Rousseau v. Bleau — 38 N.Y. St. Rep. 221

Majority

p. 221

John Rousseau, Adm'r, Resp’t, v. Jennie Bleau, Impl’d, App’lt.

(Supreme Court, General Term, Third Department,

Filed May 21, 1891.)

Headnote

1. Executors and administrators—Action by, under chap. 314, Laws of 1858—Receiver.

An administrator as representing creditors may under chap. 314, Laws of 1858, bring an action to set aside as fraudulent a deed made by his intestate, and in such action a receiver may be appointed with power to sell the land upon its recovery and with its proceeds pay the claims of such creditors. .

(Learned, P J., dissents )

2. Evidence—Attorney—Code Civ. Pro., §§ 835, 836

The plaintiff’s intestate made a deed to the appellant, which remained in the possession of the attorney who drew it until her death, when the attorney gave it to the grantee, who had never before heard of it. The attorney was a subscribing witness, Held, that this did not make him a competent witness against the grantor; that the grantor by accepting him as such did not waive her privilege of preventing him from testifying to information relative to the transaction which he had obtained as attorney, and that his evidence was incompetent against the administrator of the grantor.

'-8. Same—Res gestae.

The grantor offered to show that subsequent to the execution of the deed the grantor had stated to a physician that she was largely inde’ ted to the grantee. Held, not a part of the res gestee, and also that such evidence was not competent against the administrator in an action where he was representing the creditors.

p. 222

4. Deed—Delivery necessary.

There was no evidence that the grantee had ever directed the deed to be delivered. Reid, that delivery in some form was necessary to its validity; that if it be assumed that the delivery to the attorney was in escrow to be delivered upon the death of the grantor, then it would not take effect until her death, and it being without consideration, the claims-of creditors would attach.

The plaintiff, as administrator, recognizes the validity of certain claims made against the estate of his intestate, alleges the inadequacy of personal assets to pay the same, and that unless the real estate conveyed by the deceased in her life-time can be reached, that the estate is insolvent, and charges in his complaint the fraudulent transfer of the real estate by his intestate, and asks-in his own behalf, as administrator, and of the creditors of the estate, that the conveyance be declared fraudulent and void as to> him as such administrator, and the creditors whom he as such administrator claims to represent, and that such conveyance or transfer be set aside, and said real estate may be sold by the order of this court, or by proceedings in surrogate’s court, and the proceeds applied in due course of administration to the payment of the debts of the deceased.

The defendant Jennie Bleau, the grantee under such conveyance, by her answer, denies the allegations of fraud, alleges the validity of her deed, and denies the validity of some of the claims allowed by the administrator as valid debts against the estate of the intestate.

The action was tried at the Rensselaer circuit, and no issue-having been settled in the case, the trial judge propounded certain questions of fact to the jury, which they answered by their special verdict.

Upon the evidence given, the jury, among other things, found some of the claims against the estate valid, and that the deed of conveyance of the land in question was substantially without, consideration.

That it was substantially intended as a gift to the defendant, Jennie Bleau.

The learned trial judge adopted the findings of the jury and in addition thereto found that the personal estate of the deceased was, at the time of her death, insufficient to pay her debts, and that the deed was executed by Mary Rousseau with intent to defraud her creditors out of claims then existing and thereafter to be incurred.

And as conclusion of law, found that the deed was fraudulent, null and void, as against the creditors of the estate of Mary Rousseau, and that the property therein described belonged to her-estate, and is applicable to the payment of her debts, and directed judgment setting aside the deed, and canceling the record thereof and directing the sale of the real estate, and the application of so much of the proceeds thereof as were necessary to pay the claims established against the estate of the deceased.

Judgment was entered on this decision, and the defendant, Jennie Bleau, appeals to this court.

John T. Norton, for app’lt; H. D Bailey, for resp’t.

The evidence offered by the plaintiff in this case is substantially like that on a former trial, upon which this court held in setting aside a nonsuit and ordering a new trial: “ That the evidence was sufficient to put the defendant upon her defensa’’ 29 N. Y. State Rep., 337.

That decision establishes the right of the plaintiff to recover in this form of action, and relieves this court from the consideration of that question at this time and makes it only necessary to inquire whether the defendant by her proof established a valid defense, and also whether the trial court erred in his rulings upon the questions raised by the defendant on the trial.

The defense of the defendant upon the merits of this controversy rests solely upon the question whether, or not, she held the premises in dispute under a valid conveyance as against the plaintiff as administrator of the estate of Mary Rousseau and in ihat character representing the creditors of the estate of said deceased.

We think the evidence fully justifies the finding and conclusion of the jury and learned court that the personal estate of the deceased was at the time of her death insufficient to pay her debts, and that recourse could therefore properly be had by'her administrator to any real estate, or any interest in the same, belonging to the deceased, which might be available to a creditor for the collection of a debt against her.

If, therefore, the deed to the defendant was a voluntary conveyance without consideration, it was void as against the creditors of the grantee; or if made with intent to hinder, delay or defraud the •creditors of the grantor it was in like manner void.

But it is insisted on the part of the defendant that it was given upon a sufficient consideration, of a pre-existing indebtedness from the grantor to the grantee, and that indebtedness is sought to be •established by proof that the grantee held the notes of the grantor and also other claims against the grantor which, together with the incumbrance upon the real estate subject to which it was conveyed, constituted a full and adequate consideration for the deed.

The difficulty with that contention is, that the notes were excluded by the trial judge as incompetent evidence. The ground for the exclusion does not fully appear, but we think they were properly excluded, as it nowhere appears that they constituted any part of the consideration of the deed, are nowhere referred to, or shown to have been considered as such, and as it now appears that they are still in the possession of the grantee, and have not been cancelled or surrendered to the maker, and they are in no way connected with the consideration expressed in the deed.

It is also urged by the learned counsel for the appellant that "there was error committed on the trial in testimony by Meyers, the draftsman of the deed, offered by the defendant as to what occurred between him and the grantor at the time of the execution •of the deed and its deposit with him.

It appeared at the time of his examination as a witness that he was an attorney.

We think under the circumstances his testimony as to the per

p. 224

sonal communication between him and the deceased, who at that time sustained at least the implied relation of client and attorney, was properly excluded, and it appears from the evidence of the witness himself that he so regarded it, for on being interrogated by Elizabeth Rousseau, who claims some interest in the property before the death of Mary, he refused to communicate any information to her as to Mary’s disposition of the property, and put his refusal upon the ground that, “ it would be improper and unprofessional for me to disclose any business given in my charge.”

But it is insisted by the appellant that as the witness subscribed the deed as a witness, and took the acknowledgment of the same, that the grantor thereby waived her privilege, and that the disability was thereby removed, and cites in support of that contention In re McCarthy, 28 N. Y. State Rep., 342, and several other cases.

In the case above cited the attorney was the subscribing witness, to a will, which, being an attorney, he had drawn for the testator, and the court in substance holds, that by making the attorney one of the subscribing witnesses she had waived the privilege and made him a competent witness to testify to what occurred at the. time of its execution.

The other cases cited upon this point by the learned counsel for appellants are of a similar character or where fraud is charged in the execution of the papers.

But we think those cases clearly distinguishable from the one-at bar.

In the case of a witness to a will the testator is presumed to know that by having the attorney subscribe the will as a witness he necessarily becomes a witness on its presentation for proof, and that the will cannot be admitted to probate and become operative without the testimony of the witness as to the transactions and communications between the testator and witness at the time of’ its execution; whereas, in the case of a deed, the official certificate or acknowledgment proves it without production, or examination of the subscribing witness, and on its acknowledgment the necessity for the production of the subscribing witness ceases, and the presumption of the necessity for the examination of the-witness no longer exists, and no waiver of the privilege can therefore be presumed.

In the case of Rosenburg v. Rosenburg, 40 Hun, 91 , the communication to the attorney was in the presence of both parties,, and, therefore, was not privileged.

Nor do we see how the declarations of the grantor to Dr. Prefontain after she signed the deed are competent in behalf of the-grantor, when her title is attacked by the creditors or the administrator representing the creditors of the grantor.

Such statements were not a part of the res gestee.

The law seems well settled that when an executor or adminis trator claims aright or interest solely by virtue of his character as such, evidence of the declarations and admissions made by the deceased and his wife in his life time is competent against^ the representative. Abbott’s Trial Evidence, 59, and cases there cited.

p. 225

Can this rule be extended to a case where the administrator solely as trustee of the creditors of the estate of the deceased seeks to disaffirm the act of the intestate, on the ground of the fraudulent alienation of property by the intestate in his life time for the purpose of defrauding her creditors ?

If that be so, then the declarations of a party to a fraud could be resorted to not only to uphold the fraudulent transaction, but would estop the administrator from disaffirming the fraudulent acts of the intestate.

The theory upon which the declarations of the deceased have been received against the administrator is that there is a privity of estate between the deceased and his administrator or personal representative, and that the interests of the deceased while living and the recipients of the estate after his death are in harmony with the interest of the personal representative or administrator of the estate.

But by chap. 314, of the Laws of 1858, the administrator was authorized on behalf of the creditors of the estate to disaffirm the act of the intestate and, as the representative of the creditors of an insolvent estate, to seek to recover property which the intestate had transferred in fraud of their rights.

By the act referred to, the relation of the administrator to the deceased seems to have been changed, and he becomes the trustee for the creditors, and in that position may disaffirm and commence and prosecute proceedings to set aside a transfer made by the intestate.

He is thus placed in hostility to the acts of the intestate, and to the fraudulent grantee; the estate which he seeks to reach for the creditors of the estate he seeks in hostility to the acts of the deceased grantor, and also in hostility to the interest of the intestate’s grantee, whose acts and interests are in harmony with each other and in hostility to the interest of the creditors and of the trustees seeking to set aside the transfer as fraudulent.

In Harvey v. McDonnell, 113 N. Y., 530 ; 23 N. Y. State Rep., 501, the court says: “ They (the administrators) stand as trustees of creditors, Laws of 1858, chap. 314, § 1, and, for their benefit, may disaffirm and treat as void any transfer or agreement made in fraud of the rights of creditors interested in any property or right belonging to the estate they represent.” Under such circumstances we do not see upon what principle the declaration of the person whose conveyance is sought to be set aside as fraudulent can be received in evidence to support such conveyance.

The plaintiff stands in the place of the creditor who might have maintained this action, and it could not be maintained, nor would it be contended, that if the action had been prosecuted by the creditors instead of the administrator this evidence would have been proper. The evidence was, therefore, properly excluded.

Excluding the evidence of the draftsman and that of Dr. Prefontain as to the declarations of the deceased, we find no proof of consideration in this case sufficient to uphold the validity of this deed as against the claims of creditors established in this action.

Dissent

p. 226

But we think that there is another and serious objection in this case as to the validity of this deed as against the creditors of this grantor.

It is conceded that the deed was never delivered to the grantee by the grantor, and that the grantee had no knowledge of its existence until after the death of the grantor.

It is true that a deed may be delivered as an escrow to a third person to be delivered by him to the grantee on the happening of some future event.

But in this case there was no actual delivery by the grantor to the grantee named in it, nor is there any evidence that the grantor ever gave any direction as to the time of its delivery, or that it should be ever delivered.

Delivery in some form was absolutely essential to its validity. Stilwell v. Hubbard, 20 Wend., 44 . “Delivery includes surrender and acceptance, and both are necessary to its completion. This must be the result of a contract, the meeting of two minds, the accord of two wills.

“ The grantor must be willing and agree to deliver, and the grantee must be willing and consent to receive, and this accord of wills must be evidenced in some way to. show the unequivocal intention of both parties that the instrument shall take effect according to its purport and tenor." Best v. Brown, 25 Hun, 224 ; Fisher v. Hall, 41 N. Y., 416 .

But if we assume in this case that this delivery of the deed by the grantor to the draftsman, Myers, was valid as an escrow to be delivered to the grantee on the death of the grantor, it would not in that event be operative until delivery, Hinman v. Booth, 21 Wend., 267 , and not being upon a valuable consideration would be subject to the debts of the deceased existing at the time of her death, so that in either event the deed would, as to the creditors of the grantor, be inoperative and void.

We have carefully examined all the exceptions taken by the learned counsel for the appellant, many of which have not been discussed here, but we find no. error in the rulings of the learned trial judge for which this judgment should be reversed.

Judgment affirmed, with costs.

Landon, J., concurs.

The judgment in this action sets aside the deed from the deceased to defendant, and declares the property to belong to the estate of the deceased. It appoints a receiver with power to sell the property and pay the debts of deceased, directing him first to pay the damages of Elizabeth Rousseau; then to pay to plaintiff the amount of any other debts of deceased.

I had occasion to suggest, in a former case, the inconsistency of permitting an administrator to bring an action to set aside a deed of land; and remarked that chapter 314, Laws of 1858, speaks of “ estate or property held by or of right belonging to such trustee or estate." And that the property of the deceased does not belong to the executor or administrator.

p. 227

But there are expressions in some cases indicating that the executor or administrator may bring the action to set aside a deed of real estate of the deceased alleged to be fraudulent

I cannot think, however, that in such an action the court has the right to change the whole system of enforcing debts of deceased persons against their real estate. The statute, Code § 2749, et seq. has provided a settled course to be pursued when real estate is to be made liable to debts of a deceased person.

If this deed is fraudulent as to creditors, then I think the creditors mus» seek their remedy under the sections above cited of the Code. I do not think there is any right to give preference to one creditor over another. Nor do I think there should be a receiver appointed.

Furthermore, if the deed was never delivered, so that it never took effect, then it is void not only as to creditors, but as to the heirs of the deceased. And there is no ground for returning any of the avails to the grantee, as the decree provides.

These difficulties would not arise if the decree merely set aside the deed and left the creditors to enforce their rights in the mode provided by statute.

Judgment affirmed, with costs.