Case ID: ny-st-rep_5/html/0565-01.html
Source: Caselaw Access Project
Author: {"author": "Danforth, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James H. Truesdell, Heir-at-Law and Executor of Darius Truesdell, deceased, Resp’t, v. Henry J. Sarles, Appl’t.
    
    
      (Court of Appeals,
    
    
      Filed January 18, 1887.)
    1. Judgment — Moetgage — Coubt no authority to change deed into— CREDITOR'S ACTION.
    In a creditor’s action brought by plaintiff to set aside a conveyance of real estate by the judgment debtor to bis wife, tbe complaint averred that the conveyance was granted by the debtor in favor of his wife Avithout consideration, with the sole purpose and intent to hinder, delay and defraud creditors and demanded that the conveyance be canceled of record and the judgment declared a lien upon the property. The evidence showed that the deed was upon the actual consideration of $ 1,000 expressed therein, and was made Avith no intent to defraud any creditor, but in good faith: Field, that a judgment declaring that the deed should stand “asa mortgage security in the sum of §1,000,” and that subject to it, the plaintiff’s judgment should be a lien upon the property is not within the relief prayed for in the complaint, and is erroneous; that it in effect affirmed the validity of the conveyance to the wife so far as she was concerned, and that there was no authority for changing her deed into a mortgage. Ruger, Ch. J., and Earl J., dissenting.
    Appeal from a judgment of the supreme court, general term, second department, modifying, and affirming as modified, a judgment of the Westchester county special term, in favor of the plaintiff, Avhich judgment set aside a conveyance as in fraud of the rights of creditors.
    
      Francis Larkin with John Gfidney, for applt’s ; William Gr. Valentine, for respt’s.
    
      
      
         Reversing, 38 Hun, 612 mem.
      
    
   Danforth, J.

This is a contest, between the plaintiff, as executor of one Darius Truesclell, a judgment creditor of Henry J. Sarles, with execution issued and returned unsatisfied, on one-side, and tbe debtor and bis wife, Adaline, on tbe other, concerning tbe title to certain real estate, conveyed to her through one Gidney, as an intermediary. Tbe complaint shows that the judgment was recovered October 19, 1881, in an action commenced August 17, 1881, upon an account for goods; that Henry J. Sarles acquired title to the premises in question in 1871, and his deed to Gidney and that from Gidney to Adaline were given June 7, and recorded June 20, 1877, without consideration, with the sole purpose and intent to hinder, delay and defraud creditors, and with notice to Adaline of her husband’s indebtedness to the plaintiff and other persons; but she nevertheless holds the legal title, and claims “ to be the owner of the real estate in her own right.” The plaintiff asks judgment that the conveyances be cancelled of record, as fraudulent and void as to creditors of Henry J. Sarles; that the real estate described in them be declared to be his property and the judgment a lien upon it.

The defendant Adaline, by answer, put in issue the allegations of the complaint, and alleged that the deed to her was upon the actual consideration of $1,000, as expressed therein, and made-for the purpose of conveying to her the legal title, with no intent to defraud any creditor or other person, but in good faith. The answer of Henry J. Sarles, so far as any question here is. concerned, was in substance the same.

The learned trial judge found that, when conveyed to Ada-line, the premises were subject to a mortgage of $1,000, and, so far from finding that she paid no consideration, he found that the-conveyance to her was for the consideration set up in her deed and answer, and, instead of directing the cancellation of the deed as void, declared that it should stand “ as a mortgage security in the sum of $1,000; ” but that, subject to it, the plaintiff’s judgment should be a lien upon 'the property, and rendered judgment accordingly, with costs to be recovered of Adaline and Henry J. Sarles. Upon appeal the general term held that it was justly found that the conveyance was a mortgage, but, as Adaline had maintained her defense, she should not pay costs, but, on the other hand, have her claim established at $1,000, with interest from April 1, 1872, with costs of the action, and so modified, and then affirmed the judgment of special term.

We think the circumstances of the case required the general term to go further, and reverse, rather than modify, the decision of the trial judge. Upon the issues formed by the pleadings, the question was whether the evidence disclosed fraud, either in fact or law, sufficient, as against Adaline Sarles, to set aside the deed under which she claimed title. This was the only available ground of relief, and the burden of proving it was on the plaintiff. It is hardly necessary to criticise the evidence, for the judgment of neither court follows the plaintiff’s prayer or the statement of his cause of action. It is therefore in violation of the well-settled rule that no judgment can be given in favor of a plaintiff on grounds not stated in his complaint, nor relief granted for matters not charged, although they maybe apparent from some part of the pleadings or evidence. Rome Exchange Bank v. Eames, 1 Keyes, 588; Wright v. Delafield, 25 N. Y., 266; Southwick v. First Nat. Bank, 84 N. Y., 420. This point was fairly presented by the exception taken at the close of the plaintiff’s case, and again at the close of the testimony, to the refusal of the trial judge to grant the defendant’s motion to dismiss the complaint, and by exceptions to the refusal to find certain conclusions of law to which his attention was directed.

So far -from sustaining the plaintiff’s cause of action, the decision of the special term and the final judgment of the general term, not only in effect, but directly, affirmed the validity of the conveyance to Adaline. There is not only no finding of a fraudulent intent on her part, but the precedence and right of security, with indemnity against costs, adjudged to her an equivalent to a finding that she was innocent of fraud, or notice of any intended fraud on the part of her grantor. She stands, then, upon the record as a grantee for a valuable consideration, and this, even i£ inadequate in amount, is sufficient to sustain her title. 2 Rev. St., § 137. The decision of the court below is therefore wholly inconsistent with the contention of the plaintiff, as expressed in his complaint, that the deed was fraudulent in fact on the part of both husband and wife. Nor does the evidence permit the conclusion that it was obtained under even suspicious or inequitable circumstances. Already incumbered with a mortgage of $1,000, the property was conveyed in pursuance of an agreement that the grantee should have the title in consideration of $1,000, confessedly her own money, advanced and paid towards the building of the house. According to testimony taken upon supplementary proceedings, and introduced by the plaintiff, the debtor, “ at the time of the transfer, and for years afterwards, was solvent and able to pay his debts at a moment’s notice.” This evidence was substantially reiterated by the debtor upon the trial, and neither by cross-examination nor otherwise was a different state of his affairs presented. It is shown that in 1872 he was dealing with the plaintiff, but he paid fully and promptly, first by note at short intervals, and then met the notes, at maturity, according to the usage between them, and, although he continued from 1872 to 1881 to buy of the plaintiff, the debt in judgment was in no part an old one, but contracted, as the evidence disclosed and the trial judge found, between the twenty-sixth of March, 1881, and the twenty-first of May, 1881. The fact that the plaintiff had given credit previous to the deed. and was not informed, when subsequent credit was given, of the conveyance to tbe wife, is no evidence of fraudulent intent Carr v. Breese, 81 N. Y. 584. There are therefore no facts or incidents showing intended fraud, — no act susceptible of fraudulent operation, — and, if there are in truth circumstances which would permit a court to turn the absolute conveyance into a mortgage, they are neither alleged in the complaint nor stated in evidence.

Our attention, however, is called by the learned counsel for -the respondent to a request made by the defendant, and a finding by the trial judge in assent thereto, viz ; “ that, at the date of said conveyance, July 7, 1877, and for three or four years previous -thereto, the said Henry J. Sarles was indebted to his wife in the sum of $1,000, which was loaned to him by her, (and which was given to her by her father,) and expended in the erection of the house upon the premises described in the complaint by the defendant Henry J. Sarles ; and the conveyance was made to Ids wife, in pursuance of an agreement by her husband to convey to her the said lot of land, for security for the said $1,000, which was the consideration for said conveyance to his wife, the defendant Adaline Sarles.” This was presented after unsuccessful motions to dismiss the complaint, and evidently not hi aid of the judgment subsequently given; for it was made the basis of a request for other findings and for conclusions of law (1) that the deeds conferring title on the defendant Adaline “ were made, executed,, and delivered in good faith and for a valuable consideration, without intent to hinder, delay, or defraud the creditors of the defendant Henry J. Sarles, or the said plaintiff, of their or his lawful debts, or demands,” and (2) “ that the defendants have judgment for the dismissal .of the complaint in this action, together with the costs and disbursements of the same,” — -and these requests being denied, the defendants excepted to both refusals. The exceptions were well taken — to the refusal to dismiss the complaint, for no case had been made out; to the refusal to find as requested, because the evidence warranted nothing less. Nor was the right to insist upon the point made by the first exception waived by the subsequent request. Having failed to obtained the entire relief asked for, the defendants might demand less, without losing any right to complain of the denial of the whole.

The cases (Carpenter v. Roe, 10 N. Y. 227; Savage v. Murphy, 34 N. Y. 508; Case v. Phelps, 39 N. Y. 164; Shand v. Hanley, 71 N. Y. 319) cited by the respondent are not analogous. In all it appeared that the conveyances in question were voluntary. In Carpenter v. Roe, the debtor was largely in debt, and his solvency contingent upon the stability of the market in which, at the time, he speculated, and failed within 50 days thereafter. In the other the conveyance was made with a view to continued and future indebtedness, and witb intent to avoid payment thereof; all parties conspired to carry out tbe fraudulent purpose. Here the deed was upon a valuable consideration, without fraudulent intent, or facts from which such intent could be inferred. As between the debtor and bis wife, the property belonged to her; and if, as against creditors, tbe deed is to be converted into a mortgage, it must be upon proper evidence in an action where such relief will be consistent with the case made by the complaint and embraced within the issue.

Upon the case as now presented, the plaintiff failed, the defendants’ exceptions were well taken, and the judgments of the general and special terms should be reversed, and a new trial granted, with costs to abide the event.

(All concur, except Ruger, C. J., and Eaiil, J„ dissenting,)