Case Name: RIKER v. GWYNNE et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1908-12-11
Citations: 113 N.Y.S. 404
Docket Number: 
Parties: RIKER v. GWYNNE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 113
Pages: 404–408

Head Matter:
RIKER v. GWYNNE et al.
(Supreme Court, Appellate Division, First Department.
December 11, 1908.)
1. Fraudulent Conveyances (§ 107 ) — Transfers Invalid — Confidential Relations—Parent and Child.
While a bona fide antecedent debt may be a sufficient consideration for a conveyance by an insolvent child to his parent of all the grantor’s property, the bona lides of the transaction will be carefully scrutinized by the courts.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Cent. Dig. § 350; Dec. Dig. § 107.*]
2. Fraudulent Conveyances (§ 8*)—Transfers Invalid—Transfers to Hinder Creditors. .
An insolvent transferred his remainder interest in property worth $15,-000, being all. of his property, to his mother for a purported consideration of $6,000, which was made up of prior advances by his mother for his support. No accurate account had been kept of the advances, and the evidence strongly tended to show that the advances were gifts and not ' loans. The conveyance was made pending a suit against the grantor, in which he permitted judgment against him to be entered soon after the transfer, and his attorney in that suit represented his mother in the transfer. Held, that the conveyance was invalid as made to hinder and delay creditors.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Cent. Dig. § 8; Dec. Dig. § 8.*]
3. Fraudulent Conveyances (§ 300*) — Remedies of Creditors — Evidence— Sufficiency—Consideration .
In an action to set aside a conveyance, claimed to have been in consideration of a past indebtedness, as in fraud of creditors, the evidence held to show that the alleged consideration was a gift and not a loan.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Cent. Dig. § 896; Dec. Dig. § 300.*]
4. Fraudulent Conveyances (§ 286*)—Remedies of Creditors—Evidence-Admissibility—Value of Property.
In an action to set aside a conveyance as in fraud of creditors, recitals in the deed, revenue stamps affixed thereto, or the declarations of the parties, were not competent evidence as against the plaintiff to show the value of the property.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Cent. Dig. § 822; Dec. Dig. § 286.*]
5. Fraudulent Conveyances (§ 15 )—Transfers Invalid—Badges of Fraud.
The transfer of property pending a suit against the grantor for a large amount, against which he had no defense, the conveyance by an insolvent of all his property, the insolvency of a grantor when he conveyed property, which was known to the grantee or her attorney, the conveyance in consideration of an alleged past indebtedness which is not clearly shown to be a loan and not a gift, are all indicia of fraud.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Dec. Dig. § 15.*]
6. Fraudulent Conveyances (§ 283*)—Remedies of Creditors—Evidence-Burden of Proof—Good Faith.
That a grantor was hopelessly insolvent when he transferred property to his mother, which was known to her or her attorney in the transaction was sufficient to place upon the parties to the transfer the burden of showing good faith, in an action by creditors to set aside the conveyance.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Dec. Dig. § 283.*]
Patterson, P. J., and Ingraham, J., dissenting.
Appeal from Special Term, New York County.
Action by Samuel Riker, Jr., as trustee in bankruptcy of Edward E. Gwynne, against Helen S. Gwynne, as administratrix, and others. From a judgment dismissing the complaint (109 N. Y. Supp. 570), plaintiff appealed.
Reversed, and new trial granted.
Argued before PATTERSON, P. J., and INGRAHAM, LAUGH-TIN, CLARKE, and SCOTT, JJ.
Max J. Kohler, for appellant.
C. R. Waterbury, for respondents.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
For other eases, see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes’

Opinion:
SCOTT, J.
This is an appeal by plaintiff, as trustee in bankruptcy of Edward E. Gwynne, from a judgment dismissing his complaint upon the merits. The action 'is brought to set aside a conveyance of real estate made by the bankrupt to his mother, upon the ground that it was made with intent to hinder, delay, and defraud creditors. The property conveyed was. a vested remainder in the undivided one-half of a house and lot of ground in the city of New York, subject to the life estate of a man then 57 years of age. The conveyance was made on February 8, 1901, when the grantor was wholly insolvent and was the defendant in a certain action in which he soon afterwards permitted judgment to be entered against'him for about $50,000. The expressed consideration in the deed was "$10 and other valuable considerations," but there were revenue stamps attached indicating an actual consideration of $6,000. The court below has found that the defendant's mother, his grantee, actually paid $6,000 as consideration for the conveyance, and that the value of the interest conveyed did not at the time of the conveyance exceed $6,000. The alleged consideration, at least to the extent of $5,000, consists of moneys paid to the bankrupt by his mother previous to the conveyance.
It is not denied by the appellant that a bona fide antecedent debt may constitute a sufficient consideration for a conveyance, even, if the grantor be insolvent; but when the grantor and grantee occupy to each other the relation of parent and child, and the conveyance strips the debtor of all his property, the courts look with careful scrutiny at the bona fides of the transaction. Lawrence Bros. v. Heylman, 111 App. Div. 848, 98 N. Y. Supp. 121. The evidence showed that the bankrupt had for a long time been dependent upon his mother for support, and that she had been in the habit of giving him about $400 a month, upon which he had lived. The great bulk of the consideration was sought to be made up of sums thus paid, although no account of them had ever been kept, and no attempt was made to show just how much had been paid him in this way, or how much was due from him to his mother at the time of the com^ance, if the monthly allowances were to be treated as loans and not as gifts. There was nothing whatever to show that these payments, when made, were considered by the parties or treated as loans. Not only was no account kept of them, and no receipts or other obligations given for them, but the mother herself, in her testimony, avoids, with apparent care, speaking of them as loans or alleging that they were such, but always speaks of them as money "given" to her son. The conclusion seems to be inevitable that they were gifts, and that it never • occurred to any one to regard them as loans until it became necessary to find a consideration for which the bankrupt might place his property without the reach, of his creditors and preserve it for the benefit of his own family. That it was the intention of the bankrupt to hinder and delay his creditors is too plain for argument. He had been sued for a large sum of money, and while he defended the action so far as possible with a view to postponing the entry of judgment, when he could no longer delay the trial, he withdrew his answer and permitted judgment to be taken against him. In the meantime he had made this conveyance to his mother of his last remaining piece of property, and she had been represented in the transaction by the same attorney who was" conducting the defense of the suit against the bankrupt, and therefore knew of the impendency of a large judgment against the latter. The court has found that the value of the property conveyed did not exceed $6,000. There is no evidence to sustain this finding; the only testimony on the subject being that of a real estate dealer, who placed the value at upwards of $15,-000. This, of course, was opinion evidence, and merely advisory; but the fact remains that it is the only competent evidence of value in the case, for the recitals in the deed, or the stamps affixed thereto, or the declaration of the parties to it, are not competent evidence of value as against this plaintiff. Tifft v. Barton, 4 Denio, 171.
The case presents all, or nearly all, of the circumstances that are recognized by the authorities as indicia of fraud. First, the transfer was made while a suit for a large amount was pending against the grantor, to which it appears he had no available defense. Ford v. Johnson, 7 Hun, 563; Maasch v. Grauer, 58 App. Div. 560, 69 N. Y. Supp. 187. Second, the transaction stripped the debtor of all his property available to meet the demands of his creditors. Cole v. Tyler, 65 N. Y. 73; Fuller v. Brown, 76 Hun, 557, 28 N. Y. Supp. 189. Third, the debtor was hopelessly insolvent when the transfer was made, and this fact, if not actually known to his mother (as it probably was), was certainly known to her attorney who represented her in the transaction. This circumstance of itself cast upon the grantee, as well as the grantor, the burden of proving the bona tides of the transaction. Fuller v. Brown, supra; Wadleigh v. Wadleigh, 111 App. Div. 367, 97 N. Y. Supp. 1063. The proof clearly showed, and the court found, that Edward E. Gwynne was insolvent at the time of the conveyance. The defendants did not assume, or at least satisfactorily sustain, the burden of showing bona tides; but, on the contrary, it seems to have been assumed that the burden of proving mala tides and inadequacy of consideration still rested upon the plaintiff. Fourth, the fact that the conveyance was from a son to his mother carried a suggestion of fraud, in conjunction with the other facts in the case. First National Bank v. Miller, 163 N. Y. 164, 57 N. E. 308; Lawrence Bros. v. Heylman, supra. Fifth, the fact that the consideration is attempted to be found in past advances, which are not clearly shown to have been loans, and not gifts, and the amount of which is left vague and uncertain. Sixth, notwithstanding all these indicia of fraud, and the consequent obligation resting upon defendants to establish the bona tides of the transaction, they made no attempt to prove that the interest conveyed was not worth more than the alleged consideration, or, indeed, to prove any value whatever, leaving the only evidence in the case as to value that of plaintiff's expert, who put it at upwards of $15,000. There are .other circumstances, of perhaps minor importance, but all of which tend to show that the conveyance was made and accepted for the sole purpose of hindering and delaying the grantor's creditors, and especially that one who was pressing his claim, and in order that the property might be kept in the family for the ultimate benefit of the grantor's children, to whom, in fact, it was devised by his mother by a will executed shortly after the transfer.
The judgment must be reversed, and a new trial granted, with costs to the appellant to abide the event.
LAUGHLIN and CLARKE, JJ., concur.