Case ID: ny-st-rep_36/html/0138-01.html
Source: Caselaw Access Project
Author: {"author": "Finch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles C. Baldwin, Resp’t, v. Fannie M. Short et al., App’lts.
    
    
      (Court of Appeals,
    
    
      Filed February 24, 1891.)
    
    Fraudulent conveyance—Consideration partly fictitious.
    Where a part of the consideration for a transfer of real estate is fictitious, and it was made by the grantor with a fraudulent intent, to which the grantee was a party, the conveyance cannot he sustained to the extent of the adequate and honest part of the consideration, hut the deed is wholly void and cannot stand to any extent as security or indemnity.
    Appeal from judgment of the supreme court, general term, fourth department, affirming judgment for plaintiff entered on decision of special term, adjudging- a deed executed by defendant O rinda B. Sperry to defendant Fannie M. Short to be fraudulent and void as to certain creditors.
    
      
      Louis Marshall, for app’lts; Martin A. Knapp and Chas. G. Baldwin, for resp’t.
    
      
       Affirming 28 N. Y. State Rep., 105.
    
   Finch, J.

The findings of fact in this case establish that the conveyance of the house and lot to Mrs. Short by Mrs. Sperry was made and accepted with an intent.on the part of both grantee and grantor to hinder, delay and defraud the creditors of the latter. The conveyance was not voluntary, for it was made in part in' consideration of a debt of about-eight thousand dollars which the findings show was an honest debt and justly due to the grantee from the grantor. The conclusion of a fraudulent intent on the part of Mrs. Short was therefore essential to a recovery and was established by proof that the "balance of the consideration for the transfer was made up of a false and pretended debt for board and washing which was wholly fictitious and never in fact existed and which both parties to the transaction falsely concocted to make up a full and fair consideration for the conveyance. The existence or the falsity of that indebtedness was therefore an essential and vital element in the controversy, and the appellants claim that in the effort to show it to have been a fabrication evidence was admitted against Mrs. Short of declarations made by Mrs. Sperry at a period preceding the conveyance which bore directly upon the validity of the disputed debt and were inadmissible as against Mrs. Short.

Mrs. Parker, a witness for the plaintiff, was permitted to testify that just prior to the assignment she had a conversation with Mrs. Sperry in the absence of Mrs. Short, in the course of which Mrs. Sperry said “ I think I shall sell this house; it costs so much to keep it up just for Mary’s and my board.” The defendants had asserted that such board was an honest debt due to Mrs. Short, from her mother and the plaintiff that it was paid and extinguished as it accrued by the rent of the house and that by agreement the board was to be furnished in exchange for the rent which would otherwise have been due from Mrs. Short on account of her occupation.

The declaration sworn to by Mrs. Parker tended to show the truth of plaintiff’s contention, but was in the absence of Mrs. Short, constituted no part of the res gestee, and was inadmissible as against the grantee, in whose behalf the objection was made.

But it is a conclusive answer to this allegation of error that Mrs. Short herself, when examined as a witness, admitted all and more than what the objectionable evidence tended to prove. She acknowledged that during her occupation of the house her mother paid all the taxes and insurance and almost all the charges for repairs, and further testified: 1 don’t remember saying to Mrs. Sherwood that I boarded my mother and Mary for the rent of the house; did their washing; that while I thought a great deal of my sister, I thought it was hard I should pay the rent and that my sister should receive it; I would not say I didn’t; I don’t remember ; I don’t know when I said it; that was the arrangement under which I was in the house.”

She said again, at a later period of her examination: “ I had loanedmy mother this money; I boarded her and my sister and did their washing for this house; for the rent of the house. * * * I was not to pay any rent only in that way; only to board them in that way and do their washing; that was to pay my rent, and that arrangement continued down to the time I received my deed.” Of course, these admissions made the declarations to Mrs. Parker wholly superfluous and immaterial.

Mrs. Parker was also permitted to narrate other declarations of Mrs. Sperry, made prior to the conveyance, under objection. These were, in substance, that it was preposterous to suggest that she should make presents to her daughters because they took care of her when she was sick; that they only did their duty.

In answer to the objection interposed in behalf of Mrs. Short, the court held the declarations not competent, but to accommodate the witness allowed them to be detailed, conditioned upon their being stricken out if not made competent. In the further progress of the trial, both Mrs. Short and Mrs. Sperry testified to the transfer to the former by the latter of some “ ranch stock ” a few months before the assignment, and added that it was done as remuneration for the services rendered during Mrs. Sperry’s sickness. The declarations sworn to by the witness tended to show that the mother did not regard the services of her daughters during her illness as constituting a debt which she was in any manner bound to repay, and that is the sole element of value in the proof. But exactly that Mrs. Short herself finally admitted.

She said expressly that for her services in the illness referred to she neither asked nor expected any pay; that the transfer of the ranch stock was a present; that it was given to her; and so constituted a gift rather than a purchase. If it be still suggested that the declaration proved showed an existing unwillingness to make her a present, the fact was both immaterial and harmless, for the admitted delay of at least eight years shows the same thing much more forcibly and leaves no doubt about the sug-> gested lack of inclination.

But another class of evidence was received under objection. The plaintiff proved several instances of transfers of property by Mrs. Sperry to persons other than Mrs. Short prior to the conveyance to the latter, and it was objected in her behalf that she could not be affected by transactions to which she was not a party and of which she had no knowledge. But the plaintiff was bound to prove the fraudulent intent of Mrs. Sperry, both as against herself and against Mrs. Short, and as against the latter by evidence competent as against her. The acts and transfers of Mrs. Sperry pertinent to the question of her intent were admissible against both to establish that intent; and are not to be excluded because they do not also bear upon the intent of Mrs. Short. It is not necessary that the same fact offered in evidence should tend to establish both intents. If it proved Mrs. Sperry’s alone, but was a kind of evidence competent against Mrs. Short, no error would follow its admission. It would tend_ to prove one branch of the issue, leaving the other to be met in some different way.

There are some other objections to evidence, but of so little importance as not to justify discussion. They related principally to the. declarations of Mrs. Sperry on the day of the assignment and conveyance, and pending the preparation of those instruments, and were either within the res gestae, or wholly immaterial in view of the ultimate course of the trial.

The contention that the conveyance to Mrs. Short may be-sustained to the extent of the adequate and honest part of the consideration is fully answered by the authorities which hold that where the deed is fraudulent against creditors it is wholly void and cannot stand to any extent as security or indemnity. Boyd v. Dunlap, 1 Johns. Ch., 478; Dewey v. Moyer, 72 N. Y., 70; Billings v. Russell, 101 id., 226. A different rule would put a premium upon fraud.

Almost invariably some honest consideration is made the agency for floating a scheme of fraud against creditors, and if that may always be saved, nothing is lost by the effort, and the temptation to venture it is increased. We are thus unable to find in the record any error which will justify a reversal. Indeed, since the ground of recovery against the defendants rests almost wholly upon the single fact of a false and fraudulent consideration, fabricated by the joint act of both grantor and grantee, and distinctly admitted by each to have been without an honest foundation, the questions of evidence raised can hardly be said to have affected the ultimate result.

The judgment should be affirmed, with costs.

All concur, except Ruger, Ch. J., and Andrews, J., not voting.