Callegari v. Sartori — 174 A.D. 102

Majority

p. 102

John Callegari, Individually and as Administrator, etc., of Guiseppi or Joseph Sartori, Deceased, Respondent, v. John Sartori and Others, Appellants.

Second Department,

September 29, 1916.

Headnote

Real property — conveyance to husband and wife as tenants by entirety, portion of the consideration furnished by third person — resulting trust—Real Property Law, section 94 —parties—when creditor may sue in individual capacity—limitation of action.

Where a husband borrows money for the purpose of buying lands and takes the deed in the name of himself and wife, who has also contributed a portion of the purchase price, so that the two become tenants by the entirety, the effect of section 94 of the Real Property Law, declaring that a grant for a valuable consideration to one person, the consideration being paid by another, is presumed to be fraudulent, etc., is not to make the whole conveyance void as to the creditor of the husband who furnished the consideration, but a trust in his favor results only as to the portion of the lands purchased by the money received by the husband.

Hence, on the death of the husband the trust should be not enforced by selling the entire land, but only the deceased husband’s former interest therein.

Where the deceased grantee left no unpaid creditors save the person who furnished the consideration, he may sue individually to enforce the trust, and it is not necessary that he sue as administrator of the deceased grantee.

The Statute of Limitations on the action to enforce said trust does not expire until six years after the discovery of the fraud.

Appeal by the defendants, John Sartori and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 12th day of April, 1916, upon a decision of the court after a trial at the Kings County Special Term.

The judgment decreed that the sale of certain premises to Joseph. Sartori and Caroline Sartori was and is fraudulent and void; that plaintiff, as administrator, is entitled to a resulting trust in said premises and that an accounting of the rents of said premises and a sale of the realty should be had.

David J. Wagner, for the appellants.

Louis J. AltJcrug, for the respondent.

By deed dated May 15, 1907, in fulfillment of a contract with Joseph Sartori, Armgardt conveyed land to Joseph and Carolina Sartori, his wife, for the stated consideration of $7,200, which was met by the assumption by the grantee of a mortgage for $3,000 and by $2,700 paid by the husband and $1,500 contributed by the wife. On May 15, 1907, Joseph Sartori became indebted to his nephew in the sum of $1,500 for money borrowed for the purposes of the purchase. Joseph, while yet a resident of the county of Kings, died in Italy December 12, 1908. On January 12, 1914, Callegari was appointed by the surrogate of that county administrator of Joseph’s estate. Joseph paid interest for one year on the debt to his nephew. Mrs. Sartori, after her husband’s death, made some payment. She died November 4, 1915, in possession of the land, to which occupation her children succeeded. The plaintiff testified that he did not discover until the fall of 1913 that the title had been taken in the name of his uncle and his wife. Then he brought suit. The court found that such conveyance was fraudulent and void as to Joseph’s creditors on May 15, 1907, to the extent contributed by him, but subjects all the land to the payment of Joseph’s debt. The deed was recorded May 16, 1907, the day after its date. There is no explanation of plaintiff’s failure to learn of the conveyance to both parties. If he understood that the conveyance was to his uncle only, his delay in enforcing his claim against the land is likewise inexplicable. But where is the evidence of conscious fraudulent action on the part of either man or wife? It is said to be in this: that Joseph, being indebted to his nephew, bought the land and paid the consideration and took the title in the name of his wife. But the fact is that Joseph did not pay all the consideration, nor did he take title in the name of his wife, but in the name of himself and his wife, as much one as the other. The statute (Real Prop. Law, § 94) provides that “ A grant of real property for a valuable consideration, to one person, the consideration being paid by another, is presumed fraudulent as against the creditors, at that time, of the person paying the consideration, and, unless a fraudulent intent is disproved, a trust results in favor of such creditors, to an extent

p. 104

necessary to satisfy their just demands.” Joseph paid twenty-seven-forty-seconds of the money and the wife fifteen-forty-seconds, and they both became bound to pay the $3,000 mortgage. It was their right to have the conveyance made to them in their two names. The fact of inequality of payment did not make fraudulent the manner of their taking. Where, then, is his or her fraud in fact ? Although they took the title in their several names, the law infers a tenancy in entirety, that is, that both as one person were seized of the whole estate, so that the survivor would take it. Therein the fraud is said to reside. To them, unless the law otherwise informed them, the deed seemed to say that they had taken the title in themselves as two persons, although decision, resting on an ancient fiction, declares that they took title as one person, ha legal effect she and he did unite their two property interests. He gained the right to take her interest if he survived her; she acquired the right to take his interest if she survived him. She, solvent, ventured her interest upon the contingency; he, owing $1,500 and unable to pay it save for this land, committed his greater interest to the chances of living. The husband, living, had a right of enjoyment and what was a valuable property interest. By the manner of creating the tenancy he took something like a defeasible estate in twenty-seven-forty-seconds of the property, whereas in such part he was entitled to a fee simple absolute, and she did the same in fifteen-forty-seconds of the land. Potentially it involved loss to his creditor, assuming that his interest acquired was less valuable than if he had taken as tenant in common. What he did was not without consideration, for he acquired rights of survivorship in her property and the benefit of her assumption of the mortgage. The real question, then, is whether a debtor with no intention in fact to defraud is guilty of a legal fraud if he, entitled to take as a tenant in common to the extent of twenty-seven-forty-seconds of land, does take as a tenant by the entirety with his wife, who of right could take as a tenant in common to the extent of fifteen-forty-seconds and assumes with him a mortgage for thirty-seventy-seconds of the whole purchase price. I am inclined to the view that the statute quoted saves the right of the creditor, and that the

p. 105

manner of receiving the conveyance must as to him be regarded as voluntary and, therefore, fraudulent in law. The debtor exposed his interest to the hazard of the creditor losing it if the wife survived. It created in the wife an estate in fee, dependent upon her surviving the husband, and although there was some consideration the debtor could not render his fee dependent upon the accident of his survivorship. The wife must be deemed to have held twenty-seven-forty-seconds of the land in trust for her husband’s creditors. The conveyance is not void as found; otherwise there would he no title through Joseph. The trust should be enforced by selling, not the entire land as adjudged, but Joseph’s interest in it. Nor do I perceive any reason for granting relief to plaintiff as administrator. The transaction was fraudulent only as to creditors “ at- that time.” Plaintiff individually is the only creditor proven to have existed then or later. The statute makes the creditors the beneficiaries and they follow the trust property by virtue of the statute. The complaint alleges that Joseph Sartori left no creditor unpaid other than the plaintiff. There is no evidence of other creditors or finding that they exist. Therefore, the plaintiff individually should enforce the trust. It is urged that the action is barred by the six-year Statute of Limitations. The indebtedness arose on May 15, 1901. Interest was paid by Joseph to May 15,1908, and the aunt made a payment of. some sum. Joseph died out of the State, and the administrator was not appointed until January 12, 1914. It is evident that the debt was not barred. The conveyance was made in May, 1901, and this action was begun December 18, 1915. Six years had not elapsed since the discovery of the fraud, which was in 1913. The judgment and fin fling should be modified so as to limit, in behalf of the plaintiff individually, the sale of the property to the extent of the twenty-seven-forty-seconds interest owned by Joseph Sartori, and the judgment as so modified should be affirmed, without costs.

Jenks, P. J., Carr, Stapleton and Putnam, JJ., concurred.

Judgment modified in accordance with opinion, and as so modified affirmed, without costs. Order to be settled before Mr. Justice Thomas.