Smith v. Reed

The purpose of this action was to have certain deeds under which the defendant claimed to be the owner of an undivided interest in the lands described in the complaint declared to be a cloud upon the plaintiff’s title and to have the same .adjudged void and illegal.

There is no dispute as to the facts of case, and excepting the possession by plaintiff of the property in question, they appear by admissions in the pleadings or from records introduced in •evidence upon the trial by the plaintiff.

The defendant makes his title through a deed from Carrie Lowitz, one of the devisees of the land under the last will and testament of her mother, Caroline Taylor.

Mrs. Taylor’s title was derived from her husband, William H. Taylor, who is admitted to have been the owner of the property on November 20, 1874. On that day he conveyed it to one -Ohauncey M. Felt, who immediately conveyed to Mrs. Taylor.

The plaintiff derived his title through a sheriff’s deed executed pursuant to a sale under an execution issued upon a judgment recovered against William H. Taylor by the Nassau Bank of New York city, on April 9, 1875, and docketed in Kings county •on the following day.

The plaintiff’s contention is, and such was the allegation of the complaint, that said deeds from Taylor to Felt and from Felt to Mrs. Taylor were without consideration, and were made with intent to hinder, delay and defraud said bank, and were fraudulent and void.

The sale by the sheriff was on December 20, 1880, and the execution under which it was made was issued October 9, 1880, pursuant to an order of the supreme court and a decree of the surrogate’s court of Kings county, Mr. and Mrs. Taylor prior to .that date having both died.

This action was commenced in January, 1890. The answer put in issue the plaintiff’s title, alleged the validity of defendant’s title, and pleaded the statute of limitations. From this statement it is apparent that the defendant showed a clear paper title to the share in the land claimed by him, and it was incumbent upon the plaintiff and essential to his recovery to establish his allegation that the deeds which conveyed Taylor’s title to his wife were fraudulent and void as against the Nassau Bank, through whose judgment he claimed. To establish the fraudulent character of that conveyance, plaintiff put in evidence a judgment roll in an action originally commenced by said bank against Mr. and Mrs. Taylor and Ohauncey Felt to have said deeds set aside.

A judgment was subsequently entered in that action adjudging said deeds to be void, on the ground that they had been executed with intent to defraud .the creditors of said William H. Taylor, and that the land therein described was bound by the lien of the judgment recovered against said Taylor by the Nassau Bank, and granting leave to said bank to proceed upon execution theretofore or thereafter to be issued upon the judgment and sell said land in satisfaction thereof.

This judgment was conclusive upon the defendant as to the fraudulent character of the conveyance from Taylor to his wife, providing the court rendering it acquired jurisdiction of the person of the infant defendants therein, and whether or not it did acquire such jurisdiction was the crucial question presented upon the trial upon this branch of the case.

The trial court found that the infant defendants were not served with the summons, but that a guardian ad litem was appointed and answered for them without service of the summons, and that the judgment rendered therein as against said infants was void.

The judgment contained a recital that said infants had been served with the supplementary summons in the action, on March 11, 1878, and such recital was prima facie evidence of the truth of that fact But it was not conclusive ana the defendant was at liberty to show that service of the summons was not in fact made. Potter v. Merch. Bank, 28 N. Y., 641 ; Bosworth v. Vandewalker 53 id., 597 , Ferguson v. Crawford, 70 id., 253. No oral evidence was offered upon the question, but the appellant claims that the finding of the trial court is sustained by the inferences necessarily drawn from the papers'comprising the judgment roll and with this conclusion we agree.

The order making said infants parties to the action was granted February 23, 1878. It provided that they be brought in and made party defendants and appointed Alexander Cameron, Esq., a guardian ad litem for them unless they should procure the appointment of a guardian within ten days after the service on them of copies of the order.

The order appears to have been served on February 27th, and no guardian was thereafter appointed on the application of the infants. A supplementary summons dated March 11th, was issued pursuant to § 453, Code Civil Procedure, and upon that day was-served upon Mr. Cameron, who thereafter answered in behalf of the infants.

This evidence permits the inference that the only service was-on the guardian. No reason is apparent why the summons should have been served upon him if prior or subsequent to March 11th it was served upon the infants. It is also apparent that the

It is claimed that the order of February 23rd and the service upon the guardian was a valid service of ■ the summons under this section. Service of process upon the infants was not essential to confer jurisdiction, and if the order was properly granted and served under the section quoted, service upon the guardian was equivalent to personal service upon the infant Schell v. Cohen, 55 Hun, 207 ; 27 St. Rep., 889 .

Notice in some form to an infant is essential to confer jurisdiction upon a court to bind his property. But the legislature may prescribe that it be constructive instead of actual, and proceedings in conformity with such a statute will be valid and bind the infant. Ingersoll v. Mangam, 84 N. Y., 622 ; Croghan v. Livingston, 17 id., 218; Gotendorf v. Goldschmidt, 83 id., 110. Section 473 covers a case in which personal service cannot be made and which is not within the provisions of the Code relating to service by publication.

But the difficulty of upholding the jurisdiction of the court to render the judgment against the infants under the order of February 23d' and the service on the guardian is that the moving papers upon which the order was made do not make a case within § 473. That section permits service of the summons to be made upon the guardian ad litem with like effect as if made on the infant, but unless the court had jurisdiction to appoint the guardian the service was wholly ineffectual. To authorize the appointment of a guardian ad litem for an infant defendant the moving papers should set forth the facts conferring authority upon the court to make the order. Grant v. Van Schoonhoven, 9 Paige Ch.. 255 .

The petition of the Nassau Bank upon which the order of February 23, 1878, was made, contains no statement that any of the infant defendants were temporarily absent from the state. It states the age of all of them and that they were “ residing at 184 ■Clinton avenue in the city of Brooklyn.”

The petition was dated February 13th. Copies of the order •granted therein were served personally on all the infants at 184 Clinton avenue, on February 27th, four days after it was granted.

The theory of the plaintiff, as appears from the petition referred to, was that Carrie Taylor was not a necessary party to the action. The petition alleges that James Cleland was her general guardian,, but that there was no general guardian for the other two infants. It then prays that Cleland, as the general guardian, be made a defendant, and that a guardian ad litem be appointed for Demetrius Taylor and Henrietta Taylor, the other children of Caroline-Taylor, deceased. And there is proof of service of the petition on Cleland as general guardian "and on the infants Demetrius and Henrietta, but none on Carrie Taylor.

The order granted was broader than the prayer of the petition and made- Carrie Taylor a defendant in the action, and while it, was undoubtedly within the power of the court to make her a party upon an ex parte application, there was no jurisdiction to-appoint for her a guardian ad litem and provide for a substituted service of the supplemental summons upon him in the absence of proof of the essential fact that she was temporarily absent from the state.

The recital contained in the judgment to the effect that Carrie Taylor had been served with the supplemental summons on March 11, 1878, in view of the facts appearing from the papers in the judgment roll from which I have quoted, is not sufficient to sustain the jurisdiction of the court to render the judgment. It appears very clear, we think, from an inspection of the roll, and also from other recitals of the judgment, that the service which it is there recited was made was not personal, but was upon the guardian ad litem, and that his appointment was void from lack of proof of the facts essential to the jurisdiction of the court to make it. The finding of the trial court, therefore, that the infants were not served with the summons, and that the judgment -setting aside the conveyance of the property from Taylor to his wife was as to said infants void, was fully sustained by the-evidence.

The respondent, however, contends that the evidence in the-case, independent of the judgment in the action brought to set aside said deeds, was sufficient to establish the fraudulent character of those conveyances, and that the trial court should have so found.

The reversal of the general term was upon the facts as well as the law, and the whole case is, therefore, before us for review.

The evidence upon this question is that the conveyances referred to were quit-claim deeds-expressing a nominal consideration of one dollar, and that at the time of their execution and delivery William H. Taylor was indebted to the Nassau bank upon a, promissory note of twenty-three hundred dollars, and to the Ger-mania bank upon a promissory note of two thousand dollars, both of which notes were overdue.

Our statute, 2 R. S., 137, § 4, provided that the fraudulent intent to hinder, delay and defraud creditors by a conveyance of land shall be deemed a question of fact and not of law, and that, no conveyance shall be judged fraudulent as against creditors solely upon the ground that it was- not founded upon a valuable-consideration. But the rule is well settled that a voluntary conveyance by one indebted at the time is presumptively fraudulent. Seward v. Jackson, 8 Cow., 406 ; Erickson v. Quinn, 47 N. Y., 410 ; Dunlap v. Hawkins, 59 id., 346; Cole v. Tyler, 65 id., 78. There was. no evidence introduced by the defendant upon this-question, and we are of the opinion that the facts stated raised & presumption that the deeds were executed by Taylor with intent, to defraud his creditors, and in the absence of any explanation thereof it was the duty of the court to have determined the fact-of the grantee’s intention in accordance with such presumption. Coleman v. Burr, 93 N. Y., 17 -31.

Having established the fact of the fraudulent character of the conveyances from Taylor to his wife, the plaintiff was entitled to-a judgment adjudging the defendant’s deed to be a cloud upon his title and illegal and void. The plaintiff makes his title through the sale under the execution issued upon the judgment obtained by the Nassau bank upon the promissory note held by it, and it was not at all essential that the conveyances from Taylor to his-wife should have been adjudged fraudulent and void before that, execution was issued.

The trial court found upon plaintiff’s request that the execution was duly issued to the sheriff of Kings county, and that the order of the supreme court and the decree of the surrogate’s court granting leave that it issue were duly made.

No question was of course raised at the general term upon the: plaintiff’s appeal that these findings did not have support in the-evidence, and they are conclusive upon the appellant here. The point taken at the general term that the execution could not, under § 1380 of the Code, be issued until the expiration of three years after letters of administration had been issued upon the estate of William H. Taylor, is not now urged by the appellant,, and I do not understand him now to assail the regularity of the execution, and the sale thereunder, upon any ground except that-the judgment could not be enforced against the real estate in. question until the conveyance from Taylor to his wife had, by a valid judgment, been decreed to have been fraudulent, and set, aside; and that in the absence of such a decree, the judgment was not a lien on the land for the reason that the title at the time of' its entry was in Mrs. Taylor.

This argument has no support in the authorities in this state. A judgment creditor cannot be deprived of his legal right to enforce collection of his judgment against the lands of his debtor by a fraudulent conveyance thereof prior to the entry of the judg

Of course it can be said that the conveyance of the debtor is not absolutely void, but only voidable. That it is good inter partes, and the fraudulent grantee may convey a good title to a bona fide purchaser, and such a conveyance would destroy the lien •of the judgment.

But while the title remains in the fraudulent grantee, the lien of the judgment exists, and may be enforced against the land with ■the same effect as if the conveyance had not bgen made. As against the creditor, the conveyance, while the fraudulent grantee holds the title, is a nullity.

In this case the defendant does not occupy the position of a bona fide purchaser for the reason that at the time of the sale by the receiver of Mrs. Lowitz the plaintiff was in possession of the land, claiming title under the sheriff's deed, and such possession was notice to the defendant of his claim thereto.

The plea of the statute of limitation is not available to the defendant

The action is not to recover possession of the land, that being already in the plaintiff, but to compel the removal of an instrument which apparently impairs and injuriously affects the plaintiff’s title. An owner has a right to invoke the aid of a court of equity at any time while he is the owner to have an apparent, though in fact not a real incumbrance discharged from the record, -and this right is never barred by the statute of limitations. It is a continuing right which exists -as long as the occasion for its exercise. Miner v. Beekman, 50 N. Y., 337 -343; Schoener v. Lissauer, 107 id., 111; 11 St. Rep., 368 .

The right to this remedy is, however, denied if the invalidity of the defendant’s deed or incumbrance appears upon its face, and -a resort to extrinsic evidence to show such invalidity is unnecessary, and hence the final inquiry on this appeal is, whether the plaintiff’s case is within the rule upon which the courts interfere in this class of actions. We think that it is.

The defendant does present an apparent title through the •deeds from Taylor to his wife, the death of Mrs. Taylor and the Revise to her children and the receiver’s deed to.himself. In thus presenting the claim of title from Taylor to himself he would not necessarily disclose the defect arising from the fraudulent intent •existing in the conveyance by Taylor to his wife. He would disclose,. it is true, the fact that these deeds expressed nominal consideration only, but that fact under the statute which I have quoted would not indicate their fraudulent character. That would

And in ejectment against the plaintiff the appellant could make out a prima facie case without developing the defects in hi® title.

From these facts, all the elements exist to make this a proper case to invoke thé aid of a court of equity to remove a cloud.

We are of the opinion, therefore, that the plaintiff was entitle^ to the relief sought, and the order of the general term should be affirmed and judgment absolute rendered against the appellant, with costs in all courts.

(dissenting)—I am unable to agree with the result, reached by the majority of the court

The trial court refused to find as a fact that the deeds made by Taylor and wife to Felt, and Felt to Mrs. Taylor, “ were without consideration and were fraudulently made, executed and delivered with intent to hinder, delay and defraud the said Nassau Bank of the city of New York, and were void as against the bank,” and rendered judgment in favor of the defendant.

The general term, however, reversed the judgment on both the facts and the law, and we must now inquire whether the evidence required the finding of fact which the trial court refused to> make.

It is apparent from the record before us that the plaintiff to establish his cause of action, relied wholly on a judgment declaring, the deeds to be void on the ground that they had been executed with intent to defraud the creditors of William H. Taylor, in an action originally commenced against Taylor, his wife and Chauncey Felt Were it a valid judgment, the plaintiff’s reliance would have been well founded.

But we are agreed for reasons stated in the prevailing opinion, that the court did not in that action acquire jurisdiction over the, infant defendants, and that as to them the judgment was void.

If the decision of the general term be upheld therefore, it can only be done on the ground that there is other evidence requiring a finding that the deeds from Taylor and wife to Felt, and Felt to Mrs. Taylor, were fraudulently made with intent to hinder, delay and defraud creditors.

It will be well’ to bear in mind, as we consider the evidence, that the deeds alleged to be fraudulent, and which apparently vested the legal title in Caroline Taylor, were executed and delivered November 20, 1874, and duly recorded the day following. That Caroline Taylor died August 5, 1877, leaving a last will and testament, by which she devised such real estate to her three-children, one of whom, Caroline, subsequently conveyed her undivided interest to a receiver appointed in proceedings supplemental to execution. Subsequently the receiver, pursuant to art order of the court, sold such interest at public auction to this defendant, and a deed therefor was delivered to him bearing date

The evidence which it is insisted required the trial court to find as a fact that the deeds of November 20, 1874, were fraudulent, -consists: 1. Of the recital in the deeds of a nominal consideration of one dollar. 2. That at the date of their execution Taylor was indebted to the Nassau Bank of New York City and the Germania Bank. 3. That some months later the bank obtained judgment therefor, and issued executions thereon, which were returned unsatisfied June 15, or about seven months after the execution of the deeds.

Undoubtedly the recital of a nominal consideration would have been prima fade evidence that the conveyance was without consideration as against the Taylors, because regarded as the declaration of each. But they were not parties to the action ; indeed, both have long been dead. . And as against this defendant, who •obtained his deed nearly fifteen years later, such recitals standing -alone should not be regarded as sufficient evidence to set aside the •deeds which were the source of his title.

If such recitals, entirely unsupported, could in any case be held .-sufficient evidence of the absence of a valuable consideration, as .•against a person nota party to the conveyances, the court-should •certainly hesitate to so hold on review where, as in this case, it is apparent that the action was tried by the plaintiff on the theory ' that the judgment in the other suit was to control the disposition ■of this one.

Assuming, but not admitting, that the recitals furnish sufficient ■evidence as against this defendant of the absence of a valuable ■consideration, and that an appellate court could properly hold that, under the circumstances already referred to, the trial court erred in refusing to find that the deeds were not founded on a valuable consideration, still such a finding is not sufficient to condemn the conveyances as a fraud upon creditors.

The statute provides, “ nor shall any conveyance or charge be adjudged fraudulent as against creditors or purchasers solely on the ground that it was not founded on a valuable consideration.”

It is not true that a voluntary conveyance by one indebted at the time is presumptively fraudulent. Before the presumption •can arise, it must appear that the debtor did not have other property at the time sufficient to pay his debts. As was said by this court in Kain v. Larkin, 131 N. Y., 300 -307 ; 43 St. Rep., 197 : “ When a judgment creditor assails a conveyance made by the judgment debtor, he cannot cast upon the grantee the onus ■of showing good faith and of establishing that the grantor was ■solvent after the conveyance by simply showing that 'the deed was not founded upon a valuable consideration. But the person .assailing the deed assumes the burden of showing that it was executed in bad faith, and that it left the grantor insolvent and without ample property to pay his existing debts and liabilities.”

The plaintiff did not meet the burden which the decision quoted declares rested upon him. He did not attempt to show vthat on November 20, 1874, Taylor did not have abundant prop

In Sherman v. Hogland, 54 Ind, 579 , the court had under consideration the sufficiency of the complaint It said: “ We do not think it sufficient to charge that some months or years after the conveyance was executed no other property could be found on which to levy an execution, or that at some subsequent time it was ascertained that the debtor had become wholly insolvent.”

Whitesel v. Hinery, 62 Ind., 168 , was an appeal from a judgment overruling a demurrer to a complaint in a suit like the one under consideration.

The complaint, which was filed fifteen months after the alleged fraudulent conveyance, averred the grantor’s insolvency, and that he was without property subject to execution. It was held insufficient, the court quoting with approval from a prior decision the following: “ It is necessary to charge in the complaint and prove on the trial that, at the time the conveyance complained of was made, the debtor did not have left enough of other property subject to execution to pay all his debts."

In McCole v. Loehr, 79 Ind., 430 , the court say: “The allegation that the grantor died hopelessly insolvent does not make the ■complaint sufficient. ' The character of a transaction is to be determined by the circumstances surrounding the parties at the time it took place. The validity of a conveyance does not depend upon subsequent events. The question in such cases is the financial condition of the grantor at the time, for if then solvent Ms subsequent insolvency will not invalidate the conveyance.”

The cases thus referred to were cited with approval by this court in Kain v. Larkin, supra, and seem to be decisive of the question under consideration.

It is difficult to discover any principle on which to base a distinction between Kain’s case and this. Indeed, Kain's case seems to command the judgment which the trial court rendered. What were the important facts ? Two days after Kain commenced his action against Larkin, which resulted in a judgment, which was the foundation of the action to set aside the deed, Larkin gave his brother a mortgage for $3,000 on his house and lot, that being the full value of the property, and drew out of the savings bank $1,400, which 'he had on deposit, and immediately redeposited $1,200 in the name of bis wife.

Subsequently he conveyed the house and lot to his minor daughter, the deed declaring the consideration to be “ natural love

I advise a reversal of the order of the general term.

Order of general term affirmed and judgment absolute rendered against appellant, with costs in all courts.

All concur, except Follett, Ch. J., and Parker, J., dissenting.