The court of appeals has held that John Wilkinson must pay to the receivers the rents and profits accruing from the subject of the fraudulent grant while he was in possession of it. Loos v. Wilkinson, 110 N. Y. 195, 18 N. E. Rep. 99. Interest may be allowed upon the rents and profits-received by and recovered from a fraudulent grantee. Jackson v. Wood, 24 Wend. 443; Vandevoort v. Gould, 36 N. Y. 639, 647; Taylor v. Taylor, 43 N. Y. 578, 584; Cowing v. Howard, 46 Barb. 579; Low v. Purdy, 2 Lans. 422; New Orleans v. Gaines, 15 Wall. 624; Mowry v. Whitney, 14 Wall. 620; Littlefield v. Perry, 21 Wall. 205; 1 Sedg. Dam. (7th Ed.) 254, note; Sedg. & W Tr. tit. Land, § 670. Part of the real property attempted to be conveyed by the fraudulent grant was subject to two mortgages given November 1, 1873, payable the next day, and bearing interest, (the rate not specified,) payable semi-annually. The grantee paid interest on these mortgages at the rate of 7 per cent, per annum, from which the special term deducted 1 per’cent., and credited the grantee with the remainder. The holders of these mortgages could only collect interest at the rate of 6 per cent, per annum. Bennett v. Bates, 94 N. Y. 354; O'Brien v. Young, 95 N. Y 428. Assuming that the grantee is entitled to be allowed for interest paid, he is not entitled to be allowed a greater sum than could have been recovered from the property. Assuming (which is not held) that the grantee is entitled to be allowed for such; necessary expenses as he incurred in caring for the subject of.the grant, and in collecting the rents, the evidence as to the extent and value of the services-is such that the amount was a question of fact for the special term, and we are satisfied that no error was committed, as against the grantee, in the amount allowed. No error was committed, by the special term as against John Wilkinson, and his appeal cannot be sustained. When a grantee takes a deed for the purpose of defrauding the creditors of the grantor, and the deed is subsequently set aside for the fraud, the grantee is not entitled to be reimbursed out of the subject of the grant, or out of the rents and profits arising therefrom, as against the creditors of the grantor, for money expended in paying valid incumbrances, taxes, for repairs, improvements, insurance, or in caring for the property. Boyd v. Dunlap, 1 Johns. Ch. 478; Wood v. Hunt, 38 Barb. 302; Bank v. Warner, 12 Hun, 306; Davis v. Leopold, 10 N. Y. Wkly. Dig. 266, reversed 13 N. Y. Wkly. Dig. 337, and 87 N. Y. 620; Taylor v. Taylor, 43 N. Y. 578, 584; Woodhull v. Rosenthal, 61 N. Y. 382, 396; Wood v. Wood, 83 N. Y. 575, 581; Bean v. Smith, 2 Mason, 252; Railroad Co. v. Soutter, 13 Wall. 517; Thompson v. Bickford, 19 Minn. 18, (Gil. 1;) Pettus v. Smith, 4 Rich. Eq. 197; Seivers v. Dickover, 101 Ind. 495; Borland v. Walker, 7 Ala. 269; Mosely v. Miller, 13 Bush, 408; Stovall v. Bank, 8 Smedes & M. 305; Wilson v. Horr, 15 Iowa, 489; Allen v. Berry, 50 Mo. 90; Kenney v. Browne, 3 Ridg. App. 462; Briggs v. Merrill, 58 Barb. 389; Shand v. Hanley, 71 N. Y. 319; Beckett v. Tyler, 3 McArthur, 319; Wait, Fraud. Conv. c. 13; Bump, Fraud. Conv. (2d Ed.) 594; 1 Sedg. Dam. (7th Ed.) 246; Sandars’ Just. Inst. (6th Ed.) p. 110, bk. 2, tit. 1, § 35; Domo. Civil Law, (Cush. Ed.) 1981. This general rule is so broadly and firmly settled in all countries that we might safely reverse that part of the order which allows John Wilkinson to set off $21,620.13 against the sum which he received for rents, and stop the discussion at this poiht; but the amount involved, and the earnestness with which this case has been argued, perhaps justify a statement of how this wholesome rule has been applied to particular cases.
In Wood v. Hunt, supra, the subject of the fraudulent grant was directed to be sold for the benefit of the grantor’s creditors;, and it was provided that, if the creditors’ claims were not paid out of the avails, the grantee should pay
The policies of insurance were not taken for the benefit of the creditors of the fraudulent grantors, but for the benefit and in the name of the fraudulent grantee. If the buildings had burned the creditors could not have recovered the damages from the insurer. Bernheim v. Beer, 56 Miss. 149, 7 N. Y. Wkly. Dig. 61; Lerow v. Wilmarth, 9 Allen, 382; Carpenter v. Insurance Co., 16 Pet. 495, Nippes' Appeal, 75 Pa. St. 472; Bump, Fraud. Conv. (2d Ed.) 591. In Robinson v. Stewart, 10 N. Y. 189, a father conveyed all of his real estate, worth $2,000, and transferred chattels worth $326, to his son, who agreed to pay his father’s debts, supposed to amount to about $400, and to pay $300 to his sisters, which he paid, and much more. At the date of the conveyance and transfer the father was an indorser on a note, but died before it fell due. The maker failed to pay the note, and the heirs of the indorser were charged. The holders of the note brought an action and set aside the conveyance and transfer as fraudulent as against them; but by the judgment the son was subrogated to the rights of the creditors whose claims lie had paid, and the avails of the property were decreed to be applied in payment, pro rata, of the decedent’s debts. The son averred in his answer that” he did not know of his father’s indorsement when he received the conveyance and transfer, and there was no evidence that lie did. Ho evidence was taken in the ease, which was determined on the pleadings and a stipulation. Pages 192, 194. The provision in the judgment in favor of the grantee can be upheld upon two grounds: (1) That it was a case of constructive, instead of a case of active, fraud; (2) that, the grantor being dead, the plaintiffs having no judgment or lien, and the grantee’s claims against his father’s estate not being extinguished by setting aside the deed, his claims and all others should be paid pro rata out of the decedent’s estate in the due course of administration. In King v. Wilcox, 11 Paige, 589, the fraudulent grantee purchased and took assignments of two mortgages, and the complainant in his bill conceded to the defendant the position of a mortgagee in possession. ' This assertion of counsel is confirmed by the chancellor. Page 595. The position of a mortgagee in possession is quite different from the position of a fraudulent grantee in possession; but there are remarks in the opinion indicating that the chancellor understood that such a grantee might be compensated for improvements made by him, but these remarks are without support in the prior or subsequent authorities. The learned chancellor had, in an earlier case—Putnam v. Ritchie, 6 Paige, 403, 404—limited the right of possessors of land without title to offset improvements to possessors in good faith.
It is insisted that Wilkinson is entitled to be credited with $900, paid for collecting rents, but it is difficult to see upon what ground. He did not expend this, or any of the sums with which he was credited, for the benefit of •the creditors of his grantor, nor in good faith, but to carry Into practical effect his fraudulent scheme, and reap the benefits of the attempted fraud for ihimself and his co-conspirators. The fraud described in the record, and by which Wilkinson acquired possession and sought to acquire title, is a criminal fraud, for w'hich the perpetrators are liable to indictment, and, upon conviction, to imprisonment in a penitentiary for not more than one year, or to .a fine of not more than $500, or to both, (Pen. Code, §§ 15, 586,) which fact Wilkinson and those who have acted with him seem to have forgotten, as well as the rule that persons who obtain possession of property by criminal means do so at their peril, and are not entitled to reimbursement for moneys ■expended in preserving, repairing, or improving the property. As well might a person acquiring possession of property by larceny, when compelled to surrender it, ask a court of equity to require the rightful owner to pay for mon<eys expended in repairing, insuring, and caring for the property, as for this .grantee, who acquired possession by criminal means, to ask a court to allow him for such expenditures. That part of the order which allows John Wilkinson $7,973.86 for interest paid on mortgages, $1,351.78 paid for repairs, .$9,257.59 for taxes paid, $2,136.90 for insurance paid, and $900 for collecting rent, aggregating $21,620.13, is reversed, and said John Wilkinson is charged with the full amount of rents received, with interest upon them from the ■dates when the sums were received to the date of their payment to the receiver, at the rate of 6 per cent, per annum; the order to be settled before,Mr. Justice Martin; Conrad Loos and others, plaintiffs, and Albert K. Hiscock,
The judgments in pursuance of which the reference in this matter was had, and the order appealed from made, provided that John Wilkinson should account for and pay to the receivers herein “the amount found due on said accounting of the ‘ net ’ rents and profits collected from said premises” from December 9, 1884, to July 1, 1886; but such judgments appointed the persons named therein as receivers of “the rents and profits,” directed ■the referee to take an account for “the rents and profits,” and provided that upon the coming in of the referee’s report judgment may be entered “for the rents and profits,” without in either case using the word “net. ” Hence it maybe a question whether, under the provisions of the judgment, when taken .as a whole, it should be held that they provide for an accounting for the “ net rents and profits” only. But, assuming that the judgments provide for an accounting for “the net rents and profits collected from the premises,” it becomes important to determine the meaning of the term “net rents and profits,” as used therein. Does the addition of the word “net” in any way alter •or affect the judgment? Does the term “net rents” in this case mean more or less than rents received? The only rents received by the fraudulent vendee were net rents; or, in other words, he has been charged only for such rents .as have been actually received by him. The fact that he afterwards paid for repairs on the property, paid the taxes, and for insurance, does not reduce the amount of rents collected, nor render the rents so collected any the less net rents than they would have been if he had not paid such taxes.' insurance, .and for repairs. I do not think that the use of the word “net” in any way ■changes the liability of such fraudulent vendee for the rents collected by him. If, however, this construction is too strict, and it should be that from the words “ net rents and profits” it maybe implied that deductions might be made from the rents received, still it would seem clear that even then only such deductions should be made as would be justified by the principles of law .applicable to such a case. I do not think it was intended by the use of the words “net rents and profits” to authorize any credit to the defendant Wilkinson which was not justified by the rules of law applicable to the case of a fraudulent vendee; nor do I think such was the effect of the words used. John Wilkinson was a wrong-doer, a fraudulent vendee of the-property from which such rents were received, and was nót, I think, entitled to any of the credits allowed him by the order appealed from, for the reasons which are so •clearly and fully stated in my Brother Eqllett’s opinion, in which I concur