Case ID: ny-super-ct_49/html/0312-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Truax, J. Sedgwick, Ch. J.—[Concurring.]", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BARBARA POPFINGER, Respondent, v. HENRY YUTTE, et al., Appellants.
    
      Meal estate.—Mesulting trust for benefit of creditors.— Conveyances in fraud of creditors.—Profits on trust property.
    
    Y. being indebted to R. conveyed to him certain real property as security, and thereafter R. conveyed said property to a third person, receiving as-consideration, a mortgage thereon, which he retained in payment of his claim, and a deed of certain other premises, which, at the request of Y., was allowed to go to Y.’s wife, who thereafter exchanged the same for .other real property which she sold for $155. With this money, and $300 of her own, she purchased premises which she subsequently sold at an advance of $5,000 on the purchase price, and with $5,500 of the amount so received, purchased certain other premises. Plaintiff holding a judgment against Y. for $404.76, founded on a claim existing at the time of the above occurrences, upon which an execution had been returned unsatisfied, brought this action against Y. and his wife, to have his judgment satisfied out of said property last referred to, etc. The trial judge found that the wife paid no consideration for the property originally conveyed to her, and that she knew of Y.’s indebtedness to plaintiff, and held the property to place it beyond the reach of Y.’s creditors.
    
      Held, that the conveyances to and from the wife were void as to Y.’s creditors, and that said wife took and held and subsequently dealt with the premises originally conveyed to her, as trustee, subject to a resulting trust, under the statute, in favor of said creditors; and further that plaintiff was entitled to an accounting regarding the rents, etc., of the several parcels of land so held by said wife, and to judgment appointing a receiver and directing a conveyance to and a sale by such receiver of said premises, held by the wife at the time of the commencement of the action, and that plaintiff’s said judgment be paid from the proceeds, in full, and not merely to the extent of said $155.
    This action was tried before the court without a jury. The plaintiff and the defendants appeal from the judgment rendered. The facts are stated in the findings made by the trial .court, substantially, as follows :
    Plaintiff recovered a judgment against defendant Henry Tutte, for $494.76, June 19, 1882. Execution was issued upon said judgment and returned unsatisfied. She thereupon commenced this action to have certain conveyances which transferred the property of Henry Tutte to Ms wife, the defendant Christine Tutte, declared null and void, and, on the ground of fraud, that the said judgment be declared a lien upon the property held by defendant Christine Tutte, ■and that a resulting trust in favor of plaintiff be declared upon the real estate held by defendant Christine Tutte. The indebtedness upon which the judgment was recovered existed at the time of the following occurrences: The defendant Henry Tutte in 1877 being indebted to one Reinig conveyed to him, as security for said indebtedness, certain real property upon Long Island, which said Reinig thereafter, at the request of said Tutte, conveyed to Eliza •Gfierke, receiving therefor a mortgage on the premises, which he retained in payment of the said indebtedness to him, and a deed of a house in Jackson street, New York, which he allowed to go to Christine Yutte, the wife of said Henry Yutte, she paying no consideration therefor, and being cognizant of all the facts, including the indebtedness of her husband to the plaintiff, and holding the property for the benefit of her said husband to place it beyond the reach of his creditors. Thereafter, she exchanged said premises for a house in Avenue C, New York, which she subsequently sold for $155 in cash and certain real property in New .Jersey. With this $155, and $200 in addition which she borrowed from her son, she afterwards purchased premises in Sixth street, New York, which she sold for $5,000 more than the purchase price thereof. Thereafter, on July 19, 1882, Christine Yutte, with $5,500 of the proceeds of the sale of the premises in Sixth street, purchased the land and premises in Chrystie street described in the complaint, and took a deed thereof to herself, which she held at the time of the commencement of the action.
    The court found, as conclusions of law : I. That the several conveyances to and by Christine Yutte were void as to creditors of Henry Yutte. II. That the defendant Christine Yutte took and held the premises in Jackson street as trustee, under a resulting trust in favor of the creditors of Henry Yutte. III. That in dealing with said premises and in the several transfers above set forth, the defendant Christine Yutte acted as such trustee to the extent of the interest of said Henry Yutte therein. IV. That the plaintiff has a lien upon the land in Mew Jersey to the extent of her judgment. V. That the plaintiff is entitled to an accounting for the rents, issues, and profits of the several pieces of land and premises heretofore held by the defenddant Christine Yutte in trust for plaintiff. VI. That the plaintiff is entitled to judgment appointing a receiver and directing a conveyance to him by Christine Yutte of the premises in Chrystie street described in the complaint, and directing a sale by said receiver of said premises and lands, and directing such receiver out of the proceeds of the sale of the premises in Chrystie street to pay the sum of $155, with interest from the 13t,h day of January, 1881, on the plaintiff’s judgment besides the costs of this action, with five per cent, allowance, and the costs of such receivership and sale.
    The defendants duly excepted to divers of the findings of fact and to all of the conclusions of law of the court. Plaintiff duly excepted to the last conclusion of law, contending in said exception and her proposed findings of law that she was entitled to have all of her judgment paid out of the proceeds of the sale of the Chrystie street property, to be made by the receiver.
    
      Wehle & Jordan, for plaintiff.
    — I. The defendant Christine Yutte is liable as trustee to plaintiff for the property now held by her. The primary consideration for the Jackson street house moved from the judgment debtor, and by force' of the statute of uses and trusts a resulting trust in favor of plaintiff, who was “ at that time” a creditor of Henry Yutte, ensued, which a court of equity can enforce (2 R. S. ch. I. tit. II. § 52; McCartney v. Bostwick, 32 N. Y. 53; Kamp v. Kamp, 46 How. 143; Garfield v. Hatmaker, 15 N. Y. 475). This is not merely a creditor’s bill. It is also an action to enforce a trust. A distinction exists between creditors’ bills and actions by virtue, of the statute of uses and trusts. In the former the creditor is merely remitted to the lien of his execution, while in the latter he is entitled to invoke the interposition of a court of equity to the same extent as other cestui que trusts, as of the date when the fraudulent transfer occurred (McCartney v. Bostwick, supra). The trust estate, or any of its proceeds, may be followed by the cestui que trust through the several transmutations, so long as any part of it is distinguishable (Stephens v. Sinclair, 1 Hill, 143).
    II. The plaintiff is entitled to the satisfaction of her entire judgment out of the property now in the hands of the defendant Christine Yutte, upon the ground that Christine Yutte, as trustee, is bound to account for the gains which she secured with the judgment debtor’s property (Story's Eq. Jur. §§ 1,210-1,212; Penman v. Slocum, 41 N. Y. 59).
    III. A trustee who intermingles trust property with his own must distinctly point out his own or lose all, and if he deals with the trust estate, the cestui que trust may claim the gains (Tiffany Trusts, 34; Seaman v. Cook, 14 Ill. 505; Russell v. Jackson, 10 Hare, 209).
    
      Conlan & McCrea, for defendants.
   By the Court.—Truax, J.

—We see no reason for disturbing the findings of fact made by the court at trial term. The only question for us to determine is, were the conclusions of law warranted by those findings?

The trial court has found that the transfer made by the defendant Henry Yutte to Beinig was made for the benefit of, and in trust, for the defendant Henry Yutte; and that the Jackson street house was conveyed to the defendant Christine Yutte by Mrs. Gierke as part of the consideration for the transfer to her of the property conveyed by Henry Yutte to Beinig. This being the case the consideration for the Jackson street property was, in fact and in law, paid by the defendant Henry Yutte, and therefore came within the statute of uses and trusts above cited.

The trial court also found that the defendant Christine Yutte exchanged the Jackson street property for a house and lot in Avenue C ; that she sold the house and lot in Avenue C for $155 in cash, and other property ; that with this cash and the further sum of $200, she purchased certain premises in Sixth street, that she sold the Sixth street property and made a profit of $5,000, over and above the purchase price thereof, and that with the proceeds of this sale she purchased the property in Chrystie street now held by her. The trial court held, as a conclusion of law, that all the money that plaintiff was entitled to obtain from the Chrystie street property, was the sum of $155, with interest thereon from the date of the sale of the Avenue C property. It is of this conclusion that the plaintiff complains.

We are of the opinion that the trial court erred in this respect, and that it should have found that the plaintiff was entitled to be paid the full amount of her judgment, §494.78, and the interest thereon from the entry of the judgment. The defendant Christine Yutte is bound to account to the plaintiff for the gains she has made from the judgment debtor’s property. It is well settled that she was a trustee for the creditors of Henry Yutte, one of whom was the plaintiff, and that she held the property, part of the consideration for which had been paid by Henry Yutte, for the benefit of his creditors, and whatever profit she made by dealing with the property that she held as such trustee inured to the benefit of the creditors of Henry Yutte (Van Epps v. Van Epps, 9 Paige, 237; Ten Eyck v. Craig, 62 N. Y. 420; Flagg v. Mann, 1 Sumner, 486, cited in Penman v. Slocum, 41 N. Y. 59; see also Davis v. Leopold, 87 N. Y. 620).

One • of the findings of fact to which the defendants object is the finding that the conveyances to the defendant ■Christine Yutte were made with the intent on the part of the defendants to defraud the creditors of the said Henry Yutte.

The evidence shows that at the time these conveyances were made the said Henry Yutte was indebted in a considerable amount to the plaintiff; that the only property that he had was the property conveyed by him to Beinig, and that the consideration for the transfer to Christine Yutte was paid by the defendant Henry Yutte. The evidence put the burden of proving that the conveyance to Christine Yutte was made in good faith, and without, any such intent to defraud, upon the defendants. But they offered no evidence to rebut the presumption created by the statute (2 R. S. 1105, 51, 52, Banks’ 6th ed.) The finding was therefore right (Dunlap v. Hawkins, 59 N. Y. 342).

This view we have taken of the law disposes of the appeal taken by the defendants.

The judgment is modified so as to direct the receiver to pay to the plaintiff or her attorneys, said sum of $494.76, with interest thereon from June 19, 1882. The plaintiff is entitled to one bill of costs on this appeal.

Sedgwick, Ch. J.—[Concurring.]

—I agree in the result of the opinion of Judge Truax. It does not seem to me that the so-called profits upon the sale of the Sixth street property are to be attributed to the money she borrowed from her son more than to the money she obtained by the sale of the Avenue 0 property. These profits were the consequence of the use of the latter as much as of the former (Grillett v. Bate, 86 N. Y. 87).

Ingraham, J., concurred.