78 N.J. Eq. 365 | New York Court of Chancery | 1911
1. My conclusion of fact is that the whole trust in question was a fraudulent device as to all the future creditors of the settlor. It is, in my opinion, a transparent scheme to enable Mr.
In my judgment the law ought not to tolerate, and does not tolerate, such devices. The fraudulent intent extends to all future indebtedness. I think this is a case of actual fraud which directly affects all debts which Mr. Winberry might contract at any time after the trust conveyance was made.
2. As between Mr. Winberry and the trustee and his children the conveyance in trust of course is valid. The conveyance will be set aside only so far as is necessary to pay the debt of the complainant.
3. In my opinion under the first paragraph defining the trust, Mr. Winberry takes a life estate in the rents and income of the estate which amounts to the same thing as an equitable life estate in the corpus. He is expressly allowed to manage and control the property and to apply the rents and income to “such purposes as he may desire during his natural life.” It is impossible to find that there is any intention here that the income shall be applied only to purposes relating to the support or welfare of the children. The requirement that he shall manage and control “as he may think best for the interest of his children”
The equitable interest of Mr. Winberry is primarily liable for the debt and should be exhausted before recourse is had to the interest in remainder belonging to the children.
4. On account of the peculiar character of the trust by which the attempt is made to enable Mr. Winberry to distribute, his estate among his children whenever his life estate is attacked, it may not be important to provide in the decree for the exhaustion of the life interest before recourse is had to the interests of the remaindermen. This matter may be determined upon settlement of the decree.
In case recourse is had to the interests of the remaindermen provision, perhaps, may be made in the decree for apportioning the complainant’s debt equitably among the different shares. My recollection is that the share of one child consists of land situate in the State of New York. IIow far equality of burdens among the children may be incidentally effected while granting the complainant the relief to which he is entitled, may also be determined upon settlement of the decree. This matter has not been the subject of argument and possibly it may be proper to take some additional testimony. It occurs to me, whether an appeal is taken or not, that this matter may be reserved. If the complainant’s debt is to be paid out of this entire estate, it may be surmised that the defendants may avoid having the decree adjust any equities inter sese, if they are all now of full age, by making arrangements satisfactory to themselves.
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The foregoing memorandum was furnished to counsel as a sufficient exposition of the theory upon which the decree in favor of the complainant was based. If when this memorandum was prepared I had had the benefit of the opinion of Judge Dill, written for the court of errors and appeals in the case of Wash
Under the authority of this decision, or this deliverance, this voluntary settlement by Winberry must be regarded as void as against the complainant’s debt, which began to be contracted eight years later, and was plainly entirely beyond the contemplation of Winberry when the trust deed was made in 1895. The evidence satisfied my mind beyond all question that this voluntary conveyance in trust made in 1895 was made with actual intent on the part of the grantor, Winberry, to put his property where his then existing creditors could not reach it. The trust deed bears date April 1st, 1895, and was recorded July 2d, 1895, and on July 19th, 1895, the creditors of Winberry settled with him for fifty cents on the dollar in cash and notes. I do not think that it is possible under the circumstances proved in this case to doubt the actual fraudulent intent of Winberry in making this voluntary conveyance in trust. Under the sweeping rule applicable to this case laid down by the court of errors and appeals in the above-cited recent case it seems to be unnecessary to enter into the question whether any of the indebtedness existing when the voluntary conveyance was made and within the actual fraudulent intent of Winberry, remained unpaid when the complainant’s debt was contracted, or when this suit was begun, or what the effect of such fact may be under our law or the law of other jurisdictions. Accepting what strictly speaking seems to be a dictum in the opinion of Judge Dill as an authorized deliverance