Kilmer v. O'Hara.

and by Ford to Winchester on the 17th of October, 1854, and the appointment of Valentine as receiver of the property of Ford, by order of the 21st of May, 1855, did not abate the action. Code, § 121.

By that section of the Code, it was discretionary with the Court to allow the action to proceed in the name of Ford, or to substitute as plaintiffs those to whom his interest had been transferred. After all the present defendants had been made parties, and after all these transfers had been made, a motion was made that such substitution should be ordered, and it was denied.

Instead of appealing from that order to the General Term, all parties acquiesced in it, so far as the record discloses what occurred.

That order, and suffering the time, within which an appeal could be taken from it, to elapse without appealing; preclude the defendants from now raising the question whether other parties should have been substituted as plaintiffs.

The Court having determined that the action should proceed in the name of Ford, it necessarily follows, that all proceedings appropriate to enforce the cause of action stated in the complaint, have been, properly and necessarily, taken and prosecuted by him, and in his own name.

The views stated, dispose of the appeal taken by the plaintiff. The judgment must be modified so as to conform to the views herein before expressed, and in all other respects affirmed. Judgment accordingly.

BUCHANAN & KILMER, Plaintiffs and Appellants, v. MORRELL, O'HARA, and CAMPBELL & SMITH, Respondents.

In all actions, whether of contract or tort, whenever a plaintiff calls one of several defendants, and by examining him gives evidence tending to establish a cause of action against all jointly, and by establishing which all may be charged with the same amount for which either, on the same facts, would be liable if sued alone, the other defendants may be examined, as witnesses in their own behalf, to the same cause of action,

Kilmer v. O'Hara.

It will make no difference, that the Court may be competent in such action and on such facts, in the exercise of its equitable jurisdiction, to charge the defendants so offering themselves in their own behalf to pay a part only of the whole sum claimed, or if charged with the whole, to direct that they be so charged only in the event that all cannot be collected of their co-defendant, and to order that they pay only so much as may not be collected by execution against him. Defendants may be "united in interest," in respect to a matter involved in the issues, within the meaning of those words as used in § 397 of the Code, though not sued as partners or joint-contractors, and though sued upon a cause of action on which a separate suit against each could be maintained.

(Before BOSWORTH and WOODRUFF, J.J.)

Argued, June 8; decided, Oct. 17, 1857.

THIS action comes before the Court on an appeal by the plaintiffs from a judgment in favor of the defendants. The only questions presented by the appeal relate to decisions of the Court at the trial, permitting the defendants Smith & O'Hara to be examined as witnesses in their own behalf. The action was tried in October, 1856, before BOSWORTH, J., without a jury.

The plaintiffs, before commencing this action, had recovered a judgment against the defendant Morrell, and had purchased other judgments recovered against him by third persons, on all of which executions had been returned unsatisfied.

This action was brought by them as such creditors, to procure transfers of property made by Morrell to O'Hara, to be set aside as fraudulent and void, and for other relief, as hereinafter stated. The complaint states, the recovery of the judgments, the issuing of executions thereon, and the return of the same unsatisfied, and the assignment to the plaintiffs, of those recovered by other persons as plaintiffs.

That Morrell was a manufacturer of blank books and stationery in the city of New York, having a store containing blank books and stationery, worth from $10,000 to $12,000, and machinery and stock in his factory worth about $14,000, the machinery being subject to a chattel mortgage for $5,500, held by John Campbell & Co. (a firm composed of the defendants Campbell & Smith), and being worth some $1500 less than the mortgage upon it.

That after Morrell contracted the debts on which the judgments were recovered, and in or about October, 1852, he failed in business and stopped payment.

Kilmer v. O'Hara.

*

In anticipation of and shortly previous to such failure, "he conspired with the defendants Smith & O'Hara, to dispose of his property in fraud of his creditors, and to conceal or cover up the same so that his creditors could not reach it, and " * "in pursuance of this scheme, and with intent to delay and defraud the said creditors, the said Smith and O'Hara mutually arranged and agreed, that after the transfer should be made to O'Hara, as hereinafter mentioned," the chattel mortgage should be foreclosed and the property sold and bid in by Smith; and O'Hara should pay Smith the difference between the price at which the property sold and the amount of the mortgage.

"The defendants Smith, O'Hara, and Morrell, further arranged and agreed that all the property in the store and factory should be transferred and delivered to O'Hara, at the nominal price of $8,000, which the said O'Hara should pay in notes, and which notes Morrell should use in effecting favorable compromises with his creditors." * * "It was further arranged and agreed between the defendants, that the defendant O'Hara should go on, in his own name, with the business previously conducted by Morrell, and should employ Morrell as managing agent, at a nominal salary of $1,000 a year; that the business should be thus continued for two years, to give Morrell an opportunity to buy up at a low rate the claims against him held by his creditors, and at the end of that time O'Hara should pay over and re-deliver to Morrell all the residue of the property and effects, and the proceeds and profits thereof, after deducting $4,000 a year for his own compensation, and the amount of the notes so given by him as aforesaid;" and "if Morrell could procure a purchaser of said property at a fair price, the said O'Hara should sell the same to said purchaser in his own name, and after making the deductions above mentioned, should pay over the balance to said Morrell."

"In pursuance of this arrangement," Smith foreclosed the mortgage and bought the property for $4,000, and immediately transferred it to O'Hara, who paid Smith $5,500 therefor, and Smith paid over this money to said firm of John Campbell & Co.

"Also, in pursuance of said arrangement," the other property of Morrell in the factory, and that in the store, were transferred

Kilmer v. O'Hara.

by Morrell to O'Hara for said sum of $8,000, paid in notes as aforesaid, who continued in the business, employing Morrell as managing agent, and the said O'Hara has made a large profit thereon, at least $5,000 a year; and the said O'Hara still continues in said business, and in possession of the said goods and property, or the proceeds and profits thereof.

Wherefore, the plaintiffs demanded judgment, that the transfer made by Morrell to O'Hara be adjudged fraudulent and void, that a receiver be appointed to take possession of the said property, and the proceeds and profits thereof; that O'Hara account to the receiver for the profits of said stock and manufactory, and that Campbell and Smith be compelled to pay to the Receiver the $1,500 which Morrell had paid to Smith, and that the receiver apply the property he might receive, to pay the said judgments held by the plaintiffs.

Campbell and Smith answered jointly, and O'Hara put in a separate answer, denying the conspiracy and all fraud. Morrell did not answer the complaint.

On the trial the plaintiffs examined Morrell as a witness in their behalf, and he gave evidence tending to establish all the allegations of the complaint, except as to the recovery of the judgments, the issuing of executions thereon, and the return of the same unsatisfied. And he also "gave evidence tending to prove that the transfers of property alleged in the complaint to have been made by Morrell to O'Hara were made in pursuance of a preconcerted scheme between Morrell and the defendants Smith and O'Hara, thereby to defraud the creditors of Morrell, and hinder and delay them in the collection from him of their just claims and demands against him."

"After the plaintiffs had rested their case, the defendant, Augustine Smith, offered himself as a witness, whereupon the plaintiffs' counsel enquired, in whose behalf he was offered? To this, it was answered, that he was offered for the defendants generally, including Augustine Smith, and excluding the defendant Morrell. The plaintiffs' counsel objected to said Smith being examined in his own behalf, and also to his being exam ined for the defendants generally."

The Court overruled each of said objections, and to such decision the plaintiffs' counsel then and there duly excepted.

Kilmer v. O'Hara.

O'Hara was also offered, when the same proceedings were had as when Smith was offered, and the same decision was made and exception taken.

Smith, and O'Hara, were severally sworn and examined, on behalf of all the defendants, including himself, and excluding the defendant Morrell.

The Court gave judgment for the defendants, O'Hara, Campbell, and, Smith, dismissing the complaint as to them. From that judgment the plaintiffs appealed to the General Term.

D. D. Field, for appellants,

Insisted that, the defendants, O'Hara and Smith, were not competent witnesses for themselves. They were not united in interest with Morrell so as to make them competent, because he had been examined.

The test, under section 397 of the Code, is this: Could Morrell have been called by his co-defendant as a witness for them, or could they have been called for him? If this could have been done then he is not "united in interest" with them. That they could have been called for each other is clear, under section 397, 10 Barb. 112; 1 Kern. 131; 3 Kern. 266.

The expression "united in interest" is used in section 119, 157 and 306. Under section 119, it is clear that if either Morrell, O'Hara or Smith, had commenced an action in respect to the assigned property, he need not have joined the others with him. Under section 156, it is clear that Morrell could not have verified an answer for O'Hara and Smith. And under section 306, it is clear that the Court could give costs against Morrell, and for O'Hara and Smith. Indeed that was done in this very judgment.

Indeed, the union of interest intended by section 397, is such as must necessarily make the judgment a joint one, whatever it be.

C. O'Conor, for respondents, made and argued the following points.

First Point.-The 397th section of the Code covers this case. The part in italics was passed in 1849, and sections 390 and 391 are original sections. The case of Comstock v. Doe & Roe, 2 Code