Carpenter and others against Roe and others

Carpenter and others against Roe and others. To invalidate a voluntary conveyance, as against creditors, it is not necessary that the debtor be or believe himself insolvent at the time of the grant; it is sufficient if his solvency is contingent upon the stability of the market in the business in which he is engaged. On the first of May, A., a com merchant, purchased certain real estate, taking a conveyance of it to his wife. On the fifteenth of June, he purchased of B. a lot of corn, giving therefor his check, post-dated the twenty-fourth. On the sixteenth, being largely indebted, but neither insolvent nor apprehending insolvency, he joined with his wife in conveying the real estate to their son-in-law, in trust for the wife of A., with remainder to, her heirs; and on the twenty-third, .in consequence of a sudden fall in the price of corn, occasioned hy the arrival of news from Europe, A. suspended payment; Held, that the trust for the benefit of A.’s wife, as well as the original conveyance to her, were fraudulent and void as against B. . This was a creditor’s bill, filed in March, 1848, in the supreme court, and afterwards transferred to the superior court of the city of New-York. The facts established by the pleadings and proofs were as follows: The defendant Roe was a produce merchant, doing business in the city of New-York. On the 3d day of February, 1847, being then in unembarrassed circumstances, and believing himself fully able to discharge all his- debts and liabilities at maturity, he purchased of one Laing the store and lot No. 263 Washington-street, in that city, and by the agreement then made with Laing a deed of conveyance to the wife of Roe was to be executed on the first of May following. After this contract of purchase, and before the time for the execution of the conveyance, Roe was advised by counsel that the proposed conveyance would probably be ineffectual in investing his wife, as was intended,- with the sole and exclusive title to the land; but Laing refused to give any other, and the original conveyance was therefore accepted. The price of the lot was $10,000, of which Roe paid out of his own funds $2,000, and he and his wife gave mortgages on the land for the remainder. Early in June, 1847, the plaintiffs, who were partners in trade at Newburgh, sold to Roe a quantity of Indian corn, which was delivered” on the fifteénth of that month. On delivery, Roe gave the plaintiffs, instead of cash, his check on the North River Bank for $875.99, the amount of the purchase money, the' check' being dated forward - to the twenty-fourth of the same month.. On the sixteenth of June, being still, as he supposed, although lafgely indebted, "in solvent circumstatices, Roe joined.with his wife in executing, a conveyance of the store and lot in question to one Caswell, their son-in-law, in'trust for the use and benefit of the wife of Roe, with power to her to dispose of it by deed or will, and with remainder to her heirs; the deed being dated May first, and the intent being to carry out the purpose of the original agreement with Laing. This conveyance was confessedly voluntary and without consideration. On the twenty-third of June, in consequence of a considerable and sudden fall in the price of grain, which fall was occasioned by the news at that time brought from Europe by the Liverpool steamer, Roe suspended payment, and from that time to the date of this suit he continued insolvent. The check which he had given for the corn was presented at maturity and dishonored ; 'and judgment was soon after recovered against him for the amount of the debt. This action was then brought by the plaintiffs against Roe and his wife and Caswell, charging that Roe had caused the conveyance from Laing to be made to his wife for the purpose of defrauding his subsequent creditors, and that the conveyance in trust to Caswell was fraudulent as against the plaintiffs, who were his creditors at the time. The bill prayed for a decree setting aside the last mentioned conveyance, to the extent of Roe’s life-estate by the curtesy, and if such life-estate should be insufficient to satisfy the plaintiffs’ debt and' costs, that then the conveyance from Laing-to Mrs. Roe-might be adjudged fraudulent as against the plaintiffs, and Caswell a mere trustee of Roe to the extent of all beyond the life-estate of Roe in the premises. The supreme court dismissed the bill, without costs, declaring that the conveyances were not fraudulent as against the complainants, from which decree the complainants appealed to this court. M. S. Bidwell for the appellants. John N. Taylor for the respondents. [MAJORITY — Gardiner, J.,] Gardiner, J., delivered the opinion of the court. The conveyance by Laing to Mrs. Roe of the lot and store in Washington-street was made at the request of herhusband, who paid and engaged to pay the whole purchase money to the vendor. As between husband and wife the deed was without consideration and wholly voluntary. The previous agreement between Roe and Laing, of the 3d of February, 1847, in relation to the premises, would not relieve the conveyance from this character, had the answer setting it up been "in this particular responsive to the bill, which is not the case, or had the "contract been put in evidence by the defendants under the issue formed by the pleadings. That agreement may therefore be laid out of consideration in the determination of the cause; and the question will be, was the deed above mentioned, or the trust created for the benefit of Mrs. Roe by the conveyance to Caswell, either or both of them, fraudulent as to the creditors of her husband? The fourth section of the act (2 R. S., 127) declares that “any conveyance or charge shall not be adjudged fraudulent as against creditors or purchasers solely on the ground that it was not founded upon a valuable consideration.” This section was declaratory of the rule of law established in Seward v. Jackson (8 Cow., 422) and in Hinde's Lessee v. Longworth (11 Wheat., 199). In Reade v. Livingston (3 John. Ch. R., 481) it had been previously decided that if the party making the conveyance be indebted, at the time of the voluntary settlement, it should be presumed to be fraudulent in respect to such debts, and no circumstances would permit those debts .to be affected by the settlement, or repel the legal presumption of fraud. In 11 Wheat, (supra) the court say that a voluntary deed is not absolutely fraudulent. If it can be shown that the grantor was in prosperous circumstances and unembarrassed, and that the gift was a reasonable provision according to his state and condition in life, and leaving enough for the payment of the debts of the grantor, the presumptive evidence of fraud would be met and repelled. Tested by these principles, I entertain no doubt that the trust and conveyance were both void as to creditors. The deed from Laing to Mrs. Roe was dated on the 1st of May, 1847. Roe does not deny that he was deeply in debt at the time; he denies that he was insolvent. The extent of his obligations may be inferred from the fact that fifty days subsequent to that conveyance he was utterly insolvent, and has so continued to the commencement of this suit. He states that when the debt to the complainant was contracted he was solvent, and that his insolvency was owing to the sudden fall in the price of grain, &c. The result of his allegations is, that although he was largely in debt, yet if the article in which he traded had advanced in price, or if its value had continued as he had reason to suppose when his indebtedness accrued, he would have been solvent and would have had a surplus. All this might be stated, and with truth, by the most reckless speculator that ever hazarded the property of others on the contingency of a fluctuating market. When the purchase was made of the plaintiff, Roe states that he believed he was solvent, and for some days subsequent, and fully able to discharge his debts and liabilities at maturity, but he does not allege that he had or believed that he had one dollar of capital or property for which he had paid, to which his creditors might resort in case his speculation should result, as it did, disastrously. In this situation, with poverty or riches depending upon the intelligence to be brought by the next steamer, he did not think it dishonest to make a provision for his family by conveying his life interest in the property to his son-in-law in trust for his wife. He denies, therefore, that this trust was fraudulent, and of course that the previous deed from Laing to Mrs. Roe, of the first of May, was designed to defraud his creditors. He does not deny that at both periods his existing indebtedness'‘¿ailed for all tiis-property, or that if the conveyance or trust is upheld,' so much as is devoted to his wife will be withdrawn from those who were then his creditors.' If so, the transaction was fraudulent. ' To avoid the conveyance’and trust to and in favor of his wife, it was not necessary that the debtor should be insolvent, or believe himself to be-so, when they were executed or created. It was sufficient that he was indebted, and that insolvency would' be the inevitable or probable result of want of success in the business in which he was engaged. He could not, ‘ legally or honestly, in this manner provide for himself or family, and cast upon his creditors the hazard of his speculation..' ■ The_decree must be reversed, and the deed to Mrs. Roe, of the first óf May, and the trust for her benefit, declared void as against the complainants. All the judges concurred.' Judgment accordingly.