until the coming in of the report of the referee, is not an order, on an appeal from which, any decision actually made on the trial, can be reviewed, except the competency of the Court to direct such an inquiry by the referee, as the order provides for.
    When such a transfer by one partner to the other, is made on an undertaking of the latter to pay all the partnership debts, and also, to pay liabilities created by the partner, (who so transfers), in the firm’s name, for his own benefit, and the interest so transferred is worth less than the amount of his part of the debts so assumed to be paid, and parts of the transferred property have been so applied, and the residue is being, properly, so applied, the individual creditors of the debtor-partner cannot, in the nature of things, be defrauded, by such a transfer. Nothing is transferred to which they have any right. On such a state of facts, an actual intent to defraud, should not be found, except upon the most clear and satisfactory evidence of such an intent.
    When, at the time of such a transfer, three other papers are executed, one being a dissolution of the firm, and one being a paper stipulating to hire the assigning partner and his wife, board them, and pay them $6000 per annum, if the profits of the future business amount to so much, and the other is a mortgage by the assigning partner of individual property to secure the payment of $26,000, stated in such mortgage to be due; such papers alone, do not demonstrate that the transfer was made with a fraudulent intent. /
    The fact, that the instrument of transfer does not disclose its true consideration, will not preclude the transferee from showing what the consideration was, and if it be made to appear that it was sufficient, and that the transaction was honest, it will be upheld. It will not be held fraudulent merely because the written papers do not state the consideration.
    The agreement for hiring the assigning partner and his wife, when, upon the other evidence, the transaction appears to be honest, and upon full consideration, will not necessarily establish a fraudulent intent, when by the terms of such agreement the transferee is not to pay any thing for their future services besides boarding them, unless future profits are earned, and their services are clearly worth more than their board. There is an obvious distinction between such a transaction, and the case of a debtor assigning his property Upon terms unjust and inequitable as to his creditors, upon the condition of obtaining wholly, or in part, a future support out of the assigned property, as a part of the consideration of its transfer.
    Such a mortgage is not void upon its face, nor do its terms demonstrate a fraudulent intent. Upon the question of the intent with which it was made, the defendant may prove any facts that a Court of Equity would allow to be alleged and proved in an action to secure results not provided for by its terms, but on settled principles held to be consistent with it And if on the whole evidence, it appears to have been made with an honest intent, a transfer of other property by another instrument of the same date, will not be held fraudulent merely because such mortgage, does not on its face disclose the precise debts or liabilitiés it was made to secure.
    Papers of the same date, and between the same parties, when they do not refer to each other, nor in fact relate to the same subject matter, are not, necessarily, to be deemed part and parcel of the same transaction, in such sense that if one cannot be sustained as against the creditors of one of such parties, the others must, as a matter of course, be held fraudulent, or void.
    (Before Duer, Bosworth and Slosson, J. J.)
    Heard, March 17;
    decided, May 20, 1857.
    This action comes before the General Term on an appeal by the defendant, Cranston, from a judgment or order made therein, dated October 11, 1856, upon a trial of the action which was had in January , 1856, before Mr. Justice Slossoh, without a Jury.
    It was commenced on or about the 24th of May, 1855, by Edmund Griffin, as plaintiff, against Curtis Judson, Hiram Cranston, and George Slater, as defendants.
    The complaint alleges the recovery of a judgment by the plaintiff, against Judson, on the 19th of May, 1855, for $11,041,97 in this court, the issuing of an execution thereon, on that day, to the sheriff of the city and county of Hew York, the return of the same wholly unsatisfied, that the judgment is wholly unpaid, that Judson and Cranston, prior to December, 1854, were joint owners of leases of premises known as the Hew York Hotel, originally executed by M. Morgan and H. W. Field to John B. Monnot, reserving a yearly rent of $26,000, the said leases being for the term of ten years, from October, 1844, which leases Mon-not assigned to Judson and Cranston, in Feb. , 1854, and they had received from Monnot’s said lessors, a written refusal of a new lease for the further term of five years, at a rent of not more than $35,000.
    Judson and Cranston were also joint owners of the furniture and fixtures of said hotel, and of a large stock of wines and liquors, and were keeping the said hotel. It was a first-class stand for business, their business was large and its profits very great, and the lease and right of renewal, and the good will of the business, were worth at least $110,000.
    Judson, prior to December, 1854, became embarrassed, and to protect the property from, and to hinder, delay, and defraud his creditors, and colluding with Cranston to that end, by a deed of assignment, dated the 5th of December, 1854, transferred to Cranston all of Judson’s right, title, and interest, in and to the lease of said premises, and the said privilege of renewal thereof, and the furniture, fixtures and stock, and the good will of the said business of hotel-keeping at the same place, without any consideration, or for one merely nominal.
    There was an agreement between them that, if Judson arranged with his creditors, he should be put in statu quo, and the assignment be cancelled, and if a new lease should be got in the meantime, one half thereof should be for his benefit. In December, 1854, Cranston got a new lease for five years, at a yearly rent of $35,000. He is now carrying on the business and it is profitable. George Slater was and is a secret partner, but the extent of his interest is unknown to the plaintiff. It prayed a judgment enjoining each of the defendants from disposing of any of said property, that a receiver of Judson’s interest be appointed, with power to convert it into money, and to collect what was due to him, and ordering Cranston and Slater to account for the profits since said deed of assignment, and that said deed be adjudged fraudulent and void, and that Judson’s interest in the whole be disposed of and applied on plaintiff’s said judgment. It was verified the 24th of May, 1855.
    The answer of Cranston (which was verified the 15th of Sept’r, 1855), admitted the recovery of the judgment, but stated that, it was confessed on the 19th of May, 1855, to enable the plaintiff to bring this action, and by collusion with Judson, and to extort money from Cranston in order to quiet his possession. It controverts the issuing and return of the execution.
    It admits, that prior to December, 1855, he and Judson owned the unexpired term of a lease of ten years, from the 1st of October, 1845, and the furniture and fixtures of said hotel, and were engaged in the business of keeping it, but denies that Cranston had obtained any written or other refusal of a new lease.
    It avers, that in or about November, 1854, while he and Judson were keeping said hotel as partners, under the firm name of Judson and Cranston, he discovered that Judson had, fraudulently, and without his knowledge, or authority, or consent, used the funds of the firm, and created debts in its name, for Judson’s benefit alone, to an amount exceeding his interest in all the said property, and that a large amount of the debts and liabilities thus fraudulently created, were secured by a mortgage of said firm’s property, and that Judson was insolvent.
    That the firm could not pay the liabilities thus created, and about maturing, without pecuniary assistance. After making this discovery, and on the 27th of November, 1854, he commenced a suit in this court against Judson, based upon the frauds and facts so discovered, to obtain a dissolution of the firm, an accounting, and an injunction, and obtained a temporary injunction, prohibiting Judson from using the name or property of the firm, and an order to show cause why it should not be made absolute!
    After the injunction was served, negotiations were entered upon between him and Judson, and their counsel, for a settlement. These resulted in an arrangement whereby the firm was dissolved, and Judson assigned to Cranston all his interest in the business and effects of the firm, and Cranston assumed to pay the debts of the firm, and “ certain specified debts to a very large amount,” which Judson had contracted in the firm’s name, but solely for his own benefit, and which as between him and Cranston, it was his duty to pay-. In pursuance of this arrangement, Cranston continued the business, and procured loans from Ms friends to pay the debts of the 'firm, and those fraudulently contracted by Judson, and has paid many thousands of dollars of the same.
    Although the business prior to the dissolution had been profitable, yet Judson, prior thereto, had applied the funds of the firm to his own use, and the amount so drawn and used by Mm, together with the liabilities he had contracted for Ms own benefit in the firm’s name, and which Cranston on the dissolution agreed to pay, as before stated, exceeded Judson’s capital and his part of the profits, and on an accounting, he would be largely in debt to Cranston, “ and to secure such indebtedness as should, on such accounting, be found to exist, the said Curtis Judson, at the time of said dissolution, executed to this defendant a mortgage for $25,000, on certain personal property of said Judson, viz: the' furniture of the hotel known as the Brevoort House, in the city of Mew York.”

      It denies that the lease and privilege of renewing it, and the good-will of the business, were worth anything to Judson, in the embarrassed condition of the business and of Judson, when the firm, dissolved.
    It denies that the deed of assignment of the 5th of December, 1854, was made for any such purpose, or with any such motive, as is alleged, and avers that it is incorrectly described, and alleges it was made for full value.
    It alleges that, when that assignment was made, Cranston undertook to prosecute the business'and obtain, the assistance of his friends, with a view to pay the firm’s debts and those fraudulently contracted by Judson,. which Cranston assumed to pay, and it was an essential part of the whole arrangement that Judson should so assign to Cranston, and for the benefit of the latter, and such Undertaking and assumption were a good consideration, and saved the property from sacrifice and loss.
    That such assignment was made and taken in good faith, and was absolute, and there was no such agreement or understanding as the complainant states, as to cancelling it and restoring Judson to his former position as a partner.
    After the assignment had been made and consummated, and not before, Cranston negotiated for and obtained a new lease for three years from the first of October, 1855, at $30,000 for the first year, and $33,000 for each subsequent one. Judson never had any interest in the new lease or in the business, after he assigned as aforesaid. Slater was never a partner with Cranston, either secret or otherwise. The pleadings and evidence, verbal and written, make a case of 226 pages. The printed case, in its narrative of the proceedings had on the trial of the action, states that Judson was sworn as a witness for the plaintiff, against the objection and exception of the defendant, that he was incompetent.
    Cranston was offered as a witness in his own behalf, and excluded on the ground that he was not competent, to which decision Cranston’s counsel excepted. The printed case states, that “the Court found the following facts and conclusions of law

      “Special Term, April, 1856, Slosson, Justice.

      “ The following facts are established by the evidence:
    On the 25th of February, 1854, Judson and Cranston entered into co-partnership under written articles of that date, “for the purpose of purchasing the lease, furniture, good-will, and fixtures of the Hew York Hotel,” and for the purpose of carrying on the business of keeping said hotel, under the firm name of Judson & Cranston, the partnership to commence at the above date and to continue until the expiration of the term of the lease, then held by Monnot, “ and until the expiration of any term or time for which the said parties or either of them might thereafter obtain a lease of said hotel.”
    (Here, a portion of the finding that the two were to contribute equally, &c., is omitted, as not being material to any points decided; and other omissions, of a similar nature, are made in the remaining portion of the findings.)
    “ The lease held by Monnot expired on the 1st of October, 1855.
    “The purchase was made of Monnot in March, 1854, for $105,000. Of this sum $40,000 was paid in cash during the months of March, April and May, and the balance secured by their notes at different dates, except $5,000, which was to stand' as a temporary loan.” * * * *
    “At the time of their purchase from Monnot, Judson and Cranston executed a mortgage on the entire hotel property to Field and Morgan, the landlords, to secure the rent of the hotel—some $26,000.
    “ On the 23d of the same month (March, 1854), they executed a mortgage on the same property to Bininger and Clark, to secure them as endorsers on four notes, amounting to some $11,000.
    In May following a mortgage on the same property was also executed by them to Samuel F. Tiffany, to secure their notes and acceptances, held by Tiffany.
    About a year before the partnership with Cranston, Judson had contracted to hire the Brevoort House, another hotel.
    It is, perhaps, doubtful whether Cranston knew of this when he formed his connection with Judson. He had no interest whatever in the Brevoort House.
    From the very commencement of the partnership, Judson appears to have been a borrower of money, and as early as July, 1854, was considerably embarrassed in his pecuniary matters.
    He used a considerable portion of the funds and securities of the hotel in matters of his own, having no connection with the Hew York Hotel.
    The entries of these transactions were not, at least all of them were not, entered on the books. He also raised money on paper, created by him, in the name of the firm, to the amount of $25,000, which he appropriated to his own purposes, and of which entries were not made on the books.
    The funds and credit of the firm of Judson and Cranston, which were used by Judson for his separate business, were so used by him without the knowledge or consent of Cranston at the time.
    He also borrowed moneys of various parties, ostensibly in some instances at least for the use of the firm, which he seems to have in like manner misappropriated.
    In the latter part of the summer of 1854, Judson furnished and stocked the Brevoort House, for which he incurred liabilities to a very great extent, and as the evidence justifies me in believing, appropriated to this purpose a large amount of the moneys raised on the paper improperly created by him in the name of the firm.
    The Brevoort House was opened in September, 1854.
    In the early part of September, 1854, Judson applied to the present Judge Whiting, to become an endorser on the paper of Judson and Cranston, and to secure him, a mortgage was executed to him by them upon the furniture of the Hew York Hotel, and which was in substance expressed to be a security for any endorsements which Whiting had made, or should thereafter make, for Judson and Cranston, or either of them; and it was provided that on the failure of those parties to pay any one note thus endorsed, all the endorsements were to be considered as due, and Whiting was to be at liberty to foreclose. This mortgage as originally drawn, covered only such notes as should be drawn in the name of the firm, and was altered so as to. embrace those drawn by either of the parties.

      The mortgage was executed by Cranston while he was sick, at the request of Judson, who represented to him that it was intended to secure Whiting, as an endorser on certain notes of the firm to a large amount, at the Central Bank, on which one Fowler was an endorser, the bank requiring another name in addition to, or in substitution of Fowler. Whiting had consented to become endorser on condition that the paper was to be used at the Central Bank, and he endorsed, at various times, down to the 5th of December, to the amount of $19,500. Some $5,000 of the notes endorsed were in Judson’s individual name.
    The paper thus endorsed, was not however, in fact, used by Judson at that bank, at least not all of it.
    A portion of the avails of the notes were used by Judson for the hotel, and a portion for his private purposes.
    As a further security to Whiting, Judson gave him individually, a confession of judgment, which was not to be entered up unless Judson became embarrassed.
    In November, 1854, Cranston becoming alarmed at the financial condition of the hotel, and having ascertained that Judson had used the name of the firm, in creating liabilities, for his own purposes, commenced an action against him for the dissolution of the partnership, an account and a Receiver, and on the 27th of that month served an injunction, restraining him from further interference with the affairs of the firm.
    This proceeding led to immediate negotiations between the parties, which resulted in an arrangement, consummated on the evening of the 5th of December, by which the partnership was voluntarily dissolved, and Judson’s entire interest in the hotel transferred to Cranston.
    It is this transaction which is sought to be impeached by the present suit.
    The transaction itself was evidenced by the following papers and instruments, all bearing date December the 5th, 1854, and all executed, signed, and delivered, at the same time.
    1. A memorandum of the dissolution of the firm, and that the business would be settled by Cranston alone, who was solely authorized to sign the name of the late firm in liquidation.
    2. An absolute assignment under seal, by Judson to Cranston of all the former’s right, title, and interest, in and to, all the property and effects of the firm, of every sort, kind and description. *******
    “3. An instrument or deed poll under seal, whereby Judson acknowledges himself to be indebted to Cranston in the sum of $25,000, and for the security of said sum, thereby mortgages, sells, and assigns to the said Cranston, all his property, of every description, situate, lying and being, in the Brevoort House,” ¿i0_ * * * * *
    “4. An instrument not under -seal, whereby without any previous recital, Cranston agrees to employ Curtis Judson and his wife, in the Hew York Hotel, for and during the term of the lease thereof owned by said Cranston, and for any new term said Cranston may procure,” &c. * * *
    (These four instruments, which are not copied into the statement of facts found, read as follows, viz:
    1. Dissolution,
    “ The co-partnership lately existing between the undersigned, under the firm name of Judson & Cranston, is dissolved. The business will be settled by Hiram Cranston alone, who. is solely authorised to sign the name of the late firm in liquidation.

      “ Curtis Judson.
    “ Hiram Cranston.
    “ Dated Hew York, Dec. 5th, 1854.”
    2. Deed of Assignment.

      “ For and in consideration of the sum of one hundred dollars, to me in hand paid by Hiram Cranston of the city of Hew York, I do hereby sell, assign, transfer and set over to the said Hiram Cranston, all my right, title and interest, in and to all the property and effects of the firm of Judson & Cranston, of every sort, kind and description.
    “ In witness whereof I have hereunto set my hand and seal, at the city of Hew York, the fifth day of December, one thousand eight hundred and fifty-four.
    “ Curtis Judson, [L. S.]
    “ Sealed and delivered in ) the presence of f
    “H.F. Clark.”

      3. Deed Poll, or Mortgage, for $25,000.
    “ Know all men by these presents: That I, Curtis Judson, of the city of New York, acknowledge myself to be indebted to Hiram Cranston of said city, in the sum of twenty-five thousand dollars, and for the security of said sum I do hereby mortgage and sell, and assign to the said Cranston, all my property of every description, situate, lying and being in the Brevoort House, corner of Eighth Street and Fifth Avenue, in the city of New York; and I do hereby authorise and empower the said Cranston to take possession of said property and effects, and sell the same, and appropriate the proceeds of such sale to the payment of said debt, which is hereby acknowledged to be due.
    “ In witness whereof I have hereunto set my hand and seal, at the city of New York, this fifth day of December, 1854,
    “Curtis Judson, [L. S.]
    “ Sealed and delivered in) the presence of
    “H. F. Clark.”
    4. Agreement, for Services of Mr, and Mrs. Judson.
    “ H. Cranston agrees to employ Curtis Judson and his wife, • in the New York Hotel, for and during the term of the lease thereof owned by said Cranston, and for any new term said Cranston may procure; and as a compensation for their services said Cranston agrees that Mr. and Mrs. Judson and family, in consideratibn of the services of the said Judson and wife, to be rendered to the said Cranston, in such manner as he shall direct, and of the sum of one dollar, shall be permitted to occupy the rooms at present occupied by them in said hotel, and to have their board therein, and in addition thereto, that Mrs. Judson shall receive as a compensation for her services, a share of the profits of the business, equal to and not to .exceed the rate of $5,000 per annum; such profits to be ascertained at the end of said term and not before, and to be determined by the accounts of the hotel kept in the office, to be ascertained and reported by the book-keeper. Said Cranston does not guaranty that there shall be any such profits, nor are the said Judson and wife, or either of them, to have any right to an account of profits of the business, for the purpose of determining the amount of compensation to which said Mrs. Judson is so entitled, until the expiration of said term.
    “Mr. Cranston does absolutely engage that so long as he remains the proprietor of said hotel, said Judson and family shall be permitted to occupy their said rooms and have said board; and in case of a voluntary sale of the said hotel properties by said Cranston, he engages to require the purchaser from him to enter into an engagement with Mr. Judson, similar to that hereby made, and upon such engagement being made by such purchaser, this agreement becomes at once void. But in the event that said Cranston shall be forced, by bankruptcy or insolvency, to give up the hotel, this agreement shall become void and of none effect immediately upon the departure of said Cranston and family from said hotel.
    “Dated New York, December 5,1854.

      “Witness: )
    “H. F. Clark. f
    “Hiram Cranston, “Curtis Judson, “Amanda. E. Judson.”
    The statement proceeds thus:
    “ The condition of the affairs of Judson and Cranston, and of Judson personally, at the period of this transaction was as follows. Judson individually was indebted on account of liabilities for the Brevoort House to the amount of $74,996,70 or thereabouts, of which a little over $12,000 was falling due in December, 1854 (the month of the transaction in question), and the balance, with -the exception of some accounts, of various amounts, amounting to about $2,500, would mature in different proportions in nearly every month of 1855, and down to as late a period as February, 1856.
    Up to this time Judson- had paid all his liabilities for the Brevoort House at maturity.
    The value of the property of the Brevoort House, which had cost some $85,000, apart from any good will which it may have had, was for the purpose of a sale very much below the amount of the liabilities incurred therefor. It was also heavily encumbered by mortgages.
    Judson was also largely indebted, and under contingent liabilities to others for moneys borrowed, and for guaranties entered into for Mm, and among others, the plaintiff in this present action, to the amount of some $8,000 cash. The whole amount of such liabilities exceeded $50,000.
    Apart from his interest in the two hotels, Judson had some other property, real and personal, but all of it encumbered or hypothecated to nearly its full value. On the 5th of December, if forced to a settlement with his creditors, he was individually insolvent.
    The above is exclusive of his liability to Cranston in respect to the obligations created by Mm in the name of the firm for Ms private purposes, and amounting to $25,000, as then ascertained.
    There does not appear to have been any actual judgment existing against Mm on the 5th of December, except that confessed to Whiting, and a similar one to Slater, confessed long previously, but for what amount does not appear.
    The condition of the New York Hotel was as follows:
    The property, exclusive of the value of the good will of the establishment, and consisting of furniture, stock, cash, and outstanding bills, after a liberal allowance for wear and tear, and bad debts, amounted (according to the valuation thereof furnished by Cranston on the trial), to $132,354 03. There had been some additions made to the furniture since the purchase in the spring, amountmgin all to about $8,000, and the old furniture had been repaired, so that it would not be unreasonable to add somewhat to the above total of property, but it is taken at that amount as the one fixed by Cranston himself.
    The debts and liabilities of the firm, exclusive of the $25,000 liabilities, created by Judson, m its name, for his own private benefit, amounted to $98,334 11.
    The difference between this amount and the amount of the property, is $34,020, to one half of which, or $17,010, Judson would be entitled, on the supposition contended for, by defendant, on the trial, that Cranston assumed the payment of the $25,000 liabilities above mentioned.
    If, however, he did not assume the payment of these liabilities, and such I hold to be the fact, then the account would stand thus: on the assumption that the figures of the book-keeper were correct.
    . The balance against Judson, made up to the 31st of December, by Brown, the book-keeper, charging him with those liabilities, was $13,456 19.” ********
    “ In the above statement of assets is not included the value of the good will of the establishment. This included the value of the chance of a renewal of the lease, which was one of the inducements to the partnership, and as to creditors as well as between the partners themselves must be treated as a subject of value.
    As evidence of the value of the good will, it is shown that the profits for the time they were in partnership, had been very large—and for the subsequent year (1855) they are shown to have been some $35,000.
    The lease expired on the 1st of October, 1855.
    There was no covenant of renewal in it, but Judson and Cranston had made an application for a renewal for three years at the time they bought out Monnot, and it was, shortly after the dissolution, actually renewed in favor of Cranston, for an additional term of three years.
    At the time of the ‘dissolution, one of the notes endorsed by Whiting had become due, and was unpaid, and by the terms of his mortgage he was entitled at once to consider all his endorsements as due, and to foreclose for the whole.
    A meeting was held on the morning of the 5th of December (the day of the transactions in question), at the office of Judge Whiting, at which were present Judson, Whiting, Clark, and Rose, all creditors of Judson. At this meeting Judson was strongly urged to sell out his interest to some one for a nominal sum, and Whiting was named as a purchaser, and an instrument of sale prepared for that purpose, which Judson first agreed to execute, and then declined to do so. The leading inducement urged upon Judson to come into this arrangement, appears to have been to save the hotel from the ruin, which seemed to threaten it, from its being complicated in his affairs.
    He was charged with-being largely indebted to the firm, and with having misused its funds, which he did not deny. Clark at this interview represented Cranston—Clark told Judson that he was hopelessly insolvent, which Judson did -not deny. Whiting charged him with having deceived him, which Judson did not deny. Judson complained of the injunction as one cause of his embarrassmefit. He was told that the hotel could not go on in its then condition, and that if it did go on, the suit of Cranston would be pressed, a receiver appointed, and Cranston ruined as well-as himself, and that it was necessary that he (Judson) should retire—some intimation was conveyed at this meeting (not by Whiting) that by executing this transfer to Whiting, he (Judson) would not only save the hotel, but secure for himself a place to live in.
    The interview in the evening at the hotel lasted several hours.
    There were present Judson, Cranston, Clark, Whiting, Townsend, and Mr. Rose, all the four latter were creditors of Judson or of the firm. Cranston was represented by Clark. Judson was not represented by any lawyer, though Townsend had formerly been his legal adviser, he declined to act however in this capacity on that occasion.
    A statement in writing prepared from the books was furnished for the examination of the company.
    At the meeting he was urged to make a transfer of his interest in the hotel, and some intimation seems to have been given to him that, in doing so ne could, perhaps, arrange, his individual affairs, and, succeeding in doing that, resume his position in the hotel; but he was told he would get nothing for making the transfer, as he had already drawn out all his interest.
    It was alleged or shown that he had drawn out all he had ever put in, and some $18,000 more, and that the concern was indebted over $120,000.
    Judson was charged by Whiting with having deceived him, and told that he (Whiting) had lost all confidence in him, and that he would foreclose his mortgage unless some arrangement was made.
    Cranston offered to sell out if he could be secured against the debts.
    Whiting expressed a willingness to assist Cranston if the latter could get the lease renewed; but only on consideration of Judson’s withdrawing from the concern.
    Judson was urgent for some stipulation or agreement that he should be taken back again (as a partner) when he had got released from his creditors, but this was refused.” * * * *
    “No agreement to that effect was in fact made. To an inquiry of Judson on this matter, some answer was given that there would be no objection to taking him back if his debts were paid.
    It was not urged as a reason for Judson’s making a transfer of his interest, that otherwise he would be troubled with his private creditors.
    It was conceded that the house could not get on without resources from outside.
    Some $30,000 or $40,000 were mentioned, as the amount necessary to carry it on.
    It was a conceded thing among all present, that Judson individually was insolvent.
    Nothing was said about the renewal of the lease.
    There was some verbal understanding or. expression of an agreement, on the part - of Cranston, that on the transfer being made to him, he would assume and pay the debts of the firm, as also those contracted by Judson, in its name, for his own purposes, as far as the same were then ascertained.
    No writing to this effect was given, however, either to Judson or the creditors, nor any indemnity furnished to prevent other parties from coming in and getting the property, as judgments to a large amount would be obtained against him as soon as it was known that he had transferred his interest to Cranston.
    Cranston, in hi's answer to the complaint in this action, says, that the mortgage was given to secure him such an amount as on an accounting between him and Judson should be found due to him in respect to the moneys drawn' out by the latter and the liabilities contracted by him in the name of the firm, but for his own use and benefit.
    It is a conceded fact in the case, that Cranston is now proceeding with his suit to have the accounts stated.
    Agreement for Services of Mr. and Mrs. Judson.
    The object of this was to secure to Judson and his wife a provision for their support, and the compensation was made payable to her with the avowed object of keeping it from the reach of his creditors.

      The agreement for employment was the result of a conference between Judson and Cranston between the meetings in the morning and evening of the 5th of December.
    It was considered that the services of Mrs. Judson would be valuable, and that Judson himself, might be very usefully employed. Her services were considered valuable in superintending the domestic arrangements.
    At the interview in the hotel Judson was much depressed and weighed down in spirits.
    Notice of the dissolution was immediately after the 5th of December, advertised by Cranston in four of the principal newspapers published in the city of New York.
    Cranston, since the dissolution, has in fact assumed the payment of some of the debts created by Judson against the firm, among others, of Whiting’s, and Turner’s, and Bininger’s, and has since carried on the hotel by procuring an extension from its creditors, and by assistance from Whiting in increased endorsements to a large amount, and assistance from other friends.
    To what extent the debts have been paid does not appear.
    Some days after the fifth of December, Judson had an interview with Bininger, one of his creditors, to whose firm of Bininger and Clark he was indebted some $6,700, and told him that he had sold out his interest to Cranston, and that on the writing up of the books he hoped there would be a balance in his favor, and which he then assigned to his said firm.
    This assignment is in writing, dated the 9th of December, 1854, signed by Judson, and acknowledging an indebtedness of 3,000 dollars, in consideration of which he sells and transfers to the firm of Bininger & Clark, some shares of stock, ' and also all his right, title, and interest in the New York Hotel, and the proceeds of the business thereof.’
    Subsequently, on the 15th of December, he transfers to Bininger & Co., on account of his indebtedness to that firm of 6,700 dollars, the agreement between himself and wife with Cranston for their services, and agreeing to perform the services contemplated in the agreement—Bininger to apply as much as he could collect, under the agreement, or by a sale thereof, on said debt. Mrs. Judson ratified this arrangement.
    After this, an arrangement was made between Bininger and Cranston, and, on the tenth of February, Cranston was released from his said engagement with Judson and wife. Judson was discharged from his debt to Bininger and left the hotel, and Judson and his wife ceased to render any services, under the agreement of December 5th.
    Cranston gave a-consideration for the release from Bininger, of the agreement for services assigned to him by Judson, viz : Cranston’s obligation to pay Bininger 6,000 dollars, absolutely at the end of three years.”
    Thereupon the Court rendered a judgment, which, exclusive of its recitals, reads thus, viz.
    “It is ordered and adjudged, that the complaint herein be dismissed as to the defendant, George Slater; it appearing that he has no interest in the matters in controversy herein.
    And it is further found and adjudged that judgment was recovered and docketed in favor of the plaintiff against the defendant Judson, and execution issued thereon, and returned wholly unsatisfied; as is in the complaint in this action alleged; and that the whole amount of said judgment is still due and unpaid to the said plaintiff.
    And it is farther found and adjudged, that the defendants, Judson and Cranston; were partners together, in the keeping of the New York Hotel; as is alleged in said complaint, and as co-partners were possessed of the furniture and fixtures in the pleadings, and of a lease of the said Hotel which expired on the 1st October, 1855.
    And it is further ordered and adjudged that the transfer or assignment made by the said Judson to the said Cranston of his partnership interest on the 5th of December, 1854, mentioned in said pleadings, was made with the intent to hinder, delay and defraud the individual creditors of the said Judson, and the said plaintiff as one of such creditors, to whom the said Judson, then owed the debts for which said judgment was recovered.
    Wherefore the said transfer or assignment is hereby adjudged to be fraudulent and void as against the individual creditors of said Judson, and as against the plaintiff as such individual creditor as aforesaid.
    And it is further found and adjudged that the mortgage from the defendant Judson to the defendant Cranston for twenty-five thousand dollars, and the agreement for services between the said Cranston and the said Judson and his wife, both bearing date on the said fifth December, 1854, and executed and delivered contemporaneously with the said transfer or assignment by said Judson to said Cranston, and the agreement or stipulation for a dissolution of the copartnership between the said Cranston and Judson, executed at the same time, with the said transfer or assignment and mortgage, and agreement for services, constituted together with the said assignment one single transaction; and that said mortgage and agreement for services were as well as the said assignment or transfer by said Judson to said Cranston of his interest in the said partnership property, made with intent, to defraud, hinder, and delay the individual creditors of said Judson, and the plaintiff as such individual creditor, and as against such creditors, and the plaintiff are void; but whether the said partnership ceased as between the said Judson and Cranston, or as against the creditors of the said Judson on the said fifth of December, 1854, is a question reserved until the coming in of the Report of the Referee on the taking of the accounts hereinafter ordered.
    And it is further ordered that it be referred to Hamilton W. Robinson, Esq., to take and state an account of the said copartnership from the commencement thereof to the present time, and of all its properties, assets, and effects, and of all the partnership dealings and transactions between the said co-partners as is hereinafter particularly directed, and that in his report of the properties of the concern, he include the good will of the business, and of the new lease of said Hotel, now held by the said Cranston as hereinafter directed.
    And it is further ordered that in taking said account the said Referee do make a rest at the date of the said 5th December, 1854, and ascertain and report the state of the accounts at that date.” (Here, follow directions, as to the matters to be included in such account.)
    “ And it is further ordered that the said Referee, after ascertaining the state of the accounts on the 5th December as above directed, state an account of the collections and payments made by said Cranston or his agent since that date in settlement of the affairs of the partnership, as á partnership terminated at that date; and of the amount of outstanding liabilities and debts and uncollected assets, if any, so as to show the state of the partnership accounts at the present time.
    Arid it is further ordered, that in continuing the account to the present time, the said referee do, for the purposes of the account, consider the partnership as still subsisting, and that he estimate the value of the property, including the now subsisting lease and the good will of the concern at the date of his report, and state an account of all the outstanding debts and liabilities created by said Cranston in the business, since said 5th December, 1854, and of all receipts and profits made since that date, and of all monies advanced, paid, and expended, by said Cranston, in conducting the business of the concern, distinguishing those advanced out of Ms individual funds or resources, and those appropriated and expended out of the assets or collections of the partnership; and that he report what would be a reasonable allowance to be made to the said Cranston, if any, for his time, labor and services, in and about the conducting of the business since the said 5th of December, 1854.
    And it is further ordered that the said referee do report what balance, if any, was due to the said Judson, as between himself and the said Cranston, on the said 5th December, 1854, and what was the value of the surplus interest, if any, of the said Judson, as copartner in the property and assets of the firm at that date; and also what is due, if any thing, to him at the date of Ms report; and what is the value of Ms said surplus interest, if any, at the latter date; and that he state what, if any interest, should be allowed in favor or against either of said parties in such account.”
    * * ****** *
    (Here, follows a provision that the parties attend, and be examined, &c., on such accounting.)
    “And it is further ordered, that unless within ten"days after the entry of this judgment, the said Hiram Cranston do execute a bond with sufficient sureties to be approved by the Court, to pay to the plaintiff herein, whatever shall, on such accounting, appear to be the value of the interest of the said Judson in said copartnership property, at the date either of the 5th December, 1854, or of Ms report, as the Court shall ultimately determine him to be entitled to, including such balance of moneys or profits, as shall at such date be found due to him, to the extent at least of the said plaintiff’s judgment, interest and costs, if the value of said interest and the amount of such balance shall amount to so much; or shall in lieu thereof deposit in this Court, -within the period aforesaid, an amount equal to the said judgment, interest and costs, to be determined by the Court, to remain on deposit subject to the order of the Court; that then the said referee do appoint a receiver of the said New York hotel, its property, assets and effects, and take from such receiver the requisite security.” (Here follow various provisions in respect to the powers and duties of such receiver.)
    “ And it is further ordered, that either party, as also the said receiver, be at liberty to apply to the Court at any time, at the foot of this order, for further directions.”
    The case contained no statement of the conclusions of law, except the paper called the “ Judgment.”
    Cranston filed, in due time, exceptions to the decision of the Court, some being to decisions of fact, and others to decisions of law.
    The printed case contains the opinion of the Court, accompanying the decision of the action at Special Term, from which the following are extracts: viz.
    “In examining the transaction as finally consummated, all the several instruments by which it was evidenced must be considered as one, it being clear on the testimony that they were not only all cotemporaneously executed and delivered, but that no one of them would in fact have been executed without the other.” "" * *
    “The whole affair was begun and consummated under the urgency of fear and apprehension. The parties all acted, Judson included, on the assumption that he was largely the debtor of the concern, and had more than drawn out and realized all his interest in it. Yet, as the evidence of the book-keeper would indicate, it is by no means certain, that even if charged with the whole $25,000 of liabilities created by him in the firm’s name, for his own benefit, he had not at that time some interest of value remaining.

      “ There was one item of property which was entirely overlooked, or disregarded, in the estimates which were made of the condition of the hotel, and that is what is called the good-will of the establishment, by which I mean:

      “First, The interest which the partners had in the renewal of the lease (then shortly to expire), and which, notwithstanding there was no covenant of renewal in the old lease, had nevertheless a potential existence, and was in equity ' a valuable and vendible interest;’ a renewed lease is in equity considered as a continuance of the original lease, so far as the equitable rights of third parties in the old lease are concerned. (Phyfe v. Wardell, 5 Paige 268.).

      “Second, The advantage arising from the established reputation of the house and its local position, which though not a tangible interest, nor one susceptible of division between the partners as a piece of property, was yet a benefit which would unquestionably enhance the sale of the property, and therefore a proper subject of appreciation on determining the value of Judson’s interest. (Story on Partnership, § 99.)” * * *
    “ Neither in the absence of any written undertaking to that effect am I at liberty to say, that the assumption by Cranston of the firm debts proper, constituted the consideration for this transfer, nor that any such assumption took place. That Judson may, from expressions used at the meeting in the evening of the 5th of December, have understood that they would be paid by Cranston, is very probable, but there is nothing to conclude the latter on that point. Judson has no guaranty or indemnity against these debts. The parties undertook to reduce the whole transaction to writing—so essential a part of it as the assumption of the partnership debts by one of the parties, if it existed, in fact, should also have been embodied in the same or some other instrument. That it was not so must be held to be conclusive evidence that no such assumption was, in fact, undertaken by Cranston. It is a rule both in equity and at law, that a contract cannot rest, partly in writing and partly in, parol. (2 Story’s Eq. § 767; Greenf. Ev. § 275-6; 1 J. C. R. 273'; 14 J. R. 15.)” *****
    “ Second, what was the character and nature of this agreement for the services of Mr. and Mrs. Judson ?

      “There is one aspect of it, which I think of itself fatal to it.
    “It is a clear attempt to secure to the use of a debtor, the fruits and earnings of his future exertions, so that they cannot be reached by his creditors.” * * *
    “Upon the whole case I am clear that the transaction of the 5th of December operated as a fraud on Judson’s creditors, and cannot be sustained.
    “It matters not that Judson was in fault, or that Cranston’s private motive was a desire to save himself. In the eye of the law he was not an innocent party; he knew of the condition of Judson’s affairs, and knew, or must be presumed to have known, the necessary effect of the arrangement on his creditors; indeed, the avowed object of the transaction was too plainly expressed to excuse any party to it on the ground of ignorance. That object, as respects the creditors of Judson, was a fraudulent one, and the method adopted to carry it out operated equally to defraud those creditors, and I do not feel at liberty to uphold the transaction.
    “ The sale to Cranston must be set aside as void, and also the mortgage and agreement for services; and-there must be a reference to take and state the accounts of the partnership up to, and including the 5th of December, 1854, and of the transactions of said Cranston in the conduct of said hotel since that time; a Receiver also must be appointed, and plaintiff must have judgment for his debt out of any surplus which on such accounting may be found to belong to said Judson.
    “ The form of the judgment to be settled by the Court.”
    From the “ statement of facts,” and the “ judgment,” contained in the case, some portions have been omitted, but the phraseology of the foregoing parts of them has not been changed, in any respect.
    The defendant, Cranston, appealed “ from all and every part of the judgment or order in this action, dated the eleventh day of October, 1856, except that part thereof which dismisses the complaint herein as against the defendant, George Slater.”
    Such appeal was taken, argued, and decided before the reference ordered had been taken, and before it had been decided whether the partnership was to be deemed to have been dissolved on the 5th of December, 1854.

      James W. Gerard and H. F. Clark, for Appellant.

      D. D. Field, for Respondent.
   Bosworth, J.

This action is brought by an individual creditor of Judson, having a judgment against him on which an execution has been issued and returned unsatisfied, to set aside a transfer of property made by Judson to Cranston. The transfer was made December 5th, 1854. It was a transfer by Judson of his interest, as a partner of Cranston, in the lease and premises, known as the Hew York Hotel, with its stock, furniture, fixtures, and the good will of the business. The transfer is sought to be set aside on the ground that it was made without consideration, and with intent to hinder, delay, and defraud the creditors of Judson.

Whether the transfer was made with such an intent is a question of fact and not of law.

The printed case, in addition to the pleadings and evidence, contains a formal statement of the conclusions of fact, which the Court found to be established by the evidence.

The case then proceeds to state, that, “ thereupon the Court rendered the following judgment.”

Unless the conclusions of law are embodied in and enunciated by the “judgment,” they do not.appear in the printed case. If that, which is called in the case a “ statement of the facts,” “ established by the evidence,” contains a statement of every conclusion which the Court found as a conclusion of fact, then the conclusions enunciated in the “judgment” should be regarded as the Court’s “ conclusions of law” upon the special facts so stated to have been found. The only conclusions stated in the judgment, which should, under such circumstances, be treated as conclusions of fact, and to have been intended to be so stated, are those, which, when found at all, must, from their nature, have been necessarily found as facts.

In this view, the Court held, as legal conclusions from the facts stated to have been found, that the transfer by Judson, of his interest in the New York Hotel, was .made with intent to defraud his individual creditors.

That the four instruments of the 5th of December, 1854, were “ one single transaction,” and were made with intent to defraud the individual creditors of Judson. It is quite obvious from the opinion of the Court, that these were found as conclusions of law.

In the statement of the facts which the Court found to be established by the evidence, it is not found as a fact, that either of the four instruments was made with intent to hinder, delay, or defraud any one.

The only thing, as to the intent of the parties, contained in the statement of facts, is, that the compensation agreed to be paid for the future services of Mr. and Mrs. Judson “was made payable to her, with the avowed object of keeping it from the reach of his creditors.”

It is necessary, in order to present this case properly, to advert to some of the controlling facts, as the Court found them, and as we may think it ought to have found them—on the evidence before us.

These four instruments were executed and delivered on the 5th of December, 1854. At that time Cranston had instituted an action to obtain a dissolution of the firm, in consequence of the misconduct of Judson, and had obtained and served on Mm an injunction, prohibiting him from interfering with, the business or property of the firm.

The Court had no right, under such circumstances, to find or conclude that Cranston would not have accepted of the agreement for a dissolution, even if no other agreement could have been obtained from Judson. If he could have obtained no other he would have accepted of that, and closed the business as he thought best, or might be able, and have had the rights of himself and Judson adjusted, in the action brought for the purpose and then pending.

The Court found correctly that Judson had borrowed, on paper made by him in the firm’s name, $25,000, most or all of which he had used for individual purposes, and that this was done without the consent or knowledge of Cranston.

That charging Cranston with the value of the co-partnership assets, and crediting Mm with, the balance due to him for capital contributed and not drawn out, and also with the debts owing by the firm, including this $25,000, on the assumption that he had undertaken to pay them, Judson would be a debtor of the firm to the amount of $6,308 98.

If it be true that Cranston, in consideration of the transfer to Mm, by Judson, of Ms interest in the hotel, agreed to pay, either absolutely, or, in the first instance, all the debts owing by the firm, and also this $25,000, and if it be true, that, in taking the property at the estimated value of $132,354 03, he took it at its full and fair value, and for more than could be got for it at public or private sale, then it was impossible that any individual creditor of Judson could be defrauded by it. If on such a state of facts it was the intent of the parties to defraud the individual creditors of Judson, it was an intent which could not be carried into effect, for the reason that the whole interest of Judson was insufficient to pay Ms proportion of the partnership liabilities, and the amount owing from him to his co-partner on a correct adjustment of their co-partnership business.

It is, in our opinion, of vital importance to ascertain the truth in relation to this branch of the case, and proceed from it, as a point of observation, to consider the other issues of fact presented by the pleadings.

■ The Court found that in estimating the property and assets of the firm at $132,354 03, the good will of the establishment and of its business was not estimated and included.

In this, we think the Court erred. Cranston, on the dissolution, purchased the good will, in the same sense, and as absolutely, as a matter of fact, as the firm had previously purchased it of Monnot.

In each instance the property was valued, not with reference to the prices it would be worth to use anywhere, or'to sell again, or for which like articles could be bought from those who kept them for sale, but with reference to their then position and ‘use, and the advantages of continuing the business, in the prosecution of which they were then employed, with the prospects then existing as to its future duration at the same place.

We think no one will pretend, for a moment, upon the evidence brought before us, that. Cranston, or any one else, would have paid anything like $132,354 02 for this property, with the certainty that it must be removed at once, or as soon as it could be conveniently done, and used elsewhere.

We must, therefore, in considering and passing upon the merits of this controversy, regard all of the goodwill of the establishment, as estimated and included in the sum of $132,354 03.

The Court found, as a fact, that Cranston did not assume the payment of the $25,000.

We think this conclusion is erroneous. The testimony is explicit that Cranston did agree with Judson, to pay it. He was liable to pay it, and could not avoid paying it, if his means were sufficient to pay it.

If clear verbal proof of the fact, that Cranston agreed to pay the $25,000, is competent evidence to establish it, and if a finding of such a fact contrary to the effect of clear and explicit verbal evidence in relation to it, is erroneous, then it was incorrectly found, that Cranston did not agree to pay the $25,000.

Then the case stands thus: Judson transferred his interest to Cranston, and the latter agreed to pay more than Judson’s interest was worth. He paid more than it was worth, including the good will, of the existing business viewed as one to be continued, if we are to determine its worth by any reliable estimate of it disclosed by the evidence.

Whether Cranston agreed to pay all the debts absolutely including the $25,000, without recourse to Judson for any balance that would be due on a proper accounting, or whether he merely agreed to pay it, in the first instance, retaining the liability of Judson for any balance that might be found due from the latter, upon a fair and proper adjustment of the accounts, is a matter of no consequence, irrespective of other facts, so far as the question of an intent to defraud the individual creditors of Judson, by making such transfer is involved.

In either aspect, nothing was transferred to Cranston, to which the individual creditors of Judson had any right. It all belonged equitably, to the creditors of the firm. The transfer was made with the intent, and to the end that it should be so applied.

It was, therefore, as the case is presented by the evidence before us, a physical and legal impossibility that the individual creditors of Judson, should be defrauded by such a transfer,, and application :of Judson’s interest in this property. To find an actual intent to defraud, under, such circumstances, the evidence of.it should be. too cogent to be resisted.

. If the Court had found these facts, as.we think the evidence establishes them, and had not attached any consequence to the consideration that Cranston’s agreement to pay the debts including the $25,000, was not in writing, but was verbal merely, we cannot think it would have found the transfer to have been made, with an intent to defraud the individual creditors of Judson, unless there are other facts, not yet adverted to, which warranted such a conclusion. . .

So far as we have now advanced in considering the . case, we think the conclusions just, that the. dissolution was a result to which Cranston had an absolute right, and one upon which he would have insisted at all events, and that the transfer of Judson’s interest was made upon.a full and adequate consideration, and that the property transferred was insufficient to pay Judson’s proportion of the copartnership, liabilities, and that it was impossible to have, defrauded Judson’s individual creditors thereby; that the conclusion that the.transfer was made with such an intent is unnatural, and not warranted by the facts thus' far- stated.

The Court also found, that no agreement- was, in fact, made, to the effect, that Judson would, or might be taken back as a partner of Cranston, in this business, if he should succeed in making an arrangement with his creditors.

. One of the agreements of the 5th of December, 1854, stipulated that Cranston would employ Judson and his wife, during the term of the then existing lease, or of any renewal - of it which Cranston might obtain, and so long as he should continue proprietor of the hotel, and pay for their services, in addition to boarding them and their family, and allowing them to use the rooms they then occupied, at the rate of $5,000 per annum, if the profits amounted to that, but such profits were not to be paid, until the end of the employment, nor unless on an accounting then had, it should be ascertained that that amount of profits had been made.. -

. In considering the degree of importance which should be attached to this contract, and the effect that should be given tq it, it should be kept constantly in mind, that Judson had fraudulently involved the firm in liabilities; was individually insolvent, and that his whole interest in the partnership effects, was insufficient to pay his proportion of the partnership liabilities including the $25,000.

His agreement to render future services, was not a transfer of existing property. Those services he might refuse, or become unable to render. A failure or refusal to render services would be an end of that part of the contract.

Unless profits were made, he would receive nothing for the services of himself and wife, beyond the board and lodging of themselves and family. The $5,000 per annum, if it should become payable, would be payable out of property to be subsequently acquired by Cranston, and by reason of the future profits of his business equalling that sum. H either the then creditors of Judson, nor his future creditors, would have any right, legal or equitable, to so much of his earnings from time to time, as might be required for the support of his family.

Whatever a debtor may have earned within sixty days preceding an order, that he apply his property to the payment of his debts, which may be necessary for the use of a family, supported wholly or in part by his labor, is by law placed beyond the reach of his creditors. Code § 297.

Judson, by this agreement, did not acquire a right to the use of any property for an hour, unless, and except upon the condition that, he should continue to render services of more value, than the use of such property.

It placed him in a position that, by performing his part of the contract, he might support his family, and if the business was prosperous, might earn something in addition. But whatever he might earn, was not to be earned at the expense or prejudice of his existing creditors.

It is not a case, justifying the inference, that a debtor has transferred his property upon terms which are unjust or inequitable as it respects his creditors, on the condition of obtaining, wholly or in part, a future support out of it, and as a part of its price.

If it might be found, properly, upon the evidence, that Judson made the execution of the transfer of his interest depend upon the fact that such an agreement for the employment of himself and wife was made, instead of its being necessarily evidence, under the peculiar facts and circumstances of this case, that he transferred such interest, with intent to defraud his individual creditors, it would be evidence that in addition to obtaining for the interest transferred more than it was worth, and in a way just to his creditors, he availed himself of the embarrassments of Cranston, occasioned by his own misconduct, to extort from Cranston’s apprehensions of being reduced to personal insolvency, if the property should be sold and the business closed by a receiver, a bargain which Cranston’s hopes of the future, and his fears of the present, would alone induce him to make.

That agreement, whatever it was, was assigned to an individual creditor of Judson, within nine days of its date, and Judson at the time covenanted with such creditor to perform the services which it bound him to perform. Mrs. Judson assented to the transfer. That may not be a fact of much legal import; .but in judging the intent of parties from their acts, it should not, perhaps, be wholly overlooked.

So far as the fact of this transfer illustrates the intent of Judson at the time, it tends to show an intent, after having provided for the payment of all his copartnership liabilities, to make the future.services of himself and his wife subservient to the claims of his individual creditors, and pledge them, in advance of their being rendered, to pay individual debts.

The individual creditor of Judson, to whom this contract was assigned, compromised with Cranston all claims that he could ever have under it, and, with the assent of Judson and wife, released Cranston from all liability under it, and they thereupon left the hotel. The release was made on the 10th of February, 1855.

The effect of that branch of the transaction was after providing for the payment of the creditors of the firm, by means which they have adopted, and in a manner of which they have approved, to secure payment of an individual creditor, to the amount of $6,000, without Cranston’s having received any equivalent for the $6,000, unless he found it in being released from all connection with Judson.

We think the fact of making this agreement with Judson, for the services of himself and wife, considering the peculiar circumstances under which it was made, furnishes no satisfactory evidence that Judson transferred his interest in the hotel, with intent to defraud his creditors. That the transfer of this agreement, on the 10th day after its date, to an individual creditor, accompanied by his covenant to perform the services which he was bound to render, to entitle him to anything under it, repels the idea of its being the actual intent of any party to it, at the time it was made, to defraud the individual creditors of Judson.

That the Court is not justified in finding, as a conclusion of. law, an intent to defraud, against clear evidence that the actual intent was honest, and that the transaction was one by which the individual creditors of Judson could not be defrauded.

If these views are sound, there is nothing in any part of the transactions to justify the conclusion of an actual intent to defraud the individual creditors of Judson, unless it can be found in the instrument, called the mortgage for $25,000) and the facts established in relation to it.

On this appeal, our first duty is to determine, whether the facts found are warranted by the evidence. When we have determined what facts, as found, are warranted by the evidence, it then remains to be considered, whether the facts correctly found are sufficient to uphold the judgment, or order, however those erroneously found might properly be found, upon any evidence which could be given. If the facts correctly found, are not, when thus viewed, sufficient for that purpose, the judgment, or order, must be reversed.

The Court, on appeal, is not at liberty to find such facts, as the evidence, in its judgment, may establish, and pronounce judgment according to their legal effect. When its finding of facts differs from that of the Court at Special Term, the Court must necessarily order a new trial, when material facts are erroneously found.

The allegation of the answer, in respect to the mortgage, is, or clearly implies, that although Cranston had assumed to pay the $25,000, in the first instance, as well as the legitimate debts of the firm, yet there was to be an accounting between him and Judson, and, on such accounting, Judson would be largely indebted to Cranston, and that the mortgage was given to secure such indebtedness as should, on such accounting, be found due from Judson to Cranston.

The Court has not found, among its conclusions of fact, for what purpose it was made. It does not appear from the conclusions of fact, which the Court held to be established by the evidence, whether it was executed for such a purpose, as the answer affirms, or whether, as was' contended on the argument of this- appeal, it was executed to indemnify Cranston against liabilities then undisclosed, which, it was feared, Judson might have created by a fraudulent use of the firm’s name, and which would be asserted and enforced against Cranston, or whether it was made for some other and different purpose.

If made for either of the two purposes first named, it is not claimed that such purpose, of itself, would make the transaction fraudulent. . It is conceded, as we understand the argument made; that if it appeared clearly, that it was made for either of those purposes, and such purpose was disclosed by the terms of the mortgage itself, it would not only be no-evidence of a "fraudulent intent, but, on the contrary, the mortgage would be valid.

"If . that be so, then the question might arise, whether Cranston is at liberty, as against the creditors of the mortgagor, to show the' Teal purpose, and have the transaction determined by its real character and according to the actual intent of the parties; or, whether there is something in the terms of the instrument which demonstrates a fraudulent intent, which no parol evidence of.actual intent can be permitted to overcome.. That question we deem it unnecessary to decide on this appeal—for reasons subsequently stated. The “opinion” of the Court at Special Term, shows that the. Court came to the conclusion, that this mortgage was executed to secure Cranston against such liabilities as had been fraudulently created by Judson in the firm’s name for his private benefit, and which, as then ascertained, amounted to $25,000.

But it does not appear by the facts found by the Court, that the Court came to that conclusion.

The mortgage is good on its face. That it was made and accepted with an intent to defraud the individual creditors of Judson, must be established, if at all, by proof of facts not indicated by the terms of the mortgage.

It is not found, by that part of the case which professes to state the Court’s conclusions of fact, that it was made with an intent to defraud.

It was found that the transaction sought to be impeached by this action, was evidenced by the four instruments, all executed, signed and delivered at the same time.

But that does not enable us to reach the conclusion, that the transfer of Judson’s interest in the partnership assets, was, in fact or intent, a fraud upon the creditors of Judson. We have already stated our conclusion, that neither of the other three instruments, in connection with the facts proved, furnish evidence sufficient to justify" the conclusion of an intent to defraud. The mortgage, looking only at its face, is no evidence that the mortgage or the other papers were executed with such an intent.

To justify the inference, that even the mortgage itself was executed with that intent, it is indispensable that facts justifying that conclusion should be proved and found as facts by the Court.

We think there is no ground, on the evidence before us, to pretend that Judson would not have executed the other papers signed by him, if he had not been asked to execute the mortgage, nor that Cranston would not have taken the agreement for a dissolution, and the instrument of transfer, and have executed the service paper (as it is called), although Judson might have absolutely refused to execute the mortgage.

It is not found, that the execution and delivery of the mortgage was made a condition of the executing and delivery of the other papers, or of either of them.

But, assuming the mortgage to be invalid as against the individual creditors of Judson, is it necessarily so complicated with the transfer of his interest in the New York Hotel, as to form an essential part of the intent of making that transfer, and thus vitiate the latter, although the latter was clearly made for equitable purposes, and with an actual honest intent?

The property mortgaged is entirely distinct from that transferred. It was not mortgaged to indemnify Cranston against any liability which he assumed to satisfy, as a consideration for such transfer, nor to furnish him with means to discharge such liabilities. If it was given to secure any balance that might be due from Judson on a proper accounting, or to indemnify Mm against any liabilities fraudulently created by Judson in the firm’s name, and then, undiscovered, it was given for a lawful purpose and to secure an individual debt, in respect to which the claims of Cranston were as meritorious as those of any other individual creditor of Judson.

The mortgage and the instrument of transfer do not, in terms, refer to each other, nor relate to the same subject matter. They relate to entirely distinct and disconnected items of property. The one to property owned by Judson individually, the other to property owned by him and Cranston as partners. If the mortgage was in fact given, and if it shall be so found upon competent evidence, to indemnify Cranston against liabilities then undiscovered, which Judson had fraudulently created for his own purposes, the object of it would have no connection, in fact, either with the transfer of his partnership interest, or with the consideration paid for such transfer, if the transfer was absolute on Cranston’s assumption to pay the just debts of the firm, and the $25,000 without recourse to, or any claim upon Judson, for any balance that would be due from Mm upon a proper accounting.—2 Denio, 130, Cornell v. Todd. 1 Kern, 315 and 319-320, Craig et al. v. Wells.

If, on the other hand, it should be made to appear that the mortgage was given to secure what might be found due to Cranston upon a just accounting, as of the 5th of December, 1854, and that Cranston’s assumption of the debts of the firm and of the $25,000, was an assumption to pay them in the first instance merely, with a right to an accounting in respect thereto and of the whole copartnership business, then it would seem that it must necessarily follow that the mortgage and transfer would relate to the same matter, namely, the security and indemnity of Cranston against the liabilities he had assumed, and agreed to pay m consideration of the one, and upon the security of the other.

In the Bank of Utica v. Finch, 3 Barb. Ch. R. 293, it was expressly held, that a mortgage which, by its terms,' was given “ to secure the payment of $30,000 paid to the parties of the first part by the party of the second part,” might be shown to have been given to cover the liabilities of the mortgagor to the bank; (the mortgagee,) from time to time, including new discounts and renewals of paper and subsequent loans. And on proof of that fact, the mortgagee was permitted to enforce the mortgage for its full amount, although, of the debts covered by it, when the defendant’s equities attached, not over $8,000, consisted of liabilities existing at the time the mortgage was executed.

If that case is law, it necessarily follows, that this mortgage' was not void, or ineffectual as between the parties to it, merely because its face did not disclose the precise debts or liabilities, or the nature of the debts and liabilities, which it was given to secure.

It may have been made with an actual intent to defraud, but that is not the point now under consideration.

The broad question is this, is Cranston precluded by the terms of the mortgage from showing that it was made for a legitimate purpose, and with honest motives, the precise purpose being one which its terms do not disclose ? If he is not, then, it is insisted that the ultimate question must be one of actual intent, to be decided'upon the actual facts of the case as they shall be established by evidence, and not upon the terms of the mortgage alone, with proof merely, that there was no existing debt of $25,000, then due from Judson to Cranston.

If the Bank of Utica v. Finch be law, then it was competent for Cranston, as between himself and Judson, if $25,000 of paper fraudulently issued by Judson in the firm’s name, had been subsequently disclosed and paid by Cranston, to have filed a bill, alleging the mortgage and the facts, and on proof of the facts he could have 'enforced it, to reimburse himself the $25,000. And it is contended, if this be so, that the mortgage, whether it is or is not a part of the same transaction as the transfer, would not necessarily make the latter void.

Jackson v. Brush, 20 J. R. 10, is not in conflict with the Bank of Utica v. Finch. The former presented the case of a deed to two grantees absolute on its face. The pretence made in support of it was, that it was executed to secure a debt owing by the grantor to one of the grantees, and to enable them to sell the property, and pay the grantor’s debts, and render the surplus to him, if there was any.

A verdict was taken, subject to the opinion of the Court, on a case containing the evidence. The Court held that the deed was executed without any consideration, and when the grantor was largely in debt, and of course,- that it was made with .intent to hinder, delay, and defraud creditors. But the Court was careful to say (p. 11) that “ if this deed had been given to Livingston (the creditor), alone, to secure the alleged debt of $300, and the existence of that debt at its date -had been shown, it would present a different case.” . ...

In Darling v. Rogers, 22 Wend. 483, where an assignment, upon trust to sell or mortgage, was assailed by a judgment and execution creditor of the assignor, the Court upheld the assignment, although the trust to mortgage was conceded to be void. An honest actual intent having been found, and the trust to sell being valid, the Court of last resort held itself bound'by the statute to carry the deed into effect, according- to the intent of the parties, so far as that intent could be seen, and was consistent with the rules of law. (1 R. S. 739, § 2.)

An assignment, made by an insolvent, of his property, upon trusts prohibited, and by law-declared to be void, may, not um reasonably, be deemed to furnish some evidence.that it was made, with intent to hinder, delay, or defraud creditors.

There is a great difference between an assignment of properly to a third person intrust, and a transfer of it. to a creditor by way of security or mortgage. The effect of the one upon the legal rights and remedies of general creditors, is very different from that of the other.

In the first case, the title is vested in trustees, and those not provided for, if compelled to wait until -the execution of the trust, in order to reach the surplus, as they- would be if it was upheld, would necessarily be hindered and delayed, and the property to which they would be entitled would be withdrawn from the reach of process, pending the execution of the trust.

But when property is mortgaged to a creditor, the mortgagee only acquires, in equity, a specific lien upon it. The residuary interest may be reached by bill in equity, or by execution, according to its nature. The. creditor is not obliged to postpone action until the determination of a trust, or for a single moment. He is not, therefore, hindered or delayed, in a legal sense. He has only been postponed to creditors as meritorious as himself(Leitch v. Hollister, 4 Coms. 211.)

The argument in support of the rights of the mortgagee to show the actual purpose and object of the mortgage, notwithstanding the falsity of the consideration stated in it, is, that as the mortgage is valid on its face, whether it is fraudulent or not is a question of fact, to be determined upon all the facts of the case, as to the real purpose and motive with which it was made.

That it does not disclose on its face the nature or actual extent of the liabilities it was given to secure, may be a circumstance with others, or of itself, to show a fraudulent intent.

An attempt, or assertion of a right or purpose to enforce it, contrary to its real object, and adverse to the just rights of the individual creditors of Judson, would also be evidence on the question of an actual intent to defraud.

But if it be true that it was given for a purpose which the law approves, and if it be true that a court of equity would allow the truth to be alleged and proved, and would thereupon give it effect accordingly, as between the parties to it, then it is argued that it can only be avoided by its appearing upon the whole evidence that it was made with an intent to hinder, delay, or defraud the creditors of Judson.

“ The question of fraudulent intent, in all cases arising under the provisions of” the chapter of the R. S., entitled “ of fraudulent conveyances and contrasts, relative to real and personal property,” “ shall be deemed a question of fact, and not of law.” (2 R. S. 137, § 4.) The terms of a transfer, it must be admitted, may furnish satisfactory evidence of such an intent, and be alone sufficient to warrant the finding of that fact.

But it is insisted that when the instrument assailed is good and valid, so far as it is affected by matters appearing on its face, and as the existence of a fraudulent intent depends upon extrinsic facts to be proved, all evidence in relation to the objects and purposes of the instrument should be received, which would be admissible in an action to enforce it to secure results not provided for by its terms, but upon settled principles, held to be consistent with it.

Having come to the conclusion, that the mortgage was executed to secure Oranston against undiscovered liabilities, which he had just grounds to apprehend Judson might have contracted fraudulently in the firm’s name, and that the transfer of Judson’s. interest in the partnership effects was absolute, and upon adequate consideration, and was made with honest motives and for just purposes, the mortgage, as the evidence now stands, had no such connection with the transfer in fact, or in the intent of the parties, as necessarily to avoid the transfer, even if the mortgage could not be upheld as to the property it covers.

It, therefore, becomes unnecessary to the disposition of this appeal, upon the evidence which it brings before us, to decide whether as against the creditors of the mortgagor, the falsity of the consideration stated would be evidence prima facie, or conclusive, of a fraudulent intent in making it.

That question is one of great practical importance, and we do not deem it expedient to express any opinion in relation to it, as the decision of it is unnecessary in order to dispose of this appeal, or so far as we can now discover, for the re-trial of this action.

It is proper to observe, that the Court should have disposed at the trial absolutely of all questions of liability, and the reference should have directed only such details to be ascertained as were necessary to be known to carry the judgment into effect.

Having come to the conclusion, that a new trial must be ordered, it would be a waste of time to discuss, and decide the questions whether Judson was improperly admitted as a witness, or whether Cranston was erroneously rejected. It is not apparent, that under the act of April 13th, 1857, the same questions can arise on the re-trial of the action.

A new trial should be ordered, with costs to abide the event.

Duer, Ch. J., concurred in holding the following conclusions of fact and of law, and in the views' contained in the opinion of Bosworth, J., in support of them.

“ Whether the assignment was made with intent to hinder, delay, or defraud the creditors of Judson, is a question of fact and not of law.

The Court in its formal statement of the facts which it found the evidence established, has not found as a fact, that the trans? fer was made with that intent.

The conclusion and judgment, stated in the judgment itself, that it was made with such intent, must be deemed to have been, in the mind of the Court, a conclusion of law from the facts specially found. This is made quite obvious from the opinion of the Court at Special Term.

If the material facts, from which, the conclusion of an intent to defraud has been deduced as one of law, have been erroneously found upon the evidence given, there must be a new trial.

Upon the evidence given, our conclusions are, as follows :

1. Cranston agreed to pay for the transfer of Judson’s interest more than it was worth, and more than could have been obtained for it from any other person, or by any mode of sale either public or private.

2. That in such purchase and transfer the good will of the business was estimated and included.

3. That Cranston as a consideration for the transfer agreed to pay all the copartnership liabilities, including the sum of $25,000, which Judson had fraudulently contracted in the firm’s name, for his own benefit.

4. That the motive and intent of Cranston in making this purchase were to save himself from being ruined by Judson, and to secure the application of the partnership property to pay the partnership debts, and thus to make an appropriation of it which was just and equitable.

5. That the giving of the mortgage for $25,000, by Judson, was not made by Cranston a condition of his accepting of the transfer, and signing the service paper, and that he would have accepted of the one and signed the other, whether the mortgage had been executed or not.

6. That the agreement to employ Judson and wife, was no part of the consideration or price paid for the transfer, and was not so understood by the parties at the time, but was an agreement extorted from Cranston by force of the embarrassments and peril in which Judson had placed him ; that all he agreed to pay for such services, was an agreement to pay for a thing which did not then exist, and on which no creditors of Judson then had a lien, and was to be paid, for an equivalent to be thereafter received, and to be paid after it had been received.

7. The dissolution was absolute and complete on the 5th of December, 1854, and Cranston would have accepted of the agreement to dissolve, if no other agreement could then have been obtained from Judson.

8. That the agreement for a dissolution, the agreement to employ Judson and wife, and the transfer of Judson’s interest, on the consideration agreed to be paid, of themselves, upon the evidence as it stands, do not warrant the conclusion, that the transfer was made with an intent to defraud.

9. The mortgage was given to indemnify Cranston against liabilities then undiscovered, and which he might be compelled to pay, and which Judson might have fraudulently contracted in the firm’s name. There were such strong-reasons to apprehend the existence of undiscovered liabilities of that character, that the taking of a mortgage to indemnify and protect himself against them, would be no evidence that Cranston’s intent, in taking a mortgage for that purpose, was fraudulent.

10. It was as just and reasonable for Cranston to take a mortgage for such a purpose, as for any other creditor of Judson to take security for his debts against, or his liabilities on account of Judson.

11. A mortgage, for such a purpose, has no connection in fact, nor any necessary connection in intent, with a contract to pay a just consideration to Judson for his interest in the partnership business.

12. As between the parties to it, its real purpose may be shown, and on that purpose being established, the Court would enforce it, so as to make it subserve the purposes for which it was executed.

Whether, as against the creditors of the mortgagor, the falsity of the consideration stated would be evidence, prima facie or conclusive, of a fraudulent intent, is a question we deem it unnecessary to determine.

13. Even if the mortgage could not be upheld, as to the property it covers, it does not follow that its invalidity against creditors will necessarily avoid the transfer of the partnership assets. They do not, in terms, relate to the same matter or property. The mortgage does not relate to the partnership property, nor to the liabilities which Cranston agreed to assume and pay, in consideration of a transfer to him of Judson’s interest.

The conclusion is not authorized, by any facts correctly found, that the two were part of one transaction, in any such sense, that Cranston would not have taken the transfer, on the terms on which he did take it, if Judson had refused to execute the mortgage.

14. As many of the most material facts, as found, are not warranted by the evidence, and as it is not found as a matter of fact, that the transfer was made with an intent to defraud, a new trial must be granted.

15. Cranston being a purchaser for value, it is essential to show, that in making the purchase he knew that the intent of Judson in making the transfer was fraudulent. Whatever Judson’s intent may have been, if Cranston did not purchase with knowledge of it, but if, on the contrary, purchased for a fair consideration, to protect his just rights, and those of the partnership creditors, his purchase could not be voided, merely because the intent of Judson was fraudulent.

As a new trial is unavoidable, it is unnecessary now, and may be useless for the purposes of a second trial, to determine whether Judson was erroneously, admitted, or Cranston erroneously rejected, as a witness.

Slosson, J., dissented.