Case Name: James D. Smith, Plaintiff, v. The David Stevenson Brewing Company et al., Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1906-05
Citations: 50 Misc. 395
Docket Number: 
Parties: James D. Smith, Plaintiff, v. The David Stevenson Brewing Company et al., Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 50
Pages: 395–397

Head Matter:
James D. Smith, Plaintiff, v. The David Stevenson Brewing Company et al., Defendants.
(Supreme Court, New York Special Term,
May, 1906.,
Executors and administrators — Collection of assets — Rights, duties and liabilities — Right to pursue property fraudulently conveyed— When executor was party to fraudulent transaction.
An action may be maintained by an executor and testamentary trustee in his representative capacity to set aside a conveyance made by himself and his co-executors and co-trustees on the ground that such conveyance was induced by fraud, notwithstanding the fact that he was a party to the fraudulent transaction, and may also join as plaintiff in his individual capacity so far as may be necessary for the determination of his individual rights.
Demurrers to complaint.
Gifford, Hobbs, Haskell & Beard, for plaintiff.
George F. Martens, for defendants, Evans and others.
A.ppell & Taylor, for defendants, Bobertson and others.
Thos. J. Farroll, for defendants, Stevenson Brewing Co. d.nd others.

Opinion:
Blanchard, J.
This is an action brought by the plaintiff, individually and as executor and trustee under the will of David Stevenson, against the defendants, including one McClenahan individually and as coexecutor and cotrustee under said will,.to set aside a conveyance made by said coexecutors and cotriistees to the defendant corporation, or, in the alternative, to decree that all of the stock of said corporation is the property of said coexecutors and cotrust- • ees, and also to adjudge whether certain shares of said stock now held hy the plaintiff, individually, are the individual property of the plaintiff or are rightfully the property of said coexecutors, and cotrustees. The defendant McClenahan and several of the other defendants have demurred, on the ground that the complaint does not state facts sufficient to constitute a cause of action in favor of the plaintiff individually, or as executor and trustee, and also on the ground that the complaint improperly joins causes of action in favor of the plaintiff individually and as executor and trustee. The complaint states that, fifteen months after the death of the testator, the defendant McClenahan fraudulently induced the plaintiff and the third coexecutor, now deceased, to convey to an irresponsible party named Bobertson a brewery which composed part of the testator's estate; that said Bobertson paid no cash consideration for the property, but gave a purchase-money mortgage on certain parts of the brewery property and, immediately thereafter, conveyed said brewery, without consideration, to the defendant company in order that said McClenahan "might acquire the ownership thereof through the ownership of the stock of said corporation and pay the estate and heirs" by said mortgage, and pay said mortgage by the income from their own property; that said company did not assume said mortgage, but issued all of its capital stock, without consideration, to McClenahan and certain other defendants; that McClenahan controlled a majority of said stock, and is president and treasurer of said company, ánd, finally, that, until a recent date, the plaintiff was ignorant of these fraudulent acts of the defendant McClenahan. The facts above stated, as the defendant apparently conceded upon the argument, set forth sufficiently a cause of action. It is contended, however, that since the plaintiff was a party to the conveyance now complained .of as fraudulent, he has no standing in court. By the well-settled rule in Hew York,. it is no defense to an action brought by an executor and trustee, as such, to recover assets of the estate in the possession of the defendant; that the plaintiff in his individual capacity acted in collusion with the defendant in despoiling the estate. Wetmore v. Porter, 92 N. Y. 76; Zimmerman v. Hinkle, 108 id. 282. The defendants have, attempted to distinguish the cases above cited on the ground that there the legal title to the assets of the estate was never taken from the estate, while here the legal title to the brewery has been conveyed to the defendant company. An examination of these cases shows, however, that they are similar to the present case. There, as here, such a transfer of title had been made as would have given a tona fide purchaser for value of the property legal title, free and clear of all equities in favor of the estate, but which transfer having, in fact, been made to one who is not a tona fide purchaser for value, gave title to the latter, subject to equities in favor of the estate, which were enforcible by the executor or trustee. The plaintiff, as executor and trustee of the will of the testator, was, therefore, entitled to bring action in the present case. Being properly before the court in his representative capacity, by virtue of his prayer for the restoration of - the assets of the estate, it seems that he may also join himself as plaintiff in his individual capacity, so far as is required by his prayer for the determination of his individual rights to the shares of the defendant company. Accordingly the demurrers are overruled.
Demurrers overruled.