Clark v. MacDonald — 41 N.Y. St. Rep. 753

Majority

p. 753

Lydia A. Clark, Resp’t v. Maria MacDonald et al., App’lts (2 Actions.)

(Supreme Court, General Term, Third Department,

Filed November 30, 1891.)

Headnote

1. Pabtnebshif—Fbaudulent conveyance.

A partner retired from an insolvent firm and sold her interest to the partners remaining, the latter agreeing to pay the firm debts. Thereafter she conveyed without consideration premises to her daughter who held them for her. Held, that the conveyance was void as to firm creditors.

2. Same—Intent.

If a creditor is in fact defrauded it is not material under 3 R. S., 137, §1, whether the grantor had or had not an intention to defraud that particular person.

3. Same—Costs.

Where a plaintiff brought two actions upon two several judgments to reach the same property and said actions were tried as one, and plaintiff succeeded only as to a portion of the property attacked, Held, that she might be allowed her costs of both actions.

Appeal from judgments, entered upon reports of a referee, de-claring certain transfers of real estate and personal property fraudulent and void as against the plaintiff.

W. C. Maxwell (John L. Henning, of counsel) for app’lts ; C. S. Nisbet and W. L. Van Denbergh, for resp’t.

These are appeals by defendants from judgments on the report of a referee.

The actions rise out of the transactions which were the subject of controversy in McDonald v. McDonald, 33 St. Rep., 39 . And these actions, like that, were brought by a judgmenter editor to set .aside conveyances alleged to be fraudulent

The plaintiff sought to recover the Main street property, as to •which the referee reported in favor of defendant, the Spring street ■property, the annuity contract, and the bank stock, as to all of which the referee reported in plaintiff’s favor.

The conveyances were made by Maria Mac Donald, the judgment debtor, to her daughter Carrie S. Mac Donald. Carrie S. Mac Donald made certain conveyances of this property to one Lillie S. Stevenson. But there is no attempt on this appeal to claim that Lillie S. Stevenson acquired any better title than Carrie '3. MacDonald had. We need only refer to what was said by this court in the former case as to the attempted conveyances by Carrie •8. to Lillie S. Stevenson. The testimony given by Lillie S. Stevenson in the former case was read in this. The referee came to the same conclusion in regard to her pretended title with that of Mr. Justice Fish in the former case. • And his conclusion is unquestionably correct.

The only question of importance then is whether these transfers and conveyances to Carrie S. were valid against the plaintiff.

In 1871 the firm, of I. C. Shuler & Co. was composed of Isaac

p. 754

gave thereupon a note of $5,000 to the plaintiff, Clark’s wife, on. which note the judgment in the first suit was recovered. The-judgment in the second suit was also on notes amounting to-$1,075, made by said Maria MacDonald and said Shuler.

In 1888 Maria MacDonald sold out to Shuler. He agreed to-pay her an annuity of $800 a year for three years (which is the annuity contract) and Shuler agreed to pay all the partnership debts. The referee refused to find that the firm were then solvent and that Shuler had considerable property outside of the firm.

The three notes above mentioned are stated in the referee’s opinion to be firm notes of I. C. Shuler & Co.

.The counsel for the appellant seek to distinguish these cases from that above referred to on the ground that these were firm debts ; that Maria MacDonald had reasonably provided for their payment by her transfer of her interests in the firm to Shuler and by his agreement to pay these debts ; that she had thus become a quasi surety, and Shuler the principal debtor, and that, under these circumstances, the voluntary transfer of her property, to her daughter should not be held fraudulent.

Of course, unless the firm was in fact solvent or Shuler had property outside, there was nothing in the agreement which gave-plaintiff any protection. And in any event plaintiff acquired no additional security. When Maria MacDonald w-ent out of the firm, Shuler and the firm property were already liable ; and his agreement to pay the firm ' debts was only a matter between himself and the outgoing partner. Even if Shuler had at that time property outside of the firm, that property was already liable-for his debts. So that in. no way did Maria MacDonald, when she went out of the firm, increase the plaintiff’s security. It is further evident that the prosperity of the firm had fallen off largely before this time.

It is well settled under our statute that in such cases the question of fraudulent intent is generally one of fact. The referee finds as a fact in this case that the several transfers were made with intent to hinder, delay and defraud plaintiff, and were accepted by Carrie S. with the distinct understanding that she was to hold and manage the same for said Maria MacDonald.

And we see no reason to doubt the correctness of this conclusion. The transfers were without consideration, and they transferred all the property of Maria MacDonald. Carrie S. herself says she took this property to manage it for her mother and is managing it for her. This is plainly not a case of a gift to a child, reasonable in amount compared with the property of the parent.

The appellants claim that even if Maria MacDonald transferred this property to Carrie S. with intent to defraud some creditors, yet the transfers were not void as to the plaintiff because she was (as they claim) secured by Shuler’s agreement to pay them. We have already seen that she was not, in fact, secured by this agreement and that it was of no benefit to her. But, in any event, the statute does not say tho*t an assignment made with intent to defraud creditors shall be void as to those whom the assignor-

p. 755

intended to defraud, or as to those who have no security whatever. That would be a very lame statute. The statute is that the assignment is void “ as against the persons so hindered, delayed or defrauded.” 2 E. S., m. p. 137, § 1. If one makes an ■assignment with intent to defraud creditors, it is void as to a defrauded creditor, although he was not in the mind of the assignor. The creditor thus actually defrauded by the act of the debtor is not to be deprived of his rights to reach what is truly the debtor’s property by an assertion on the part of the debtor that lie supposed that that creditor could collect his debt in some other way and that Ilo was only endeavoring to defraud some other creditors. The appellants in this case say : “ True, these transfers were made with intent to defraud creditors; but Maria MacDonald was not thinking of this plaintiff, and, indeed, supposed that Shuler would pay her; therefore, although the plaintiff is actually defrauded and unable to ■collect her debt, yet the fraudulent assignee shall keep the property from this insolvent debtor.

An assignment with intent to defraud creditors cannot stand as .against any creditor who is thereby defrauded; whether the intent was specially to defraud him or not, and whether or not he may have a right to sue some other person for the debt. For the thing assigned in such a case is not rightfully the property of the assignee, but as against creditors of the assignor is still the property of the assignor.

Of course the fact that Shuler had agreed to pay these debts was a circumstance, with all the other circumstances, to be considered on the question whether the transfers to Carrie S. were made with intent to defraud creditors. But on this question of fact, on the intent of Maria MacDonald and Carrie S., we think the referee found correctly. He could hardly have found otherwise.

The appellants urge that as the plaintiff did not succeed in re■spect to the Main street property the referee should not have ■allowed costs against them in each action. Ho appeal is taken by the plaintiff in respect to the judgment as to this Main street property. Yet there are circumstances which cast suspicion on the conveyance of that property. It was without consideration. The deed was not recorded for four years. Taxes, etc., were paid ■out of Maria’s money. Fortunately for the defendants the referee decided that the conveyance was not with intent to uefraud creditors. But we think that the defendants’ success in that respect -does not make their position so meritorious that they should escape paying costs.

Judgment affirmed in both cases, with costs against defendants personally.

Landon and Mayham, JJ., concur.