16 Abb. N. Cas. 47 | The Superior Court of New York City | 1884
The action is brought by plaintiff, as administrator of the estate of Philip Lore, deceased, to set aside a transfer of leasehold property by him in his life-time to defendant Catherine Dierkes, as fraudulent as to the creditors of the intestate. The court found, upon sufficient testimony, that at the time of the transfer, the intestate was indebted to one Philip Baum, in $637, as evidenced by a promissory note payable on demand, and also to one Frederick Luxinger, in $300, which was due. This last indebtedness may be dropped from the case, except as a piece of testimony on the issue of fraud—as the plaintiff admitted upon the trial, that the amount due to Luxinger had been paid since the action was begun, and the judgment could not provide for his being again paid out of the property. The transfer of lease and the term, was to have and hold the same, subject “to the payment of the following-named sums to the persons hereinafter named, at the time and in the manner following, but without any interest thereon ; that is to say, the sum of $636 to Philip Baum, husband of my daughter Elizabeth, and the sum $300 to my son-in-law Frederick Luxinger, in quarterly installments, to each of them respectively, of not less than $75, such payments not to commence or be required until after the lapse of one year after my decease.” As the effect of this transfer was to postpone, for a definite time, the application of the property to the satisfaction of the debts, it was fraudulent as to the creditors, who had a right to
This, however, must be confined to indebtedness existing at the time of the transfer. There was no proof that any indebtedness was incurred by the intestate after the transfer, and no proof was given of any intent to defraud subsequent creditors if there had been any.
Before the transfer, the intestate had made a bond, evidently intended at the time, to be for the benefit of the creditors that have been named, and also, to secure the bond, a mortgage upon the leasehold after-wards assigned. One of the mortgagees was the defendant Catherine Dierkes, to whom the intestate was indebted in the sum of $1,800. If this had been an effectual security for the indebtedness due to Philip Baum, it would make a serious question as to the fraudulent character of the transfer in this action. In fact, however, Philip Baum was not secured, as the bond and mortgage were to Elizabeth his wife. Catherine Dierkes claimed under the transfer to her, and not under the mortgage. Contemporaneously with the transfer, the intestate made a declaration, that the mortgage had been made by mistake and had never been delivered, although it had been recorded, and he declared that he therefore canceled it. There is nothing connected with the mortgage that tends to show that the transfer in question was not fraudulent.
The next question concerns the amount or quantity of the recovery ; that is, the judgment that was recovered. It adjudged that the premises be sold by a receiver, and that, from the proceeds, after specified deductions of expenses and costs, the receiver “pay
From this judgment both parties appeal. The plaintiff objects to it, that as he requested the judge to direct judgment that plaintiff have an accounting of all rents and profits, and tha t plaintiff recover all rents collected by the defendants, and excepted to the refusal to direct such a judgment, it should be modified in the respects adverted to. I am of opinion that the plaintiff was not entitled to an account of the rents received by the defendant, at any earlier date, at least, .than that of the disaffirmance of the transfer, or to a recovery of their amount. The request was therefore, incorrect, in part at least, and the judge was justified in not acceding to it. It was not, futhermore, necessary to the satisfaction of any indebtedness of the intestate, that resort should be had to the rents. The property in question had a value of at least $5,000, to be applied to debts, that were not nearly so great in the aggregate, so far as the evidence disclosed, and any provision as to accounting for rents should have been conditioned that the proceeds of the property were not sufficient to pay the claims.
The plaintiff further urges that the provision for payment to the defendant of the sums of $1,800, and $500, was erroneous, on the ground that the defend
In view of the case of Davis v. Leopold (87 N. Y. 620),
The defendant objects to the judgment, that it is erroneous in directing that the surplus of proceeds be paid generally and finally to the administrator who may be appointed by the surrogate. In my judgment, the objection is valid. The cause of action is of the kind described by chapter 314, Laws of 1858 (4 Edm. St. 483). The first section provides, that any executor, administrator, &c., may for the benefit of creditors or others interested in the estate, disaffirm, treat as void and resist all acts done, transfers, etc., made in fraud of the rights of any creditor, including themselves and others, interested in any estate or property held by or of right belonging to any such trustee or estate, etc. As upon the disaffirmance of the transfer, the property would be in the transferer, the section would imply, that the trustee could recover it. It is doubtful whether such a cause of action is the one intended by the second section, which provides that every person who shall in fraud of the rights of creditors and others have received, taken, or in any manner interfered with, the estate, property, or effects of any deceased or insolvent association, corporation, partnership or individual, shall be liable in the proper action to the executor, etc., or other trustees of such estate or property, for the same, or the value of any property or effects so received or taken, and for all damages caused by such acts to any such trust estate. The absence of words that would indicate a reference to the first section, together with the characteristics of
The counsel for the plaintiff insists, that the transfer may be disaffirmed for the benefit of others than creditors; viz., such as are interested in the estate, like heirs or distributees. This, however, is not of so much importance as is the thing that may be dis-affirmed. The administrator can disaffirm only transfers made in fraud of creditors and others interested in the estate or property. The proposition does not need discussion that an instrument which transfers the whole property of a person to one of those who are his next of kin, and would upon his death become his heirs or distributees, to the exclusion of the rest, is not a fraud upon them. The transferer has no obligation to any of his next of kin, in such a matter. Although the instrument may be fraudulent as to creditors, the next of kin, or their representative, cannot avoid it. The representative of the next of kin, or rather the administrator, avoids it in behalf of creditors. Such an avoidance cannot result in favor of those for whom it cannot be avoided, but against whom it is vested. I therefore think that the judgment was erroneous, in so far as it did not limit the application of the proceeds of sale to the claims of creditors.
In my opinion, there should have been made in the judgment, provision, that after the payment of claims of creditors, the surplus should go to the fraudulent assignee. This would be the result of recognizing that a fraudulent transfer is valid between the parties to it, although it may be avoided by parties defrauded
In Bostwiek v. Menck, the plaintiff did not represent all the creditors of the fraudulent assignor, in solido. He represented only those, in whose behalf he had been appointed. The plaintiff in this case represents them all, to a certain extent. Some of them, may be at present unknown. In such a suit as this, the plaintiff must show that there were in fact creditors, although it may not be necessary to show that he has proved who were all the creditors. A creditor’s bill presents an analogous case. The court can use due measures to protect unknown creditors, while it also uses due measures to provide for the contingency of there being no other creditors than such as have appeared and proved their claims.
The fact, that to entitle creditors to a distributive share in the estate, it is enough if they present their claims within six months from the first publication of notice to present claims, has not been lost sight of. If necessary, it would be appropriate to consider whether they might not be bound, for the purposes of this action, by a notice of less than six months. This necessity may be avoided by making the notice to be such as the administrator shall give as required by law,
The referee should not allow, as claims upon the proceeds, any that are founded upon indebtedness that
Ho reason has been assigned why the motion to dismiss the complaint against John Dierkes, husband of Catherine Dierkes, should not have been granted. The action concerned the wife’s separate property, and she might have been sole defendant. The husband had no interest in the property, or obligation in respect of it, or the defense of the action. Ho claim was proved against him. His admission in the answer, was only that during the intestate’s life-time, for some time, he, defendant John Dierkes, lived in a part of the premises with him.
The motion should have been granted, with costs.
One other matter calls for attention. The fraudulent assignment was made subject “ to the payment of the further sum of $500 to my son John Lore, to be made in such sums, from time to time, after the lapse of one year after my death, as said Catherine Dierkes in her discretion, shall deem necessary, proper or advisable ; which said last three named sums the said Catherine Dierkes hereby assumes and covenants to pay, as aforesaid, as part of the consideration herein-before expressed.’’ It may be assumed that the plaintiff was not entitled to have the instrument set aside
The facts of the case intimate that it would be proper to add to the judgment a provision that defendant Catherine Dierkes might purchase the claims of creditors and succeed to their interests in the fund.
If there were no other evidence of fraud, it would be sufficient to modify the judgment as is indicated in the opinion, and, as so modified, affirm the judgment. It appears, however, that the complaint alleged that the assignment of the lease was obtained by undue influence and fraud. On the trial, the plaintiff offered to prove that the assignment of the lease was “ made under undue influence on the part of the defendants with the deceased.” This was objected to by the defendants, and the objection was sustained. Plaintiff requested the court to find that such assignment was procured by the defendant, Catherine Dierkes, from the deceased, by undue influence, while he had not full liberty of his actions. The court refused so to find. The statute provides that any executor may, for the benefit of creditors, or others interested in the estate, or property so held in trust, disaffirm, etc., all acts done, transfers and agreements made in fraud of the rights of any creditor, including themselves and others interested, in any estate or property held by, or of right belonging to any such trustee or estate. If, therefore, this assignment was obtained by undue influence, it would not be binding on the assignor, and
If the plaintiff desire to try such issues, he should have the opportunity, and the judgment should be reversed and a new trial ordered, with costs to the defendant Catherine Dierkes. If, however, the plaintiff does not insist on that right, the judgment should be modified as directed by this opinion, and, as modified, affirmed, without costs to either party on this appeal. The order is to be settled by the chief judge, on notice to all the parties to the action.
Ingraham, J., concurred.
Reversing 10 Weekly Dig. 266. Compare Popfinger v. Tutte, 49 Super. Ct. (J. & S.) 312.
See a further decision in 8 Abb, Pr, N. S. 169.
And see, as to necessity of proving claim, Matter of Burdick, 10 Daly, 49.
Compare 16 Abb. Pr. 137.
The reference is to 2 R. S. 88, § 34; same statute, 3 Id. 7 ed. p. 2299.
Consult, in connection with this rule, Code Civ. Pro. § 786, providing for publication of orders giving notice to present claims in such actions.