Court Opinion

ID: 5507451
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:19:54.49838+00
Date Added: 2024-06-11T08:34:05.096121
License: Public Domain

VAN BRUNT, P. J.
(dissenting). I cannot concur in the conclusion arrived at by Mr. Justice EOLLETT that the judgment in this-action in all its parts should be affirmed. It is undoubtedly true that no ground was established for setting aside the two mortgages given to Sturtevant. But in respect to the trust agreement an entirely different question arises. It is true that such agreement appears to have been executed at the same time with the mortgages. But the validity of the mortgages cannot validate an agreement which, as to the creditors of Matthews, was void upon its face. It might very well be urged that, the mortgages and trust agreement having been executed at the same time, and the trust agreement being fraudulent, the mortgages must therefore fall with it. But the rule to Avhich attention has been called does not apply to mere fraud in law, but only to those cases in which a series of papers are executed at the same time, and a fraudulent intent in fact pervades the whole transaction. The mortgages to Sturtevant were executed in good faith, to secure to him the amount of his indebtedness. The trust agreement was also executed to add to that security, but Avithout Sturtei'ant’s knowledge or consent. Such trust agreement was not one which could prevail, or give any title to the trustees therein named as against the creditors of Matthews. Such being the case, Matthews’ creditors had the right to avoid that agreement. The plaintiffs in this action were creditors of Matthews at the time of the execution of the agreement, and they have brought this action to set it aside as an impediment to their securing the payment of their debts. It is not necessary to discuss the nature of the agreement. It is apparent that it is such an agreement as an insolvent debtor cannot make, and that trustees appointed thereunder cannot hold the property of such debtor as against his creditors who have Sled their bills to enforce judgments which they have obtained against the creator of the trust
It is urged in the opinion referred to that it does not appear that an execution has been returned unsatisfied against Matthews, or that the sheriff has been unable to find property subject to execution, and that, therefore, the refusal of the court to find insolvency was justified by the evidence. It is not necessary that a judgment *1090creditor should have an execution returned unsatisfied in order that illegal incumbrances upon the part of the judgment debtor should be set aside. The creditor may maintain his bill in aid of an execution still in the sheriff’s hands. If Matthews, the creator of the trust, at the time of the bringing of this action was not insolvent, it seems to be strange that these judgments should be standing against him, and executions certainly unsatisfied. There is no proof whatever that Matthews had property out of which these executions could be satisfied. I do not understand it to be necessary for a judgment creditor, in order to attack the fraudulent transfer of the property of his debtor, to show that he has an execution returned unsatisfied, or that the debtor had no property. The fact that the creditor has a judgment, and that he has an execution in the hands of the sheriff, unsatisfied, gives him standing in court to set aside clouds upon the property of the judgment debtor, in order that his execution may attach. Under these circumstances it seems to me that it was error to sustain this trust agreement, and to prevent these creditors from reaching the equity in the property of the judgment debtor covered by the mortgages and trust agreement in question. I think the judgment should be modified by declaring void the trust agreement, and setting the same aside so far as it affects the plaintiffs in this action.