Opinion
07-05-1889
ENGLEBRECHT v. MAYER et al.
S. B. Ransom, for complainant. E. S. Cowles, for defendants.
Bill by Anthony Englebrecht against Henry L. Otto Mayer and others, to set aside fraudulent conveyances of land.
S. B. Ransom, for complainant. E. S. Cowles, for defendants.
BIRD, V. C. Mrs. Mayer's claim for $5,460, as so much money advanced to her husband in 1868, seems to fall under the condemnation expressed as to such matters in the cases of Lee v. Cole, 44 N. J. Eq. 327, 15 Atl. Rep. 531; Post v. Stiger, 29 N. J. Eq 554Luers v. Brunjes, 34 N. J. Eq. 19, 561; Besson v. Eveland, 26 N. J. Eq. 468; Clark T. Rosenkrans, 31 N. J. Eq. 665; Miller v. Sauerbier, 30 N. J Eq. 71; Humes v. Scruggs, 94 U. S. 22. The effort seemed to be to show that this large sum was used by the husband in his business; but the proof shows it more likely that it was used for the purchasing of bonds, and that the bonds were used in payment of the price of certain lots of land, the title to which was taken in his name, and held by him from about the time of the alleged loan until the time of the conveyance in the cause now complained of. During all of this long period—nearly 20 years—the wife does not call her husband to account, nor secure from him any recognition of her claim. In some cases, perhaps, the ignorance of the wife might awaken some consideration with the court, but not so in this; for Mrs. Mayer says that she earned this money in business which she carried on on her own account, and a portion of the time while her husband was in South America, and was disabled from rendering her any aid. This shows that she had opportunity, and must have become to a great extent acquainted with her individual rights, and learned how to take care of them.
1. As to the claim of H. E. G. Luytees for $1,105.34, I think, at least as between the complainant and him, that it must be regarded as paid. Luytees not only had the security of the declaration of trust hereinafter referred to, but he also had a chattel mortgage on a large amount of personal property. This personal property was seized and sold by the sheriff under the judgments named in the bill, and all purchased by Luytees, subject to the lien of the chattel mortgage, paying therefor only $52. He was the owner of the mortgage, and thus he became the owner of the equity of redemption, thereby securing all the estate and interest in himself. It very forcibly occurs to me that, as the case stands, the whole amount secured by this chattel mortgage must be considered as paid or satisfied. It may be said that Luytees stands in the same right as to the goods as a stranger would, had a stranger purchased. But this is not so in all respects. Had a stranger purchased, he could have held subject to the mortgage. The mortgagee could have foreclosed, and made what he could out of the goods at auction. The stranger so purchasing would only be accountable for the reasonable care of the goods. The sale under foreclosure would have developed the fair value, and that might be taken as an accounting. But in this case Luytees buys subject to his own mortgage; and, if it be going too far to say that that meant subject to the payment of his own prior claim, it surely is not going too far to say that it was his duty to realize the full value of the goods, and to account therefor in this particular case. Instead of so doing, he manages so as to render a just and fair account impossible. He not only allows Mayer to retain possession, but allows large portions of the articles either to greatly depreciate in value or to be lost beyond identification. Look at the case as I may, I am unable to cast off the conviction that in equity, and as between Luytees and the judgment creditors of Mayer, the claim of Luytees and his wife, secured by this chattel mortgage, should be regarded as paid. If this does not arise as a matter of law according to the cases, (Whyte v. Arthur, 17 N. J. Eq. 521; Bolles v. Trust Co., 27 N. J. Eq. 308; Holcomb v. Lake, 24 N. J. Law, 686; Hinchman v. Emans, 1 N. J. Eq. 110; Van Wagenen v. Brown, 26 N. J. Law, 204; Hill, Trustees, 252; Wade v. Miller, 32 N. J. Law, 296,) it is manifestly so in a case in which it appears that the mortgagee and purchaser has wasted the goods, or a large portion of them, or has allowed his debtor to continue in absolute control of them after such purchase. I think that every principle of justice requires the utmost faithfulness in such cases. And especially does it demand a full and fair accounting—a showing upon his part of all and everything—when the mortgagee knows that the object of the debtor was and is to delay, if not to defeat, his other, creditors, as Luytees knew in this case. Mrs. Luytees' claim was included in the chattel mortgage; and, as her husband acted for her in all of this matter, she is bound by what he did.
2. And as to the title to the lands in question under the declaration of trust, I have not yet been able to see any foundation upon which that can rest as against creditors. Mayer being very heavily indebted, a part of winch indebtedness was to the firm of which Luytees was a member, and another to the wife of Luytees, and a very large part to the mother-in-law of Luytees, who is the wife of Mayer, Mayer employs a lawyer to prepare, and then he executes, four deeds of conveyance, which include all of his lands in New Jersey, to Luytees. He then delivers these deeds to Luytees. But Luytees swears that he knew nothing of the intention of Mayer until after the deeds were delivered, and had no intimation that he was going to make such conveyances before the deeds were so delivered. Luytees, however, undoubtedly learned about this time, and certainly before the declaration of trust next named, that the object of Mayer was to place all of his property beyond the immediate reach of his creditors, who were pressing him for payment. Luytees knew that the transaction, considering the object that Mayer had in view, was illegal. With this knowledge he accepted the chattel mortgage, dated December 17, 1885, and made a declaration of trust as to all of the real estate so conveyed to him by said deeds, in and by which he declared that he held the said lands for the payment of the debt due to his firm, the debt due to his wife, and, after these, then the debt due to his mother-in-law. This declaration was recorded December 22d as a mortgage, and December 23d as a deed. On the former daythe first judgment, under which the goods were sold and under which the complainant purchased, was entered of record. As stated, Mayer intended to hinder and delay his creditors, and Luytees knew it. With this knowledge he participates in this transaction, and becomes a party to it. It is true that he secures the claim of his firm, the claim of his wife, and that of his mother-in-law; but does that purify it? Luytees knew that the deeds to him were illegal, because the intention was to delay creditors. Was the scheme which he assented to and participated in any less fatal to the interests of creditors? Were they not equally delayed? The title still remained in him, not only as security for the payment of his firm's claim, but for the payment of two other claims. It was not agreed that the debts should be discharged by him at a time certain, and upon sale of the property, but on demand, and without providing any means with which to pay on demand. With the title to all of the debtor's estate, and that debtor a father-in-law, is it likely that there would be any demand? And the whole subsequent conduct of the parties shows that they regarded this last device as a more efficient method of evading the statute of frauds than the former, for Luytees has collected the rents to the amount of several hundred dollars, and sold a portion of the goods named in the chattel mortgage for $600, and, so far as has been disclosed, has rendered no account to Mayer, or to his wife or mother-in-law; nor have they attempted to call him to an account; nor has Mayer. He certainly will not, for that was foreign to his purpose. Unfortunately, in this intention, judging from their conduct, there is perfect harmony between them. See Owen v. Arvis, 26 N. J. Law, 22; Bank v. Sprague, 21 N. J. Eq. 530. I will advise a decree declaring all of these deeds, and also the declaration of trust, fraudulent and void as to the complainant, with costs.