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Ellis v. Myers

8 N.Y.S. 139 Court N.Y. Gen. Term English

Delivered by Hardin, P. J.

Contents

Majority

p. 139
Ellis v. Myers et al.
(Supreme Court, General Term, Fourth Department.
November, 1889.)

Headnote

1. Fraudulent Conveyances—Evidence.
In 1888 a husband conveyed land to his wife in payment of an alleged indebtedness contracted during marriage, and this conveyance was attacked by his creditors as fraudulent. From the wife’s evidence it appeared that before 1845 she was entitled to money from her father’s estate, and in that year a settlement was made with her guardian, and a release was executed by her and her husband, which recited that they had received the full amount of the indebtedness to her. She became entitled to other money from her uncle’s estate, and in 1864 received from the executor a note given by her husband to the testator. She testified that her husband, at the time of each of these transactions, promised to pay her these sums when he could, but had never done so, and she was corroborated by him. HeZcZ error to find that no indebtedness existed.[1]
2. Same.
Although the marriage took place before the passage of the married woman’s separate property act, the promise to reimburse her was a sufficient consideration to sustain the conveyance, as the husband could decline to assert his common-law rights if he chose to do so.
3. Same.
Nor did the fact that the statute of limitations prevented the recovery of the debt when the conveyance was made affect the sufficiency of the consideration, as only the debtor himself can take advantage of the statute under such circumstances.
4. Assignment for Benefit of Creditors—Omission of Assets.
The omission of a claim of doubtful validity from the schedule of assets annexed to an.assignment will not invalidate it, as, if the claim is valid, the schedule can be amended in that respect, and the claim would pass even if omitted.
Appeal from special term, Tompkins county.
Action by George A. Ellis against Eeuben J. Myers, Oliver Cady, and John E. Cady, to set aside an assignment made by the latter two defendants to the former. It was found as a matter of fact by the trial court that upon the 19th day of January, 1888, Oliver Cady and John E. Cady executed and delivered to Eeuben J. Myers a general assignment, “both as individuals and copartners, which assignment was in due form of law, and was duly accepted by
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said Myers as assignee, and he duly executed and tiled his bond as such assignee, and entered upon the discharge of his duties.” Fhat on the 6th o£ February, 1888, an inventory and schedules were tiled in the clerk’s office showing the liabilities to be the sum of $31,210.99, and the actual worth of their assets $12,105.55. On the 23d of February, 1888, the plaintiff recovered a judgment against the Cadys for $5,291.67; “the same being upon an indebtedness which accrued some three years prior to the said judgment. An execution was duly issued thereupon to the sheriff of the county of Tompkins, in which county the said defendants then lived, which execution was thereafter, and before the commencement of this action, duly returned wholly unsatisfied. ” The trial court further found, viz.: “ That the aforesaid general assignment for the benefit of creditors, made by the said Oliver Cady and John E. Cady to the defendant Myers, was fraudulently made, with the intent on the part of the said assignors to hinder, delay, and defraud their creditors and this plaintiff;” also, “that, by reason of said assignment, the creditors of said assignors and this plaintiff have been hindered, delayed, and defrauded in the collection of their debts;” also, “that the defendant Myers did not participate in, and had no knowledge of, the fraudulent intent of the assignors.” As matter of law it was found “that the said general assignment made by the defendants Cady to the defendant Myers is void as to this plaintiff.” There was a judgment for plaintiff, and defendants appeal.
Argued before Hardin, P. J., and Martin and Merwin, JJ.
Rich & Dutton and S. E. Payne, for appellants. Almy & Bouton, for respondents.

On the 11th day of January, 1888, Oliver Cady executed a conveyance of 120 acres of land to his wife, Cornelia Cady, ostensibly in payment and discharge of an indebtedness of his to her which arose during their married life. All the facts and circumstances relating to that indebtedness were disclosed by evidence. The trial judge was requested to find as follows: “That on the 11th day of January, 1888, the said Oliver Cady conveyed to said Cornelia Cady one hundred and twenty acres of land by deed, which said deed contains a full description of said lands, and the same was recorded in Tompkins county clerk’s office, January 20th, 1888; that said conveyance was in payment of, and in full satisfaction of, said indebtedness then due and owing from said Oliver Cady to said Cornelia Cady, and the said land was of the value of $-.” He refused to make the finding. We are called upon to inquire whether that proposed finding accords with the evidence. In the memorandum which the trial judge delivered, accompanying his decision of the cause, he remarked: “I think from the evidence that over forty years ago Oliver Cady obtained from his. wife the sum of money claimed. I think, furthermore, that he obtained from his wife the sum of money claimed at the death of Mr. Goddard. These moneys were used for their joint benefit, without an intention and'without a promise by Oliver Cady to his wife to repay them. * * * During the whole forty years no recognition of that as a debt was ever made until within a montii or two of the assignment. All these circumstandes lead me to the conclusion that there never was a promise, express or implied, by Oliver Cady to repay those sums to his wife, and that at the time of the assignment there was no indebtedness, legal or equitable, from him to her.” Mrs. Cornelia Cady was placed upon the stand as a witness by the plaintiff. He thus vouched for her credibility and reliability as a witness. From her testimony we learn that she was a daughter of John Phillips, who died when she was about six years of age, and that her uncle, Schuyler Goddard, was appointed her guardian after the death of her father, and that the guardian made several loans of money belonging to the estate of her father to Oliver Cady, and received his notes therefor. By a release which was produced in evidence, executed by Oliver Cady and Cornelia Cady,

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bearing date the 24th day of May, 1845, it appears that there was a settlement between Schuyler Goddard, as such guardian, and a recital therein that Cornelia and Oliver had “received from said Schuyler Goddard $842.42 in full of all demands against him ‘as such guardian.” That receipt was corroborated by the testimony of Mrs. Cady and of her husband, Oliver Cady, and there is no evidence in the'appeal book to the contrary on the subject of the amount of moneys that came from the estate of Mrs. Cady’s father. The fact should therefore be regarded as satisfactorily established. It also appears that Mrs. Cady became entitled to certain moneys from the estate of Schuyler Goddard after his death, and that Augustus Phillips, brother of Mrs. Cady, was appointed executor, and that she had a settlement with the brother in reference to the estate of her uncle, Schuyler Goddard, and that the executor turned out to her a note of $600 which he had taken from Oliver Cady in settlement of Mrs. Cady’s interest in Schuyler Goddard’s estate. The note was produced upon the trial. It bears date February 29, 1864, and is for $600 and interest, and was executed by Oliver Cady and John Cady, -and there had been indorsed thereon $42 in payment of interest, March 6, 1865. Mrs. Cady testifies that her husband .said to her he would pay this money, and the interest upon it, to her. The origin and existence of the indebtedness of $600 is also stated in the testimony of Oliver Cady, and that Mrs. Cady had not been paid at the time of the execution of the deed in question, on the 11th of January, 1888, either the money which her husband had received from her father’s estate, or the indebtedness which accrued as has just been stated. Mrs. Cady testifies that she turned over the notes which came to her from her guardian, Goddard, to her husband; and she says, viz.: “At that time he told me he would pay me the money back, and the interest on it. That was in 1844. He said that when he got the money.” She testifies, in speaking of the $600 received from the Goddard estate, viz.: “My husband said he would pay this money to me and the interest when he could. He told me last ¡November or December that he would give me a deed to pay me what he owed me.” Mrs. Cady is not a party to the action, and, after making due allowance for her relation to the defendant, after weighing her testimony in connection with the papers produced, and the evidence of her husband, so far as it corroborates her testimony, we are led to the conclusion that at the time her husband received the several sums of money there was an agreement that he should return the same with interest to her; and we are of the opinion that the indebtedness formed a consideration for the conveyance which she received from her husband. It was competent for him to pay that indebtedness; it was lawful for her to receive the payment thereof by the conveyance in question. Grapel v. Hodges, 1 N. Y. Supp. 823 . In Jewett v. Noteware, 17 Wkly. Dig. 438 , it appeared that a debt, 18 years after its origin, was secured by a mortgage, together with the interest on the indebtedness. That indebtedness was due to a wife for money borrowed, and the intent of the husband in executing the mortgage “was to secure his wife in any event,” and it was held, viz., “that, as the debt was bona fide, the judgment creditor could not attack the mortgage.”

Although the marriage between Mrs. Cady and her husband took place prior to the act of 1848, for the protection of property of married women, his promise to her, made to reimburse her the money which he borrowed from her, furnishes the foundation in equity for upholding a conveyance made for that purpose. He had a right to decline to assert absolutely his marital rights to the personal property of his wife, and to borrow the money of her with the understanding and agreement that it should be repaid. In Jaycox v. Caldwell, 51 N. Y. 395 , it was held in the case, involving a similar question, that “the agreement is for a good consideration, and imposes an equitable obligation upon the husband; and a preference of the debt in good faith, and without an intent to defraud, in an assignment for the benefit of creditors, is legal,

p. 142
and does not vitiate the assignment.” And it was further said in that case that “there is no distinction between cases where the property at the time of the marriage consisted of money in the possession of the wife and those where it consisted of choses in action. ” The doctrine laid down in Jaycox v. Caldwell 51 N. Y. 395 , was reaffirmed by the court of appeals in Plow Co. v. Wing, 85 N. Y. 426 .

We think it is quite apparent from the evidence that Mrs. Cady expected to receive a return of the money which she allowed to pass into the hands of her husband, with interest thereon, and that he promised, from time to time after receiving the money, to make good the same to her, and that he had never done so prior to the conveyance of .the 120 acres. We think these remarks appropriately apply to the money which came from her father’s estate, as well as the money that came from her uncle’s estate. We therefore differ with the learned trial judge, and cannot accede to the comments made upon that transaction in this memorandum. While the plaintiff was at liberty to contradict the evidence given by Mrs. Cady, and to prove the facts other than as stated by her, yet we think that such contradiction ’and proof are not furnished. We are of the opinion that the trial judge should have found in accordance with the request made in regard to the indebtedness to Mrs. Cady at the time of the execution of the deed of 120 acres, and that the conveyance was made for the purpose of paying to her a valid indebtedness.

It does not aid the respondent’s ease if it be conceded that she had no demand in January, 1888, which in law she could have enforced as against the statute of limitations. The plaintiff is not in a situation to insist upon the statute ■of limitations against that indebtedness. That defense is personal to the ■debtor, and manifestly was waived when the settlement and payment of the indebtedness took place by means of the conveyance. See Jaycox v. Caldwell, supra.

If the trial judge had found in accordance with the views which we have expressed upon the subject we have been considering, it is inferable that his general finding that the assignment in question was fraudulent in fact might have been otherwise. We therefore think there should be a new trial.

We think the criticism that the schedule of assets did not contain a claim of SI,000 in favor of Oliver Cady against one of his daughters is not sufficient to warrant a finding that the assignment was fraudulent in fact. After an inspection of the evidence, we are inclined to think there is some doubt as to the validity of any such supposed indebtedness. However, if it be a valid claim, the schedule may be amended, and the assignee may bring an action to recover the indebtedness. If there was one existing, it would pass, ■under the assignment, to the assignee, even if omitted from the schedule. Warner v. Jaffray, 96 N. Y. 253 ; chapter 466, Laws 1877.

We see nothing in the circumstances attending the omission of the alleged indebtedness of the daughter to Cady from the schedule made after the assignment which clearly or satisfactorily establishes an intent on the part of the assignors, in the execution of the assignment, to commit a fraud upon their creditors. Clark v. Taylor, 37 Hun, 314 . There is no collusion shown on the part of the assignee in respect to that supposed indebtedness, or the withholding of the same from the schedules. If any remedy is needed in respect to that indebtedness, it may be sought by the assignee in proceedings to have the schedule and inventory amended, or by bringing an action to recover the amount of the indebtedness. Miller v. Halsey, 4 Abb. Pr. (N. S.) 28; Wilson v. Forsyth, 24 Barb. 105 ; Bank v. Webb, 15 How. Pr. 193 ; Carpenter v. Muren, 42 Barb. 300 .

Judgment reversed on the exceptions, and a new trial ordered, with costs, to abide the event.

Martin, J., concurs. Merwin, J., concurs in the result.

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