90 N.J. Eq. 103 | New York Court of Chancery | 1919
This is a creditor’s bill. The facts are few and undisputed. Catherine Bowers, the complainant, held the defendant Annie Bowers’ due bill for $500, upon which she sued and recovered in the supreme court. Under execution the undivided one-third interest of Annie in lands in Somerset county was sold and conveyed to Catherine. While the suit was pending Annie and her husband executed their bond and 'mortgage on Annie’s interest in the land to Allen W. Eose for $3,500 to satisfy a debt of Annie’s husband. Eose assigned the bond and mortgage to William Prout, and Prout assigned them to the Newark Trust Company as collateral security for his debt. Catherine filed this bill to set aside the mortgage as fraudulent and the trust company counter-claimed, praying a foreclosure and sale. The bill charges that the mortgage was without consideration, and was given to protect the property from the claim of Annie’s creditors, and to prevent the complainant from collecting her debt; that a.s against Catherine, a then existing creditor, it was a voluntary conve3ance and constructive^ fraudulent, even though there was consideration; and that it was void because given by a married woman as surety for the debt of another — her husband in this ease.
1. The last ground may be disposed of by quoting from well-recognized authority: “It is established that a married woman may, with her husband, mortgage her land to secure the payment of a debt of his or of any other person, for the payment of which she is in no way liable.” Merchant v. Thompson, 34 N. J. Eq. 73, and eases there cited.
2. The charge that there was no consideration for the mortgage, and that it was given, intentionally, to cheat the complainant, is not borne out by the testimony. These facts are established to my entire satisfaction. Eose lent to Henry Bowers, Annie’s husband, from time to, time nearly $3,500. The, first loan was for $1,000, for which a promissory note was given. Two items of $500 each were advanced upon the security of a deed made by Bowers to Eose for twenty lots at Eagle Bock Terrace, and the remainder was lent in dribs, ranging from $25 to $100 and upwards, for which due bills were taken. The loans
3. The mortgage was not a voluntary conveyance and void under the statute of frauds, within the principle laid down in Haston v. Castner, 31 N. J. Eq. 697, that a voluntary conveyance is void by the force of the statute with respect to debts existing at the date of such conveyance. That the mortgage was given by Annie while she was indebted to Catherine Bowers we must assume to be established by the judgment, and that she was under no legal or moral obligation to give it and that it was in nature and effect a gift to her husband is clear, and if it had been given to secure his pre-existing debt a different question would have arisen. But here the mortgage was given in payment of her husband’s debt. Eose took the mortgage in satisfaction of his debt, and not only acquitted Annie’s husband of his liability, but also gave up his securities and paid cash besides, and all
The complainant’s right to relief — that is, to supplant the superior legal estate of Rose and his assigns, rests exclusively upon the twelfth section of the statute of frauds and perjuries (Comp. Stat. p. 2818) by which conveyances of lands or chattels made for the purpose of delaying or defrauding creditors are declared to be void as against such creditors. But the fifteenth section provides that the act shall not extend to any conveyance made in good faith and for a valuable consideration to a person not having notice of a fraud. As Rose’s mortgage and Rose himself are-within the category of the saving clause, the statute fails of operation.
That Prout when he took the assignment from Rose knew of the complainant’s debt, and realized that the mortgage would prevent its collection, cannot affect the stability of the mortgage. The rule is that if a second purchaser with notice acquires title from a first purchaser, who was without notice and bona fi\de, he succeeds to all the rights of his immediate grantor. Pom. Eq. Jur. (4th ed.) § 754; Holmes v. Stout, 4 N. J. Eq. 492; Rutgers v. Kingsland, 7 N. J. Eq. 178, 658, and Roll v. Rea, 50 N. J. Law 264-
The bill will be dismissed and the counter-claim of the Newark Trust Company will be sustained, with costs.