Lichtenberg v. Herdtfelder — 3 N.Y. St. Rep. 91

Majority

p. 91

Charles Lichtenberg, App’lt, v. Elizabeth Herdtfelder et al., Resp’t.

(Court of Appeal,

Filed October 5, 1886.)

Headnote

1. Executors and administrators— Creditor’s action—Fraudulent

CONVEYANCE.

Where, in asuit brought after a decedents death to foreclose a mortgage, ' made by decedent in his lifetime, a judgment is obtained for deficiency " against decedent’s executors in their representative capacity, the person obtaining such judgment cannot maintain an action to set aside a conveyance of real estate claimed to be fraudulent and made by decedent in his lifetime, and to subject such real estate to his judgment for deficiency.

2. Same—Preference .

The law gives no preference to a vigilant creditor in the case of a de. cedent. It impounds his estate for the benefit of Ms creditors and no creditor can by any procedure or any degree of vigilance obtain any preference over others.

p. 92

8. Same—Reclamation of heal estate conveyed by a decedent in ras

LIFETIME in featjd of ceeditoes—How ACCOMPLISHED.

Where real estate has been conveyed by a decedent in his lifetime in fraud of creditors, and reclamation and sale of the same for payment of his debts is sought, it must be accomplished in the statutory method by the decedent’s executors, whose action may be compelled by the surrogate,even though one of the executors is the grantee in the fraudulent conveyance.

Appeal from a judgment of the supreme court, general term, first department, affirming a judgment of special term dismissing the complaint in an action to set aside certain conveyances as fraudulent.

The complaint in this action shows the following facts : In 1873 George Herdtfelder, for the purpose of securing the payment of $4,000 with interest, executed and delivered to the plaintiff his bond and as a collateral thereto a mortgage upon real estate executed by himself and the defendant Elizabeth, his wife. Subsequently in the years 1874 and 1875, Herdtfelder and his wife conveyed certain real estate by several deeds to the defendant Heinlin, and certain other real estate by certain deeds to the defendant Kreuder; and subsequently in the lifetime of Herdtfelder, Heinlin and Kreuder by several deeds conveyed the same real estate to the defendant Elizabeth, and all these conveyances were without consideration and made with intent to hinder, delay and defraud the creditors of George Herdtfelder. He died September 21, 1876, leaving a last will and testament, in which he nominated his wife and Frederick Fink and Charles T. Stephan as executors. The will was admitted to probate, and the three executors named duly qualified as such and took upon themselves the duties of executors. Thereafter in April, 1877, the plaintiff commenced an action to foreclose his mortgage, in which the executors and others were made defendan.. There was a judgment of foreclosure and a sale and a deficiency of $3,126.96, for which a judgment was entered and docketed against the executors. In September, 1878, the executors made their final accounting in the surrogate’s court, in which the plaintiff’s claims upon his judgment was admitted. The whole value of the estate in the hands of the executors was the sum of $528.45, which was wholly inadequate for the payment of the debts of the testator.

This action was commenced on the 29th day of January, 1879, against Elizabeth Herdtfelder, Heinlin and Kreuder, and the judgment prayed for in the complaint is that the several conveyances above-mentioned be adjudged fraudulent and void as to the plaintiff, and that a receiver be appointed to sell the real estate conveyed or so much thereof as may be sufficient to satisfy plaintiff’s judgment.

The defendants Elizabeth and Heinlin appeared and

p. 93

answered, putting in issue the allegations of fraud. The defendant ¿render did not answer.

The action was brought to trial at a special term, and before any evidence was given the counsel for the defendants moved to dismiss the complaint on. the ground that it did not state facts sufficient to constitute a cause of action, and the court granted the motion and gave judgment to the defendants, dismissing the complaint. From that judgment the plaintiff appealed to the general term, and from affirmance there to this court.

F. B. Coudert, for app’lt; Isaac Fugleman, for resp’t.

It appears from the opinion of the judge who presided at the special term that he gave judgment against the plaintiff for the reason that he had not obtained leave to sue under section 1628 of the Code. At the general term, as appears from the opinion there pronounced, the judgment was affirmed because no execution had been issued the plaintiff’s judgment.

We think this action is without precedent, and that the judgment should be affirmed, but not for the precise reasons stated in the courts below.

Plaintiff’s judgment, obtained subsequently to the death of the testator, in an action against his executors in their representative capacity, did not become a lien upon any real estate left by him, and no execution could be issued thereon against any real estate. It was provided in the Revised Statutes (2 Rev. Stat., 449, § 12), that “the real estate which belonged to any deceased person shall not be bound or in any way affected by any judgment against his executors or administrators, nor shall it be hable to be sold by virtue of any execution issued upon such judgment;” and subsequently the same provisions were incorporated in the Code. (§ 1823.) Executions authorized by 2 Rev. Stat. 88 (§ 32), and by the Code (§§ 1825, 1826), are such only as can be issued against personal assets which are in the possession or under the control of the executors or administrators, ai^d have no relation whatever to real estate.

The conveyances, therefore, which the plaintiff seeks to set aside are no obstruction to any hen he may have or to the enforcement of any execution which he may be able to issue. If the conveyances should be set aside, he would not be able to sell the real estate by virtue of his judgment or any execution issued thereon, and hence this is a case where he is not entitled to the equitable relief which he seeks. Spring v. Short, 90 N. Y. 538 . If the plaintiff could obtain the judgment which he seeks, it would result that, without having any hen upon the real estate, he would obtain satisfaction of his claim in preference to the

p. 94

other creditors of the testator. The law gives no preference to a vigilant creditor in the estate of a decedent. It impounds his estate for the benefit of his creditors, and no creditor can, by any procedure, or any degree of vigilance, obtain any preference over others. This scheme of the law would be violated if such an action as this could succeed.

The lands, although conveyed by the testator in his lifetime, were assets which could be appropriated for the payment of his debts. Chapter 314, Laws 1858. If the facts stated in the complaint are true, it is the duty of the executors to pursue the real estate, and reclaim it for the benefit of the persons interested in the estate of the testator, and no one creditor can appropriate it for his sole benefit. Southard v. Benner, 72 N. Y., 424 ; Spring v. Short (supra) ; Crouse v. Frothingham, 97 N. Y., 105 .

The fact that the fraudulent grantee is one of the executors, furnished no insurmountable obstacle. If she should refuse to restore the lands to the estate she could be removed from her office of executrix, and then the remaining two executors could, under the act of 1858, disaffirm the conveyances of the real estate, and bring an action to set them aside; or the two executors could commence the action, making the executrix a defendant, and in such action obtain for the estate the relief demanded. If the two defendants refuse to commence the action upon the application of the creditors or some of them, they could be compelled to commence it by an order of the surrogate, who has ample power to that end, under section 2481 of the Code. Here it does not appear that any application was made to the surrogate, or to the two executors, and there is no reason whatever for not. pursuing the orderly method pointed'out by the statute for the reclamation of this real estate, and its sale for the payments of the debts of the testator. We are therefore of the opinion that there is no basis for the maintenance Of this action, and that the judgment should be affirmed, but without costs.

All concur, except Miller, J., absent.

Cases cited

Spring v. Short 90 N. Y. 538 N.Y. 1882-12-15 p. 93