215 F. 181 | E.D.N.Y | 1914
These actions grew out of the same general situation which preceded a petition in bankruptcy, filed by one Elizabeth Peace, on the 30th day of December, 1912, in this court. The plaintiff, Everett H. Osborn, was appointed trustee in bankruptcy of her estate on the 24th day of January, 1913, and one of the debts proved in the case was a judgment obtained by the Cosmopolitan Bank, for $5,301.15. This was the amount due upon a promissory note for $5,000, becoming due March 1, 1912. The action against the individual defendants is concerned with a piece of real estate known as No. 33 Stevens street, Astoria, Queens county, upon which was erected a dwelling house, and in which the bankrupt, Elizabeth Peace, and her husband, had been and are residing at the present time. The action against the Eday Realty Company is based on the sale of two four-story apartment houses on the north side of Kelly street, about 173 feet west of Intervale ávenue, in the borough of the Bronx, a piece of land in New Jersey, consisting of about 13 acres, and a plot of land at Canarsie, Queens county. In the case of the Stevens street house above referred to, it appears that title was conveyed to Elizabeth Peace and Margaret Rendall by deed under date of June 16, 1897, recorded in Tiber 1159 of Deeds, page 145, in the office of the clerk of Queens county.
It appears from the testimony that Mrs. Peace is the sister of the defendant Margaret Rendall, and wife of the defendant Peter Peace. Some time previous to the dates above named, John Rendall, who was in business in the city of New York as a plumber, undertook certain building operations in the city of New .York, and acquired a plot of property for the purpose of erecting an apartment, which will be later referred to as the “Kenilworth.” This John Rendall was the brother
It will he noticed that the note to the Cosmopolitan Bank became due upon March 1, 1912, and in the month of April of that year Peter Peace organized, with the approval and help of his wife, her sister and nephew, a corporation known as the Eday Realty Company. Upon the 17th of April, 1912, Elizabeth Peace transferred to the Eday Realty Company the property on Kelly street in the borough of the Bronx, New York, and also the New Jersey property and Canarsie lots which have been mentioned. These conveyances were all for a nominal consideration, and left Elizabeth Peace with no real estate in her own name.
It appears that the building operations of John Rendall in constructing the Kenilworth had exhausted the money which had been loaned to him by his sisters and his brother-in-law; and he had made numerous loans with the Cosmopolitan Bank, and also had other transactions with the Bronx Borough Bank, which will be referred to subsequently. The title to the Kenilworth was placed in the names of Elizabeth Peace and Margaret Rendall, and subsequently sold, the Kelly street property, the Jersey land, and the Canarsie lots being received as a part of the price and held in the name of Elizabeth Peace until the conveyance to the Eday Realty Company.
A long series of notes were put in evidence, bearing the name of the wife of John Rendall as maker, and the indorsement of John Rendall and Elizabeth Peace. The testimony shows that Rendall made the statement that his sister, Elizabeth Peace, owned $30,000 or $40,000 worth'of real property, and was a woman of independent means. She indorsed the notes, knowing that he was intending to use them in his real estate transactions, and that she was doing so as an accommodation. There is no evidence, and it appears not to be the fact, that she had knowledge of the statements made by him to the bank. The notes were renewed or payments made on account, so that the last amount was the $5,000, on which judgment was entered.
Upon the sale of the property known as the Kenilworth, certain sums of money were realized which were handled and disposed of by John Rendall, who acted as attorney for his sisters; and under agreement with Rendall this money was taken by Dr. Becker, the president of the Cosmopolitan Bank, and used in part to pay obligations of Rendall in the Bronx Bank. This amount was more than sufficient to have paid the claim against Margaret Peace in the Cosmopolitan Bank. John Rendall then went into bankruptcy, and nothing having been received from his estate, suit was brought against-the indorser, Mrs. Peace, by the Cosmopolitan Bank, and resulted in the judgment which has been referred to.
With reference to the Stevens street property, the trustee in bankruptcy, having the same standing as a judgment creditor, charges that the trust created by taking the property in the name of Mrs. Peace was void; that John Peace, while really the party purchasing the property,did not preserve any valid claim thereto as against creditors of Mrs. Peace; that even in equity, Peace could claim no trust,except to have his wife account for the proceeds of the property; that the transfer of the one-half interest to Miss Rendall and back to Peace was but another step to cover up the real situation; and that the whole transaction was fraudulent so far as bona fide creditors of Mrs. Peace were concerned, or so far as innocent parties relying upon the bona tides of the transaction subsequent to the taking of title to the property in the name of Mrs. Peace.
The testimony seems to entirely bear out the various propositions urged by the defendants with respect to the method of acquiring the actual interest of the parties in the Stevens street house.
But with reference to the property transferred to the corporation, a different situation is presented than with respect to the Stevens street house. In the case of the Stevens street house, the money invested had not been lost, nor had creditors dealt with Mrs. Peace from any knowledge of the transaction itself. In the case of the Kenilworth and the purchase of the other property, the money was lost in the transaction of the very operations from which the stockholders of the corporation have attempted, through the use of Mrs. Peace as a dummy holder of title, to transfer to the corporation for their own benefit some part of the property it represented or investment made by them at the solicitations of their brother.
It would seem that, considering the statements of Mrs. Peace’s agent, in borrowing money from the bank, it should be held that the transaction with the Eday Realty Company involved fraud, and that there is sufficient value to the properties transferred to indicate that the parties who were thus using Mrs. Peace to hold their title to the real estate, intended to secrete that property from creditors who had extended credit, knowing that she was the ostensible owner of the property as to which the debt was incurred. In this case transfer of £his property to the Eday Realty Company would be void as against creditors, and the .proceeds should be accounted for to the trustee in bankruptcy. The action against the individuals should be dismissed.