Nugent v. Jacobs — 2 N.Y. St. Rep. 798

Majority

p. 798

Henry Nugent, Resp’t, v. Eli B. Jacobs, impleaded, etc., App’lt.^[1]

(Court of Appeals,

Filed October 5, 1886.)

Headnote

1, Fraudulent conveyance—Presumption or good faith—evidence.

The payment by the purchaser of a fair consideration upon a sale of property affords strong evidence of the good faith of the transaction, and - while not conclusive upon that question, requires clear evidence of the existence of fraudulent intent to overcome the presumption of honest motives arising from that fact

2, Same—Evidence—competency on cross-examination.

Where the conveyance of real estate is sought to be annulled as made to defraud creditors, and oral testimony was allowed to prove that the grantor in said deed, the same day it was executed, but afterwards, made .a chattel

p. 799

mortgage to his wife of such property as he had loft. Held, that testimony showing the circumstances under which the chattel mo tgage was executed, and what was done with it afterward, was material and competent on cross-examination.

Appeal from a judgment supreme court, general term, fifth department, affirming a judgment setting aside a deed as fraudulent toward creditors.

E. W. Gardner, for app’lt; Henry M. Field, for resp’t.

This action was brought to vacate and annul a conveyance of certain land made by one Grace to-the defendant J acobs, upon the ground that it was executed and delivered for the purpose of hindering, delaying and defrauding creditors, and particularly the plaintiff, in the collection of a debt owing to him by the defendant Grace. The findings of the court below show that 'Jacobs paid Grace the full value of the land upon the transfer, but it is claimed by the respondent, aud was found by the court below, that the evidence established the fact that the conveyance was nevertheless made and received with the intent to hinder, delay and defraud the plaintiff. The evidence upon which this finding was based was not conclusive, or even strongly preponderating upon the fact found, and the erroneous admission or exclusion of evidence was likely to affect materially the conclusions reached by the trial court.

The payment by the purchaser of a fair consideration upon a sale of property affords strong evidence of the good faith of the transaction, and, while not conclusive upon that question, requires clear evidence of the existence of fraudulent intent to overcome the presumption of honest motives arising from that fact. Billings v. Russell, 101 N. Y., 226 . One of the most prominent circumstances from which a fraudulent intent was sought to be deduced was the execution by Grace on the the same day, but after the execution of the deed in question, of a chattel mortgage to his wife, conveying such property as he had remaining after the transfer of his land. This fact was proved upon the oral examination of the-alleged fraudulent debtor produced as a witness for the plaintiff; and although the defendant objected that such evidence was not competent, and that the mortgage should be produced, it was allowed by the court. The defendant, upon cross-examination of the same witness, attempted to-show what was done with the mortgage after its execution, and the circumstances under which it was given; but upon the objection of the respondent the evidence was excluded, by the court, and the appellant excepted to the ruling. We see no ground upon which this ruling can be supported.

The mere giving of the mortgage under the circumstances

p. 800

-did not afford conclusive evidence of a fraudulent intent on the part of the mortgagor, and the circumstances under which it was executed, the existence of a valuable consideration therefor, the fact that it was promptly filed in the town clerk’s office, and the publicity attending its execution, were all competent and material facts bearing upon the question of intent, and should have been received by the court. In a case where the evidence is not preponderating on one side or the other, such circumstances should be heard and considered, and we cannot say that injustice may not have been done by the exclusion of the proposed testimony.

For this reason, therefore a new trial should be ordered, costs to abide the event.

All concur, except Miller, J., absent.