D'Ivernois v. Leavitt , 23 Barb. 63 ( 1856 )

Clerke, J.

The rights relating to the acquisition, enjoyment and disposition of real property, are prescribed and regulated, exclusively by the laws of the country in which the property is situated. Every community, independent and sovereign, possesses this power, as an inherent and essential element of its sovereignty. No other community can interfere with the method by which real property may be acquired or lost, the tenure by which it may be held, the duration or quantity of interest in it, or the conditions to which the enjoyment of it is subject; but an instrument purporting to dispose of real property situated in another state or country, may nevertheless be within the reach of the laws of the state in which the instrument is executed, and may be assailed on the ground, for instance, that the instrument was in fraud of its own citizens, or that it was obtained fraudulently from the grantor. It appears to me that this is as essential an element of sovereign power in the state, in which the fraud is perpetrated, as the power of which I have above spoken is essential to the sovereignty of the state or country in which the property is situated. lío country can efficiently discharge its functions unless it can protect its citizens against fraud; and this it never could do, unless it can exercise its authority in repressing or redressing fraud, over every one within its jurisdiction, over every wrong committed within it, and over every means by which the commission of fraud is attempted. I therefore think, that although many of the assignments in question relate to real and personal property in other states, if our law deems them fraudulent, it is within the province of this court to declare them void. The assignments marked as schedules A, B, C, D, E, F, G, K and L, contain the clause allowing the assignee to sell on credit, and are clearly within the principle established in Nicholson v. Leavitt, (2 Seld. 510.) The ground that schedule A is distinguishable from the rest, because another joint owner of the property, not liable to the plaintiffs, united with B. & J. W. Leavitt in the conveyance, is not tenable. The property assigned is not merely of the joint interest, but that of each of the assignors. The assignments, marked as schedules H, I and J, do not contain the clause authorizing a sale upon credit; but, in my opinion, they each contain one equally obnoxious. They allow the assignee to withhold the division and distribution of the assets for any length of time, which he in his discretion may think proper. This, if carried out, gives him a coercive power over the creditors, arming him with the means of constraining them to a commutation or release of their claims. It is, in a great measure, to prevent and ignore such a design, that courts of justice have so generally, of late, evinced a disposition to avoid all instruments investing the assignee with any discretion beyond what is absolutely inseparable from the performance of his trust. A power to sell on credit invests him with a discretion to protract, indefinitely, the satisfaction of the claims of creditors, and the final reckoning and settlement of the trust; the very thing which he is directly and expressly authorized to do by the clause to which I have referred in schedules H, I and J, which I perceive is also contained in A and L.

The decision in Mackie v. Cairns, (5 Cow. 547,) is analogous to this case, in relation to the judgment confessed by J. W. <fc R. Leavitt to David Leavitt. In the language of Senator Golden, “if the judgment was an independent transaction between the parties it would be valid. Where a security is taken which is defective, questionable, or even fraudulent, a party may take a new security that may be free from objection. But, he must abandon the objectionable or fraudulent security. He cannot hold the good security, and yet avail himself of that which is vicious. Much less can he make the new security a means of sustaining that which was illegal.” In the present case, the assignee holds fast tenaciously to the assignment and to the judgment; and, by the aid of both, endeavors to effectuate an intent manifested in the assignment, which the law, in my opinion, declares fraudulent and void. The cases are parallel; and the judgment must abide the fate of the assignments.

With regard to the sale of the personal property at Weehawken, I think we have no jurisdiction over it. The sale was made, and the property was delivered in Hew Jersey. By the answer of Mr. David Leavitt, and according to the evidence of J. W. Leavitt, the bill of sale, with the inventory, was made out and delivered on the premises, with the property. The validity of the transaction, both as to the sale itself, and the extrinsic acts, simultaneous with or subsequent to it, must be determined by the laws of Hew Jersey.

I think there should be no direction to the referee at present, as to any amounts which he has applied in discharge of debts due to himself. It will be better to reserve that question until the coming in of the report; of course, the referee may ascertain the amounts so applied without crediting him at present for them in the account.

The decree of the special term should be reversed with costs, and a new decree settled in conformity with the principles which I have indicated in this opinion.

[New York General Term, September 8, 1856.

Davies, J., concurred.

Roosevelt, J., dissented, in part.

Decree reversed.

Roosevelt, Davies and Clerke, Justices.]