Court Opinion

ID: 5649082
Source: CourtListenerOpinion
Date Created: 2022-01-11 21:52:34.871694+00
Date Added: 2024-06-11T08:38:29.895275
License: Public Domain

Leonard, J. (dissenting).
The court below have wholly mistaken the effect of the fraudulent transaction of October, 1854, between the debtor and his son. They were each equally culpable, and the law has no partiality fór either of them.
The judgment declaring the conveyances of October 20 to have been made to hinder, delay and defraud the creditors of William B. Bement, and void as to them, and directing a sale of the lands thereby granted, to satisfy the executions of the said creditors, granted no relief to the parties to the said fraud. ■ As to them, the transaction remained as it did before. Neither could allege their own turpitude as a ground for setting aside the deed or the mortgage. They were forever estopped by those instruments. There was no revesting of the title to the land in William B. Bement by the judgment declaring his convéyance null and void as against Hyde and Everett. The father and son did not thereby again become tenants in common of the land, as if no conveyance had been executed. It was only for the purpose of relief to , creditors that the land was subjected to their debt, as if no deed had been executed. Hence, there could be no partition of the lands between William B. and Egbert Bement. As between them, the conveyance was a barrier to their ownership in common. The General Term appear, to have so considered it, as they refuse to direct a sale in the inverse order of alienation, according to the usual rule in equity, but direct the sale of the mortgaged premises without respect to the division which had taken place.
The effect of this modification, and the further direction to divide the surplus money arising from the mortgage sale between Hyde and Everett and Egbert Bement, is to charge *258the share conveyed by the fraudulent deed with one-half of the mortgage debt, interest and cost. It gives to Egbert Bement a large portion of the benefit derived from his fraudulent transaction, and to that extent the creditors of William B. Bement are still hindered, delayed and defrauded. What is there in the facts which gives rise to this tenderness for Egbert Bement? The fact found by the judge, that he received no consideration for the mortgage, is wholly immaterial. The want of consideration, arising from the defeat of the fraudulent transaction, is a fact which Egbert is estopped by his mortgage from setting up, either as against his father or any other holder. Were the mortgage held by his father, neither would have any rights which would call for or permit a sale by foreclosure of that portion of the land covered by the fraudulent deed. Nor does the fact; also found by the judge, that William B. Bement applied the proceeds of the sale of the mortgage to the payment of his just debts, in any manner sanctify the fraud. The hindrance and fraud, and the consequent damage to creditors, must be overcome, as far as it is in the power of a court of equity to do it, without injury to the rights of innocent third parties.
Had Egbert paid the money for the conveyance of October 20, and the transaction had been committed to hinder, delay and defraud creditors', neither the payment of the money nor its subsequent honest application -by the debtor to the payment of other debts would have saved the premises so conveyed from being subjected by a decree in equity to the executions of judgment creditors; and such would have been the result, without any regard to protecting Egbert, or making the money paid by him a prior equitable charge upon the land which he had sought fraudulently to acquire. It is his misfortune, as it was his fault, that this incumbrance was created, and not that of Hyde and Everett. Egbert Bement must bear the consequences resulting from the injury inflicted upon his father’s creditors by the fraudulent act to which he was a voluntary party. A court of equity can extend no protection to Egbert Bement in this transaction, without visiting some portion of the injury arising from the fraud upon *259the creditors, and, to that extent, making the fraud operative. The plaintiff has purchased a security of no validity as a lien upon the land conveyed by the fraudulent deed in the hands of the mortgagee, as against his creditors. It is theprarchase by the plaintiff, in good faith and for value, that gives it any validity in his hands, as against the interest acquired by Hyde and Everett. The plaintiff became the owner before the creditors of William B. Bement had made any claim, or given any notice of their equitable rights, affecting a portion of the land covered by the mortgage. The defendant Egbert Bement made the claim by his answer ,• and it is between him and Hyde and Everett that the litigation has been conducted.It was necessary for Hyde and Everett to appear and defend, to protect their interest. They are entitled to costs of their whole defense and of the appeals taken against the defendant, Egbert Bement, whose unfounded claims have rendered the defense and the appeals necessary.
The decree should be modified, by directing a sale of the interest of the defendant, Egbert Bement, in the first instance, and payment of the mortgage, with interest and costs. In case there is a surplus, it is to be applied to the costs of Hyde and Everett, as far as necessary, and the surplus to be paid into court. Should the sale of the interest of Egbert fail to produce the sum reported due, with interest from October 27, 1854, and the plaintiff’s costs, then the interest purchased by Hyde and Everett at the sheriff’s sale is to be sold to raise the deficiency, and the surplus to be paid into court. Ho costs to be allowed as between the plaintiff and Hyde and Everett, nor as .between the plaintiff and Egbert Bement, upon this appeal, nor of the appeals to the General Term of the Supreme Court, as no judgment in favor of the plaintiff has at any time been correct. The defendants Hyde and Everett should recover the costs of their defense, and of the appeal to the General Term and to this court against the defendant Egbert Bement.
Judgment affirmed, with a modification striking out the claims therein disposing of the' surplus moneys, if any, arising from the sale of mortgaged premises.