Kinghorn v. Wright

Headnote

I. Fraudulent conveyance.

1. Action by judgment creditors to set aside one.

(a) Prior conveyances by judgment debtor of other property CANNOT BE ATTACKED WHEN THE ACTION DOES NOT COMPREHEND THE SETTING THEM ASIDE.

1. Consequently the fact that the consideration for the conveyance sought to be set aside was paid by the grantee out of funds which can be traced as forming a part of the proceeds arising from the sale by the grantee of the judgment debtor of property which had been previously owned and conveyed by the judgment debtor to such grantee, is immaterial.

1. Such proceeds cannot, in such an action, be shown tp be the property of the judgment debtor, by evidence showing that the deed made by the judgment debtor to his grantee of the property from the sale whereof, by such grantee, the same was derived, was fraudulent as to creditors.

The plaintiff was appointed receiver of the property of James M. Melville in proceedings supplementary to execution issued on a judgment recovered by the First National Bank of Saugerties against said James M. Melville.

The action was brought to set aside a deed made by said James M. Melville and wife to Edward Wright, of premises 307 West Twenty-second street, as fraudulent and void as against creditors. This deed was made in payment for advances therefor made by Wright to James M. Melville, and for a small amount of costs paid at the time of the conveyance. No other conveyance was sought to be set aside.

Plaintiff claimed that the money out of which the advances were made was the money of James M. Melville himself.

The judge at special term dismissed the complaint on the merits, with costs, holding, among other things, that, under the complaint and the evidence applicable to the issues joined by the pleadings, the money could not be regarded as that of James M. Melville.

The original source of the money, and the mode in which it came to the hands of the defendant, Wright, appear in the. opinion of the judge before, whom the cause was tried at special term, which opinion was as follows:

“Sedgwick, J.—It appears that the advances made by Wright to Melville, Maginley & Cooke, on Melville’s credit, were from sums deposited to Wright’s credit with Duncan, Sherman & Co. These funds were principally made up of a sum of $9,750, the proceeds of a check to Mrs. Melville’s order,, paid as a consideration of the sale of the Orange Lake Hotel property, stand

ing in the name of Mrs. Melville, and the conveyance of this to Mrs. Melville was a part of the consideration paid to her for her conveyance of No. 37 West Twenty-eighth street-. This last property had been conveyed to her by her husband through a third person, December 16, 1873. This action did not comprehend the setting aside of these conveyances to Mrs. Melville as fraudulent. Nor are there any facts in evidence which would justify these being declared fraudulent as against the creditor whom the plaintiff represents. It did not appear that, at the time of the conveyance, December 16, 1873, the defendant, Melville, meant to defraud his future creditors, still less the creditor particularly represented here. But the conclusive consideration is that these conveyances are subsisting and valid, until competently they are adjudged fraudulent, and that they cannot be adjudged fraudulent- upon an examination of them as matters of evidence.

“The deposit of Mrs. Melville’s check in Wright’s bank account- made the money Wright’s, and left her a creditor of Wright. There was no proof that she had ever given this money to her husband. The general evidence given by Mrs. Melville, as a witness for plaintiff, viz.: —that she gave to her husband her money whenever he requested it,—does not justify the conclusion that she had given this $9,750 to Melville, so that the advances by Wright were made out of Melville’s money.

“It cannot be said that the relations between the parties and their transactions that regarded the disposition of Melville’s earnings do not present considerations in favor of plaintiff ; and upon these considerations the counsel for plaintiff has made an exhaustive and very able argument, but the conclusion must be that they do not amount to proof. And it- is further right to say that defendant claimed that the transaction alluded to did not call for explanation on the common issue in this case.

“If the money did not belong to Melville, it does not change the legal effect of the action that Mrs. Melville was a creditor of Wright.

“The complaint is dismissed with costs, but no allowance.”

From the judgment of dismissal on the merits, with costs, entered upon the findings of facts and law made by the court below, plaintiff appealed.