Anderson v. Tydings

| New York Court of Chancery | Sep 15, 1852

The Chancellor:

The principle of course is not, and cannot be, disputed, that at common law, and independent of our insolvent laws, a debtor may secure one creditor to the exclusion of others, either by payment or a bona fide transfer of his property, Hickley vs. The Farmers and Merchants’ Bank, 5 G. & J., 377; Cole vs. Albers and Runge, 1 Gill, 412.

The deed in this case is not assailed upon the ground that it was made, or caused to be made, under an expectation of taking the benefit of the insolvent laws, and with intent thereby to give an undue and improper preference to one creditor to the prejudice of others; nor could it be assailed on any such ground because Tydings the debtor has not in fact applied for release under the insolvent laws, and there is no person in existence who can impeach his acts as in violation of them.

If, therefore, the deed in this ease can be successfully attacked, it must be upon the ground, that either at common law or under the provisions of the statute of 13 Elizabeth, ch. 5, it is void, as having been made to delay, hinder, and defraud creditors. The allegation of the bill is “ that said deed was concocted and executed with the sole view and purpose of cheating and defrauding the complainants of their claims against said Tydings, and hindering, delaying, and embarrassing them and his other creditors in the collection of their debts,” &c.

Had this deed been a voluntary one, founded merely upon natural love and affection, it could not possibly be allowed to stand in the way of the creditors of the husband, as the agreement filed on the 26th of July last shows that he had no other property from which the claims of his creditors could be satisfied. It would, therefore, upon the most indulgent view of the statute, or of the common law, be fraudulent and void as to creditors, and would unhesitatingly be set aside at their instance.

But the answers take the position, and the evidence maintains it, that this deed rests upon a valuable consideration; that is, that it was caused to be executed by the party having the equitable title in satisfaction of a debt due from him, of an amount equivalent to the value of the property. It is said, however, that this evidence is inadmissible, because the deed purports upon its face to have been executed for the consideration of the sum of one hundred and forty-four dollars’paid by the grantee to the grantors; and that it being shown that no such sum was paid by the former, it is not competent to support the deed by proof of the consideration relied upon in the answers. The consideration stated in the deed was, however, paid to the grantor by Tydings the husband, and, therefore, being founded upon a moneyed consideration it is good as a 'deed of bargain and sale.

It is not like the cases of Hurn vs. Soper and Betts vs. The Union Bank, relied upon in the argument, in which it was decided that when a deed purports to he made on a moneyed consideration, it cannot be shown that money did not constitute the consideration, because that would be to change the character of the deed from a bargain and sale to a covenant to stand seized to the use of the grantee, a principle which will be found upon examination to have controlled the decision in 2 Peere Wms., 204, referred to by the complainant’s counsel. The case is not one of that description. The consideration attempted to be shown here is ejusdem generis with that stated in the deed. It is money paid to the use of the party holding the equitable title and at his instance and request, and it is the same thing precisely as if it had been paid to him.

The deed here has not been impeached by showing that the consideration expressed in it was not paid. In point of fact it was paid. But it is urged that it was paid by Tydings the husband, and the property conveyed, should, it is insisted, be accessible to the claims of his creditors ; and the alleged fraud consists in having the deed executed to his wife, thus putting it out of their reach.

The proof offered, and to which objection is made, is to meet this imputation of fraud. The object is not to change the character of the deed, but to show that the creditors of the husband have no right to complain, because the motive which induced him to direct the deed to be executed to his wife was one which the law allows; that is, to satisfy the claim of one of his creditors.

The principle settled by the Court of Appeals in the case of Claggett and Hall vs. Hall, 9 G. & J., 80, appears to me to warrant the introduction of this proof for the purpose for which it is offered. It is there said, that when a deed is charged to be fraudulent, and when the consideration stated in it has not been disproved, evidence of collateral circumstances showing an additional consideration not expressed in the deed, may be received to repel the charge of fraud. The observations of the judge who delivered the opinion of the Court, on page 91, seem to be conclusive upon tbe question. I should therefore think, even if formal exceptions to the admissibility of this proof had been filed according to the Act of Assembly, it would be admissible.

But it is said, and the rule is clear, that to support a deed against the claims of creditors it must not only be founded on a good or valuable consideration, but it must also be bona fide. 1 Story’s Eq., secs. 353, 369. And it is urged that the deed in this case was made, or procured to be made, with intent to defraud and defeat creditors, and that therefore though a good and adequate consideration may have been paid for it, is void under the statute, and Twyne’s case, 3 Cokes Rep., 81, and the cases maintaining the same doctrine have been referred to in support of this position.

There is no doubt of the truth of the position, and that a valuable and full consideration will not protect a transaction, if the intent was a fraudulent one. This is clearly shown by the cases cited in sec. 369 in 1 Story’s Eq., 363; but when a conveyance or transfer of property rests upon a valuable consideration, it is not open to impeachment unless the party assailing it can show affirmatively that the design was fraudulent. There can be no question to be sure that such design may be exposed by circumstances, and that the party seeking relief against af Conveyance need not produce direct evidence of an agreement to defraud the creditors of the grantor. In Worseley vs. De Mattos, 1 Burr., 474, 475; and in Twyne’s case, the deeds were declared void because the grantors were allowed to remain in the possession and use of the property as their own, by means whereof they enjoyed a credit to which they were not entitled and were enabled thereby to deceive and defraud others who dealt with them, because of their possession and enjoyment of the property which had been conveyed. But in the case now before this Court, the credit was given to Tydings before the date of the conveyance, and therefore there is no ground for charging collusion between the parties, to deceive third persons by holding out Tydings to the world as the owner of the property conveyed; Besides this deed, which was executed on the 8th of January, 1848, was recorded on the same day, thus giving constructive notice to all the world of its contents. It is the case, then, simply of a party indebted to several, and securing one, of his creditors to the exclusion of others, a thing which at common law and apart from the insolvent laws ho had a perfect right to do, and which the preferred creditor had an undoubted right to call upon him to do. And as soon as the transfer was made the conveyance was enrolled among the public records of the county that all persons having an interest in knowing might bo apprised of the condition of the title.

Henry M. Murray and Frank H. Stockett, for Complainants. Cornelius McLean, for Defendants.

In addition to all this, there is not a particle of evidence that either Mrs. Elliott, whose money paid for the property, or Mrs. Tydings, to whom the conveyance was made, knew of the indebtedness of Roger Tydings, to the complainants, without which knowledge there can of course be no pretence for imputing- to them the design to injure the complainants; though I am very far from being of opinion that such knowledge, even if it existed, would have rendered their conduct in taking the conveyance iniquitous.

The deed, therefore, in my opinion must be permitted to stand; and as the complainants can reach Roger Tydings’ interest as tenant by the courtesy, by an execution at law (if he is entitled to such interest), this Court should not interfere and, grant relief to that extent. The bill, therefore, will be dismissed.