The bill was filed by a judgment credit- or to set aside as fraudulent two deeds of premises No. 170 East Ninety-fifth street, in the city of New York, one made by the judgment debtor to Mahike Charmack, July 9, 1888, and the other made by Charmack to Rebecca Levy, the wife of the judgment debtor, July 10, 1888.
The conveyances were subject to a $10,000 mortgage, and the property was worth about $14,000. The transfers were made without consideration, and for the purpose of putting the title in Rebecca Levy, Charmack acting as a mere conduit.
The conveyances, if they rested upon these facts, would have to be set aside, but the explanation offered requires serious thought before reaching that conclusion. It appears that the judgment debtor, on February 17, 1888, while doing a prosperous business, and before the debt was contracted for which judgment went against him, executed and delivered a deed of the realty in question to his wife Rebecca, intending to make a gift of the property to her. The deed was not put upon record, because the defendant- was advised that a deed executed from a husband direct to his wife was void, and, following this advice, the two deeds in question were subse
Separate ownership by the wife is now possible, and she may take the legal title to personal property (even a transfer of the purchaser’s interest in a contract for the sale of land) by gift direct from her husband (Fruhauf v. Bendheim, 127 N. Y. 590; Kelly v. Campbell, 2 Abb. Ct. App. Dec. 492). A husband honestly indebted to his wife may give to her a chattel mortgage to secure the debt, .although he is, at the time of executing it, unable to pay all his debts in full (Spaulding v. Keys, 125 N. Y. 113). As to real estate the rule is somewhat different. Thus in White v. Wager (25 N. Y. 328) it was held that a deed executed by a wife to her husband was ineffectual to pass title. To the same effect is Winans v. Peebles (32 N. Y. 423) in which case it was held that the deed might, however, be established in equity where a consideration had been paid. In Hunt v. Johnson (44 N. Y. 27) the conveyance was by the husband to the wife, and the court, referring to White v. Wager (supra), said: “ That case differs from the present action in this, that it was a conveyance by the wife to the husband ; this was by the' husband to the wife. They do not necessarily stand on the same basis in equity. It is the duty of the husband to provide an assured and comfortable support for his wife during his life and after his death. No duty rests upon the wife to provide for the husband...... An application of the husband’s property for her comfort is eminently equitable, and has been favored by the courts from their earliest existence.”
In Dean v. Metropolitan Elevated R. R. Co. (119 N. Y. 540) it was held that prior to the passage of the act of 1887 (ch. 537) a deed of lands from husband to wife, or from wife to husband, was void, and did not operate to divest the
The deed executed by the judgment debtor to his wife, Rebecca, on February 17, 1888, being after the act of 1887 (ch. 537), expressly authorizing such tranfers, was good both at law and in equity, and being founded on love, affection and the obligation to support his wife and family, might have been held valid as against all but existing creditors, if it has been placed on record at the time of its delivery to her, and if the grantee, in her answer, had pleaded its execution and delivery (See also Laws of 1892, chap. 594, authorizing a married woman to enter into any compact with her husband, which act is supposed to destroy the last remnant of marital disability to contract).
Bump, in his work on Fraudulent Conveyances, at p. 82, says: “A deed, not at first fraudulent, may become so by being concealed, because by its concealment persons may be induced to give credit to the grantor. In such a case the use that is made of it relates back and shows the intent with which it was made. The omission to place a deed on record, or leaving it in the hands of the grantor, or placing it in the hands of a third person, to be produced or suppressed accordingly as exigencies may demand, are instances of secrecy under the rule” (citing cases).
It will not do to leave title apparently in one, while it
It is not contended that the failure to record a deed is conclusive evidence of fraud, but that unexplained it is a suspicious and strong circumstance tending to prove fraudulent intent (15 Weekly Dig. 153; 22 Id. 430). The difficulty with the explanation offered here is that it strikes at the integrity and validity of the deed itself
Steele v. Coon (27 Neb. 586) presented a somewhat similar question to that which arises here. In that case land had been conveyed by a husband to his wife, through a third party, the deeds being dated March 27, 1883, but not recorded. These deeds having been lost or mislaid, as thé defendant alleged, new deeds were executed on October 13, 1884, and at once recorded. The husband’s liability to the plaintiff was upon a note executed .August 22, 1884, and maturing October 22, of the same year. The defendant expressly claimed that the first deed was not kept from the records with any intent to •defraud the creditors of the grantor. Upon this point the court said: “ Neither of the conveyances can be upheld as a voluntary conveyance; the second, for the •obvious reason, that at this date the grantor, Archibald F. Coon, has already incurred the obligations upon and for which the several judgments of the plaintiffs were afterward .rendered against him, and the first conveyance, forth e reason that the deed was in law concealed and not pursued, not being placed upon record, in the due and ordinary course of business in like transactions, nor until after the incurring of the obligations by the grantor which aré now sought to be enforced against the farm— indeed never was recorded.
The question again came up in Hilliard v. Cagle (46 Miss. 309). There it appeared that a debtor who believed himself solvent executed a deed of trust of his plantation, stock, store house and merchandise on December 19, 1886, to secure a ninety day note- for $40,000.
It was held, however, that in ascertaining the motive, the court must look through the conduct, and from it make the deductions and inferences. A man must be •conclusively taken to intend the natural and logical results of his acts. They say: “ The natural and logical effect of knowledge by the public of the existence of the deed would be to destroy his credit and stop his business, except for liquidation. . . . The concealment of the •deed, on the other hand, would enable him to prosecute his business. He could buy merchandise on credit, keep Jhis .warehouse full, and deal largely in cotton. He might be able to pass through the active business season with unshaken credit, and come out successful. . . . To •come to this result it is not necessary to hold the deed itself to be fraudulent in its inception; for, as was declared (in 1692 by Lord Commissioner Hutchins, in Hungerford v. Earle, 2 Vern. 261) ‘a deed not at first void may become so by being concealed or not pursued, by which creditors are drawn in to lose their money.’ - . . We are of opinion that the natural and logical effect of the agreement and assignment, and the conduct of the parties thereto, was to mislead and deceive the public, and induce credit to be given to Baggett (the grantor) which he could not have obtained if the truth had been known, and therefore the whole scheme was fraudulent as to subsequent creditors, as much so as if it had been contrived with that motive and for that object.”
In Scrivenor v. Scrivenor (7 B. Mon. 374) a son executed a deed to his father as security in 1834, when the grantor was a trader, purchasing hogs on credit, borrowing money and inducing others to become his security. It was not recorded until seven years later, when he had
In Hildeburn v. Brown (17 B. Mon. 779) the court, referring to an unrecorded mortgage, said : “ Such contrivances or acts, though not designed to perpetrate an actual fraud upon other persons, have an inevitable tendency that way, and are obviously opposed to the general policy of the law requiring the public registration of all liens and incumbrances upon property permitted to be retained and claimed by debtors ” (see, also, Mead v. Gregg, 12 Barb. 653,656; Blennerhasset v. Sherman, 105 U. S. 100; Beecher v. Clark, 12 Blatchf. 256, 268).
The judgment debtor was engaged in a business in which purchases were made on credit, and the failure which occurred was one of the hazards to be reasonably apprehended ; and the plaintiff, though a creditor subsequent to the voluntary transfer to the wife, is entitled to complain of it (Young v. Heermans, 66 N. Y. 374 ; Mead v. Gregg, supra). The conveyances to Charmack and by him to the wife of the judgment debtor, were made while the latter was embarrassed. and had reason to expect
Submit findings and decree.