Merchants' Bank v. Thalheimer — 18 N.Y. St. Rep. 816

Majority

p. 816

Merchants’ Bank of Rochester et al., Resp’ts, v. Ignatz Thalheimer et al., App’ts.

(Supreme Court, General Term, Fifth Department,

Filed October 19, 1888.)

Headnote

1. Fraudulent conveyance by insolvent debtor—Parent and child.

Where an amount in value is transferred by an insolvent debtor to a creditor largely iu excess of the debt to be paid, it is evidence of an intent to hinder and delay creditors; but the payment by a father of a debt actually due to the son by a conveyance of real estate to him of that value would not be in fraud of the rights of creditors.

2. Same—Equity—Bill to set aside fraudulent conveyances, etc.

Ignatz Thalheimer, being in failing circumstances, conveyed to his son William certain real estate, and assigned to him a claim which Ignatz held against the firm of Hays & Thalheimer. 1 ette Thalheimer, his mother, also assigned to William a judgment she held against Ignatz. The creditors of Ignatz filed a bill in equity to set aside the conveyances, and both of the assignments, on the ground that they were in fraud of the rights of creditors. The evidence showed that William was a prosperous business man of Louisville, Kentucky, and that the father was engaged in the business of loaning money in Rochester, New York. William, for many years, had sent to his father sums of money at different times, to be loaned for him, the father agreeing to guaranty the loans and giving his son his notes for the amounts sent. At the time of the conveyances and assignments in question the amount of these notes, with interest, was $10,605.76, and the value of the real estate so conveyed to the son was $11,000. William did not accept the assignment of the claim of Ignatz, for about $15,000, against the firm of Hays & Thalheimer, and never made any claim thereunder. The testimony of Ignatz and William differed as to the times the money was sent. Held, that the discrepancy in the testimony of the father and the son as to dates, after many years, had elapsed since the transactions, is rather in favor than against the credibility of the testimony; had the witnesses agreed perfectly there might be ground for-suspicion of collusion between them. Held, further, that as William did not accept the assignment of the claim against the firm of Hays & Thalheimer, no inference of fraud, by reason of its transfer, can exist as far as William is concerned. Also that the trial court having decided that under the evidence, as Ignatz was to guaranty the loans, they would be valid only if in writing, and that the guarantor is liable upon them only upon default of the principal debtors. This was error, the court overlooking the fact that the promissory notes were given therefor, and the notes made Ignatz liable for the money, with interest.

3. Same—Evidence.

Upon the trial, the defendant William offered in evidence a note executed, by Ignatz to Yette for $300, together with the bond executed by Ignatz to William, and offered to show that William was liable on his father’s note to Yette, for $300; that his father was to make him good for that liability, and that $800 of the amount had been paid, which evidence was excluded by the trial court. Held, error, that as the amounts of the notes, with interest, held by William was less than, the value of the real estate conveyed to him, William had a right to show that he had paid this difference. It was important evidence as bearing upon his good faith and as to whether he had paid full value for such real estate.

p. 817

Appeal from a judgment entered upon a decision of the Monroe equity term.

J. & L. Van Voorhis, for appl’ts; William H. Cogswell, for resp’ts.

This action was brought by the plaintiffs as judgment creditors of the defendant, Ignatz Thalheimer, to set aside certain conveyances of real estate made to his son William Thalheimer, as being in fraud of the rights of creditors; also an assignment of a certain cause of action which the defendant, Ignatz Thalheimer had against the firm of Hays & Thalheimer; also a judgment in favor of Yette Thalheimer, against the defendant, Ignatz Thalheimer. It appears that the defendant, Ignatz Thalheimer, had indorsed for the firm of Hays & Thalheimer, to the amount of $12,000, and had also loaned that firm about $15,000; that on the 7th day of July, 1874, he learned that the firm was insolvent. He thereupon brought an action against Hays & Thalheimer, in which he procured an attachment to be levied upon the goods of that firm. He also conveyed to his son, William Thalheimer, the real estate in question, and executed an assignment to William, of his claim against Hays & Thalheimer; but the court has found that the assignment of this claim was not accepted by William, and that he never made any claim thereunder. The court further found as facts, that there was no consideration paid by William Thalheimer or by any one in his behalf, to Ignatz Thalheimer, for the conveyance of the real estate, and that the same was entirely without consideration, except as stated in the decision, The court further finds that at the time of receiving of the conveyances, William Thalheimer had in his possession three notes given to him by Ignatz Thalheimer, one of which was dated on the 12th day of Uovember, 1879, and was for $2,500; another of which was dated on the 15th day of January, 1880, and was for $3,000; and another of which was dated on the 19th day of April, ,1881, for $3,000; but that in fact there was nothing due from Ignatz to William upon such notes. Exceptions were taken to the findings, that there was no consideration paid by William for the real estate, and that there was nothing due upon these notes.

These exceptions present the serious questions for consideration upon this appeal. The amount of these notes with the interest accrued thereon at the time of the conveyance of the real estate to William was $10,605.76. It was stipulated upon the trial that the value of the real estate conveyed was $11,000. It appears from the evidence that William was a prosperous business man residing in Louisville, Kentucky; that his father, Ignatz Thalheimer, resided in the city of Rochester, and was engaged in buying notes and mortgages, and loaning money.

p. 818

The plaintiff introduced in evidence the testimony of Ignatz Thalheimer, taken before a referee in which he testified that at the time of the conveyance he owed his son William on the three notes, $8,500, besides the interest; that -one of the notes was given in 1879, he believed one was given in 1880 and one in 1881; that these notes were given up to him by his son William when he executed and delivered the conveyances of the real estate in question. These notes were, at the request of the plaintiff, produced in court by_ the witness, and the notes were by the plaintiff put in evidence, and are of the dates and amounts found by the court. Each of the notes was signed by the defendant Ignatz Thalheimer. The witness further testified that each of the notes was given for money loaned to him by his son William; that his son sent him the money from time to time to loan for him.

The defendant William testified in substance that he advanced money to his father from time to time to invest; that he had an agreement with him that he was to be liable to him for the money so advanced; that he sent the money to him for which the notes were given, etc. This evidence is undisputed. It is corroborated by some of the exhibits, especially that of number 1, which is a letter dated Richmond, Kentucky, January 10, 1878, and is a letter from William to his father in which he states that he sends him by bearer, $1,000, which with the other $1,200 makes now $2,200, and states that his father would have to guarantee this to him, that he could not let it go under any other consideration.

It appears to us that under this evidence the trial court erred in finding that there was no consideration for the deeds and that there was in fact nothing due upon the notes. The learned judge in his opinion states that it was not clear just when the money was advanced by William to his father; and then comments upon the discrepancy in the testimony of Ignatz and William as to the dates. But it does not appear to us that this should be conclusive. They each testified that the money was sent from time to time. True, they different somewhat as to dates, for each relies upon his recollection and after the lapse of so many years it is not strange that their recollection in reference to dates should vary, indeed, had they agreed perfectly there might be ground for suspicion that they had concocted a story to aid them in defrauding creditors.

The court further proceeds to state that the purpose for which the money was advanced was to lend it for William, and that it was not a loan to Ignatz, and the fact that Ignatz received money to lend for William did not make him Hable to repay the money; that under the evidence of William, his father was to guarantee the loans which he made, and that it was a sufficient answer to this to say that such an agreement would be valid only if in writing; that the

p. 819

liability was not made out because if there was a guarantee the guarantor is liable upon it only upon default of the principal debtor, etc. In- this view we think the learned trial court has overlooked the fact that Ignatz on receiving the money made and delivered to his son promissory notes therefor. The notes made him liable to the son for the money loaned with the interest that should accrue thereon. It is true that William stated in his letter that his father would have to guarantee the - money sent to him; that he could not let it go under other considerations. But what did he mean by this further than that he should look to his father for the money sent him? The money does not appear to have been loaned out by the father in the name of his son. On the contrary, it appears that as to some of it, he invested it in real estate, taking the title in his own name. It consequently appears to us 'that he was liable . upon the notes as maker, and that the question in reference to the liability of a guarantor is not involved in the case.

It is contended that the assignment by Ignatz to William of the cause of action against Hays & Thalheimer for about $15,000, indicates a fraudulent intent on the part of Ignatz. Had this claim been valid for that amount its transfer in connection with the real estate would have vested in William property to the value of about $26,000, which would be largely in excess of any claim which he had against his father; and it would tend to show an intention to hinder and delay the creditors of Ignatz, and had William become a party to this, the cause of action might have been made out. But the couit has found that William did not accept the transfer of this claim, and consequently no inference of fraud by reason of its transfer can exist so far as William is concerned. If Ignatz actually owed his son William $10,605.76 upon these notes, William had the right to collect that sum; and the payment of him in money or the transfer to him of property of that value would not be in fraud of the rights of other creditors.

Upon the trial the defendant, William, offered in evidence, a note executed by Ignatz Thalheimer to Yette Thalheimer for $3,000, together with the bond executed by Ignatz to William. These papers were objected to by the plaintiff, and the counsel for the defendant offered to show that William was liable on his father’s note to Yette Thalheimer for $3,000; that his father was obliged to make him good for that liability on the bond; that the payments made by the witness to her were made in good faith upon these instruments at his father’s request. The objection of the plaintiff was sustained, the evidence was excluded and the defendants excepted. At the time of the conveyance of the-real estate in question, it appears that William delivered to

p. 820

his mother ten promissory notes, of two hundred dollars ■each; that four of them have since been paid. It appears that the amount of the principal and interest due upon the notes was something less than the value of the real estate ■conveyed. And it appears to us that the defendant William, had the right to show that he had paid this difference. If he could have shown that Ignatz was owing Yette; that William was liable to Y ette for the amount, and that he held the bond of his father as-security, and that the ten two hundred dollar notes were delivered to her by the direction •of his father, and a part of them had been paid, it was important evidence as bearing upon his good faith and as to whether he had paid full value for the real estate conveyed to him.

The trial court held that the judgment of Yette Thalheimer recovered against Ignatz Thalheimer, for $8,266.25, was void as against the creditors of Ignatz. The plaintiffs, however, have a right to attack this judgment only upon the theory that it is an apparent lien upon the estate of Ignatz. It is not a lien upon the real estate if the conveyances to William are valid. It is only in event that the conveyances to William should be adjudged invalid, that it becomes necessary to determine whether this judgment creates a valid lien upon the real estate. We, therefore, do not, at this time, regard it necessary to consider that question. We do not hold that the evidence did not warrant the conclusion that the conveyances to William were fraudulent as against the creditors of Ignatz Thalheimer, but independently of the finding upon the question, of consideration, effect cannot on this review be given to such conclusion as it is not seen that it was not influenced to some extent by the • fihding upon that question.

The judgment should be reversed and a new trial ordered, costs to abide the final award of costs.

Bradley and Dwight, JJ., concur; Barker, P. J., not sitting.