Watson v. Le Row

6 Barb. 481 | N.Y. Sup. Ct. | 1849

By the Court, Paige, P. J.

On the 26th of May, 1841, the interest of Bigelow in the lot of land in question, was an equitable interest. He was .in equity the owner in fee, having paid the whole consideration money of the land to Marcy and Clark, from whom he purchased it; and they, in equity, were his trustees. (1 Barb. Sup. Court Rep. 499. 2 Story's Eq. Jur. § 1212. 6 John. Ch. 402, 405.) At law, Marcy and Clark were the legal owners, but were liable to be compelled by a bill in equity to convey the legal title to Bigelow. The revised statutes (1 Vol. p. 728, §§ 45, 46, 47, 48) did not divest the legal estate of the vendors and vest it in the vendee, although in equity the vendors were mere naked trustees, as the vendee did not acquire his interest by virtue of any grant, assignment or devise. The equitable interest of Bigelow, in the premises in question, although he had paid all the purchase money, was not the subject of sale on an execution; nor could a docketed judgment or decree create a lien on it. The revised statutes declare that the interest of a person holding a contract for the purchase of land, shall not be bound by the docketing of any judgment or decree, nor be sold by execution upon any such judgment or decree. (1 R. S. 744, § 4. Talbot v. Chamberlain, 3 Paige, 220. Grosvenor v. Allen, 9 Id. 76. Griffin v. Spencer, 6 Hill, 525.) This provision of the revised statutes excepts the case of an equitable interest in real estate created by a contract of purchase, from the rule applicable to equitable interests in lands, which in equity subjects them to the lien of judgments. (9 Paige, 76. 10 Id. 569. 18 Wend. 240, 241, 253.) It is very apparent that the judgment recovered by the plaintiff in this suit and William K. Watson against Bigelow,, on the 7th May, 1841, under which the defendant Harris claims, was not a lien in equity upon the equitable estate, of Bigelow, in the premises in question, at the time of the conveyance by Marcy and Clark to trustees, in trust for Mrs. Bigelow.

If the conveyance by Marcy and Clark to trustees, in trust for Mrs. Bigelow, by the direction of Bigelow, passed the legal estate to Mrs. Bigelow; and if a trust resulted to Bigelow in favor of his then existing creditors, under the revised statutes, (1 Vol. 728, § 52,) as is asserted by the plaintiff’s counsel, and as is conceded by the counsel of Harris, did the judgment against Bigelow, under which Harris claims, become a lien in equity on the trust estate, which so resulted to Bigelow in favor of his creditors ?

According to the opinion intimated by the chancellor in Brewster v. Power, (10 Paige, 560,) such judgment became a lien in equity, upon such trust estate, and was entitled to a preference over all subsequent liens and claims, except as against a purchaser for a valuable consideration, without notice, although the premises could not be sold upon execution on the judgment.

It is a familiar principle, where several equities affect the same estate, that if the equities are otherwise equal, they will attach upon the estate according to the periods at which they commenced; for it is a maxim of equity as well as of law, that qui prior est tempore potior est jure. (2 John. Ch. 608. 18 Wend. 240, 253. 9 Paige, 76.) If the chancellor’s view of this question is the correct one, although there might be some doubt whether the assignment of Bigelow to the receiver, and the sale by the receiver of the lands in question to Harris, passed to Harris, any legal interest in such lands, yet the sale to Harris, and the payment by him of the purchase money, and the acceptance of the same by Stephen Y. R. and W. K. Watson, would at least create, in favor of Harris, an equity to compel them to assign to him their judgment against Bigelow, so far at least as to enable him to enforce their lien in equity by a complaint in the nature of a bill in equity against the premises in question. And this equity of Harris would be sufficient to deprive the plaintiff in this suit of the relief he asks in his bill.

It is insisted, on the part of the plaintiff, that the creditor’s bill filed by the plaintiff and William K. Watson against Bigelow, did not reach the trust which resulted in favor of the creditors of Bigelow, because Mrs. Bigelow apd the trustees were not made parties to the bill. And it is also insisted, on the part of the plaintiff, that the only interest which was reached by that bill, and which was, or could be sold by the receiver, was the estate of Bigelow as tenant by the curtesy in the lot in question. Upon the hypothesis assumed by the counsel of the plaintiff, that the, conveyance to the trustees in trust for Mrs. Bigelow came within the 51st and 52d sections of the article of the revised statutes relative to uses- and trusts, a trust on the execution and delivery of the conveyance resulted to Bigelow in favor of his then existing creditors. This resulting trust was an equitable interest of Bigelow in the lands, for the benefit of such creditors. This equitable interest was peculiarly a proper subject for the operation of a creditor’s bill.1 It is the appropriate office of a creditor’s bill, to reach the property of the judgment debtor, which is not the subject of levy and sale on execution. Such property consists of equitable interests in real and personal estate and things in action. (2 R. S. 174, §§ 38, 39, 1 Paige, 308, 9. Beck v. Burdett, Id. 637. Edmeston v. Lyde, 4 John. Ch. 687.) The creditor obtains no specific lien on the equitable estate and things in action of his debtor- by the issuing of an execution, or by its return unsatisfied. He only acquires such lien by the filing of his bill in equity, after the return of his execution at law. (1 Paige, 309, 640.) And wherever there remains in the debtor an equitable interest in real or personal property, the filing of the creditor’s bill against the debtor alone, will give the judgment creditor a specific lien thereon, and such interest may be transferred to a receiver, and sold and conveyed by such receiver under the order and decree of the court; and the purchaser can call upon the trustee of the defendant for a conveyance or an assignment of the real or personal property in which the debtor has such equitable interest, in the same manner as the defendant himself might have done, previously to the filing of the bill. (1 Paige, 640.) In all such cases the trustee is not a necessary party. It is only where the debtor has fraudulently assigned his property, and has no legal or equitable rights as against the assignee, that it is necessary to make the assignee a party, to enable the court to reach the property in his hands. (Edmeston v. Lyde, 1 Paige, 640.) In this case, if the conveyance by Marcy and Clark to S. Bigelow and Kingsley, in trust for Mrs. Bigelow, came within the 52d section of the article relative to uses and trusts, a trust under the provisions of that section resulted to Bigelow in favor of his existing creditors, which was an equitable interest in the premises in question. Upon this equitable interest Stephen Y. it. Watson and William K. Watson obtained a specific lien on the filing of their creditor’s bill; and it was transferred to the receiver by the assignment of BigeL loxv, and passed to the defendant Harris on the sale to him, by the receiver, of the lands in question. The sale and conveyance to Harris vested in him the whole equitable estate in the land, and authorized him to compel the heirs at law of Mrs. Bigelow to convey to him the legal title. The only effect of not making the trustees and heirs at law of Mrs. Bigelow parties to the creditor’s bill, was, that the decree in the creditor’s suit did not conclude them, and they were left at liberty to controvert the allegation, that a trust estate resulted to Bigelow in favor of his creditors.

If the supreme court gave a correct construction of sections 45, 51 and 52, of the article in relation to uses and trusts, in Wait v. Day, (4 Denio, 442,) no doubt can exist on the subject of the title of Harris to the lot in question, under his deed from the receiver. In Wait v. Day the supreme court decided that the trust which resulted in favor of the creditors of the person paying the consideration, to the extent necessaiy to satisfy their just demands, was turned by the 45th section of the statute of uses and trusts into a legal right, cognizable as such in the courts of law.

Chief Justice Bronson says, in his opinion in that tiase, that by 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. He says, “ It does not result to, but ‘ in favor’ of the creditors. It results to the debtor for then-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.”

If, then, the equitable interest of Bigelow in the land was turned into a legal right, it can not be denied that the legal title passed to the receiver by Iris assignment made under the order of the court, and was conveyed to Harris by the receiver’s deed. If the estate so conveyed to Harris was a legal estate, no legal proceeding against the heirs of Mrs. Bigelow is necessary to perfect his title, and he is now seised of both the lógal and equitable estate. It was unnecessary to maleé the heirs of Mrs. Bigelow parties, in reference to any surplus which might arise on the sale of the premises. Such surplus, if any, would of course be paid into coui't, and the heirs would be entitled to receive what remained of the same after thé payment of all the debts of Bigelow, due to such persons as were his creditors at the time the consideration of the conveyance was paid.

The allegations in the creditor’s bill were sufficiently comprehensive to embrace the intérest of Bigelow in the land, whether that interest was legal or equitable. The bill contained an allegation that Bigelow was t.hé owner of, or in some way or manner beneficially interested in, some real estate; and it prayed that Bigelow might be decreed to apply in payment of the judgment of the plaintiff any property, real or personal, in law or equity, belonging to him or held in trust for him, or in which he was in any way or manner beneficially interested.

The sale by the receiver, without a special order of the court, was regular. The sale was after the final decree in the cause, (Rule 192 of ed. of 1844.) If a special order had been required by the rules of the court, the title would nevertheless have passed to Harris by the receiver’s deed. (4 Hill, 173.) But it seems that the amended final decree expressly authorized the receiver to sell the interest, legal or equitable, which Bigelow had in any real estate on the 3d of May, 1841, or at any time afterwards.

Previous to the revised statutes, if a person pitrehased real estate and paid for it with his own money, and tdok a conveyance of the legal title in the name of another, there was, in equity; a resulting trust in favor of him who paid the money, unless it satisfactorily appeared that the purchase was intended as a gift of advancement to the person in whose natiie the conveyance of the legal title' was taken. (10 Paige, 567.) The revised statutes changed the law on this subject. (1 R. S. 728, §§ 51, 52.) They provide that no trust shall result for the benefit of the person who paid the consideration; but only in favor of his creditors, and for their benefit. It was the intention of the revised statutes to put an end to all resulting trusts hi favor of the person paying the consideration, where the conveyance was taken with his consent or knowledge in the name of another. At common law, if a husband purchases lands in the name of his wife, it will be presumed, in the first instance, to be an advancement, or provision for the wife, and no trust will result to the husband. (1 Cruise, tit. Trust, ch. 1, §§ 43, 55. 2 Story’s Eq. Jur. § 1204.) This presumption may be repelled by evidence. (1 Swanst. Rep. 17. 10 Ves. 367, Sumner’s ed. notes. 8 Id. 195, notes, p. 207.) But the onus probandi does not rest upon the wife. (Finch v. Finch, 15 Id. 51.) Those who insist that a trust results to the husband must make it out by evidence. In Guthrie v. Gardner, (19 Wend. 414,) it was held that if it be shown the object of the husband was to defraud his creditors, it may be assumed that the idea of a provision for the wife was sufficiently rebutted to allow of a resulting trust in favor of the husband, which might be sold on execution, and the legal title thereby transferred to the purchaser,- by virtue of the 4th section of the old statute of uses. (1 R. L. of 1813, p. 74.) Had it not been for this decision I should have appre-. hended that the legitimate consequence of the husband’s causing a deed of land, purchased and paid for by himself, to be taken in the name of his wife, with intent to defraud his creditors, would have been to make the deed void, and* to compel the creditors of the husband to resort to a court of equity to obtain possession of, or payment out of the consideration money paid for, the land. The revised statutes, (1 R. S. 728, §§ 51, 52,) have no application to cases where no trust would, at common law, result to the person paying the consideration. If, then, at common law, no trust would have resulted to Bigelow on the conveyance being made to his wife, sections 51 and 52 of the article in relation to uses and trusts have no application. At common law the conveyance in trust for Mrs. Bigelow would be presumed an advancement for her, and not a trust for her husband. And those who insist that a trust resulted, are required to repel this presumption by evidence. It is a general rule that the question whether a trust results or not must depend upon the intention of the grantor. (Cook v. Hutchinson, 1 Keen, 50. 1 Paige, 265.)

A voluntary purchase in the name of the wife, by the husband, will be fraudulent as against antecedent creditors, in like manner as if the settlement was of property actually vested in the husband. (Sug. on Ven. 627. 19 Wend. 415.) A voluntary conveyance in favor of a wife or child, by one indebted at the time, is prima facie fraudulent as to antecedent creditors. (Seward v. Jackson, 8 Cowen, 454, 434. 4 Wend. 303. 7 Id. 436. 11 Wheat. 213. 8 Id. 229. 1 Pet. C. C. Rep. 460. 5 Pet. 280.) And an antecedent creditor has, even under the revised statutes, the right to require of the person claiming under the voluntary conveyance, to rebut by evidence the presumption of fraud. ( Wood v. Jackson, 8 Wend. 32, per chancellor.) Although in an action at law the prima facie evidence of fraud is to be submitted to, and passed upon by, the jury. (4 Wend. 303. 7 Id. 436.)

In this case the fraudulent intent of Bigelow, in causing the conveyance to be made to his wife, is alledged in the plaintiff’s c bill, and admitted by the heirs at law of Mrs. Bigelow. It is expressly alledged in the bill that the conveyance was made with intent to defraud Bigelow’s creditors. And as the bill is taken as confessed by the trustees and heirs at law of Mrs. Bigelow, they have admitted this allegation to be true. If the conveyance was made with this intent, the statute of frauds pronounces it absolutely void. And it is not only void as to the antecedent, but also as to the subsequent, creditors of Bigelow. (4 Kent’s Com. 309, note 6. 3 John. Ch. Rep. 481.) If this conveyance is absolutely void, it is to be regarded as if it had never existed, at least as to those creditors who elect to impeach it. (18 John. 526.) The conveyance out of the way, Bigelow’s interest in the premises in question was an equitable interest, derived under his contract of purchase with Marcy and Clark. This equitable interest was reached by the creditor’s bill of Stephen Y. R. Watson and William K. Watson against Bigelow, and was transferred to the receiver by the assignment of Bigelow, and sold and conveyed by the receiver to Harris. (1 R. S. 744, §§ 4, 5.) And Harris having thus acquired all the interest of Bigelow under the contract, he has a right to call upon Marcy and Clark to convey to him the legal title. The heirs of Mrs. Bigelow can not now gainsay this right, having, by allowing the bill in this suit to be taken as confessed against them, admitted that Bigelow caused the conveyance to Mrs. Bigelow to be made with intent to defraud his creditors. By considering the conveyance in trust for Mrs. Bigelow as fraudulent and void, it may be objected that Mrs. Bigelow and the trustees ought to have been made parties to the creditor’s bill, to enable the court to reach the interest of Bigelow in the land in question. But I can not see why the decree in the creditor’s suit, the assignment to the receiver, and the sale to Harris, were not as effectual in passing to the latter the interest of Bigelow, under his contract of purchase, as a sale by a judgment creditor of a fraudulent grantor, under a judgment and execution at law, is to pass the title to the purchaser of the land fraudulently conveyed.

I can not conceive how it was necessary to make Mrs. Bigelow a party to the creditor’s suit, to enable the court to reach the interest of Bigelow in the land in question. She was undoubtedly a necessary party to enable the court to reach her interest therein, if she had any. Why can not Harris file his complaint against Marcy and Clark and the heirs at law of Mrs. Bigelow, and compel the former to convey to him the legal title, and the latter to deliver up the possession 1 I see no objection to such a proceeding. The heirs at law may perhaps, in the suit against them by Harris, be entitled to controvert the allegation that the conveyance in trust for Mrs. Bigelow was fraudulent, or the allegation that a trust resulted to Bigelow in favor of his creditors, unless they are estopped from doing so by suffering the bill in the present suit to be taken as confessed against them. But whatever may be the result in regard to the right and interest of Harris under the receiver’s deed, to be deduced from the assumption that the conveyance in trust for Mrs. Bigelow was fraudulent and void as against creditors, I have no doubt—upon the ground that a trust resulted to Bigelow in favor of his creditors, which must be assumed, from the decision in Guthrie v. Gardner, supra, and which is alledged by the plaintiff in his bill, and can not therefore be denied by him, whether that trust was a mere equitable interest in Bigelow for the benefit of his creditors, or was turned into a legal estate for the benefit of such creditors—that Harris is entitled, under his deed from the receiver, either in law or equity, to the premises in question.

The right of Harris is paramount to that of the plaintiff. All the interest of Bigelow in the premises was conveyed to the receiver in February, 1842, which was several months before the entry or docketing of the decree against Bigelow under which the plaintiff claims, and four years before the plaintiff filed his bill in this suit.

The decree of the vice chancellor of the 8th circuit must be reversed, with costs; and the plaintiff’s bill must be dismissed as to the defendant Harris, with costs.