Wilmerding v. Jarmulowsky

. In so far as this judgment affects the title to the real estate conveyed by Philip Bernstein and wife to Sender Jarmulowsky it must be reversed. There is ample evidence to sustain the finding of fraud against Bernstein, and if the conveyance of the property in question had been to his assignee, or to this defendant Jarmulowsky, without a valuable consideration, the proof would have been suffi-' cient to have supported the judgment rendered. But Jarmulow: sky paid a valuable consideration, and he followed it up by not only taking possession of the property, but erecting on one of the lots a building costing upwards of $14,000. Where a valuable consideration is paid, a still further step has to be taken by the party attacking the conveyance in order to affect the purchaser. And a valuable consideration does not necessarily mean an adequate consideration. If valuable and substantial, although inadequate as to amount, it will be sufficient to sustain the grantee’s title, unless he is chargeable with notice of the fraudulent intent of his grantor. (Truesdell v. Borles, 104 N. Y. 164 .)

The severest rule which is ever invoked against a purchaser paying a valuable consideration arises in cases where there is an outstanding title, lien or equitable interest affected by the conveyance, which, of course, does not include a case like this where only general creditors are affected. In such a ease the purchaser’s title cannot be affected unless it be proved that, prior to the consummation of the sale, he had knowledge of facts sufficient to put him on inquiry as to the existence of a right, title, lien or equitable interest in conflict with that which he was about to purchase. If that be established, then the law is, in a case where a reasonable investigation would have disclosed the real situation, that the grantee is pre

Even under this rule the plaintiffs failed to establish a case. "What facts tending in that direction have they proved this grantee had knowledge of prior to the conveyance? Nothing of moment, except inadequacy of consideration, towards which their evidence strongly points, so strongly that it is perfectly safe to say that the purchase price of the property was considerably less than its real value. The payment of full value by a purchaser is evidence bearing upon the question of bona fides, because an ordinarily prudent man will not pay full value under circumstances that may provoke a lawsuit and possibly a loss of the amount invested. Rut it is not conclusive upon that question. It constitutes merely one circumstance to be weighed in connection with such others as may be proved. So inadequacy of consideration is a circumstance to be weighed in connection with others, but it is not conclusive. Nor is it sufficient standing alone, for it is the general rule that dealers in real estate, and other property as well, are constantly on the lookout for what they term bargains. They buy only because they are convinced that they can sell again for a better price. And the purchaser, watching for an opportunity to buy real estate from which he can secure an advance, will not be deprived of his purchase solely because it appears that he believed he was getting the property for less than he could sell it for. There must be other circumstances having a tendency to make a would-be buyer suspect that the offer to sell at a low price is induced, not by the pressing necessities of the grantor, but because of a desire to defraud others.

Jarmulowsky, prior to the conveyance, had loaned Bernstein $3,000, and taken as security a mortgage upon the property, which was already incumbered by mortgages aggregating $31,750. A few months after the making of the loan, Bernstein applied to him for a further loan upon the property, which Jarmulowsky refused to grant. He was a large owner of real estate in that section of the city, having at that time title to property aggregating in valuation

So far we have considered this matter as if it were governed by the rule established in Williamson v. Brown, and other cases cited supra, and have reached the conclusion that, even under that rule, a case was not made out which would support a judgment so far as it affects the conveyance to Jarmulowsky. But a different and less-stringent rule seems to have been adopted in Stearns v. Gage ( 79 N. Y. 102 ) as to a purchaser of land who pays a valuable consideration in a case where the conveyance is sought to be set aside on the ground that it was made with intent to defraud creditors at large' having no special Hen or equity. This distinction seems to have been made because of the language of the statute relating to fraudulent convéyances. But, however that may be, the fact remains that, the court asserted in that action, which was one to set aside a deed on the ground that it was fraudulent and void as against creditors, after quoting the statute, that “ this plainly means that actual notice shall be given of the fraudulent intent or knowledge of eircum

As tliis case is of tlie same character as Stearns v. Gage, if of course comes within that decision, and calls for other and different proof of notice than that required by Williamson v. Broion, tbe requirements of wliicli were not even met by tbe plaintiffs, as we have already observed.

Tlie judgment should be reversed as to tlie 'defendant Jarmulowsky and a new trial granted, with costs to tbe appellant to abide the event.

Van Brunt, P. <L, and O’Brien, J., concurred.

Judgment reversed as to defendant Jarmulowsky and new trial granted, with costs .to appellant to abide event.