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 *Page 580 conveyed her undivided interest to a receiver appointed in proceedings supplemental to execution. Subsequently, the receiver, pursuant to an order of the court, sold such interest at public auction to this defendant, and a deed therefor was delivered to him, bearing date October 4, 1889, nearly fifteen years after the execution of the deeds, alleged to be fraudulent.
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 banks obtained judgment therefor, and issued executions thereon which were returned unsatisfied June fifteenth, or about seven months after the execution of the deeds.
Undoubtedly, the recital of a nominal consideration would have been prima facie 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 not a 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 *Page 581 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): "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 that on November 20, 1874, Taylor did not have abundant property, aside from that conveyed, out of which to satisfy the claims of the Nassau and Germania Banks, the only creditors disclosed by the record. The evidence does not demonstrate that the act complained of made him insolvent. The only evidence on the subject is that about seven months later the sheriff returned two executions unsatisfied. The return of the sheriff is evidence that at that time he did not have property within the county where the executions were issued, out of which they could be made, but it was not evidence that he did not have property in the adjoining county, nor that he had not had during some portion of the seven *Page 582 months prior thereto abundance of property in the same county to have satisfied the claims of the banks.
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 courts 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 his 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 *Page 583 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 re-deposited $1,200 in the name of his wife. Subsequently he conveyed the house and lot to his minor daughter, the deed declaring the consideration to be "natural love and affection and one dollar." Then Larkin's brother satisfied the mortgage which had been given him. The plaintiff also proved that about one year and seven months after the conveyance the sheriff returned unsatisfied an execution issued against the property and effects of Larkin, and that subsequently, and before the commencement of the action, Larkin was examined in proceedings supplemental to execution. The learned trial court thought the plaintiff had established the fraudulent character of the deed, and so found. But this court reversed the judgment on the ground that the plaintiff did not show the defendant's financial condition at the precise time of the making of the conveyance. It said: "It is quite probable that Patrick Larkin did divest himself of all his property by the disposition made of his deposit in the savings bank and the conveyance of his real estate. But that should not be left to mere inference. If true, it is capable of proof, and the plaintiff who comes into court alleging fraud and assailing the deed therefor should furnish the proof."
I advise a reversal of the order of the General Term.
All concur with BROWN, J., except FOLLETT, Ch. J., and PARKER, J., dissenting.
Order affirmed and judgment absolute for defendant. *Page 584
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