113 N.Y. 526 | NY | 1889
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *529
The complaint shows the plaintiff Harvey to be a creditor of the decedent, John McDonnell, by virtue of certain contract obligations, to the amount of $2,000 and upwards, and that upon the death of McDonnell the defendants were appointed his administrators. They recognized the validity of his claims and paid dividends thereon from the proceeds of the land sold by order of the surrogate. The property coming to their hands as such representatives has been exhausted and there still remains due the plaintiff the balance above referred to. The complaint further states that, shortly before his death, the decedent, to defraud his creditors, caused a certain other portion of his land to be conveyed without consideration to Lucy McDonnell, his wife, and that she retains it and also some personal property which she claims to be her own. The plaintiff has requested the defendants to take proceedings to set aside these transfers, and they have declined to do so. He therefore brings this action in behalf of himself and all other creditors of the decedent against Lucy McDonnell, individually and as administratrix, and against the other defendant as administrator of John McDonnell. He asks that the fraudulent conveyances be canceled, that an account be rendered by the defendant Lucy, a receiver appointed, and a distribution made of such moneys as may come to his hands among the creditors of the intestate. The defendants answered jointly, setting up, in substance, a general denial and also the statute of limitations. No objection was taken by answer to the sufficiency of the complaint, but, on the trial, upon motion of the defendants' counsel, it was dismissed upon the sole ground that the plaintiff was not a judgment-creditor. The cases cited by the learned counsel for the respondents afford many instances where the right of a creditor to proceed in equity against the property of his debtor has been denied by reason *530
of his failure to exhibit a judgment and execution. They show the rule to be well settled that a creditor at large, or a simple contract creditor, must sue at law, establish his debt and then exhaust, by such proceeding as the law allows, the real estate on which the judgment is a lien, and the personal property liable to execution, before he proceeds against property which is not subject to either judgment or execution. The plaintiff has done neither, and he is a contract creditor of the decedent, John McDonnell. But this is not all. He is a claimant against the estate, his claim has been allowed, and the representatives of McDonnell have exhausted the property which has come to their hands, both real and personal, by applying it upon the debts of the intestate, and, among others, the plaintiff's claim. It is not wholly satisfied, and the plaintiff points out other property once, confessedly, belonging to the decedent, but, as alleged by the plaintiff, conveyed away in fraud of the rights of creditors. He has asked the defendants, as administrators of McDonnell, to pursue it and set aside the fraudulent conveyances. If the allegation is true, they might do so, and it would then be their duty to apply the proceeds in the due course of administration. The plaintiff would receive his share, not by virtue of his own action, but because of the character which the administrators bear in relation to the estate, and the power conferred upon them by statute. They stand as trustees for the creditors (Laws of 1858, chap. 314, § 1), and for their benefit, may disaffirm and treat as void any transfer or agreement made in fraud of the rights of any creditor interested in any property or right belonging to the estate they represent. (Id.) The same act confers like power upon assignees for the benefit of creditors, and in favor of such a one we held that he had greater power to seek for and reclaim property fraudulently conveyed than the creditor himself, for "the creditor can assert no right until by judgment and execution he has a lien, or a right to a lien, upon the specific property, but in favor of an assignee for his benefit the legislature have substituted a statutory right in place of these conditions." *531
(Reynolds v. Ellis,
Lichtenberg v. Herdtfelder (
The judgment should, therefore, be reversed and a new trial granted, with costs to abide the event.
All concur.
Judgment reversed.