Case Name: Albert Cole, Respondent, v. William H. Tyler et al., Appellants
Court: New York Commission of Appeals
Jurisdiction: New York
Decision Date: 1875-01
Citations: 65 N.Y. 73
Docket Number: 
Parties: Albert Cole, Respondent, v. William H. Tyler et al., Appellants.
Judges: 
Reporter: New York Reports
Volume: 65
Pages: 73–85

Head Matter:
Albert Cole, Respondent, v. William H. Tyler et al., Appellants.
Where, in an action to set aside a conveyance by a debtor as made to hinder, delay and defraud creditors, the conveyance is found to be fraudulent and void and judgment is perfected, setting it aside and directing a sale of the lands by a receiver, the error, if any, in directing such sale, is not ground for an appeal, but is to be rectified by motion to correct the judgment.
A debtor conveyed, without consideration, certain real estate to a third person, with a view of having the title vested in his wife, to whom it was conveyed by such third person. The property remaining to the debtor was entirely insufficient to pay his debts. Held (Reynolds, 0., dissenting), that the evidence was sufficient to sustain a finding that the conveyance was made for the purpose of hindering, delaying and defrauding creditors.
The fact that the plaintiff knew of the transfer at the time it was made and raised no objection, does not, in the absence of evidence that he knew that the debtor was depriving himself of the means to pay his debts, estop him from questioning it. (Reynolds, 0., dissenting.)
As to whether he would have been estopped had it appeared that he was cognizant of all the facts, quaere.
(Argued September 30,1874;
decided January term, 1875.)
Appeal from judgment of the General Term of the Supreme Court in the second judicial department, affirming á judgment in favor of plaintiff entered upon a decision of the court at Special Term.
This action was brought to set aside certain conveyances from John Orawford to Samuel J. Glassey, and from Glassey to Sarah E. Crawford, as being without consideration and fraudulent as to the plaintiff, a creditor of said John Crawford, and to apply the property so conveyed to the payment of a judgment recovered by the plaintiff against the said John Crawford.
The court found, in substance, that Crawford was the owner of certain real estate situated in Yonkers, Westchester county, before December 7,1869, and, while such owner, he conveyed it, on or about that date, to Samuel J. Glassey without consideration, and with the view and purpose of vesting the title to the premises in his wife; and that Glassey, on the same day, without consideration and at Crawford’s request, conveyed to Mrs. Crawford, both conveyances being duly recorded. It was further found that Crawford, when he made these conveyances and caused the property to be vested in his wife, was largely indebted; that he had no other real estate and but little personal property, and that this was largely insufficient to pay his debts, and that the conveyances above referred to were made with the avowed purpose of securing the property to Mrs. Crawford against all parties whomsoever, and for the purpose of hindering, delaying and defrauding creditors. Mrs. Crawford died intestate on the 7th of August, 1870, being a resident of the city of Mew York, leaving no issue, and without having disposed of or incumbered the premises so conveyed to her, which, on her death, descended to her heirs at law, who were made parties defendant to this action, and claim only in that character. The plaintiff and one Barker were copartners in business in the city of Mew York, and prior to May 9, 1866, had business dealings with Crawford, whereby he became indebted to them on that day in the sum of $3,885.88. Barker, for a valuable consideration, assigned his interest to the plaintiff. An action was brought in the Supreme Court, in the county of Mew York, to recover this amount, and judgment obtained on the 11th day of Movember, 1870, against him, for $5,134.68, damages and costs, and docketed on the same day in that county, and afterward in the county of Westchester. On the same day (Hovember eleven) execution was issued to the sheriff of the county of Hew York, where Crawford resided, whereupon the execution was returned unsatisfied, and no part of the judgment has since been paid.
The judge, on these facts, found, as matter of law, that the conveyance made to Mrs. Crawford was fraudulent and void as to the plaintiff and other creditors then existing; that the defendants, her heirs at law, have no better claim to the premises than Mrs. Crawford herself.
It was accordingly adjudged by the court that the conveyances should be set aside, as against the plaintiff, and his judgment was declared to be a valid lien upon the premises in litigation. It was further ordered that the land should be sold at public sale, by a receiver appointed for that purpose, and that the receiver should execute deeds to the purchasers, and that the proceeds of the sale should be applied to the payment of the plaintiff’s claim.
Other facts appear in the opinions.
Samuel Hand for the appellants.
The judgment was erroneous in directing a sale and foreclosing and barring defendants from all interest or equity of redemption in the premises. (Hendrickson v. Winnie, 3 How., 127; Walker v. Waite, 36 Barb., 594; Farnham v. Campbell, 10 Paige, 598; 2 R. S., 370, §§ 45-48; Chautauqua Bank v. Risley, 19 N. Y., 369.) Plaintiff had no other rights than those of a judgment creditor upon Crawford’s land. (Robinson v. Stewart, 6 Seld., 189; Ames v. Blunt, 5 Paige, 13; Avrill v. Loucks, 6 Barb., 477; Briggs v. Palmer, 20 id., 405; Clute v. Fitch, 25 id., 428.) Plaintiff was bound to prove fraudulent intent on the part of Crawford in making the conveyance in order to maintain the action. (Dygert v. Remerschnider, 32 N. Y., 639 ; Phillips v. Wooster, 36 id., 412; Wilbur v. Fradenberg, 52 Barb., 474; Van Wyck v. Seward, 6 Paige, 327; Seward v. Jackson, 8 Cow., 406.) Plaintiff was a privy to the transfer, and having assented to its being made, is estopped from questioning it or charging that it was fraudulent. (Pell v. Treadwell, 5 Wend., 677; Dennison v. Fly, 1 Barb., 610;. Tilton v. Nelson, 27 id., 595; Wood, v. Seeley, 32 N. Y., 195.) It was not necessary to the estoppel that plaintiff should have intended to mislead. (Bank v. Hazard, 30 N. Y., 226; Kingsley v. Vernon, 4 Sandf., 361.) Plaintiff was bound to exhaust his remedy at law before this action could be maintained. (Brinkerhoff v. Brown, 4 J. Ch., 671; McDermutt v. Strong, id 687; Stevens v. Badger, 8 Paige, 130; Forbes v. Walter, 25 N. Y., 430; Forbes v. Logan, 4 Bosw., 475.) Equity had no jurisdiction in this case. (Story’s Eq. Jur., 1526.)
Hamilton Odell for the respondent.
The conveyance by Crawford to his wife was without consideration and made when he was insolvent, and therefore fraudulent as against his creditors. (Reade v. Livingston, 3 J. Ch., 481; Bayard v. Hoffman, 4 id., 450; Jackson v. Seward, 5 Cow., 67; Seward v. Jackson, 8 id., 406; 2 Edm. Stat., 142, § 4; Carpenter v. Roe, 10 N. Y., 230; Babcock v. Eckler, 24 id., 623; Dygert v. Remerschnider, 32 id., 648; Curtis v. Fox, 47 id., 300; Van Wyck v. Seward, 6 Paige, 62; U. S. Bk. v. Housman, id., 527, 534; Jacksons Post, 15 Wend., 593; Holmes v. Clark, 48 Barb., 237; Borst v. Corey, 16 id., 136; Lorsmore v. Campbell, 60 id., 62; Fullerton v. Viall, 42 How., 494; Dunlap v. Hawkins, 2 S. C. R., 292; Hurd’s Lessees v. Longworth, 11 Wheat., 199; Fox s. Moyer, 54 N. Y., 131; Savages Murphy, 34 id., 508; Spaulding v. Worman, 51 id., 672; Carpenter v. Roe, 10 id., 227; Case v. Phelps, 39 id., 164; Mead s. Gregg, 12 Barb., 656; Holmes v. Clark, 48 id., 237; Wilbur s. Fradenburgh, 52 id., 474; Partridge v. Stokes, 44 How., 341; Loeschigk v. Addison, 3 Robt., 349; Wadsworth v. Hamens, 3 Wend., 411; King v. Wilcox, 11 Paige, 589; Fiedler v. Day, 2 Sandf., 594; 2 Edm. Stat., 142, § 1; Planck v. Schermerhorn, 3 Barb. Ch., 644; Mason v. Lord, 40 N. Y., 484; Putnam v. Hubbell, 42 id., 113; Burgess v. Simonson, 45 id., 228 ; Vermilyea v. Palmer, 52 id., 471; Haydock v. Coope, 53 id., 72.) Plaintiff’s judgment was conclusive evidence of Crawford’s indebtedness to him. (Burgess v. Simonson, 45 N. Y., 225.) There was no ground for an estoppel. (Brazil v. Isham, 12 N. Y., 9; M. and M. Bank v. Hazard, 30 N. Y., 226; Brown v. Bowen, id., 541; Un. Bk. v. Sixth Nat. Bk., 43 id., 456; Cont. Bk. v. Bk. Comm., 50 id., 581; White v. Ashton, 51 id., 285; Lawrence v. Am. Nat. Bk., 54 id., 436; Ryder v. Ins. Co., 52 Barb., 447; Rice v. Dewey, 54 id., 455.)

Opinion:
Dwight, C.
It is objected by the appellants that the judgment in this case was erroneous in directing a sale by a receiver; and that the proper course, if the conveyances to Mrs. Crawford were to be set aside, was to have the plaintiff to sell on execution against Crawford, on his original judgment. ,
This objection cannot be sustained. The court has power to order a transfer to a receiver in such cases. (Chatauque Country Bank v. Risley, 19 N. Y., 369.) The practice, as laid down in that case, permits the court to make an order that the judgment debtor should convey to the receiver. That course was not pursued in the present instance, the judgment simply directing that the receiver should sell, execute deeds, etc. If this direction was erroneous, we are of opinion that the error is not to be rectified by an appeal from the judgment, but a motion should have been made to correct the judgment, the matter being one merely of detail, and not affecting the decision of the cause upon its merits.
It is also claimed that there was no intent on Crawford's part to defraud his creditors, and that the findings of the judge upon this .subject were not sustained by the evidence. It was not necessary that there should be any actual fraudulent intent. (Mohawk Bank v. Atwater, 2 Paige, 54.) The requisite intent may be inferred from the circumstances of the case. The evidence showed that Crawford was indebted, when he made his conveyance to Mr. Grlassey and through him to Mrs. Crawford, to an amount largely beyond his remaining property, or, in other words, after deducting the amount conveyed, he had by no means sufficient property to ' pay the plaintiff. It will be said that he was in prosperous business, and might soon have acquired the necessary means. This suggestion is not to the purpose. The true inquiry is : Had he, at the time the alleged fraudulent conveyance was made, sufficient means to pay his debts ? It was at one time the rule "that a voluntary conveyance by one indebted at the time was fraudulent, as a matter of law, towards his creditors. Ho evidence was allowed to rebut the presumption of fraud. (Reade v. Livingston, 3 J. Ch., 481.) This rule was subsequently deemed to be too severe by the courts, and the less stringent rale was adopted, that while a conveyance by a person indebted was presumptively or jgriyia faoie fraudulent, the presumption might be rebutted by proof to the contrary. (Seward v. Jackson, 8 Cow., 406.) This presumption, however, is not to be overthrown by mere evidence of good intent or generous impulses or feelings. It must be overcome by circumstances showing on their face that there could have been no bad intent, such as that the gift was a reasonable provision, and that the debtor still retained sufficient means to pay his debts. He can no more delay his creditors by such voluntary conveyance than he can actually defraud them, (Carpenter v. Roe, 10 N. Y., 230; Babcock v. Eckler, 24 id., 623; Dygert v. Remerschnider, 32 id., 648; Curtis v. Fox, 47 id., 300.)
The judge found, as a fact, that the conveyance was made for securing certain parcels of land to the wife, and saving the same from the claims of all parties whomsoever, and also for the purpose of hindering, delaying and defrauding creditors. There was evidence to sustain this finding, and it cannot be disturbed here.
It was, however, urged, on the argument, that .conceding the correctness of these views, in general, the conveyance was not fraudulent as to the plaintiff. This was maintained on the ground that the transfer to Mrs. Crawford was no secret. The plaintiff knew that it was to be made — knew that it was made and raised no objection. It is therefore insisted that he was privy to the transfer, assenting to it, and forever estopped from questioning it as fraudulent.
This claim, I think, is without force. Though the plaintiff knew of the transfer, there is not a particle of evidence that he knew that the defendant Crawford was depriving himself of the means of paying his debts. The presumption was the other way. They were intimate friends. It was undisputed that the plaintiff had the greatest confidence in Crawford. The very openness of the transaction would naturally tend to disarm all suspicion. Could it be that a trusted friend would make such a transfer openly, and yet design to defraud him ? Such would not be the ordinary supposition. Moreover, the plaintiff might well think that he had his legal rights. Mr. and Mrs. Crawford were bound to know the law and to be aware that they could not defraud the plaintiff. He was no assenting party so as to create an estoppel, certainly so long as he did not know the true state of Crawford's affairs, and the fact that he was defrauding himself of his estate so as to be unable to pay his debts. It is not necessary to inquire whether he would have been estopped had he known all the facts. As matters stood, he certainly was not. It would be dangerous, as well as unreasonable, to extend the doctrine of estoppel to such a case as the present.
The plaintiff has in no respect forfeited or compromised his right to proceed against the property of Crawford in the hands of the heirs of Mrs. Crawford, in order to reimburse himself for his claims as creditor.
There was some suggestion that there was collusion between the plaintiff and Crawford in bringing this action; such collusion was not found as a fact, and we cannot assume its existence.
There were some exceptions to the exclusion of evidence, which we do not deem it necessary to notice specially. The rulings of the judge were correct.
The judgment "should be affirmed.