Durack v. Wilson

The plaintiff, as trustee in bankruptcy of the defendant Hattie P. Wilson, brings this suit in equity to set aside a mortgage dated April 1, 1901, made by the bankrupt to the defendant Gordon to secure the sum of $2,500, and a deed made by the bankrupt to her sister, the defendant Weeks, dated April 8, 1901, for the alleged consideration of $2,500. The property transferred by the mortgage and deed was the bankrupt’s undivided one-half part of a parcel of 2y2 acres of land situated at Locust Valley, near Peacock Point, in Nassau county. The mortgage and deed were acknowledged before one Kraus, as notary public—the mortgage on April 1, and the deed on April 8, 1901; a certificate of the clerk of New York county to the official character of the notary is attached to each instrument, dated April 12, in each case; and the mortgage and deed were recorded together on April 17, 1901.

It appears that in October, 1900, one Stuart, an iron manufacturer in New Hamburg, Dutchess county, recovered a judgment for $291.29 against the Manhattan Bath Tub Company in a Municipal Court in the city of New York. The defendant company appealed from this judgment, and stayed the execution by an undertaking dated November 8, 1900, on which the bankrupt became surety; making oath that she was a freeholder, and justifying by affidavit

On the trial here the plaintiff offered proof of statements substantiating his claims made by the defendant Mrs. Wilson and her sister and the defendant Gordon, under oath, before the referee in bankruptcy. He also proved by one Hughes, an attorney in New York, that Gordon had stated that the mortgage now attacked was not a bona fide mortgage. The defendant Mrs. Wilson and her husband were in court, but were not called to the stand. Mrs. Weeks testified that at the time of the conveyance her sister owed her the $1,250, one-half of the Hagar mortgage, which she had turned over to her in December, 1900, and that she had loaned her at different times, in small sums, of which no account' was kept, over $1,000. At the time the deed was made to Mrs. Weeks, the latter knew of Stuart’s claim; knew that he had a judgment against her sister, the defendant AVilson, and that he 'was endeavoring to collect it. She testified to a valid indebtedness from Mrs. Wilson to her of $1,250, and, in a less satisfactory way, to an additional indebtedness of $1,900, or $2,250 in all. Gordon says the mortgage for $2,500 was for a valid consideration, because Mrs. Wilson had agreed to be responsible for moneys which he thereafter loaned to her husband, John O. Wilson, and he says he did loan him $2,500 in varying

I am convinced that the mortgage to Gordon was fraudulent; that it was without consideration, and part of a scheme to defraud Mrs. "YVilson’s creditors; and that Gordon was a party to the transaction. Whether or not Gordon advanced the money alleged to Wilson is not very clear* on the testimony. If he did, it is remarkable that no account, memorandum, or receipt was produced to verify his statement; but, if the money was advanced, I am satisfied that the claim that it was advanced on Mrs. Wilson’s credit, ór because of any agreement on her part to repay it, is an afterthought. While it is true that the statute of frauds is a personal defense, and that the verbal promise of Mrs. Wilson to answer for her husband’s debt, if made, would be valid as against the plaintiff (Livermore v. Northrup, 44 N. Y. 108 ; De Hierapolis v. Reilly, 44 App. Div. 22 , 60 N. Y. Supp. 417 ; Brown v. Hall, 5 Lans. 177 ), the fact that the alleged advances and the alleged promises by Mrs. Wilson are uncorroborated in any way is material.1 As was said by Mr. Justice Hiscock in Breen v. Henry, 34 Misc. Rep. 237 , 69 N. Y. Supp. 631 :

“There is no satisfactory evidence of any definite arrangement between the people. There was no note or written acknowledgment of any kind evidencing this indebtedness. No account was presented showing its inception, continuation, or termination. No receipt or other written evidence was given to show that it was canceled by the execution of these conveyances.”

The entire transaction with regard to this mortgage, considered with reference to the situation and relationship of the parties— the significance of the dates of the instruments with regard to Stuart’s proceedings—shows, to my mind, a dishonest attempt tó avoid liability on an undertaking given by which legal process was stayed. It seems unfortunate that this defendant, a woman,- should have been drawn into such proceedings; but she has voluntarily subjected herself and her property to judgment, and the rights of the creditor, which have been stayed and hampered by her interference, should not be lost by this patent attempt to escape just liability. The mortgage to Gordon should be canceled and set aside as fraudulent.

With regard to the deed of her one-half interest to her sister, at the date of the conveyance I find that there existed a valid indebtedness for $2,250. If this deed of April 8, 1901, was to be treated as a deed absolute, I would hesitate in denying the plaintiff relief, because Mrs. Weeks knew of Stuart’s claim and judgment at the time she took the conveyance; and there is much force in the contention, on all the facts, that there was a mutual design to hinder and defraud creditors. In such case the fact that there existed

The plaintiff is entitled to judgment in accordance with these conclusions, with costs.

Judgment for plaintiff, with costs.