11 N.Y.S. 442 | N.Y. Sup. Ct. | 1890
This was an action of foreclosure. There was a surplus of $117,642.46 arising from the sale herein. This surplus was directed by the court to be deposited in certain specified banks or trust companies, in the names, of Charles E. Hubbell and Alfred K. Hiscock, as receivers of the property of J. Forman Wilkinson and Alfred Wilkinson, subject to the order of the court in which this action was brought. Subsequently, upon notice to the appellants and other parties having judgments or other liens upon the property of J. Forman and Alfred Wilkinson, and upon the petition of Conrad Loos, a claimant of a portion of such surplus moneys, an order was duly granted in this action, whereby it was referred to Nathaniel M. White, Esq., as a referee, to ascertain and report the amount due to the petitioner, or any other person or persons, which was a lien upon such surplus moneys, and as-to the priority of such liens.
In pursuance of this order, the usual notice of hearing was given to the appellants and other persons who were parties to the action, or who appeared to" have unsatisfied liens upon such surplus. The appellants and other parties claiming liens thereon appeared before the referee, and gave proof of their respective claims. The referee thereupon made his report, whereby he in substance found that J. Forman and Alfred Wilkinson became the owners of the mortgaged premises November 1, 1873, as tenants in common each of an undivided one-half; that May 5, 1884, they and their wives gave a deed of these and other premises to John Wilkinson; that on November 24, 1884, John Wilkinson gave a mortgage thereon to Charles B. Crosby, as security for the payment of $125,000, and interest; that on December 9,1884, J. For-man and Alfred Wilkinson, who were co-partners, doing business under the-firm name of Wilkinson & Co., made a general assignment of both their individual and partnership property to Charles E. Hubbell for the benefit of their creditors, and that he duly accepted the trust; that Alfred Wilkinson- and Edward N. Westcott were partners, and on December 11,1884, they duly assigned all their individual and co-partnership property to James S. Crouse, in trust for the benefit of their creditors, and he duly accepted such trust;, that afterwards Crouse, as such assignee, gave notice to creditors to present their claims; that such claims were presented, and amounted to about $177,-000; that on December 23,1884, William James recovered a judgment against J. Forman and Alfred Wilkinson for $203.17, which judgment was docketed on that day in Onondaga county, where the said mortgaged premises were situated; that afterwards James commenced and prosecuted to judgment an action whereby the deed, mortgage, and assignment made by J. Forman and Alfred Wilkinson and John Wilkinson were set aside as to said judgment, on the ground that they were fraudulent and void as to the creditors of J. For-man and Alfred Wilkinson; that on January 3,1885, the Merchants’ National Bank of Syracuse recovered a judgment against J. Forman Wilkinson for $30,807.99, which was a lien on his real estate; that on February 4,1885, the said bank recovered another judgment against the same defendant for $10,-380.83, which was also a lien on his real estate; that upon an execution duly issued upon the first-mentioned judgment for $30,807.99, the sheriff of the county of Onondaga, on August 29, 1887, duly sold to Hon. George N. Kennedy the undivided one-half interest of J. Forman Wilkinson in the premises covered by the mortgage foreclosed by this action, and duly.issued certificates of such sale to said Kennedy; that Kennedy, on November 29, 1888, transferred to Conrad Lpos, Harlow B. Andrews, and Edward P. Bates a one-half
The appellants excepted to the report of the referee, and opposed the confirmation of such report. The referee’s report was, however, confirmed by the special term, and the surplus moneys arising in this action were directed to be paid in accordance with such report. From the order overruling the appellants’ exceptions, confirming the referee’s report, and directing the distribution of such surplus moneys, this appeal was taken.
That this was a proceeding in the foreclosure action for the distribution of the surplus moneys arising upon the sale therein, we have no doubt. The fact that the money was ordered deposited in certain banks or trust companies
We think the claim that this was a proceeding in the creditors’ actions, in which the receivers were appointed, is without force. We need not therefore consider the question as to what rights the appellants would possess in a proceeding in those actions requiring the receivers, as such, to account and distribute the assets remaining in their hands.
The practical and important question in this case is, what rights, if any, had the appellants to the surplus moneys in the hands of the court for distribution? The surplus moneys arising upon sale of lands under a final decree in foreclosure belong to the parties who had estates or interests in the lands sold, which were cut off by the sale. The real estate having been converted into money, the several parties are entitled to be paid out of the fund the equivalent of their respective interests, in the order of their priority as between each other. Clarkson v. Skidmore, 46 N. Y. 301. The appeal-book in this case discloses that Simon D. Paddock, one of the. appellants, had a judgment against J. Forman Wilkinson and-Alfred Wilkinson for $40.82, which was docketed in the county in which the mortgaged premises were situated on January 2, 1885, and that he recovered another judgment against the same defendants for $2,057.36, which was docketed January 26,1885. It. also discloses that Thomas B. Sessions, the other appellant, obtained a judgment against them for $4,316.46, which was docketed January 31, 1885. Thus it will be seen that Paddock’s judgment for $40.82 was docketed in the county where the mortgaged premises were situated prior to the .judgment, recovered by the Merchants’ National Bank, under which the interest of J. Forman Wilkinson in the premises was sold and purchased by Judge Kennedy. It further appears from the appeal-book that the other judgment obtained by Paddock and the judgment recovered by Sessions were prior to-many, indeed to most, of the judgments upon which creditors’ actions were brought to set aside such deed, mortgage, and assignment, and in which receivers were appointed. The appellants brought no action to set aside such deed, mortgage, and assignment, nor were they named as plaintiffs in any action brought for that purpose. Their claims were not set forth in any such action; neither have they made any application or taken any steps to become parties to, or to come in under, the Loos or any other creditor’s suit or judgment against the Wilkinsons, or contributed, or offered to contribute, to the' expenses thereof.
We think the referee and special term properly held that the widows of J. F. Wilkinson and Alfred Wilkinson were entitled to receive the value of their dower rights in the mortgaged premises, notwithstanding the fact that they had joined with their husbands in conveying the equity of redemption in the premises to John Wilkinson. That conveyance was set aside on the ground that it was fraudulent as to the creditors of J. Forman and Alfred Wilkinson. In Hinchliffe v. Shea, 103 N. Y. 155, 8 N. E. Rep. 477, Judge Andrews said: “It is the generally recognized doctrine that, when the husband’s deed is avoided, or ceases to operate, as where it is set aside at the-instance of creditors, or is defeated by a sale on execution under a prior judgment, the wife is restored to her original situation, and may, after the death, of her husband, recover dower as though she had never joined in the conveyance.” Robinson v. Bates, 3 Metc. (Mass.) 40; Malloney v. Horan, 49 N.
- As we have already seen, the judgmentof Paddock for $40.82 was prior to the judgment of the bank, upon which the interest of J. Forman Wilkinson in the premises was sold; and therefore, if it became a lien thereon, it was prior and superior to the lien of the bank judgments. But the respondents claim that it never became a lien on the premises because of the previous transfer of the premises by the Wilkinsons, although such transfer was fraudulent and void as to their creditors; in other words, their claim is that that transfer was valid until set aside, and, not having been set aside as to the appellants’ judgments, they never became a lien on-the premises. This contention does not appear to be sustained by the authorities. The doctrine of the authorities seems to be to the effect that, as to real estate, judgment creditors acquire liens thereon in the order in which their judgments are docketed, and that their priority is not affected by suits brought to set aside a fraudulent transfer of such real estate. Bank v. Farthing, 101 N. Y, 346, 347, 4 N. E. Rep. 734; Underwood v. Sutcliffe, 77 N. Y. 62; Insurance Co. v. Mayer, 19 Abb. N. C. 92; O'Brien v. Browning, 49 How. Pr. 113. Moreover, the transfers by the Wilkinsons were shown to have been fraudulent and void as to their creditors by proof introduced by the respondents. In Bank v. Risley, 19 N. Y. 369, it was said: “The defendant’s title depended, therefore, on the fact that the assignment had been made in fraud of creditors; and, having proved that fact in his own favor, he could not allege that it was not true in respect to the plaintiff.”
The court erred in holding that Kennedy, Loos, Bates, and Andrews were entitled to the remainder of the one-half of the surplus moneys arising from the sale of J. Forman Wilkinson’s interest in said premises. The judgment of Paddock for $40.82 and interest was a prior lien and should have been ordered paid before any sum should have been directed to be paid to the purchaser at the execution sale or- his transferees.
It is contended by the appellants that the deed given by the sheriff to Kennedy, Loos, Bates, and Andrews in pursuance of such sale was void for various reasons, specified in their points. The chief reasons assigned are: (1) That the property was in the hands of the court in a creditors’ action when the sale was made and deed given, and that the sale was .void because made without the consent of the court; and (2) that the transfer by Judge Kennedy to other creditors tended to induce them not to redeem the premises from him, and was therefore against public policy, and consequently void. After examining the appellants’ brief and authorities upon the question of the invalidity of that deed, we have concluded that the claim that it was invalid cannot be sustained. This court has already held that the sale under the execution issued on the bank judgment was properly made. In re Loos, 3 N. Y. Supp. 383. That decision we regard as final upon this question.
We have been unable to discover any principle of' public policy that has been violated by the transfer, or by the agreement between Judge Kennedy and the other creditors of the Wilkinsons, to whom such transfer was made. The parties had the right to make and receive that transfer, and the agreement between thém was, we think, valid. It therefore follows that the ¿grantees in the sheriff’s deed are entitled to the remainder of the surplus moneys in this action arising from thesale of J. Forman Wilkinson’s interest in said premises, after paying the widow’s dower, the James judgment, and the Paddock judgment of $40.82, at least so far as the appellants are con
This brings us to the consideration of that part of the order which relates to the surplus moneys derived from the sale of the portion of the premises that formerly belonged to Alfred Wilkinson. As we have already held, the •court properly directed the payment to the widow of Alfred Wilkinson of a gross sum in lieu, and in full satisfaction and discharge, of her right of dower in the premises. We are of the opinion that the remainder of such •surplus should be first applied to the payment and discharge in full of the debts of Alfred Wilkinson and Edward 3ST. Westcott, as copartners, and Alfred Wilkinson individually, as directed by their assignment to Crouse, so far as the same may be necessary to the full discharge of such debts, after applying the assets of said firm, if any there be, to that purpose. The residue, if any shall remain after satisfying the widow’s right of dower and discharging the debts of said firm and Alfred Wilkinson, should be retained by the receivers, and applied in payment and discharge of the debts of Wilkinson- ■& Co.
The appellants’ contention that the creditors who have brought suits in equity in which receivers were appointed have waived their legal liens on •said premises and the surplus moneys arising from the sale herein cannot, we. think, be sustained. It will be observed that no attempt was made in those suits to appoint a receiver of the real estate of the judgment debtors. The persons appointed were made receivers of the.personal property and the rents and profits of the real estate only. There was neither judgment nor order directing the judgment debtors to transfer the title to the real estate to the receivers, and-no such transfer was ever made. The receivers never acquired any title to the real estate. The title to the real estate remained in the judgment debtors, so far as their creditors were concerned. We are of- the opinion that the creditors of the Wilkinsons could pursue their remedy to set aside the fraudulent conveyances made by the judgment debtors, and have a receiver appointed of their personal estate, without waiving their legal lien on ■the premises. Bank v. Risley, 19 N. Y. 369; Walker v. White, 36 Barb. 593; Erickson v. Quinn, 15 Abb. Pr. (N. S.) 166.
It is quite manifest that the referee made a mistake in describing the premises in his report, and that in that respect his report was incorrect; but that •the premises sold on foreclosure were a-part of the premises sold on the bank "execution is not denied. These considerations lead us to the conclusion that the order appealed from should be modified, so as to conform to the views expressed in this opinion, and, as modified, should be affirmed, with costs to the appellant Paddock, payable out of the surplus moneys in this action. If the parties do not agree upon the form of the order, it may be settled before Martin, J., on five days’ notice.
Judgment modified, so as to conform to the opinion herein, and, as modi•Sed, affirmed, with $10 costs and disbursements to Simon D. Paddock, to be paid out of the surplus moneys. If not agreed upon, order to be settled by Martin, J., on five days’ notice. All concur.