Court Opinion

ID: 8059551
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:36:37.331478+00
Date Added: 2024-06-11T16:38:00.085998
License: Public Domain

The opinion of the court was delivered by
Depue, J.
The plaintiff, in November, 1868, recovered upon the verdict of a jury a judgment against the defendant *174for $4000 debt and $89.26 costs. In November, 1879, satisfaction of the judgment was entered of record in virtue of a power of attorney made for that purpose. The plaintiff now applies to have that satisfaction set aside and vacated on the ground that it was procured by fraud.’
A court of law may, where the rights of third persons have not intervened, cancel the satisfaction of record of its own judgment, if the same was procured by fraud or false and fraudulent representations. This power exists in virtue of the control of the court over its own records. Keogh v. Delany, 11 Vroom 97.
The plaintiff is the defendant’s daughter. The defendant left the state immediately after the verdict was rendered and before judgment could be entered, and did not return until after satisfaction was entered of record.
The defendant paid $50 for the satisfaction-piece. He admits that he induced the plaintiff to give the power of attorney by representing that he had no property. He says that representation was true.
The depositions show that the defendant at one time was the owner of seventy shares of the capital stock of the National Express Company and fifty shares of the stock of the Safe Deposit Company of New York. The par value of these stocks was between $11,000 and $12,000. These stocks the defendant, in December, 1867, transferred to his wife, or to some one for her benefit, without any consideration paid for the transfer. The defendant admits that he made this transfer of property to save it, in case he had creditors, so that they could not get hold of it. He also says that his object in making the transfer of this property was to place it beyond the reach of execution in case judgmént was recovered against him in this suit.
On the case presented by the depositions a plain case of a transfer of property in fraud of creditors is shown.
A compromise voluntarily made without any fraud or imposition cannot be set aside, however disadvantageous it may be. Steele v. White, 2 Paige 478. But, as fraud vitiates every *175transaction infected by it, a compromise obtained' by fraud is a nullity. Thus, if a creditor compounds with his debtor under a false impression, in which the debtor knowingly leaves him, as to the extent of the debtor’s estate, the creditor will not be bound by the composition, and may sue for the balance of his debt. Vine v. Mitchell, 1 Moo. & Rob. 337. Inducing a creditor to part with his claim at a sacrifice, by a false representation that the debtor is insolvent and unable to pay his debts, is a fraud, and indictable as a false pretence. State v. Tomlin, 5 Dutcher 13.
The merits of this application consist in the inquiry whether the plaintiff was induced to sign the satisfaction by fraud.
Independent of those cases of implied or constructive fraud which arise out of a breach of duty, trust or confidence presumed from the relations existing between the parties, fraud consists of the conjunction of wrong and injury. Fraud in this sense always implies artifice, deceit, and injury resulting therefrom. The complaining party must show that a deception was practiced—a false representation of a material fact, made with knowledge of its falsity, and that he, being ignorant of its falsity and believing it to be true, was induced to act upon it. Big. on Fraud 3. If a party having knowledge of the fraud settles the matter in relation to which the fraud was committed, and releases the person who defrauded him, he can have no relief either at law or in equity. Parsons v. Hughes, 9 Paige 591; Adams v. Sage, 28 N. Y. 103 ; Baker v. Spencer, 47 Id. 562; 1 Story Eq., §§ 202, 203.
The defendant testified that he had a number of interviews with the plaintiff before she consented to cancel the judgment, in each of which he represented that he had nothing; that he felt it to be his duty to protect his family, and had nothing of his own to give her. This testimony is equivocal in import. Coupled with a positive assertion of the defendant that he had .nothing to pay with, what he said would naturally imply that his duty to his family had reference to future acquisitions of property. It certainly will not call for the inference that he made the plaintiff acquainted with the fraud *176he had committed in putting away his property, that with knowledge of the facts she might condone the fraud.
The plaintiff testified that she first learned that the defendant had transferred his property to his wife about two or three months before she was examined as a witness. She was examined as a witness in June, 1881, and the rule to show cause was obtained May 12th, 1881.
The plaintiff’s testimony is confirmed by that of Mr. Shafer, her attorney. He testified that, in obedience to the plaintiff’s instructions, he met the defendant in New York city by appointment, and endeavored to pursuade him to settle the judgment by paying part of the, debt, and that the defendant declined to do so upon the ground that he had nothing to pay with—that he could not even pay the costs of the suit. The conduct of the attorney would be inexplicable in accepting the small sum of $50 in settlement if he or his client had knowledge of the property which the defendant had transferred in fraud of creditors, which might be reached in satisfaction of the judgment.
I think there is no reason for denying the plaintiff relief on the ground that she executed the satisfaction-piece with knowledge of the defendant’s prior fraudulent conduct, and that the Satisfaction entered on the record should be vacated, with costs.