Bate against Graham, administration, and Jordan

Bate against Graham, administrator, and Jordan. It is the right and duty of an executor or administrator of a deceased debtor, whose estate is insolvent, to impeach a sale of personal property made by the deceased with intent to defraud creditors, and recover the same from the fraudulent vendee. Per Denio, J. Ordinarily, a creditor of the estate cannot maintain an action against such fraudulent vendee alone, or against him and the executor or administrator, to set aside the fraudulent transfer, and have the property held under it administered as assets’ to pay debts. Per Denio, J. But if the executor or administrator collude with the fraudulent vendee, or after reasonable request refuse to take proceedings to impeach his title and reach the property in his hands, a creditor may maintain an action against him and the executor or administrator, for that purpose. Therefore, where a debtor in his lifetime assigned a chose in action with intent to defraud creditors, and, his estate being insolvent, the administrator denied, that the assignment was fraudulent and, insisted that it ought not to he set 'aside; Held, that a creditor could maintain an action against the assignee and administrator to have the assignment declared void as to creditors, and the chose in action administered as assets to pay debts. And where the complaint omitted to aver the fact, that the administrator claimed that the assignment was valid, but this fact appeared from his answer, and objection to the complaint on account of this omission was first taken at the trial, when it was overruled and judgment rendered in favor of plaintiff, and defendants appealed to this court; Held, that this court would deem the defect in the complaint supplied by amendment, and sustain the judgment. The action was commenced in 1851 by Bate, a judgment creditor of one Whorry, deceased, against Graham, the administrator of his estate, and Jordan, to set aside an assignment made by Whorry in his lifetime, to Jordan, of a verdict in his favor, against one Miller, on the ground that the assignment was fraudulent, and void as against creditors. The complaint alleged .that the plaintiff was the owner of a number of judgments, which were specified, recovered against Whorry in his lifetime, upon one. of which an execution was returned unsatisfied shortly previous to the death of Whorry; that in October, 1850, Whorry recovered in an action on contract against .one Miller, a verdict for $1400, and soon after, and before judgment thereon, assigned the same to the defendant, Jordan; that such transfer was without consideration, and made to defraud the creditors of Whorry. That in November following, Whorry died, and the defendant Graham was appointed administrator of his estate. It further alleged, that all the real estate owned by the deceased had been sold to satisfy mortgages thereon, and that the personal estate which had come to the hands of the administrator, was of trifling value and wholly insufficient to pay the plaintiff’s judgments. The complaint prayed that the transfer of the verdict to Jordan be canceled and set aside. Jordan, by his answer, denied that the assignment of the verdict to him was made without consideration, or to defraud creditors, and put in issue most of the other allegations of the complaint, by denying knowledge or information thereof. Graham, the administrator, by his answer, admitted all the allegations of the complaint, except that the verdict was assigned to Jordan to defraud creditors; this -he denied, and also denied that it was assigned with any fraudulent intent whatever, and insisted that the assignment ought not to be set aside. The cause was tried at the Orange county circuit,'before Justice Brown, without a jury. At the trial, and before any evidence was given, the counsel for Jordan moved the court that judgment be rendered in his favor, on the grounds, among others, that the plaintiff 'had no right to maintain the action; but that it should have been prosecuted in the name of the administrator of Whorry ; that the complaint showed no fraud or neglect of duty on the part of the administrator, or any fact giving the plaintiff a right to maintain the action, and that it was not averred in the complaint that without the verdict against Miller, the estate of Whorry was insolvent. The court denied the motion, and the counsel for Jordan excepted. Evidence was given on the issues made by the pleadings. At the close of the evidence the counsel for Jordan renewed the objections to plaintiff’s maintaining the action, taken at the commencement of the trial; said justice overruled the same, and the counsel fdr Jordan excepted. Said justice having found and decided that the assignment to Jordan was fraudulent and void as against the creditors of Whorry, ruled and decided that the plaintiff was entitled to maintain the action against Jordan, and that Graham as administrator was a proper and necessary party thereto, and ordered the assignment of the verdict to be declared void as between Jordán and the creditors of Whorry, and that the proceeds of the same be applied by , Graham as administrator, to the payment of the debts of the deceased. To each of these rulings and decisions the counsel for Jordan excepted. Judgment was entered pursuant to this decision, and affirmed by the supreme court sitting in the 2d district at general term. The defendant Jordan appealed to this court. T. R. & C. R. Westbrook, for appellant. T. McKissock, for respondent. [MAJORITY — Denio, J.,] Denio, J., delivered the opinion of the court. I am of opinion that a creditor of a deceased person, whether by judgment or, simple contract, cannot, there being an executor or administrator appointed, maintain an action against a party in possession of, or claiming title to the assets of the debtor, to try the right to such assets. We have not been referred to any precedent for such an action, and I have been unable to find one. The executor or administrator is the party designated by the law to vindicate all such rights; and it would be incongruous to allow the creditor to pass him by, and bring an action directly against-a party whom he conceives to be accountable to the executor. The court of chancery, however, had, and the supreme court now has plenary jurisdiction over executors and administrators, and can, concurrently with a court of law, and with the surrogate in certain cases, take cognizance of the administration of' personal assets, of debts, legacies and distributions, and of the conduct of executors and administrators. (3 Bl. Com. 437; 1 Story's Com. on Eq. § 453; Elmendorf v. Lansing, 4 John. Ch. R. 562.) !As an incident to this jurisdiction, the creditor may make a debtor of the deceased, or other party against whom the executor has a claim, a party defendant, where the executor is insolvent, or is acting in collusion with the debtor, and in some other special cases. The general rule, however, is, that a debtor of the estate cannot be made a party to the bill against the executor, as it would be taking the business out of the hands of the latter, and would lead to confusion in the administration of the estate. (Bowsher v. Watkins, 1 Russ. & Myl. 277; Gedge v. Traill, id. note; Utterson v. Mair, 2 Ves. jr. 95; Long v. Majestre, 1 John. Ch. R. 305.) Upon the statements of the complaint in this cause, the defendant Jordan is not strictly a debtor to the estate, but he occupies the position of a party who has fraudulently got possession of assets which he claims a right to appropriate to his own use. It was the duty of the defendant Graham to contest his title to those assets, and to take such proceedings as might be necessary to establish his right to them as administrator; and in the absence of any allegation to the contrary, it is to be presumed that he was ready and willing to do his duty. The rule which formerly prevailed, that the personal representatives of a deceased person could not impeach a transfer made by such person in his lifetime, on the ground that it was made with intent to defraud creditors, has' been abolished by statute; and the defendant Graham had therefore the same right to question the assignment, of the judgment which he would have had if it had been obtained by any other species of fraud or by duress, or in any other unlawful manner. (2 R. S. 469, § 17; Babcock v. Booth, 2 Hill, 185.) One material question in this case, therefore, is, whether the complaint contains any sufficient allegations to justify the making of Jordan a party defendant. I think there is a sufficient statement that there were no other assets from which the plaintiff’s debt can be paid than the claim transferred to Jordan. It is shown that an execution against the intestate had been returned unsatisfied, that his real estate had all been sold on mortgages, and that he was insolvent at the time of his death. and that only a small amount of personal property, not sufficient to pay the plaintiff’s demand, had come to the hands of the administrators. It is not, however, alleged that the administrator is insolvent, or that he recognizes the title of Jordan, or is acting in any respect in collusion with him, or that he had been requested to challenge the assignment: nor is there any allegation showing the necessity of an injunction against Jordan, or that he had threatened to dispose of the demand assigned to him, or was himself irresponsible. If the complaint had been demurred to by Jordan for not stating facts sufficient to constitute a cause of action, I do not see how it could have been sustained. Hagan v. Walker, in the supreme court of the United States, • (14 How. R. 29,) has carried the right to join a fraudulent grantee of the deceased, as a defendant in a bill against the administrators, further than any prior case. There the alleged fraudulent grantee demurred to the bill, and although there was the same want of averments of insolvency and collusion on the part of the administrator which exists here, yet the complaint was sustained. The decision was placed in part upon the ground that there had been a delay on the part of the administrator of about two years, in taking proceedings to contest the title of the fraudulent grantee, and that it was doubtful whether the administrator could, without the concurrence of a creditor, disaffirm the conveyance of the intestate. These features do not exist in the case under review. But these were not the only or the principal grounds upon which the court placed its judgment. The opinion relies upon the circumstance that the administrator had likewise demurred to the bill, and had relied to support it on the statute of limitations; but the bill is sustained, “ chiefly, because, (as the opinion states,) there is no danger of interfering with the due course of administration, or taking from administrators their proper control over suits for the recovery of assets, by holding that a creditor may file a bill against the administrator and the fraudulent grantee of the deceased debtor, to subject the property fraudulently conveyed to the payment of the debt.” Regarding the expressions which I have last quoted, as unsupported by the prior authorities, and not consistent with the rule as long since settled and constantly recognized, I should hesitate to act upon it in this case. But there is another circumstance here which will, I think, enable us to sustain this judgment. Graham, the administrator,’in his , answer denies that the assignment to Jordan was executed with any fraudulent intent whatever.' Had the complaint suggested that he maintained such views, it would have been beyond all just exception. ’ It is the main point in which I have supposed it to be defective. ' I am of Qpinion that it may now be supplied by amendment. By the one hundred and seventy-third section of the code, the court may, before or after judgment, in furtherance of justice, allow an amendment, “by inserting other allegations material to the case, or when the amendment' does not change substantially the claim or defense, by conforming the pleading or proceeding to the facts proved.”’ When, therefore, the defendant Jordan, at the commencement of the trial, took the objection under consideration, the court having before it the record, which showed that the administrator as well as Jordan was endeavoring to uphold the alleged fraudulent assignment, the court should, I think, have permitted or ordered an amendment of the complaint, to the effect that the administrator refused to regard the asignment as fraudulent, but concurred with the other defendant in seeking to uphold it. It has been shown that the supreme court of the United States, in the case referred to, took into consideration the mode • of defense pursued by the administrator, even where the question arose upon a demurrer interposed by the alleged fraudulent grantee. This case is much stronger; for here the grantee submitted to answer the complaint, reserving the objection until the trial, and when the trial took place the record demonstrated that both defendants were, relying upon the absence of fraud, and that both maintained the legal validity of the assignment. I am,' therefore, of opinion, that the judgment of the supreme court should be affirmed. Judgment affirmed.