Isham v. Schafer

| N.Y. Sup. Ct. | Sep 4, 1871

By the Court, Johnson, J.

A new trial must be granted in this case, on account of the error of the referee, in admitting incompetent and improper evidence against the appellant. The books of account of one Bellow's, who was deceased, containing an account consisting of debt and credit between Bellows and the appellant’s husband, were offered for the purpose of proving that the husband of the appellant had paid Bellows for a quantity of stone which the latter had furnished for the house which the appellant had built on her premises. This evidence was objected to by the appellant as immaterial and inadmissible. The referee overruled the objection and received the books and the entries therein as evidence, and the appellant’s counsel excepted. This was clearly incompetent evidence as against the appellant. It was an account between other parties, and could not be made evidence against her, upon any principle. The books, as the proof stood before the referee, could not have been made evidence against the appellant’s husband even, upon an issue between him and the personal representatives of Bellows. Some of the entries were in the handwriting of Bellows, and some in the handwriting of some other person, but what other person did not appear. It is not enough, however, that it was an account to which .the appellant was not a party, and could prove nothing against her, even if it could have been evidence against her husband.

As the judgment must be reversed and a new trial had, it may be important to see upon what principle the plaintiff is entitled to relief against the appellant, if he has any title to relief as against her. The plaintiff is a judgment creditor of the appellant’s, husband. He has issued his execution which has been returned wholly unsatisfied. He brings his action against the wife of his debtor, whom he impleads with the husband, to reach the property of his debtor, alleged to be in her hands. . In his complaint he alleges, in substance, 1. That the husband paid the consideration or purchase price of the premises, and had them conveyed to the wife with intent to defraud his creditors. 2. That after the premises had been so conveyed to the wife, the husband expended a large sum of money in erecting a dwelling-house on said premises by way of gift to his wife, and to place his property thus in his wife’s hands, beyond the reach of creditors and with intent to defraud his creditors, all with the knowledge and consent of the wife, the appellant.

The relief demanded is, that the conveyance to the wife may be declared void as against the husband’s creditors, and the premises sold to satisfy the plaintiff’s judgment; or that the appellant may be decreed to pay the judgment, and the judgment be declared a lien upon the premises, and the premises sold upon the judgment to satisfy the lien. The referee, upon the evidence, found against the plaintiff on the question of purchase and payment of the price by his judgment debtor, and his finding is conclusive upon that question, so far as this trial is concerned. On the other branch of the action, however, the referee found that the judgment debtor had expended over $500 of his own money in building a house on the premises of the appellant, with the intent to put the same into the appellant’s hands for the purpose of defrauding, and with the intent to defraud, his creditors, of which the appellant had knowledge. The referee therefore ordered a decree that the judgment be a lien on the appellant’s premises, and that the same should be sold to satisfy such lien. If this last finding is justified by the evidence, the relief granted would be proper upon the merits. The law devotes all the property of a debtor, both real and personal, to the payment of his debts, and if a debtor, instead of paying his debts, uses his personal property upon the real estate of another, so that it becomes a part of such realty, for the purpose of defrauding his creditors, and preventing them from obtaining satisfaction of their demands out of his property, with the knowledge and consent of the owner of such realty, the judgment creditor may follow the property into the hands of the owner of the premises thus benefited, and fasten his judgment upon such premises, to-the extent of the debtor’s property therein. Such relief has been frequently granted, and I can see no objection to it, in principle. This, of course, is upon the assumption that no debt, express or implied, has been created between the judgment debtor and. the owner of the real estate. If a debt has been created, the judgment would be fastened upon such debt, and the debtor of the judgment debtor would be decreed to pay the debt, to the judgment creditor. But where no debt has been created between the parties to the fraudulent transaction, and the personal property of the judgment debtor has merged in, and become part of, the real estate of another in this way, the appropriate, if not the only remedy is to fasten the judgment upon the real estate to the extent of the judgment debtor’s property thus made part of the realty; and this,, as I understand the complaint, is the case as stated here, in one aspect of it.

[Fourth Department, General Term, at Rochester, September 4, 1871.

In every such case, however, it must appear that the debtor has contributed something in the nature of property to the real estate of another. Something which the creditor had the right to claim as property, and which could be appropriated and converted into money, by legal process, to satisfy a debt or demand. If it was something else, for instance, the mere labor, or skill, of the debtor gratuitously bestowed, no such relief could be had. on account of it. The law gives the creditor a lien and claim upon the property of his debtor—upon the fruits of his labor and skill, when received or earned—but nó lien or claim upon his capacity to labor, or upon his skill and ingenuity. His labor and his skill, upon which a creditor has no lien, or claim of any kind, the debtor may, if he sees fit, give away to another, and the creditor can have no remedy against the recipient, if it is in fact a mere gift. And so it has been held that a husband, who acts as agent for his wife, and oversees her affairs gratuitously, does not thereby render his wife liable to his creditors for what such services might be worth, if compensation were to be made. (Buckley v. Wells, 33 N. Y. 518, 523.) These observations are only important in view of the new trial, and of an apprehension arising from an examination of the evidence before the referee, that the distinction between the property of the judgment debtor as such, and his gratuitous services in his wife’s favor, may not have been kept in view in the finding of the facts. The new trial is granted, however, solely on the ground of the erroneous ruling in the admission of improper evidence.

Judgment reversed and new trial• ordered; costs to abide the event.

Mullin, P. J., and Johnson and Talcott, Justices.]