Opinion
01-12-1931
KAPLAN v. HEILES et al.
Maurice S. Maurer, of Newark, for complainant. Quinn, Parsons & Doremus, of Red Bank, for defendants.
Syllabus by the Court.
After a judgment at law has been obtained on a promissory note, the defendants having appeared and made defense, this court will not inquire into the validity of the note.
Syllabus by the Court.
A defendant cannot by his testimony deny admissions made in his answer.
Syllabus by the Court.
When property is conveyed for a nominal consideration, a debt of the grantor being in existence at the time, and the grantor thereupon becomes insolvent, an irrebuttable presumption of fraud arises.
Syllabus by the Court.
When a grantor holds himself out as an owner of property with the knowledge andat the suggestion of the grantee, the grantee is estopped from, denying, as against a creditor, that the grantor was the actual owner.
Syllabus by the Court.
Where a grantee participates in the fraud of the grantor, no allowance will be made to him for improvements to the property.
Suit by Joseph Kaplan against Regina S. Heiles and others.
Decree for complainant.
Maurice S. Maurer, of Newark, for complainant.
Quinn, Parsons & Doremus, of Red Bank, for defendants.
CHURCH, Vice Chancellor.
This is an action to get aside a conveyance as in fraud of creditors. On September 3, 1929, Regina Heiles signed a note and delivered it to her brother Alfred, to be given to Jacob Zuckerman in consideration of the assignment of a certain $10,000 mortgage. Jacob Zuckerman sold the note to the complainant. Suit on the note was begun in the New Jersey Supreme Court. Regina Heiles retained counsel and filed an answer. On a motion to strike out the answer and for summary judgment, affidavits of Regina Heiles and her brother Alfred were presented to Chief Justice Gummere. He ordered the answer stricken out and judgment entered for the sum of $2,310.37. The legality of the note is thus established, and no evidence to attack its validity will be considered in this court.
On September 3, 1929, when the note was made, Regina Heiles was the owner of a property in Long Branch, N. J. She conveyed this property to her brother Alfred. The consideration was $1. She admitted in her answer herein, and on examination under an order of discovery, that she had no other property. She thereafter attempted to deny her insolvency. However, she cannot now deny the admissions in her answer. See Endicott-Johnson. Corp. v. Binder, 101 N. J. Law, 122, 127 A. 166.
Therefore the judgment, the existence of the debt on September 3, 1929, when the conveyance was made, the nominal consideration when the deed was given on September 17, 1929, and the insolvency of the grantor having all been established, there is an irrebuttable presumption of fraud. First National Bank of Belleville v. Merrick, 103 N. J. Eq. 63, 142 A. 243.
Testimony was introduced to show that Harry Zuckerman, son of the original payee, made loans on certain property and verbally promised that Regina Heiles would not have to pay the note. This could not be a legal defense against the payee unless he participated in the alleged arrangement nor against a holder in due course. There is no proof that either knew anything about the alleged promise.
The note was given by Regina Heiles because she was the owner of the property and Jacob Zuckerman required her to do so. As she held herself out as owner of the property, and contracted the debt as such with the knowledge and by the suggestion of Alfred Heiles, subsequent grantee, he is estopped to deny as against the creditor that she was the owner. Peragallo v. Oneto, 98 N. J. Eq. 74, 130 A. 367.
Claim is also made that tbe note was one of accommodation and that the obligation did not become due until after protest. Conway v. Raphel, 101 N. J. Eq. 495, 138 A. 691, was cited in support of this contention. I decided that case in this court and was sustained by the Court of Errors and Appeals in 102 N. J. Eq. 531, 141 A. 804. That case refers to an accommodation indorser and has no bearing on the case at bar. In this case the indebtedness arose when Regina Heiles signed the note. See First National Bank of Belleville v. Merrick, supra.
Defendant Alfred Heiles claims an allowance for improvements placed on the property. Where a grantee participated in the fraud of the grantor, as Alfred undoubtedly did, he cannot be allowed for such improvements. City National Bank v. Hamilton, 34 N. J. Eq. 158. Conveyance with intent to defraud creditors made to a person taking with notice is void, though a full consideration is paid. Russell & Erwin Mfg. Co. v. Faltoute Hardware Co. (N. J. Ch.) 62 A. 421.
I will therefore advise a decree setting aside the conveyance and denying any allowance to Alfred Heiles.