Case Name: PETER LORE, as Administrator, &c., Appellant and Respondent v. CATHARINE DIERKES and JOHN DIERKES, Appellants and Respondents
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1884-12-22
Citations: 19 Jones & S. 144
Docket Number: 
Parties: PETER LORE, as Administrator, &c., Appellant and Respondent v. CATHARINE DIERKES and JOHN DIERKES, Appellants and Respondents.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 51
Pages: 144–161

Head Matter:
PETER LORE, as Administrator, &c., Appellant and Respondent v. CATHARINE DIERKES and JOHN DIERKES, Appellants and Respondents.
Executors and Administrators.—Setting aside transfers made by deceased person under Laws 1868, eh. 314—in whose favor set aside—form of ¡judgment—parties to action.—Fraudulent transfer—unla/wfulpostgjonement— rents, accounting for—preference of payment to transferee.
A transfer by a person deceased, may under ch. 314, L. 1858; be set aside by his executor or administrator, for the benefit of such persons as could, in the life-time of the deceased, upon obtaining judgment, have set it aside as being fraudulent as to creditors, and upon the grounds on which said persons could have set it aside. Such setting aside will inure to the benefit of none but such creditors, and can only be had when it is shown that there is at least one such creditor.
Where the deceased could himself, in his lifetime, have set aside the transfer as having been obtained from him by fraud, or undue influence, etc., the executor or administrator may set it aside upon the grounds on which he could have so done. Such setting aside will inure to the benefit of legatees, distributees, or next of kin.
Where the transfer is set aside for the benefit of creditors, the judgment should appoint a receiver with such powers as are requisite; it should also appoint a referee, and should direct the administrator or executor to give the usual administrator’s and executor’s notice for presentation of claims as required by law; it should require the administrator or executor to present to the referee the claims presented to him under such notice, and to prove them, or to notif)r the claimants of the proceedings and require them to present and prove their claims before the referee: it should give the referee power to pass on the validity of the claims and whether they are entitled to share in the proceeds of the transferred property ; it should direct that so much of the fund as is necessary to cover the claims of those creditors who are entitled to share in it, should be paid by the receiver to the administrator, who shall pay it, pro rata, to such creditors; and should direct the surplus to be paid to the transferee.
The husband of the transferee who has no connection with the transfer, or the property, other than residing on the transferred property with his wife and the transferer, is not a proper party to an action to set aside the transfer.
A beneficiary under the transfer, whose rights may be protected by the judgment without injury to others, although a proper, is not an absolutely necessary party to such an action; but when the judgment must necessarily bar and destroy his rights he is a necessary party.
A transfer which provides for the payment to creditors of the sums due them without interest, in quarterly sums, payments not to commence or be required, until one year after the decease of the transferer, the transferer having no other property, is fraudulent as to creditors and void.
The transferee in such case, cannot be called on to account for rents at any earlier date than that of the disaffirmance of the transfer; nor for those received afterwards, if the corpus of the transferred property is sufficient to pay those creditors who are entitled to be paid out of it.
The transferee is not entitled to priority on a claim as to which, aside from the transfer, he is a mere general unpreferred creditor entitled only to a footing with other creditors. But he is entitled to priority of payment for money disbursed by him in and about the care and protection of the transferred property where his guilty participation is constructive rather than actual. Davis v. Leopold (87 Jf. Y. 620), distinguished,-
Decided December 22, 1884.
Before Sedgwick, Ch. J., and Ingraham, J.
Appealed hy both parties from a judgement entered upon decision of a judge at special term.
The facts sufficiently appear in the opinion.
Cook & Shuck, attorneys, and of counsel for plaintiff,
argued :—I. The facts in this case fully sustain the judgment and decree setting aside, as fraudulent and void, the instrument complained of (Young v. Heerman, 66 N. Y. 374 ; Union Nat. Bank v. Warner, 12 Hun, 306). Defendants claim, that all the relief the plaintiff was entitled to, if any, was a judgment and decree that the defendants should satisfy any debt against the deceased which should be proved at the trial. Before the act of 1858, and even yet, a creditor was and is only allowed to attack a fraudulent assignment or conveyance, so far as it prejudiced his rights, and he could only recover the full amount of his claim and nothing more. But by the statute of 1858, an administrator and other trustee is empowered to treat as void all transfers, &c.- made in fraud of the rights of creditors and others. It is a also well settled principle of law that a conveyance which is void in part because it hinders, delays or defrauds creditors is void intoto. The fraudulent intent of a part of the instrument vitiates the whole, thereby rendering it void (Wait’s Actions and Defenses, Vol. III. 470 ; Hyslop v. Clark, 14 Johns. 464). A deed fraudulent in fact is absolutely void and is not permitted to stand for any purpose (Davis v. Leopold, 87 N. Y. 622). Any doubt on the subject is removed by section 2 of the act of 1858, by which an administrator is authorized by action to recover not only the estate so fraudulently transferred, but its whole value, in case the estate cannot be recovered, with all damages, from every person who- shall have taken such estate in fraud of the rights of creditors and others. Formerly an administrator could not question the fraudulent transfer of a deceased person whose representative he was. He was not allowed to attack or impeach the honesty or good name of his predecessor (probably from reasons of public policy), and after the decease only a judgment creditor could attack a fraudulent transfer. The deceased in his lifetime was not allowed to ask a court to set aside a fraudulent transfer made by him because he was a party to the fraud. But the law of 1858 changes the old rule entirely, for it not only authorizes but makes it the duty of an administrator to disaffirm and declare fraudulent and void all such transfers, and authorizes him to sue for and recover the estate so transferred or the value thereof. The plaintiff was not in a condition to prove all the debts that existed against the estate of the deceased. Nor was he bound to do so. It was enough to prove the existence of one or more debts for the purpose of setting aside the instrument complained of. The law fixes the means of ascertaining the debts of a deceased.
II. John Dierkes was a proper party defendant. The proof shows that after the decease of Philip Lore both defendants went into possession of the premises under the assignment, and, have ever since been in such possession. Before the suit was brought a notice is served on both defendants by the plaintiff, wherein the assignment is disaffirmed, and possession of the premises demanded, which demand was refused. This notice served on the defendants was produced by them on the trial, under notice to produce and put in evidence by plaintiff, though they denied the service on them thereof in their answer. In the 5th paragraph of their answer they admit that they are in possession of said premises. The complaint charges that the defendants wrongfully withhold the premises from the defendant.
• III. The plaintiff claims that the judgment below is correct, except that part, and from which he appeals, which directs the sums of $1,850 and $500 to be paid to tire defendants, with interest. During the trial it appeared that the deceased was indebted to the defendants in the sum of $1,850, and that after the making and delivery of the assignment complained of, $500 was paid off on account of a $4,500 mortgage, a hen on said premises. It appears by the evidence that the said sum of $500 was paid off during the lifetime of Philip Lore, and there is no proof whatever that the defendants paid that sum. The court below found that the defendants participated in the fraud and accepted the fraudulent assignment with full knowl.edge. The judgment directing the payment to the defendants of the sums named, is in direct conflict with the rule laid down in Davis v. Leopold (87 N. Y. 620), ■ viz : That a grantee who is a party to a fraud is not entitled to protection for any sum paid or liability incurred. The conveyance is absolutely void, and is not allowed to stand as security for any purpose of indemnity or reimbursement. The learned court below were probably led into this error by the decision in the case of Van Wyck v. Baker (16 Hun, 168). On examining that case it will be found that the grantee there was innocent and did not know of or participate in the fraud, and it was held there that a court of equity would treat the conveyance, as to him, as a security only. A similar ruling was made in Pond v. Comstock (20 Hun, 402).
IV. It is conceded in the case that the defendants since the death of Thomas Lore, have been in possession of the premises in question, and have received the rents for the same. All of this has been declared by the judgment of this court to be wrongful, and yet the court below has omitted to adjudge that the rents thus collected by the defendants should be accounted for and paid over to the plaintiff. This was also error.
Henry F. Lippold, attorney, and Emile Beneville, of counsel for defendant,
argued:—I. Section 1 of chapter 314, laws of 1858, provides : “ That any executor, admin istrator, receiver, assignee, or other trustee of an estate, or the property and effects of an insolvent estate, corporation, association, partnership or individual, may, for the benefit of creditors, or others interested in the estate or property so held in trust, disaffirm, treat as void, and resist all acts done, transfers and agreements made, in fraud of the rights of any creditor, including themselves and others, interested in any estate or property, held by or of right belonging to, any such trustee or estate.” The title of the act is : “ An act to declare and extend the powers of executors, assignees, receivers and other trustees, and to protect the rights of creditors and others against fraud, and for other purposes.” The object of the statute and the extent of its application are clearly defined in the title. Prior to the enactment of this statute, neither executors nor administrators had the right, or could, by any judicial proceeding, question, impeach or avoid the acts or transfers of deceased testators or intestates, even when those acts and transfers were made with the purpose and intent of defrauding creditors. The only persons who could impeach, or in any manner attack such fraudulent transfers, were such as had recovered judgments upon their claims, the collection of which was likely to be hindered, delayed, etc., by the said transfers (3 R. S. Banks’ 6th ed. 145). It is true that by 2 R. S. 449, § 17, an action was already given to executors and administrators to protect estates of deceased persons, but such actions were confined to cases where a person had taken or interfered with the property or effects of the deceased, and such interferers were declared to be responsible as wrongdoers to the executors, etc., for the value of any property or effects so taken or received, and for damages, and on the theory that the personal representatives held the position of trustees to the judgment creditors of the deceased, they were permitted to question fraudulent conveyances, etc., which he had made in his lifetime (Moseley v. Moseley, 15 N. Y. 336 ; Bates v. Graham, 11 Ib. 237). The object of the statute of 1858 was then, 1st. To give simple contract creditors the same rights with those who had recovered judgment on then claims (Southard v. Benner, 72 N. Y. 424) ; and 2d. By giving to executors, etc., a statutory right to property fraudulently conveyed, to permit them to impeach any act or transfer calculated to defraud creditors, etc., and others interested in the estate, by a proper proceeding brought for that purpose. To this extent only does the statute go. It is creditors, and only creditors, and persons standing in the position of quasi-creditors, or having vested or contingent interests in the estate, who can be included in the language of the statute, “others interested in the estate or property,” who are benefited by the statute. The person, therefore, who can claim the benefit of the act must be some one having a direct personal claim or demand against the person whose act, grant, deed or devise is sought to be impeached, or at any rate, some claim or right either vested or contingent in the transferred estate, existing, independent of the volition or power of the grantor, assignor or deceased, and whose said act, deed, transfer or devise was calculated to defeat, hinder, or injuriously affect the said claim, interest or demand—in other words, the transfer, actor devise must be “in fraud of ” such rights. Now, the questions arise : Are heirs at law, next of kin, or personal representatives, persons who come under the designation of “ others interested in the estate,” as used in the statute? And, can a person, absolutely owning property, commit any fraud on his next of kin, etc? It will not be disputed that a person owning property has the absolute and uncontrolled right to dispose of it as he pleases, so far as his descendants are concerned—no child, parent, relation or next of kin, has any right or claim therein. All property is subject to the absolute disposition of it, by its right owner, limited only by the liability to be used to pay bona fide demands of creditors, or those of persons having claims or rights therein, prior or superior to those of the owmer himself. He may, therefore, give it away without consideration, or devise, or make whatever disposition of it that seems to him. best, regardless of his next of tin or heirs at law, and such disposition is controlled only by the duty that in so disposing of his property, he shall not injure others who have legal claims against him. The next of tin certainly would never be heard to question, in a court of justice, any transfer of property which an owner might have made of it in his lifetime. If they cannot do this in the lifetime of the owner, then certainly the fact of his death will not cause rights to spring into existence, which never existed before. What interest or right, then, can the next of kin of any person be said to possess in the property or estate of such person ? Clearly none in Ms lifetime ; and after his death, only such as are given to them by the statute, in the absence of a testamentary disposition. Then, and not till then, does then mterest begin, and only m such property as to which the ancestor died intestate. It is well settled that when a person makes a voluntary conveyance of property, such conveyance is in every case valid' where it does not break in upon the legal rights of others. As to the grantor or his personal representatives, such a conveyance is absolutely good and ummpeachable. Only creditors or persons having legal rights against the grantor or the property, will be heard to impeach such a conveyance, and they only to the extent in wMch it may be necessary to deal with the conveyed estate for their satisfaction. To tMs extent, and to tMs only, it is treated as if it had not been made. For every other purpose, and as against every other person, it is good. In the language of Judge Story, “ Satisfy the creditors and the conveyance stands ” (Story Eq. Juris. § 361, 5th ed. ; Jackson v. Garnsey, 16 Johns. 189 ; Seward v. Jackson, 8 Cow. 406 ; Drinkwater v. Drinkwater, 4 Mass. 354). The rights of the next of tin, &c., are those of the ancestor; they stand m Ms shoes; what he would have done, they may do ; what he would not do, they shall be barred from doing. To argue, therefore, that after a transfer of premises, valid as agamst the grantor, his next of kin or heirs-at-law, are interested in such transferred premises, or that by such tranfer valid as against a grantor, they were defrauded of any right, would seem to be a mere waste of words. It is then evident, that in the case at bar, only such persons as could have established a legal claim against the deceased assignor or against the property assigned, could have successfully assailed the assignment, and a judgment finding no debt due by the assignor unpaid, and yet directing the proceeds of the property realized at the sale, after payment of costs and the defendant’s debt, to be paid over to the administrator (evidently for the benefit of the next of kin), is manifestly wrong and should be set aside ; even if the alleged claims had been valid, the proceeds remaining after they were satisfied should have been directed to be paid to the assignee and appellant (Van Wyck v. Baker, 10 Hun, 39).
II. The court should not have rendered final judgment in the action, all the parties interested in the premises, under the assignment to defendant, Catherine Dierkes, not being before the court.
III. The judgment should certainly be reversed as to the defendant John Dierkes. Not a word of testimony was offered against him, in no way has he been implicated in the transaction, the transfer was not to him, he received no benefit from it, and had no interest of any manner or kind in the premises. As well might the -decree have been against an entire stranger, as against the defendant John Dierkes.
IV. The plaintiff’s exception to the court’s refusal to find, and direct, that the defendants should account for all rents received by defendants since the death of Philip Lore, the grantor, is not well taken. The assignment was valid between the parties, and no creditor, not having a lien, had any right to, or interest in the rents (Robinson v. Stewart, 10 N. Y. 197).
The opinion does not suggest what provision should be contained in the judgment when the transfer is set aside in favor of devisees, distributees, or next of kin, but it would seem in such case to be sufficient to divide the whole proceeds, after providing for the payment of such claims as have priority, to be paid to the plaintiff to be administered upon according it to law.

Opinion:
By the Court.
Sedgwick, Ch. J.
The action is brought by plaintiff as administrator of the estate of Philip Lore, deceased, to set aside a transfer of leasehold property by him in his lifetime to defendant Catherine Dierkes, as fraudulent to the creditors of the intestate. The court found upon sufficient testimony, that at the time of the transfer, the intestate was indebted to one Philip Baum, in $637, as evidenced by a promissory note payable on demand, and also to one Frederick Luxinger, in $300, which was due. This last indebtedness may be dropped from the case, except as a piece of testimony on the issue of fraud, as the plaintiff admitted upon the trial, that the amount due to Luxinger had been paid since the action was begun, and the judgment could not provide for his being again paid out of the property. The transfer of lease and the term, was to have and hold the same, subject "to the payment of the following named sums to the persons hereinafter named, at the time and in the manner following, but without any interest thereon; that is to say, the sum of $636 to Philip Baum, husband of my daughter Elizabeth, and the sum of $300 to my son-in-law Frederick Luxinger, in quarterly installments, to each of them respectively, of not less than $75, such payments not to commence or be required until after the lapse of one year after my decease." As the effect of this transfer was to postpone, for a definite time, the application of the property to the satisfaction of the debts, it was fraudulent as to the creditors, who had a right to an immediate application. The provision that the charges should not carry interest was fraudulent. The finding that the assignment was fraudulent was correct, the judge also finding that the intestate, at the time of the transfer, had no other property than the lease referred to.
This, however, mast be confined to indebtednes existing at the time of the transfer. There was no proof that any indebtedness was incurred by the intestate after the transfer, and no proof was given of any intent to defraud subsequent creditors if there had been any.
Before the transfer, the intestate had made a bond, evidently intended at the time, to be for the benefit of the creditors that have been named, and also, to secure the bond, a mortgage upon the leasehold afterwards assigned. One of the mortgagees was the defendant Catherine Dierkes to whom the intestate was indebted in the sum of $1,800. If this had been an effectual security for the indebtedness due to Philip Baum, it would make a serious question as to the fraudulent character of the transfer in this action. In fact, however, Philip Baum was not secured, as the bond and mortgage was to Elizabeth his wife. Catherine Dierkes claimed under thé transfer to her and not under the mortgage. Contemporaneously with the transfer, the intestate made a declaration, that the mortgage had been made by mistake and had never been delivered, although it had been recorded, and he declared that he therefore canceled it. There is nothing connected with the mortgage that tends to show that the transfer in question was not fraudulent.
The next question concerns the amount or quantity of the recovery; that is, the judgment that was recovered. It adjudged that the premises be sold by a receiver, and that from the proceeds, after specified deductions of expenses and costs, the receiver " pay to the defendants the sum of $1,800, with interest, and the further sum of $500, with interest, and that said receiver pay the balance of all moneys remaining in his hands, to the administrators who may be appointed by the surrogate of the estate of Philip Lore, hereafter to be appointed." Specific attention will be given to the provision as to $500. The plaintiff has received letters of administration, but the surrogate had ordered, the ' the authority of the within named administrator is hereby limited, so that while allowed to prosecute the action brought by him in the superior court, he is forbidden to receive the avails of any judgment he may recover therein."
From this judgment both parties appeal. The plaintiff objects to it, that as he requested the judge to direct judgment that plaintiff have an accounting of all rents and profits, and that plaintiff recover all rents collected by the defendants, and excepted to the refusal to direct such a judgment, it should be modified in the respects adverted to. I am of opinion that the plaintiff was not entitled to an account of the rents received by the defendant, at any earlier date, at least, than that of the disaffirmance of the transfer, or to a recovery of their amount. The request was therefore, incorrect, in part at least, and the judge was justified in not acceding to it. It was not, furthermore, necessary to the satisfaction of any indebtedness of the intestate, that resort should be had to the rents. The property in question had a value of at least $5,000, to be applied to debts, that were not nearly so great in the aggregate, so far as the evidence disclosed, and any provision as to accounting ' for rents should have been conditioned that the proceeds of the property were not sufficient to pay the claims.
The plaintiff further urges that the provision for payment to the defendant of the sums of $1,800, and $500, was erroneous, on the ground that the defendant can take no benefit or keep any indemnity, through the operation of an instrument that is fraudulent, she having notice of its character. At any rate, it seems to be clear that she can get no benefit through the operation of the instrument as such, whether she took with notice or not. The judgment gives her priority, as to the $1,800, out of the proceeds. Apart from the transfer to her, which is void because fraudulent, she was a general unpreferred creditor, entitled only to a footing with other creditors. Her claim to a preference, then, can only rest upon the operation of the transfer. As this is void, the claim must fall. But as a creditor, she is entitled to her share of the estate, in the course of administration, as much as any ' other creditor. This does not come through the impeached transfer. It would exist, if there were no transfer.
In view of the case of Davis v. Leopold (87 N. Y. 620), it is necessary, in order to consider properly the claim to be paid the $500 out of the proceeds, before payment to the plaintiff, to ascertain, if within the meaning of that case, she was guilty of participation in the fraud, in such a sense as to deprive her of her right to be indemnified for money paid on the mortgage subject to which she took the conveyance. On the findings and the whole case it appears, that Catherine Dierkes had not an actual intent to defraud creditors in any other sense, than that an intent to defraud must be charged upon her, because of a presumption that she knew the law and was chargeable with intending the consequences of the assignment, even if she had neither of these matters in her mind. Her guilt was constructive rather than actual. In such case, it would not be inequitable or illegal to allow her for an amount of money which she paid on an existing mortgage, and which payment increased the value of the equity of redemption in a peculiar way. If she had bought the mortgage she could have enforced it, and equity can consider her as entitled to an interest in the mortgage corresponding to the amount she paid upon it. In this regard her claim is superior to that of the plaintiff who represents creditors.
The defendant objects to the judgment,- that it is erroneous in directing that the surplus of proceeds be paid generally and finally to the administrator who may be appointed by the surrogate. In my judgment the objection is valid. The cause of action, is of the kind described by chapter 314, Laws of 1858 (4 Edm. St. 483). The first section provides, that any executor, administrator, &c., may for the benefit of creditors or others interested in the estate, disaffirm, treat as void and resist all acts done, transfers, etc., made in fraud of the rights of any creditor, including themselves and others, interested in any estate or property held by or of right belonging to a.ny such trustee or estate, etc. As upon the disaffirmance of the transfer, the property would be in the transferrer, the section would imply, that the trustee could recover it. It is doubtful whether sucha cause of action is the one intended by the second section, which provides that every person who shall in fraud of the rights of creditors and others have received, taken, or in any manner interfered with, the estate, property, or effects of any deceased or insolvent association, corporation, partnership or individual shall be hable in the proper action to the executor, etc., or other trustees of such estate or property, for the same, or the value of any property or effects so received or taken, and for all damages caused by such acts to any such trust estate. The absence of words that would indicate a reference to the first section, together with the characteristics of the conditions described by the second section, suggest that the second section in the case of executors and administrators refers not to property that has been transferred by a person in his lifetime, but to property taken or received after the decease. For the purposes of the point in view, it will not be necessary to determine whether the two sections have different aspects.
The counsel for the plaintiff insists, that the transfer may be disaffirmed for the benefit of others than creditors ; viz., such as are interested in the estate, like heirs or distributees. This, however, is not of so much importance as is the thing that may be disaffirmed: The administrator can disaffirm only transfers made in fraud of creditors and others interested in the estate or property. The proposition does not need discussion that an instrument which transfers the whole property of a person to one of those who are his next of kin, and would upon his death become his heirs or distributees, to the exclusion of the rest, is not a fraud upon them. The transferer has no obligation to any of his next of kin, in such a matter. Although the instrument may be fraudulent as to creditors, the next of kin, or their representative, cannot avoid it. The representative of the next of kin, or rather the administrator, avoids it in behalf of creditors. Such an avoidance, cannot result in favor of those for whom it cannot be avoided but against whom it is vested. 1 therefore, think that the judgment was erroneous, in so far as it did not limit the application of the proceeds of sale, to the claims of creditors.
In my opinion, there. should have been made in the judgment, provision,- that after the payment of claims of creditors, the surplus should goto ihe fraudulent assignee. This' would be the result of recognizing that a fraudulent transfer is valid between the parties to it, although it may be avoided by parties defrauded by it. The case of Bostwick v. Menck (40 N. Y. 383), declares this as to a plaintiff, a receiver, in supplementary proceedings, representing creditors, in the kind of way that the present plaintiff represents them. It was there said : "It is clear that the right of the receiver representing creditors and acting in their behalf, is no greater than that of the creditors. What then are the legal and equitable rights of a creditor as to property fraudulently transferred ? Manifestly, only to treat as void and set aside such transfer, so far as shall be necessary to satisfy his debts and costs. He has no light to interfere with the transfer beyond this. When his debt and costs are paid, the transfer is as valid as to him, as to other persons." It was held that the plaintiff was only entitled to judgment for the amount of the judgment upon which he had been appointed receiver, and certain expenses.
In Bostwick v. Menck, the plaintiff did not represent all the creditors of the fraudulent assignor, in solido. He represented only those, in whose behalf he had been appointed. The plaintiff in this case represents them all, to a certain extent. Some of them, may be at present unknown. In such a suit, as this, the plaintiff must show that there were in fact creditors, although it may not be necessary to show that he has proved who were all the creditors. A creditor's bill presents an analogous case, The court can use due measures to protect unknown creditors, while it also uses due measures to provide for the contingency of there being no other creditors than such as have appeared and proved their claims. Thompson v. Brown (4 John. Ch. 639), specifies the different cases, in which unknown creditors have been called into proceedings in suits essentially like this action, and such creditors as have hot appeared and proved their claims, have been bound by the adjudication. The case referred to is, with others of a similar kind, cited in Kerr v. Blodgett (48 N. Y. 62). This last case shows that the person bound to distribute funds among all creditors, will be protected by a judicial accounting against the claims of creditors, who are not known to the trustee to claim to be creditors, and who have omitted, without fault on then part, to prove their claims in the proceedings.
The fact, that to entitle creditors to a distributive share in the estate, it is enough if they present their claims within six months from the first publication of notice to present claims, has not been lost sight of. If necessary, it would be appropriate to consider whether they might not be bound, for the purposes of this action, by a notice of less than six months. This necessity may be avoided by making the notice to be such as the administrator shall give as required by law, requiring him to present in this action, claims presented to him under the notice, and to prove them, or to notify the claimants of these proceedings, and requiring them to present and prove their claims, before the referee who must be appointed in the judgment. It will be noticed that this provides for the contingency of the administrator's notice having been published for six months before the judgment is entered.
The referee should not allow as claims upon the proceeds, any that are founded upon indebtedness that arose after the fraudulent transfer. Such part of the fund as is for the benefit of creditors, should be paid by the receiver into the hands of the administrator, who should pay it, pro rata, to the creditors who would be entitled, under the judgment. It may happen that every creditor of the estate is not, for that reason, entitled to a part of the fund. Some may have ratified the assignment, for instance, by receiving a benefit under it. John Luxinger would be such a case, if he received from Catherine Dierkes the indebtedness to him, subject to which the assignment was made to her. The judgment should further provide that the surplus be paid to the defendant Catherine Dierkes.
Mo reason has been assigned why the motion to dismiss the complaint against John Dierkes, husband of Catherine Dierkes, should not have been granted. The action concerned the wife's separate property, and she might have been sole defendant. The husband had no interest in the property, or obligation in respect of it, or the defense of the action. No claim was proved against him. His admission in the answer, was only that during the intestate's life time, for some time, he, defendant John Dierkes, lived in a part of the premises with him.
The motion should have been granted, with costs.
One other matter calls for attention. The fraudulent assignment was made subject "to the payment of the further sum of $500 to my son John Lore, to be made in such sums, from time to time, after the lapse of one year after my death, as said Catherine Dierkes in her discretion, shall deem necessary, proper or advisable ; which said last three named sums the said Catherine Dierkes hereby assumes and covenants to pay, as aforesaid, as part of the consideration hereinbefore expressed." It may be assumed that the plaintiff was not entitled to have the instrument set aside as against John Lore, without making him a party. This objection was not made in the answer or upon the trial or in any way to the court below, so far as the case discloses. It is made on this appeal for the first time, and therefore, should not be sustained for the benefit of the defendants. But the judgment will not bind John Lore or his representatives. The judgment should declare, on its face, that it is made subject to the rights of Lore, and the sale should be made subject to those rights.
The facts of the case intimate that it would be proper to add to the judgment a provision that defendant Catherine Dierkes might purchase the claims of creditors and succeed to their interests in the fund.
If there were no other evidence of fraud, it would be sufficient to modify the judgment as is indicated in the opinion, and as so modified affirm the judgment. It appears, however, that the complaint alleged, that the assignment of the lease was obtained by undue influence and fraud. On the trial the plaintiff offered to prove that the assignment of the lease was "made under undue influence on the part of the defendants with the deceased." This was objected to by the defendants and the objection was sustained. Plaintiff requested the court to find that such assignment was procured by the defendants, Catherine Dierkes, from the deceased, by undue influence, while he had not full liberty of his actions. The court refused so to find. The statute provides that any executor may, for the benefit of creditors, or others interested in the estate, or property so held in trust, disaffirm, etc., all acts done, transfers and agreements made in fraud of the rights of any creditor, including themselves and others interested, in any estate or property held by, or of right belonging to any such trustee or estate. If, therefore, this assignment was obtained by undue influence, it would not be binding on the assignor, and could be disaffirmed as to him. The property would therefore, by right, belong to the estate. If the assignment was not his voluntary act and, at least, if he or others competent to represent him disaffirmed it, the property it referred to would remain in him, and it could be recovered from the assignee, by the assignor's administrator. A recovery in such case would be for the benefit of the distributees, as well as of creditors. In that case John Lore would be a necessary party.
If the plaintiff desire to try such issues, he should have the opportunity, and the judgment should be reversed and a new trial ordered, with costs to the defendant Catherine Dierkes. If however, the plaintiff does not insist on that right, the judgment should be modified as directed by this opinion, and as modified, affirmed without costs to either party, on this appeal. The order is to be settled by the chief judge, on notice to all the parties to the action.
Ingraham, J., concurred.