Opinion
05-27-1886
GRAVES v. WINANS and others.
F. D. Smith, for complainant. S. D. Haines, for defendant.
F. D. Smith, for complainant.
S. D. Haines, for defendant.
WILLIAMS, Advisory Master. It is undisputed that Lilliston, prior to 1875, owed Wild a debt for which Wild got judgment against Lilliston in the Brooklyn city court, April 19, 1875, for 81,100. Graves, Lilliston, and Middleton testify that this judgment was assigned to Middleton under the following circumstances: Lilliston was in difficulty in 1874, by having failed to account for some funds, belonging to the Wardell heirs, for whom he was guardian; and, to save himself from arrest, gave a mortgage for $2,800 to one Mrs. Voss, for the heirs, on some lots in Halsey street, Brooklyn. In order to make this a first lien, it was necessary to pay off an existing mortgage on the lots. This required 8750, which Middleton advanced to Lilliston for that purpose, taking, as partial security, a deed for the Halsey-street lots, subject to the Voss mortgage. Subsequently it was agreed between Lilliston and Wild to convey these lots to Wild for his debt, first freeing them from the Vossmortgage by its cancellation, which Wild undertook to get from Mrs. Voss. To induce her to do this, Wild (her attorney) was to sue the sureties on the bond of Lilliston, as guardian, and it was explained to her that the lots were worth considerably less than her mortgage, and that she would be better off by relying on her legal remedy against the sureties than by holding the mortgage. This was true to some extent. The lots were not worth the $2,800. Mrs. Voss did cancel the mortgage, and Wild sued the bondsmen, and ultimately recovered some $800 for the Wardell heirs. To carry out this agreement, the Voss mortgage being canceled, or ready to cancel, it was necessary to get in Middleton's title to the Halsey-street lots. His deed had not been recorded, but Wild and Lilliston knew of it. Lilliston had in the mean time given a deed for the same lots to Logan as security for another indebtedness, and Logan's deed was recorded. Lilliston got Logan to convey; and, as to Middleton, it was agreed that, on his surrendering his deed to be destroyed, the Wild judgment should be assigned to him as security for his claim. Wild executed accordingly an assignment in blank, and on the completion of the matter Middleton's name was filled in, and the assignment delivered to him, as agreed. This history is sustained by the testimony of Graves, Lilliston, and Middleton. Wild is not sworn; but a conversation with him is testified to by several of the defendants' witnesses, in which he said he had sold or assigned the judgment, not to Middleton, however, but to one Runyon. Runyon is sworn for the defendants, but does not sustain this. There is no testimony to shake the statement of the three witnesses mentioned. Some discrepancies appear in Middleton's evidence, and some differences exist between his testimony here, and that which he gave on the same points in another suit in Brooklyn; but, on the whole, I must conclude that the above history is established in this case.
These facts place Middleton in the position of a bona fide holder of the judgment by assignment, to secure his claim against Lilliston. The judgment was satisfied in Wild's hands by the conveyance of the lots to him for so much as exceeded Middleton's claim. But Middleton, in consideration of the surrender of his title to the lots, was, by the agreement of all parties, to receive the judgment in lieu thereof, to the extent of his claim. I think he has failed to prove a claim over $750; being unable to specify or explain the loans he says he had made to Middleton beyond that sum, for political purposes, and he must be restricted to that sum; but, on the whole evidence, I think he is corroborated to that extent.
Graves, the complainant, stands in the shoes of Middleton, having merely taken an assignment of the judgment, and can recover no more than his assignor could; that is, $750, with interest at least from the date of Wild's judgment. The $750 was advanced before that date, and at some time in 1874, but there is no evidence as to the agreement as to interest, or as to its payment; and it will be near enough to adopt the date of the judgment as the starting point for interest. It is established, therefore, that a debt of $750 incurred prior to 1875 was owing by Lillistonwhen, on February 10, 1875, Mrs. Lilliston received the legal title to the Bayonne lots.
Let us now look at the history of this title. It appears undisputed that Lilliston had caused certain lots on Macon street belonging to him to be placed in the name of one Mrs. Hale to keep it out of the reach of his creditors. Placing property under cover of another name was a constant usage of his, as appears from the several instances stated in the evidence, and of which his wife was fully aware. He negotiated an exchange of this property with one Wiley, for $1,500 cash and the Bayonne lots. In pursuance of this exchange Mrs. Hale conveyed the property she held to Wiley, and Wiley conveyed the Bayonne lots to Mrs. Hale, who held them, as she had the former property, merely for Lilliston. She conveyed them to Mrs. Lilliston on February 10, 1875, by Lilliston's direction, without consideration, and Mrs. Lilliston did not even know it at the time. Up to this point there is no. divergence between the assertions of Mr. and Mrs. Lilliston. She does not claim to have paid or furnished any consideration for this conveyance to her, nor deny that the property so conveyed to her was Lilliston's. In her hands, then, it is free from doubt that the Bayonne lots were subject to the right of Lilliston's creditors to assert a trust for their benefit to the extent of their debts. It matters not whether Lilliston was solvent or not at the time, under the rule adopted in this state. But there is sufficient evidence that he was insolvent; and it appears that, for a course of years, he had been diligently keeping property in the names of one or another of his and his wife's friends and relations to defeat his creditors.
Mrs. Lilliston and her husband conveyed the Bayonne property by deed dated May 1, 1876, acknowledged June 3, 1876, to one Catherine Dewing, a daughter of Mrs. Lilliston by a prior marriage, who has always lived with her. The consideration expressed was $100. The consideration in the deed from Mrs Hale to Mrs. Lilliston was $8,500, and the evidence as to actual value is that the lots were worth about $2,000, and were unincumbered so far as appears. Mr. Lilliston testifies that this conveyance was also by his direction, to cover the property from creditors, and that Miss Dewing paid nothing, and did not know of the conveyance at the time. Mrs. Lilliston in her testimony calls it a sale; says she sold it because she needed money, and received $100 cash. Mrs. Winan's answer admits this conveyance was for the consideration thus expressed. Miss Dewing is not sworn as a witness at all. In view of all the evidence as to this transaction, the discrepancy in price, the coloring of Mrs. Lilliston's testimony, the non-appearance of Miss Dewing as a witness, and her connection with some of Lilliston's other schemes for covering up his property, I cannot believe that this was a bona fide transaction, and conclude that it was, as Lilliston testifies, another of his devices to defeat creditors. I doubt the payment of the $100; but, if paid, it was not in good faith, and does not avail.
Miss Dewing held the title until February 27, 1882, when she conveyed it to Sarah E. Winans, a sister of Mrs. Lilliston, who is the present defendant, and who claims to be a bona fide purchaser for value.
Mrs. Winans was a widow lady, of small means. She owned only a little place of 20 acres of farm and bush land three miles from Plainfield, New Jersey, only a small part cleared, and with a little house on it. She was supported by the earnings of her sons, who lived with her, with what little she could sell from her place or earn by manual labor. At the time of this conveyance she says she had only $100 in money, which she got from her son, and had about three months, and which she paid on the purchase; and that Catherine Dewing owed her $200 for produce, and work of herself and her sons, and that other persons owed her perhaps as much as $100. She says Miss Dewing first proposed that she should buy the lots; that she agreed to buy them for $1,000; that Miss Dewing insisted on having the consideration in the deed expressed at the amount actually paid, $100. Why pay this, the only money she had, when they owed her $200; and why did Catherine Dewing insist that it should be so, unless there was some motive, some desire, to make the transaction appear other than it was? Is not the key to this found in Mrs. Lilliston's testimony of another fraudulent conveyance, when she says Mrs. Breakey paid Lilliston a dollar to make the transfer legal? This debt she says was for produce and work previously furnished in the house-keeping, which Miss Dewing was responsible for; her mother having no income, while they lived at Plainfield, Dunellen, and Evona. She produces no account or details of this debt. She did not see the lots she was buying. She did not make any search, nor know anything about their condition, situation, or value. No written obligation was asked or given for the $700, which she says she was still to pay after applying the $100 cash and the $200 indebtedness, nor was there any verbal promise or understanding as to when or how she should pay it, except that she was to pay as she could. No provision was made as to evidence of indebtedness in case of her death. On November 11, 1882, she says she paid another $100. One son was 23, one 19, and one 17, in July, 1884. The eldest was therefore not over 21 when she bought the lots, and the youngest 15. It was a strange undertaking for a woman thus situated to buy vacant lots so far above her means, and taxed at some $30 or $40 a year. While family confidence might account for some of the peculiarities of the transaction, it bears no resemblance to an ordinary and bona fide affair. To say the least, such a history puts the burden of proof strongly on the person affirming its good faith. She does not sustain this burden, or bring either Catherine Dewing or her sons as witnesses. She brings only Mrs. Lilliston, whose credibility is much impaired by her testimony as to the conveyance to Miss Dewing, and as to other parts of the case.
On comparing Mrs. Winans' answer with her own and Mrs. Lilliston's testimony, we may observe that the answer states that the conveyance to herself was for the consideration therein expressed of $100, and adds, "which sum of $100 was paid by this defendant to the said Catherine Dewing on the delivery to her of said deed." No mention is made of a bargain at the price of $1,000. This first appears when Mrs. Lilliston testifies. Mr. Lilliston testifies that he told Mrs. Winans, in or about1880, that he had taken this property out of his wife's name, and put it into Catherine Dewing's name; and that he had before that told her, and told her then again, it was to protect himself against his creditors; to keep them from getting hold of the property. This conversation came up naturally enough, on occasion of his going to get her to sign a satisfaction of a mortgage he had put in her name previously without hei knowledge; and, as she did not exactly understand it, he says he explained to her how he had been putting property from time to time in the names of his wife, of Mrs. Breakey, another sister, of Miss Dewing, and others. Mrs. Winans does not contradict this alleged conversation. If it took place, it goes far to disprove her good faith. She could only escape on the ground of having forgotten it when she bought the lots. But she was not asked about it, although examined after Lilliston had stated it.
I do not, however, give full confidence to Mr. Lilliston's testimony where not in some way corroborated. The disagreement between Lilliston and his wife had not broken out in 1876, when the deed to Catherine Dewing was made; but in the early part of 1881 they separated, and it would seem that after that she determined to avail herself of the property which had been placed in her and her daughter's names. This is the only way to account for the sale to Mrs. Winans, if it was a sale.
If Mrs. Winans purchased in good faith, she can only be protected to the extent of the money she has paid; the pre-existing debt due her would not entitle her to protection. On her own evidence she has only paid $200.
But, in view of the undisputed facts, and on weighing the conflicting and doubtful testimony, I cannot believe that she purchased in good faith. I think she knew the facts, and entered into the ostensible purchase at the suggestion of Mrs. Lilliston and her daughter, so as to keep to themselves this property of Lilliston's from his creditors. It may be noticed that a suit was begun in Brooklyn by Middleton against Catherine Dewing to set aside an alleged fraudulent conveyance, and attempts had been made to serve the papers, and they were finally served on March 2, 1882. Miss Dewing made conveyances of both Brooklyn and Bayonne property just about this time. It appears, however, that Miss Dewing paid several years' taxes on the Bayonne property, viz., for 1875 to 1881, inclusive, on April 17, 1882, amounting to $284.86. This was after the deed to Mrs. Winans, which was made about March 1st. Why Miss Dewing should advance the money for this purpose when, as alleged, Mrs. Winans was owing her $700 on the lots, and where the money really came from, are not explained. But the lax receipts are produced, and the payment stands proved. To this extent, with interest, the present title should be protected.
A decree will be made that Mrs. Winans holds the property in trust for the complainant to the extent of his claim under the judgment, as before explained, after first satisfying her to the extent of the taxes paid, and the property will be sold to pay the claims in that order. Costs are awarded against her.