#### Matter of the Proceedings Supplementary to Execution Brought by Charles W. Millar, Judgment Creditor and Appellant, *v.*William Wall Weaver, Judgment Debtor and Respondent.

(City Court of New York, General Term,

March, 1898.)

Supplementary proceedings — Fraudulent transfer through a third party.

Upon an examination in supplementary proceedings of a third party, who originally held an interest in an estate as trustee for the judgment debtor, the judgment creditor is entitled to show that a transfer of this interest, made by the judgment debtor to another person, was a mere subterfuge, was intended to delay creditors, that the trustee himself furnished the consideration and that it was inadequate.

Appeal from an order for the examination of a third party in supplementary proceedings.

J. Noble Hayes, for appellant.

Blair, Phelps & Lyman, for respondent.

Fitzsimons, Ch. J.

The jddgmlent'.debtor having an one sixteenth interest, in an estate apparently valuable, transferred it to one Howard for $800, who stated that he agreed at the time said transfer was made that !he, in tum, would transfer said interest to one Truslow whenever he was requested by Truslow to do so, and that Truslow had furnished Mm, he thought, with the consideration money paid to the judgment debtor.

At the time said transfer was made, Truslow held as trustee the one-sixteenth interest wMch the judgment debtor had in the éstate in question, and was also the judgment debtor’s cóitsin. lipón ttie examination of Truslow herein, he was subpoenaed as a third *255party for the purpose of showing that he held property of the judgment debtor. The judgment creditor endeavored to prove by him that the value of the property exceeded the consideration price paid, also that he paid the purchase price of said interest, instead of Howard, the alleged purchaser, and the value ,of the monthly rental of such interest also, when the transfer was made to Howard.

All questions in this line of examination the witness Truslow declined to answer, and the Special Term justice, upon motion, declared his examination closed without requiring* him to answer them. In so acting, we think the learned justice erred.

The judgment creditor, upon this examination, had a right to-show that such transfer was a fraud upon creditors, and that Truslow held such interest as a fraudulent transferee holding in fraud of creditors; and that said transfer was in fact ¡a mere blind and subterfuge entered into between said debtor and Truslow for the purpose of preventing creditors from collecting debts due them from Weaver. 40 N. Y. 328.

If the answers to said questions showed a fraudulent sale then, of course, in an action brought by a receiver to set aside the transfer made, it would be set aside, and then honest creditors paid their claims as far as such interest would do so.

The very purpose of examinations of this character is to discover property of the judgment debtor; if found in his possession he must turn it over to a receiver ¡or sheriff as directed by the court. If found in the hands of dishonest "and fraudulent transferees such receiver may institute proper proceedings to recover the same, when recovered to apply it to payment of the judgment which caused his appointment.

The order appealed from should be reversed, and the witness Truslow must answer the questionsi which he refused to answer and any other questions which may be deemed proper by the Special Term justice.

Olcott, J., concurs.

Order reversed, with costs.