| N.Y. Sup. Ct. | Nov 16, 1894
Lead Opinion
The defendants Matthews and Waddell have not answered in this action, evidently desiring that the plaintiffs should prevail. This is a race between creditors, at the outset of which the debtor favored his landlord and indorser, but before the close he attempted, in the interest of other creditors,—these plaintiffs,— to destroy the securities which he had voluntarily given, on the ground that they were fraudulent; but on the trial he testified in behalf of the plaintiffs, and when confronted with his notes and the indorsements which the mortgages were given to secure he admitted that all of them were just and honest, and no attempt was made to show that they were not. It is apparent that Matthews gave these mortgages with an honest intent to secure to his creditor his just demands, but that for some reason, within 30 days, he came to regret his act, and attempted, by "permitting other credit- , ors to charge him with fraud, which he failed to deny, to substitute them in the place of his landlord. The court found that the mortgages were given and received to secure honest debts, without any intent on the part of the mortgagor or mortgagees to hinder, delay, or defraud creditors. No other conclusion was possible under the evidence. These mortgages were not fraudulent in fact, nor were they fraudulent in law. Matthews had a legal right to secure Mr. Sturtevant by chattel mortgages on his property, which he did. The court finds that Sturtevant did'not know that the trust mortgage was to be executed until after «it had been executed and delivered. It is apparent that Matthews, being in poor health, and desiring to put some persons in charge of Ms property, which he was about to leave, devised, through his attorney, tMs scheme of giving to trustees a mortgage upon the property so as to give them a right to possession and power to manage. The court refused to find that Matthews was insolvent when the mortgages were given, or that he was insolvent at the date of the trial, and he testified that he had property not included in the mortgage. It does not appear that an execution had been returned unsatisfied against him, or that the sheriff had been unable to find property subject to execution, and we think the refusal of the court to find insolvency was justified by the evidence.
Had Sturtevant participated in this scheme, a more serious question might have arisen; but he did not. That no ground was established for setting aside the two mortgages given to Sturtevant
PARKER, J., concurs.
Dissenting Opinion
(dissenting). I cannot concur in the conclusion arrived at by Mr. Justice EOLLETT that the judgment in this-action in all its parts should be affirmed. It is undoubtedly true that no ground was established for setting aside the two mortgages given to Sturtevant. But in respect to the trust agreement an entirely different question arises. It is true that such agreement appears to have been executed at the same time with the mortgages. But the validity of the mortgages cannot validate an agreement which, as to the creditors of Matthews, was void upon its face. It might very well be urged that, the mortgages and trust agreement having been executed at the same time, and the trust agreement being fraudulent, the mortgages must therefore fall with it. But the rule to Avhich attention has been called does not apply to mere fraud in law, but only to those cases in which a series of papers are executed at the same time, and a fraudulent intent in fact pervades the whole transaction. The mortgages to Sturtevant were executed in good faith, to secure to him the amount of his indebtedness. The trust agreement was also executed to add to that security, but Avithout Sturtei'ant’s knowledge or consent. Such trust agreement was not one which could prevail, or give any title to the trustees therein named as against the creditors of Matthews. Such being the case, Matthews’ creditors had the right to avoid that agreement. The plaintiffs in this action were creditors of Matthews at the time of the execution of the agreement, and they have brought this action to set it aside as an impediment to their securing the payment of their debts. It is not necessary to discuss the nature of the agreement. It is apparent that it is such an agreement as an insolvent debtor cannot make, and that trustees appointed thereunder cannot hold the property of such debtor as against his creditors who have Sled their bills to enforce judgments which they have obtained against the creator of the trust
It is urged in the opinion referred to that it does not appear that an execution has been returned unsatisfied against Matthews, or that the sheriff has been unable to find property subject to execution, and that, therefore, the refusal of the court to find insolvency was justified by the evidence. It is not necessary that a judgment