Wait v. Day

| N.Y. Sup. Ct. | May 15, 1847

By the Court, Bronson, Ch. J.

Under the old law of use* and trusts, when lands were conveyed to one person, and the consideration was paid by another, there was a resulting trust in favor of him who paid the money; and the statute 29 Car. 2, c. 3, § 10, which was re-enacted in this state, subjected the lands to judgments and executions against the cestui que trust in the same manner as though he had been seized of the legal! estate. (1 R. L. 74, § 4.) Under the present statute, no use or trust results in favor of him who paid the money; and the title vests in the person named as alienee in the deed. But the conveyance is presumed fraudulent as against the creditors, at that time, of the person paying the consideration ; and if a fraudulent intent is not disproved, a trust results in favor of those creditors, to the extent which may be necessary to satisfy their just demands. (1 R. S. 728, §§ 51, 52.) The chancellor has said, that the creditors cannot sell the land on execution. (Brewster v. Power, 10 Paige, 562.) But the case did not call for a decision of the question ; and I think the 45th section of the statute of uses and trusts must have been overlooked. By that section it is provided, that “ every estate and interest in lands shall be deemed a legal right, cognizable as such in the courts of law, except when otherwise provided in this chapter.” There is nothing in the chapter which forbids that this trust or interest should be “ deemed a legal rightand it can only be “ cognizable as such in the courts of law” by allowing the creditors to sell the land on their executions. As I read the 51st and 52d sections, a trust never results for the benefit of the person who pays the consideration; but only for the benefit of his creditors. It does not result to, but “ in favor” of the creditors. It results to the debtor, for their benefit. And then the 45th section turns the equitable interest of the debtor in the land into “ a legal right, cognizable as such in courts of law,” and, of course, subject to sale on execution. Upon this construction, creditors will have the same direct and speedy remedy now, which they had under the former statute. They were not then obliged to resort to a court of equity to obtain their rights; and I can see no reason why they should be sent there now.

Uses and trusts are not wholly abolished: they are only modified. (§ 45.) And it is expressly provided, that in a case like this a trust shall result. (§ 52.) It can only result to the debtor, though it is “ in favor” of the creditor, and him only.

The legislature only intended to make two changes in this branch of the law. The first was, to discourage the purchase of lands in the name of another, by cutting off any resulting use or trust, so far as the person paying the consideration is himself concerned. And the second restricts the trust for the benefit of creditors, to such as are creditors at the time the money is paid. In other respects, the law remains as it was before. If A. pays the consideration, and the conveyance be to another, there is a resulting trust to A. for the benefit of such persons as are then his creditors: and this trust, which in its nature is of equity cognizance, is transformed by the statute into a legal right, which may be handled in a court of law.

If this question had been settled the other way by the court of chancery, we should probably have followed the decision. But there is nothing more than a dictum of the chancellor, by which he would not feel himself concluded should the question be directly presented for adjudication.

If Barker paid the consideration within the meaning of the statute, the land was properly sold to satisfy his creditors; and the plaintiff made out a plain case. Barker was insolvent, and the judgment was recovered before the land had been purchased. Paying for lands which were purchased in the name of another, instead of applying the money in satisfaction of debts, was a palpable fraud upon his creditors ; and there was nothing—if, indeed, there could by any thing in such a case—to disprove a fraudulent intent. A trust consequently resulted for the benefit of creditors.

The next question is upon the payment of the consideration. The words of the statute on that point are as follows : “ Where a grant for a valuable consideration shall be made to one person, and the consideration therefor shall be paid by another,” “ such conveyance shall be presumed fraudulent as against" the creditors, at that time, of the person paying the consideration.” .The evidence tended to show, and on the ruling at the circuit it must be assumed, that the whole of the purchase money for the land was paid by Barker. A part of it was paid directly from him to Smith, the vendor; but the greater portion was paid through the defendant. But the form in which the business was done is not material: the question is upon the true character of the transaction. If Barker owed a debt to the defendant, and at her request paid the money to Smith on account of her purchase, that would not give Barker or his creditors any interest in the land. And on the other hand, if the purchase was made by Barker, either directly or indirectly, or upon any trust, express or implied, for his benefit, his payment of the consideration, through the defendant, instead of making it directly to the vendor, would not take the case out of the operation of the statute. The law regards substance; and not mere form.

I have already said, that if Barker was paying his own debt there was no resulting trust. And although he may have been under no legal liabilty to the defendant, yet if he paid the money in discharge of what he deemed a moral obligation to indemnify the defendant against the consequences which had already resulted from their illicit intercourse, I think the case would not be within the statute. He had made her the mother of two illegitimate children, and was at liberty to refund the money which she had already expended for the necessary support and education of those children. Where there is an existing obligation, either legal or moral, to pay so much money, and the payment is not made with any reference to the future, nor by way of mere gratuity, the case is not within the mischief against which the legislature intended to provide. But when the payment is made by way of gift to some favorite whom the debtor may be willing to prefer before his creditors; or the purchase is made upon any trust, express or implied, that the debtor shall in any form reap the fruits of it; and in all cases where there is no present duty, legal or moral, to pay the money, the payment is a fraud upon creditors, and they can, I think, reach the land by their judgments and executions. If there be any exception, it must be where the land is purchased in the name of, or by way of advancement to a wife or child. (Guthrie v. Gardner, 19 Wend. 414.) I see no principle upon which a purchase of that kind, by one who is a debtor at the time, can be allowed to stand as against those who were then his creditors. But however that may be, I think it quite clear that a purchase made by way of gift or advancement to a mistress, although it may not look to future cohabitation, cannot be supported. Creditors have a higher and better claim than such a woman. It is hardly necessary to add, that a payment which looks to future cohabitation cannot for a moment be defended as against creditors.

It must be understood that I am all the while speaking of a case where the debtor stands in some degree connected with the purchase of the land. If, without any reference to a purchase, past or prospective, he gives money to a mistress or any one else, which is laid out in the purchase of real estate, I do not see how the creditors can seize the land under this statute. Their remedy would be in a court of equity.

The circuit judge held, that the presumption from the evidence was, that the money advanced by Barker was paid at the instance of the defendant, in discharge of the moral obligation he was under to the defendant for the consequences of the past illicit intercourse between them. I have not been able to see that the evidence tended so strongly to that conclusion, and against any other inference, as to make it proper to take the case out of the hands of the jury, and nonsuit the plaintiff. There was nothing to show that Barker had not previously discharged all the obligation, legal or moral, which could have arisen out of the past intercourse of the parties, so far as that obligation could be measured by money. During the greater part of the time he had been solvent: and the history of most men who have kept a mistress goes to prove that they have paid at the time as much, at the least, as they could afford to pay, or the woman ought to receive. Indeed, such men, unless they have large estates when they begin, generally become insolvent ; and if they have charge of the money of others, the probability is, that they will prove faithless to their trust. Barker became insolvent, and so did the bank of which he was cashier, while this illicit connection, was going on; and had the case been left to the jury, they might have thought that when the land was purchased and the consideration paid, Barker was under no obligation to the defendant, either legal or moral, on account of past transactions.

But this is not all. Although Barker had removed to New-York, he continued his visits to the defendant, which were made in the house which had been purchased with his money. It is quite possible that he paid the consideration as a mere gratuity to his paramour; or that she was to hold the property in trust for his benefit; or, at the least, that the purchase was made for the purpose of facilitating their future illicit intercourse. If a jury should arrive at either of these conclusions, it would be their duty to find a verdict for the plaintiff. The claims of creditors are superior to those of bankrupts and unchaste women, although the latter may claim the merit of having been seduced.

Without intending to intimate any opinion as to what the verdict should he, we think the case should not have been taken from the jury.

New trial granted