The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-06-09
UNITED STATES DISTRICT couar-s BANKRUPTCY


Importeni Decision by Judge Biatchford ~
to Voluntary Convsynnces-Opinions Of
Chancellor Walwerth and Lord Chancellor
Westbury.
John Sedg,otck, Assignee in BANKRUPTCY OF James
Z. Place ana James u. Sparknan. cs. james X.
Place ana Others.-Tnls case has been rcargued in
the United States District Coury. The plantH sets
forth that the settlement made by Place on his wife
or property In the Fifth should be set aside
and rendered void and fraudulent. on the ground
that 1t was maGe with the view Of cheating his
creditors.
Judge Blatchford has Just rendered very lengthy
decision In the case. lie says the plaiutirf Ii
not entitled to decree as prayed for as respects
such property. furniture and proceeds. Mr..
Sedgwick, the plaintiff, as assignee In bank
ruptcy OF James X. Place. Is vested, by
virtue Of section fourteen Of the Bankruptcy
act with all property conveyed by the bankrupt in
fraud of his creditors. 1t was decided by the SUI
preme Court or the United States in 1928 Sexton vs.
Wheaton, Wheaton, 800 tiat q voluntary settle
ment In favor OF o wife cannot be 1mpcached BY
subsequent creditors, merely because 1t Is voluntary.
In Kinds, lessee, vs.. Longworth III Wheaton. 1891,
In 800, the doctrine was laid down that the mere
fact that a grantor who makes q deed to child in
consideration OF Affection is IN debt to small
amount Will not make such deed fraudulent as
against creditors, II 1t be shown that tho grantor
was In prosperous circumstances and unenbar-
raised; thai the gift 10 tue ch1d was reasonable
provision according to his state and condition Of
lie, ana that enough Was left for Inc payment OF
the debts grantor. This doctrine was approved
by the Court Of Appeals of New York IN 1851 IN car.
penter vs. Roo 90 New York, go, and In 1852, IN
cited also SAYS that snbsea1ent Indebtedness cannot
be tnvoS 10 make that fraudulent which Was honest
and free from impeachment at the time. In Van
Wyck vs.. Sc ward u Page 81 In 1885, Chancellor wal
WOrtl said I'll presume cannot be seriously urged
that when parent makes an advancement TO his
child honestly and fairly retaining III MS own hands
al The same time property sufficient 70 pay all MS
debts. such child viii DC bound TO refund slch adj
vanCemont for the bene1t OF creditors Ii IL AMER
wards happens that the parent, either oy misfortune
or fraud does not actually pay ali his debts winch
case Of tho Bauk OF the United States vs. Horsman
20 Page, 52 in 1887, the same judge said II Was the
settled law CT New York That voluntary CONVEYANCE
was not, fraudulent even rs hsainSt creolt0rS
to whom the grantor was indebted t the date oil tho
deed In Frazer vs.. Weston {. Barbour, On. Il. 2aol
iu 1916, the same Judge sanctions conveyance
formed upon the consideration oil blood Ot blood OF
OF marriage merely. The legal PRESUMPTION, there
fore, Is that such conveyance Is wand ana not q
fraud upon the rights OF any one. The Judge refers
at much length 10 other authorities, citing the de-
case OF spirett VS.. Willows Is lie Ger. Jones VI.
Smith, 2a8 and II Jurists. new series, part l. i0.
IL that case the Lord Chancellor sald:- he plaintiff
sues as creator to set aside voluntary settle
mont or decd OF giit made by the defendant. his
debtor. the PLAINTIFFS debt was contracted
has since recovered Judgment at law and the
Gebtor has become bankrupt The plaintiff com.
his Judgment ami execution are Murdered, delayed,
ana defrauded by the conveyance OF The goods and
Element. The ieence IS that at the time OF making
the settlement the debtor reserved and had prop.
erty enough 10 pay the plaintiff anu all his other
creditors III fu and that The settlement, therefore,
Is not fraudulent, because the debtor remained SOL
vent after he made 1t. There is some Inconsistency
In the decided cases on the subject or congeyance5
IN fraud OF creditors, but tnnS tie following con.
clusoas well founded:Ii The debt OF the credi-
tor by whom the voluntary settlement Is impcached
existed at the dale OF the Sc teinenL ana Il it is
snown thai the remedy OF the creditor g defeated
or DELAYED by the existence OF tho settlement 1t IL
lmnaterial whether the debtor or not
solvent after making the settlement. Eut If
voluntary settlement OF deed of ut.t lie impcacned
by Subsequent creditors waose debts had not been
contracted at the cate OF the settlement, Win eX-
press intcnt TO delay, hinder or delraud creditors
that after the settlements The debtor hal no sum-
Gent means or reasonable expectations Of beng
able to pay his then existing debis-;hat II To sly,
was reduced to STATE OF insolvency, the Law im-
plie5 that the settlement was made with Intent 10
delay, hinder or deiraud creditors, ana that IL Is
therefore, frauauicn: and void. IL Is obvious that
voluntary setter retaining money enough TO pay The
debts which lie owes al the time VI making the SET
Element but no. actually paving them, cannot give
or the statute. IL still remains yoidntary aliena.
ton or deed OF att WHEREBY, IN that event, the
remedies OF creditors are delayed, hnicrcd or de-
1rauded. am, therefore, OF opinion that this settle
mcnt Is void rs against the plaInt,n.
Judge Slatchiord quotes other authorities, ana
SAYS that James X. Place, the settler, Tor
ersl years previous to December i, 1865, In pros
porous business in the city OF New York az a mem
In which he and T.. b. Pace were the only general
partners and James d. Sportsman was inc scle
special partner. The copartnersHlp had, by Its
terms on the 30ih OF November, 1865, sone time yet
to ruo In the summer of 1885, J. X. Pace being az
that tiinc prosperous III business and Tree ron EN-.
barrassincnt ard abunhantly sovea,, determined to
make settlement on his wife OF house Tor rest.
dence. In pursuance Of that purpose he purch ased
for $4,000 ground rent tease OF lot OF land on
Filth avenue Tho holder OF the lease assigned 1t to
James y. Place, By an instrument dated June ~,
1883, and recorded September 10, 1861 He lntned-
atey commenced the erection Oh house on TINS lot
Within the principle, settled In the cases before re-
fcrrea to James *. Place was solvent ana pecunariy
In condition 10 make tho settlement. 1t was not
unreasonable IN amount, and after he made 1t no
had ABUNDANT property left to pay the debts which
he owed.
As TO the Fifth avenue property In question the
Judge decides I'm Iavor OF defendant; and with re-
spoct to other property involved he gives decree
for the plaintiff.
1t is understood that this may possibly be ap.
pcaled to the United states Circuit Court.
UNITED STATES DISTRICT CoUST-M ADMIRALTY.
Yesterday Judge Blatchford rendered q decision