Bryant v. KlattBryant v. Klatt
(after stating the facts as above). I am satisfied that this old gentleman had no intention of conveying the beneficial interest in his property from himself to his sons, but that the deed was a device of an incompetent lawyer to protect him against his son-in-law. It is true that, in the nature of things, the evidence could not be disputed, but it is antecedently probable in itself. It is not likely that he meant to strip himself of his life’s earnings, and put his property out of his hands, for no reason at all. It so happens that, if the trust which he attempted so to create had been expressed in the deed, or in any adequate writing, it would have been void in New York under section 93 of the Real Property Law (Consol. Laws, c. 50), which vests all “dry” trusts at once in the cestui que trust, just as the statute of uses executed uses. The trust attempted not being one of those allowed under section 96, and the cestui que trust being the settlor himself, the deed would have been a nullity.
However, the trust was not in writing, and was therefore void under section 242. It is therefore the plaintiff’s position that August O. Klatt took a fee as tenant in common with his brother, free and clear of ali equitable interest, and leviable in the interests of his creditors. The conveyance on the eve of bankruptcy was, they claim, as much a fraud on them as though the land had been bought with their money. Perhaps this ought to be the law, but in fact it is not. While as against the grantee the cestui que trust has no rights which he can enforce, still if the grantee chooses to recognize his “moral” obligation, as it is called, his creditor's may not complain. The courts seem to have been able to endure the spectacle of a man who in his own interest defrauds a confiding fellow, but to stick at allowing the same privilege to his crditors. Whatever may be thought of the logic of the distinction, it is well settled. Gardner v. Rowe, 2 Sim. & Stn. 346, affirmed by Lord Lyndhurst 5 Russ. 258; Silvers v. Potter, 48 N. J. Eq. 539,
The plaintiff further argues that he may win by estoppel'. This rests upon a talk between Lang, the agent of a creditor, Coulter, and August 0. Klatt, in which Klatt is supposed to have said that he had a one-half interest in the house he lived in, which was the locus in quo. This talk Lang places some time before June 9th, and the theory is that the goods sold after it were sold on the faith of August O.’s supposed title. These goods amounted in all to $943.10. Of them only $300 were sold after August O. Klatt says that his father told him of the deed. Assuming that the trustee is vested by section 70e (Comp. St. § 9654) with the rights of Coulter to avoid the deed, I think that the circumstances do not justify the relief. It may be that the* sons learned of the *169 deed earlier than August 0. admits. Indeed Charles J. says that it was early in June, though he also says it was after he signed the notice to quit. But the date makes no difference, I think, because I do not see why the equity arising from Klatt’s declaration to Lang should be superior to that arising on the parol trust. If the trust had been enforceable, no one would say that any declaration of the trustee could affect the rights of the cestui que trust.
But in cases of this kind apparently the law treats the trust as valid so long as the trustee does not choose to insist upon the absence of any writing. Foote v. Bryant,
Bill dismissed, hut without costs.
On Reaegument.
The first point is the distinction between the New York statute of frauds and those in many other jurisdictions. The New York statute provides that no trusts shall be created without writing; the others, that they shall not be enforced. The distinction is thoroughly casuistical. If the trustee cannot be legally compelled to recognize the trust, his recognition is as voluntary as though no trust was created at all. In either ease it is really a question of how far the courts will consider thq moral obligation of the trustee as binding on his creditors. The wholo doctrine is, strictly speaking, anomalous, and it seems to me a mistaken notion to graft upon it purely verbal and sophistical distinctions which ignore the real reason of it; i. e., the unwillingness of the courts to allow a man’s creditors to profit by what was truly never his at all. Therefore I decline to change my ruling as to this point.
The second point rests upon a case in New York, Fritz v. Worden,
Hence it becomes necessary to take a more positive position upon the evidence than I did in my first opinion. Did August O. Klatt, while he held title, tell Lang that he owned half the house, and did Coulter sell him the three last bills of goods on the faith of that representation1? Unless this took place after August O. Klatt had title, and knew he had title, it would not he an estoppel. August J. could not he bound by a declaration made before he had give,n any color for the making <Jf it. Lang’s memory was naturally hazy about dates, but he is sure that he had the talk before the bill of goods of June 9th was delivered. By implication it was after May 26th, because it was the bill of that day which, added to the rest, caused his concern. Yow it seems to me rather curious that August O. Klatt should have told Lang that he owned one-half, and not the whole, property as an inducement to give him credit, if he merely intended a fraud upon Lang. He did own one-half between June 3d and June 9th in a sense which he might well have claimed it, without supposing himself to be cheating Lang, though he did in good morals owe a duty to his father to guard it for him.
Klatt denies that he knew of the deed till June 27th, and he is in some measure borne out by the fact that on June 7th it was Weiss, and not Charles J. and August O. *170 Klatt, who collected the rent, something more consonant with the Klatts’ story than with Lang’s. Further, while Klatt’s denial is not as categorical as one might wish, he does deny that he ever told any one in June that he had a half interest in the property.
On the whole, I believe that Lang’s story is the more credible, and that Klatt knew of the deed before June 9th, perhaps only a day or two. I cannot account otherwise for the curious compatibility between Lang’s story and the truth. Hence I hold that to the extent of $943.10 the trustee has established his lien.
A decree may therefore pass, declaring a lien upon a one-half interest in the tenement to the extent of $943.10, with interest from the several dates of delivery.