88 N.Y.S. 585 | N.Y. App. Div. | 1904
The plaintiff is the trustee in bankruptcy of one John B. Roberts, and as such brought this action to set aside' conveyances of real estate in the city of Hew York, which at one time belonged to the bankrupt. The grounds upon which the action is founded are that the conveyances constituted an illegal preference within the provisions of subdivision b of section 60 of the Bankruptcy Law (30 U. S. Stat. at Large, 562), and that they were also made in fraud of the rights of the general creditors of the bankrupt, giving to the trustee in bankruptcy a right of action under subdivision e of section 67 and subdivisions a and e of section 70 of that statute (Id. 564, 565, 566, respectively). These grounds are presented in the complaint in the form of two separate -causes of action. They are hot inharmonious. The court below found in favor of the plaintiff, setting aside the conveyances on the ground that they were made with intent to hinder, delay and defraud the creditors of Roberts,-and were in violation of the provisions of the Bankruptcy Law, but without specifically stating in the conclusions of law anything else than that they were made with intent to hinder, delay and defraud creditors, and that they should be set aside and discharged of record and avoided as being in fraud of creditors, and particularly of the plaintiff in this action, the trustee in bankruptcy of John B. Roberts.
"We are not required to enter upon a critical examination of the provisions of the Bankruptcy Law, under which this action is brought. As relating to this particular case it is entirely immaterial to the result, whether there was an illegal preference given to a particular creditor, or the conveyances were generally in fraud of creditors. The question as affecting an illegal preference is whether
Upon an examination of the record and an ascertainment of the ’ facts appearing in evidence, we think the findings of fact and the conclusions of law of the learned trial judge cannot be sustained. Roberts at one time owned the premises described in the complaint. There was a mortgage upon them, which was foreclosed, and a sale under the decree of foreclosure was had on the.20th of May, 1902. At the sale- the premises were bid in by one James M. Hills, who took a deed from the referen in foreclosure. Hills, in the trausacactión, undoubtedly acted for Roberts^ and subsequently conveyed the premises to the defendant Christie at the request of Roberts and Christie. Christie admits that Hills was- acting substantially for Roberts and alleges that he (Christie) furnished the consideration for the purchase of the property at the foreclosure sale. He alleges,, however, that Hills was acting as agent, or attorney of both -Roberts and himself, and avers that he did not know at the time the conveyance was made to him that any illegal preference under the Bankruptcy Raw was being, made. He also asserts that Roberts was indebted to him at the time the conveyance was made, in the sum of $3,612.14, with interest, and the conveyance was made to Min, not as an absolute deed, but simply as a mortgage to secure the payment of the indebtedness mentioned and such future advances as he (Christie) might make for the preservation of the property.
In going over the evidence in the record we are convinced that Christie honestly became the grantee (as mortgagee) of the premises for a considerationj and that he is entitled to hold the deed as ■ security for the amount of’his advances to Roberts. He has not sought to disguise - in any way the real nature of the transaction. He admits the property was Roberts’; that Hills was acting for Roberts as well as for himself (Christie); that his right to the property was ■ limited to that of a mortgagee, and he has made proof of
The history of this deed becomes important. That Hills was selected to hold the title for the purpose • of convenience is established. The referee’s deed to Hills was made and delivered on. the 29th of May, 1902, and on that same day Hills executed, the deed in blank at the request of Roberts. . Subsequently, notwithstanding this deed in blank, it was suggested that Hills should still hold the title and give a mortgage to secure Christie for the amount of his loans, but Hills objected to that; he did not want to become liable, on a bond or become a mortgagor; and thereupon it was proposed that the blank deed be filled up in the name of Christie, which was done. The attorney was directed to fill in Christie’s name. We cannot escape the conviction that this was done by full authority of Roberts and Christie and, as the attorney testifies, of Hills, and with the intention that the deed should be held as a mortgage. Although this deed was not, recorded until February, 1903, it was effectually delivered to the attorney, with the intention of becoming an operative instrument fully authorized by all the parties to. the transaction. As the attorney fixes the date of the completion of the deed as an intended operative instrument on the 1st of July, 1902, the conveyance does not come within the scope of the four months’ preference provision of the Bankruptcy Law.
The judgment should be reversed and. a new trial ordered, with costs to appellant to abide the event.
Ingbaham, McLaughlin, Hatch and Laughlin, JJ., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.