1 Paige Ch. 519 | New York Court of Chancery | 1829
The Chancellor:—The first question presented in this case is whether the conveyance from Smith and wife to the appellant, in January, 1818, was a fair and bona fide conveyance, or was intended to defraud creditors, or hinder or delay the collection of their debts.
The suit of Oonine was then pending, but could not be tried so as to have a judgment rendered therein previous to the May term. But the suit in behalf of the state, on the loan office bond, was in a situation that a judgment might be entered therein in a few days. Smith was also indebted to Losee and others. Under such circumstances he made a conveyance of all his property, both real and personal, to his father in law. And what did he get in exchange to pay his creditors, who were about to obtain judgments against him? He got $4,000 in Virginia lands, which had been conveyed to Lee, twenty years before, but which he had never seen. It is true a regular paper title to this land is produced, under a location made in 1786. But every person at all acquainted with the location of Virginia and Kentucky land warrants is aware that it frequently happened that several holders of these warrants, located upon and obtained patents for the same tract, without knowing it had before been granted to others. A patent, under such circumstances, is scarcely prima facie evidence of title. And when we take into consideration the fact that no attempt has been made to take possession of the land under this
That a fraudulent use was made of this conveyance as regards Hallenbeck, is also evident from the pleadings and proofs in this case. The whole amount due to this state was received and misapplied by Smith; and Hallenbeck and his surety were entitled to full indemnity from him. In the appellant’s bill in this cause, he says that he agreed with Smith, as a part of the consideration of the conveyance of the farm, to pay and discharge the- amount due to the state for which the suit was brought on the bond. H such an. agreement was made, it was carefully concealed from the knowledge of Hallenbeck; and it appears from
Although the finding of the jury upon the sheriff’s inquest in August, 1818, as to the personal property which was conveyed simultaneously with the deed, and the more formal trial and verdict, which was given at the circuit in December, 1819, in the replevin suit for the same property, are not conclusive evidence of the fraudulent nature of this transaction; yet they are calculated to give me additional confidence as to the correctness of the conclusion at which I have arrived on this question from the pleadings and proofs before me in this cause. But the result of the replevin suit has an important bearing upon another point-in this case.
It is insisted on the part of the appellant that as Hallenbeck took a deed from him for the thirty-two acres, he is estopped from setting up the fraud in the original conveyance. On the part of the defendants it is alleged that by the finding of the jury in the replevin suit, all parties became satisfied the conveyance of the first of January, 1818, could not be sustained; and that the legal title to the whole farm was vested in Conine, under the sale upon his execution ; that in consequence thereof, the mortgage to Hallenbeck, and the agreement therein contained on his part, which had been made before the fraudulent nature of the original deed to Lee was known to him, were abandoned; and a new agreement was made for his indemnity. I think this allegation in the answer is abundantly established by the evidence in the case. There was no formal surrender of the deed and defeasance, but the recitals and stipulations
If the original deed to Lee was fraudulent, and the mortgage security to Hallenbeck was abandoned by the agreement of December, 1819, the appellant has no right to complain of the proceedings under the act for the relief of Hallenbeck, passed in April, 1819, unless he thinks proper to comply with the conditions of the contract with Conine, and to make his claim under the equity of that agreement. But *if he had all the proper parties before the court, and was willing to comply with those conditions, his right to the farm in the hands of Hunter would be extremely doubtful, especially after such a lapse of time.
At the time of the compromise, in December, 1819, the people had a judgment which was a lien on the farm, and was prior in point of time to that under which Conine had purchased. The only question which can possibly arise in this case, is whether Hallenbeck was so far bound by that agreement as to preclude him from taking advantage of the law which had been passed for his relief. Although a condition was inserted in that agreement for the benefit of Hallenbeck, he was not technically a party thereto, and had no personal claim against any one except Smith, who was insolvent, for the payment of the debt for which he was responsible. He had an equitable claim to have the judgment of the state satisfied out of the property of Smith, on which it was a prior lien, instead of its being satisfied out of his own property. The legislature, in passing the act, divested no legal or equitable rights, and did nothing more than a court of equity might have done under like circumstances. At the time Hallenbeck took the assignment un ■ der that act, Lee had left the state, and probably without ever intending to comply with the conditions of the contract with Conine. It therefore became a struggle between two bona fide creditors of Smith for a preference against the estate which had been fraudulently conveyed to Lee. In
I am perfectly satisfied that this suit was improperly brought by the appellant; that no decree could be made in his favor against the defendants, and that the conveyance of the 1st of January, 1818, was fraudulent and void, not only as against Conine, but as against Hallenbeck, and the same ought to be set aside. The decree of the equity court is therefore affirmed, with costs; and the further proceedings to carry the same into effect may be had in this court.