Cramer v. Reford

17 N.J. Eq. 367 | New York Court of Chancery | 1866

The Master.

The main point to be determined in these cases is the same, and depends on the same evidence, and they were, by consent of parties, argued together.

The complainants are judgment creditors of the defendant^ James A. Reford, and executions, issued upon theip respective judgments, have been levied upon a certain house and lot of land, containing about one acre and seventy-five hundredths, situate in Bloomfield township, Essex county, formerly owned in fee by Reford, and by him conveyed to his son, Joseph B. Reford, who conveyed them to the defendant, Ann, wife of said James A. Reford, and she now holds the same.

It is charged by the complainants, that these conveyances are fraudulent and void as against creditors, because, as it is alleged, they were without valuable consideration, and were made with intent to defraud creditors, and while Reford was in debt, and also with a view to his future indebtedness; and the prayer is, that the deeds may be declared fraudulent and void, and the property sold to pay the judgments.

The answer of Reford and wife denies that the conveyances were made with intent to defraud creditors, and states that they were made upon good and valuable consideration, because, as it is alleged, it had been agreed between Reford and his wife, that the property should be hers, when he first bought it, and that the conveyance to her was in pursuance of that agreement, and that she had, during the coverture} bought cows and poultry, and sold milk and fowls, and received the pay for them; and that she had also boarded her children, who, though they lived at home with their father and made a part of his family, yet worked for other persons and maintained themselves, and that the children had, at different times, made her presents of money, and that it was agreed, between her and her husband, that she should have the money so paid to her in these different ways, in her own right, and appropriate the same to her own use and the support of the family; and that she had expended it in buying furniture and other articles for the family, and also in buying cows, the milk from which she sold as before mentioned ; and that without such aid from his children, and the industry of his wife, Reford would have been unable to accumulate the means with which he purchased said house and lot, as his earnings would otherwise have been necessarily expended in the support of his family. The answer admits that, at the time the conveyances were made, Reford was indebted to various persons, but says that those debts have all since been paid. The answer also admits, that the conveyance from Reford to his son, was mainly for the purpose of having the property conveyed to his wife, but says, nevertheless, that Reford was at that time indebted to his son, “ about sixty dollars,” and that the son was also then in debt to his mother “for board and washing, the amount whereof is not now recollected, and also for some twenty-two or three dollars, money advanced to him by his mother, out of her earnings, for the purpose of purchasing railroad commutation tickets for his own use,” and that it was agreed that said conveyances should satisfy and settle such indebtedness. Upon these grounds, it is insisted that said conveyances were made upon good and valuable consideration.

The consideration expressed in the deed from Reford to his son, and also in the deed from the son to his mother, is $1500. But it is admitted that no money, or other thing of value, was, at the time of the conveyance, actually paid or delivered by either party to the other.

The value of the house and lot is, according to the evidence, from $3000 to $4000, and by some of the -witnesses is placed still higher. Reford says, in his answer, that he wished to buy tho property in 1849, but could not do so then for want of means, and also because a judgment for about $446 was then standing against him and others, his co-defendants, in a suit in the Supreme Oourt, and that he, therefore, got Mr. Conger, in 1849, to take a deed for it in his own name. Conger continued to hold the property until that judgment was settled, and then, in the year 1856, conveyed the property to Roford, who held it until the spring of 1858, when lie conveyed it through his son to his wife.

The conveyance by Reford to his son, must be regarded as only a means used by him to convey the property to his wife, and cannot stand, if the conveyance to her was fraudulent.

Was the conveyance to Mrs. Reford made for a good and valuable consideration ? The evidence does not show that she had any property at the time of her marriage, or that she has since acquired any by inheritance, gift, devise, or otherwise, except what she received from the sale of milk and poultry, and from her children for their board, or as presents. It does not appear that she kept any account of the money so received, nor how much it amounted to in all. And it was spent by her, as the auswer states, in procuring furniture and other articles for the use of the family, The money given to her as presents by her children, seems to have been inconsiderable in amount, and the testimony in regard to it, is vague and unsatisfactory. The allegation that there was an agreement between her and her husband, to the effect that the money received by her from the different sources before mentioned should be hers, in her own right, is not sustained by the evidence; and if she really took the money as her own separate funds, it was all spent, or nearly so, before the deed was executed to her. She had none then in hand to pay over, and she paid none. But even if such agreement had been made, and even if she had kept the money as her own, and paid it over as a consideration for the conveyance, it could not avail to sustain this deed, as against the creditors of her husband, under the circumstances of this case. It was in truth his money. The wife's earnings and the avails of her labor, during coverture, belong to her husband, and he cannot, as against his creditors, give or agree to give them, to her, nor can she justly claim, that property purchased with them, in her name, is hers, and not subject to be taken for his debts. Skillman v. Skillman, 2 Beas. 403; Belford v. Crane, 1 C. E. Green, 265.

I am of opinion, therefore, that the conveyance to Mrs. Eeford cannot be sustained upon the ground that it was for a good and valuable consideration.

Is the conveyance void by reason of the indebtedness of Eeford at the time of its execution, or because it was made in view of his future indebtedness, as charged by the complainants ?

There is evidence that Eeford was at the time of that conveyance in debt to several different persons. Some of those debts, but not all, have since been paid. Among those not paid, is the debt of about $100, due to Ehlers, for teaching his daughters music. For the rent of the Pocahontas mill, (hereinafter mentioned), which accrued from October, 1858, to April, 1859, Eeford gave his note, indorsed by Oorwin, one of the complainants, at his request, to Mr. Nay, and the note having been duly protested for non-payment, and Oorwin becoming fixed as indorser, he was compelled to pay it; and the sum so paid by him, is a chief part of the claim on which his judgment against Eeford was recovered. The complainants insist, and I think correctly, that this should be' considered as an indebtedness existing prior to, and at the time of the conveyance to Mrs. Eeford. It is a part of the debt, which by the lease, he bound himself to pay. The obligation to pay rested on him before and at the time of the conveyance, though this portion of the rent did not accrue till afterwards. Nor does it make any difference, that Cor-win, by paying off the note he had so indorsed, became the creditor of Reford, in the place of the original payee. The obligation resting upon Reford was not therehy in any wise changed, except as to the person to whom the debt was to be paid.

I will not remark- further upon the indebtedness existing at the time of the conveyance, but will consider whether or not it was made in view of future indebtedness.

In the spring of 1858, some time in the latter part of the month of February, Reford commenced a negotiation for a lease of a paper mill, near Morristown, known as the Pocahontas mill, and it was continued through March and down to the first of April, when a lease, dated on that day, was executed between him and John C. Kay, whereby the mill and its appurtenances was leased by Kay to Reford for four years, commencing on that day, at a rent of $960 a year, payable half yearly. Reford was also to pay the taxes, and keep the machinery and premises in as good repair as they then were, and to pay the expense of insuring the mill against loss or damage by fire. The machinery was old, and not in good repair at the time of making the lease. Reford entered into possession under the lease, and ran the mill until about the middle of April, 1859, when he gave it up, and went into business elsewhere. His business, while at the mill, resulted in a loss to him, caused, as he alleged, by an unusual scarcity of water, but said by others to be owing to the machinery being old and out of repair. It is certain, however, that he was unsuccessful, and that while running the mill, he contracted debts which yet remain unpaid, to a considerable amount, and among them are the debts of some of the complainants, and for which their judgments were obtained. Upon an execution issued upon Corwin’s judgment he was ai-rested, and thereupon applied for the benefit of the insolvent laws, and after much litigation and delay, he was at length discharged as an insolvent debtor. When he rented the mill, he had little if any property, besides the house and lot at Bloomfield and his household furniture there. He had no capital or means, even to buy the necessary stock for the purpose of manufacturing paper and carrying on the mill, for h'e bought it on credit, or with money raised on notes, indorsed for him, o.r lent to him by others. In this situation he stood when about to commence business at the mill, under a lease for four years, at an annual rent of $960, besides payment of taxes, and cost of insurance^ and the expenses of keeping the machinery and premises in repair. It was, to a man in bis circumstances, an undertaking attended with some hazard, to say the least, and one in which he must certainly incur debts, in addition to his rent, and which, in case he should not be successful, he would have no means whatever to pay, except his property at Bloomfield. Yet, just before he executed that lease, and after he had agreed to take it, he began to take steps to convey away his house and lot, which, except his household goods, was all the property he had.

The deed from him to his son is dated 25th’ March, 1868, and it wag, according tq the certificate of acknowledgment indorsed upon it, acknowledged on the first of May following, by-Retard and his wife. But Mr. McDonald, who drew the deed, and before whom the acknowledgment was taken, and who was called as a witness on the part of the defendants, says, that he thinks it was signed and acknowledged by Reford on the day it bears date, and that Mrs. Reford was not then present, but came afterwards and signed and acknowledged it on the first day of May, and that he then wrote the certificate of acknowledgment, the same as if they had both acknowledged it on that day. Mr. McDonald further says, that when he peceived instructions to draw the deed from Reford to his son, he was at the same time instructed to draw the deed from the son to Mrs. Reford, and was also directed to hold the deed tq the son as an escrow, -ipntil Mrs. Reford signed it, and that he did sq hold it until the first of May. The deed to the son was therefore not fully delivered, and did not operate as a conveyance until that time.

The deed from the son to his npother is dated on the third of May, 1858, and was acknowledged the next day. Both deeds were recorded on the 17th of that month.

The testimony shows clearly, that about the time the deeds were delivered, and also afterwards, Eeford represented to different persons with whom he was dealing, that he was the owner of the house and lot in question, and that it was clear of incumbrance, and he obtained credit, and accommodation indorsements, and discounts of notes, by that means. It seems to me, in view of the evidence, and of all the circumstances attending the transaction, that this is a plain case of a conveyance in view of future indebtedness on the part of Eeford, and with an intent to place his property beyond the reach of his creditors, in case the business in which he was about to embark should be unsuccessful. Such a conveyance is fraudulent as against creditors^ and will be set aside in this court. Reade v. Livingston, 3 Johns. Ch. R. 500; Beeckman v. Montgomery, 1 McCarter 106.

There is strong evidence of fraud upon the very face of the transaction, and without looking into the testimony which was offered, of the declarations made by Eeford about the time he was preparing to lease the mill. Mr. Ehlers expressly states that Eeford told him, about that time, that persons at Morristown advised him not to risk his property at Bloomfield in that undertaking, and that he ought to convey it to his wife. And Mrs. Eeford, who was present at this conversation, expressed the same views, and wished to have the property conveyed to her, in order to put it beyond the risks of the business. And the witness says further, that about two months after that, they told him it had been done. This witness is, however, contradicted on this point as well as others, by both Eeford and his wife, who were called and examined as witnesses for the defence, but under objection, made at the time, to their competency. I think that Eeford was not a competent witness, and that his testimony must be excluded. He is testifying in favor of his wife in a civil suit, in which she is a party. The husband and wife cannot be witnesses for or against each other, where either is a party in a civil suit; Trenton Banking Co. v. Woodruff, 1 Green’s Ch. R. 131, and cases there cited; Bird v. Davis, 1 McCarter 467.

The testimony of Mrs. Reford, it may be said, stands on a different ground, as she is testifying in her own behalf, in defence of "her own claim to real estatej the title whereof is now vested in her, and in which her husband has no right or interest, unless it be as tenant by the curtesy initiate, which will be perfected only upon the contingency of his surviving hei\ Her testimony is objected to on other grounds. But I do not think it necessary to consider them, for even if her testimony be admitted, and its full force given to it in the particulars in which she contradicts Ehlers, I think that the other evidence in the case clearly shows that the conveyance to her by her husbandj through her son, was in view of future indebtedness, and for the purpose of placing the property beyond the reach of creditors.

I am, therefore, of opinion that the conveyance from Reford to his son, and from the son to Mrs. Reford, should be declared to be fraudulent and void, and be set aside, and that the complainants’ judgments should be declared to be liens upon the house and lot in question, and that the property should be sold to satisfy the amount due upon them respectively, (subject however to Mrs. Reford’s right of dower,) and that it should be referred to a master to ascertain and state the amounts due upon the judgments respectively, and their order in regard to priority, and that further directions be reserved till the coming in of the report. And I respectfully recommend to the Chancellor to make an interlocutory order and decree accordingly.