Baldwin v. Reardon — 48 N.Y. Super. Ct. 166

Majority

p. 166

TRUMAN H. BALDWIN, as Receiver, &c., Appellant, v. EDWARD REARDON, et al., Respondents.

Headnote

Extra allowance—when should, not be granted—baüis of.

Where a receiver in supplementary proceedings, in consequence of disclosures upon the examination, was properly authorized to bring suit to set aside a certain absolute conveyance of real estate by the judgment-debtor to a third party, and an instrument executed by said third party declaring that he held the premises in trust (1) for the payment of all debts contracted for or on account of the premises, except mortgage liens, and (2) for the benefit of the judgment-debtor and one Blesson; and on the trial it appeared that by secret arrangement the declaration of trust was not recorded for a long time, and was kept from the knowledge of the unsecured creditors; that the apparent value of the property largely exceeded the record liens; and that Blesson disavowed all interest therein,—Held, in view of the conduct of the judgment-debtor defendant, that though the declaration of trust be upheld and the complaint dismissed, defendants should not be awarded an allowance in addition to taxable costs, it appearing that the adverse result was due largely to the inadequacy of the property to meet the claims upon it, which claims could only be ascertained by suit.' Further held, that as plaintiff sought to enforce a claim of only $900 against the judgment debtor’s equity of redemption, there was no basis for an allowance of $2,000, in any event.

Before Sedgwick, Ch. J., Freedman and Russell, JJ.

Decided April 3, 1882.

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Appeal by the plaintiff from an order granting an extra allowance of $.2,000, and from a judgment adjudging that the complaint be dismissed, that the defendants Reardon and Richard S. Treacy recover of the plaintiff, as receiver of the property of Edward Reardon, $124.68 taxable costs, and the further sum of $2,000, granted as an extra allowance, and that Ferdinand Kurzman as receiver in this action, pay to the said Reardon and Richard S. Treacy the balance in his hands, exclusive of his proper costs and charges.

The facts appear in the opinion.

Samuel F. Gregory, attorney, and William Allen Butler, of counsel, for appellant.

M. J. A. McCaffery, attorney, and Joseph J. Mar rin, of counsel, for respondents.

This action was commenced by the plaintiff, as receiver of the property of Edward Reardon, appointed in proceedings supplementary to execution upon judgments recovered in this court for work and labor as mechanics, by Arne t Seaman, and John H. Seaman, as plaintiffs, against said Edward Reardon, as defendant, in May, 1878, amounting in the aggregate to $857.35.

The action was brought to set aside a conveyance executed by the defendant Edward Reardon, to the defendant Richard S. Treacy, March 26, 1878, of certain lands and buildings thereon, in the city of New York, particularly described in the complaint, and a certain instrument or declaration of trust executed on March 29, 1878, by said Richard S. Treacy, declaring that he held and would hold said conveyed premises upon certain trusts: 1st. As security for the payment of all debts and liabilities contracted for or on account of said premises except the mortgage liens thereon; also the taxes and assessments on said property; and, 2d. In trust for

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said Edward Reardon and Edward J. Blesson, also a defendant in this action, equally, share and share alike.

Upon the trial the plaintiff’s complaint was dismissed with costs and an allowance of $2,000 was shortly thereafter granted on motion. There is an appeal from the judgment of dismissal in conjunction with an appeal from the order granting the allowance ; but on the argument it was conceded that by reason of the foreclosure of a prior mortgage on the premises and the insufficiency of the fund iri the hands of Richard S. Treacy as trustee and of Ferdinand Kurzman as receiver, the plaintiff as the receiver appointed in the supplementary proceedings could not succeed to enforce in this action the lien of the judgments represented by him. The substantial controversy upon this appeal relates, therefore, to the allowance that was granted. Upon the facts contained in the printed case it clearly appears that the judgment-creditors represented by the plaintiff were entitled to the remedies they took ; that the defendants, by their secret and suspicious transactions, invited this action ; that, in consequence of certain disclosures in the supplementary proceedings, this court was justified to, and by order did, authorize the commencement of the suit; that the adverse result to the plaintiff is due largely to the inadequacy of the property to satisfy all proper prior claims against it; and that, under the peculiar circumstances of this case, these claims could only be .ascertained by an equitable action like the one instituted. According to the record in the register’s office, the defendant Reardon, the judgment-deb tor, was the sole owner of the premises, and as such he conveyed to the defendant Richard S. Treacy, by a deed which made the latter the apparent owner, while in fact he had no individual interest, and was trustee for other parties, under an arrangement secret as to the unsecured creditors, and not put on record for a time by the express agree-

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of the parties interested. , The defendant, Edward S. Blesson, the alleged copartner of Reardon, was an infant, and he disavowed the partnership relation and claimed to represent Hugh Blesson, his father; while the latter in turn swore that he was not a partner and had no interest in the property. Moreover, the apparent value of the entire property exceeded all the liens and claims against it which were matters of record. Although, therefore, the trust deed was upheld as an equitable mortgage, and the plaintiff’s complaint dismissed, yet upon all the facts of the case it is not equitable that the succeeding defendants should have a greater indemnity than simple costs. Nor is there anything in the case upon which so large an allowance as was granted, could be upheld, even if it were a case for an allowance ; for the value of the property in dispute consisted of the value of Reardon’s equity of redemption, no question having been made as to the mortgages on record, and the claim sought to be enforced against such equity of redemption by the plaintiff amounted to only about $900.

The order granting an allowance should be reversed, and the judgment modified by deducting therefrom the amount of the allowance included therein, and, as thus modified, the j udgment should be affirmed, without costs to either side on this appeal.

Sedgwick, Ch. J., and Russell, J., concurred.