141 N.E. 920 | NY | 1923
The finding of the Appellate Division that the transfer from Von Bayer to his wife was made and accepted in fraud of creditors has evidence to sustain it. The inference is permissible that the purpose of the grantor was to cover up the title while retaining the dominion (Galle v. Tode,
The question remains whether credits claimed by the wife in accounting for her disposition of the fund were improperly rejected.
Von Bayer, the judgment debtor, was interested with one McDonald in the promotion of an enterprise which is styled in the record "the Lampton oil deal." An Oklahoma oil lease was to be sold; and for the acquisition and management of the property, a corporation, the Fort Orange Oil Company, was to be formed. The transaction was still inchoate at the time of the assignment. Following the transfer Von Bayer paid to his wife from time to time, $2,849.65, the proceeds of this deal. Part of this money, however ($822.25), belonged, not to Von Bayer, but to McDonald, his associate. The wife received it with the understanding that she would pay it to McDonald, and this she did. To that extent, the creditors of Von Bayer had no interest in the proceeds (Hamilton Nat. Bank v. Halsted,
Expenses of $559.32 were incurred in consummating the "Lampton deal." They were paid by the wife from time to time, in advance of full collection of the fund, out of the installments in her hands. If these expenses had not been met, the fund itself would have been defeated. Payments essential to the preservation of the property *477
are to be allowed to the grantee, though privy to the fraud (Loos v. Wilkinson,
At the date of the transfer, the judgment debtor had a bank balance of $134.92, with outstanding checks of $592.18. Of these, the wife herself held checks to the amount of $311, and other creditors checks to the amount of $281.18. Upon the making of the transfer a new account was opened in the name of the wife, with instructions to the bank that the checks upon the old account were to be charged against the new one. These instructions were carried out. As a result, the entire balance of $134.92 was applied by the wife, under agreement with the husband, to the payment of his creditors.
We think that credit for this payment to the extent of the balance thus distributed should have been allowed on the accounting. The judgment debtor might have paid some creditors in preference to others if the account had been kept in his own name. He did not lose this right because the name adopted was another's. As a result of the fraud, the wife held the money in trust for her husband. She disbursed it under his orders, not for his own benefit nor for hers, but for the benefit of creditors whose debts were in existence at the time of the assignment. She did this before any preferential lien or title was acquired by the plaintiff. In so acting, she was following directions which the husband, if we view him as the true owner, was still competent to give (Smith v. Wise,
The collections from all sources were $3,317.69. The credits erroneously disallowed amount to $1,516.49. The balance is $1,801.20. Liability has been adjudged for $2,868.23, the full amount necessary to satisfy the plaintiff's claim. To the extent of $1,067.03 the judgment is excessive.
The judgment should accordingly be modified by deducting therefrom the sum of $1,067.03, and, as modified, affirmed, without costs to either party in this court.
HISCOCK, Ch. J., HOGAN, POUND, McLAUGHLIN, CRANE and ANDREWS, JJ., concur.
Judgment accordingly.