Opinion
05-09-1904
LEVY v. LEVY et al.
W. Holt Apgar, for complainant. Edwin C. Long and P. C. Lowthorp, for defendants.
Bill by Lena Levy against Simon Levy and others for the foreclosure of mortgages. Decree for defendants.
W. Holt Apgar, for complainant.
Edwin C. Long and P. C. Lowthorp, for defendants.
REED, V. C. The bill was filed August 14, 1903. Its purpose is to foreclose three mortgages—one executed March 30, 1901, to secure $3,000, on a property in Perry street, Trenton; a second dated April 4, 1901, to secure $1,500, on a property on North Broad street, Trenton; and a third of the same date to secure $500, on a property on Dillon's alley, in the city of Trenton. The first of these mortgages was acknowledged on March 30, and the second and third on April 4, 1901. The first was lodged for record on April 15, and the second and third on April 11, 1901, and they were all taken from the office, after being recorded, by Simon Levy, on May 14, 1901. At the time of the execution of these mortgages, there were already a first mortgage upon the Perry street property of $1,500, and another mortgage upon the Broad street property for a like amount. Simon Levy, the mortgagor, on March 20, 1903, filed his petition in bankruptcy. The trustee in bankruptcy is a party defendant in this foreclosure suit and has filed an answer and a crossbill attacking the three mortgages upon the ground that no money passed from Lena Levy to Simon Levy for the mortgages, and that their execution was in pursuance of a scheme to cheat and defraud the creditors of the mortgagor. Upon the trial Simon Levy swore that in April, 1901, Lena Levy paid to him in bills $5,000 as a loan, and this sum the three mortgages were given to secure. Lena Levy swears to this fact, as well as Dora Levy, the wife of Simon Levy. No one swears or can swear that no money was paid by Lena Levy to Simon Levy in April, 1901. The defense is put upon the inherent improbability of the story told by Lena and Simon.
Simon Levy had for years kept a small store where he dealt in new and secondhandclothing. His story is that previous to April, 1901, he had formed a design to enlarge his business, and for this purpose applied to his niece, Lena Levy, for a loan. For this loan he proposed to secure her by mortgages upon the property already mentioned, stating to her the amount of rental which the said properties produced. Both say that she consented to loan him $5,000, and that on some day in April, 1901, she came over from Brooklyn to Trenton, carrying in the bosom of her dress the $5,000 in bills, which she paid to him in his store, on North Broad street. He says that he placed this money in his pocket, and thus kept it for some time, when, on a visit to New York City, he met some person up on Third avenue, near Sixtieth or Sixty-Second street, who pretended to know him, and invited him into a place where there was a game in progress; that he took part in the game, and lost all of the $5,000. His story is that his purpose in going to New York on the occasion mentioned was to buy goods for a new store in Plainfield. He says that he lost all of the $5,000. He says that he made no complaint of his loss to the police, and that he got home by having a previously purchased return ticket. It does not appear that he visited any place where goods were sold. He admits that he did not go up Third avenue to Sixtieth or Sixty-Second street for the purpose of buying goods. When asked why he was in that vicinity, he said: "I don't know why I went there, unless to look around and see the sights." He says he returned home, and said nothing to his wife about his loss. Lena Levy's account of the alleged loan is that some time before April, 1901, her uncle had solicited from her a loan, and she said she would loan him $5,000 upon mortgage. When asked the source of the money which she loaned him, she says she got it from rents of a tenement building in which she had a half interest with her husband, who owned the other half; that her husband permitted her to retain the entire amount of the rentals, which was $325 a month; that this rental was retained for a period of from four to six months; that it was kept by her husband either in his safe or in his bank account; and that the remainder of the $5,000 was given to her by her husband, who brought her the money either the evening before or on the morning when she came over to Trenton. She says her husband did not suggest that she take a draft or a check instead of bills, and she brought the bills because Simon Levy had said that he could use bills better than checks. She says she came over partly to visit her uncle. She admits that she had never been to Trenton before; that upon this visit she did not go into the living rooms attached to the store, but paid over the money in the store; and she thinks she did not even stay to dinner. She says she saw the mortgages, but she does not know whether they were at that time executed or not. This is a bare skeleton of the stories told by these two witnesses. From the manner in which the testimony was delivered, quite as much as from the testimony itself, I am compelled to the conclusion that the story told by Simon Levy is radically untrue. Of course, men have been swindled in much the same way as Mr. Levy swears he was. But I am sure that Mr. Levy is not within the class likely to be the subject of such an operation. The reason given by him for visiting New York City; his failure to make any effort to buy goods; his excuse for being so far uptown; the fact that he carried upon his person into this locality $5,000 in money; the manner in which he says he played bill after bill until the whole $5,000 was lost; his failure to make any complaint, or any effort to locate the place where he had been swindled—are in themselves circumstances sufficient to discredit his story. If he received this money, he either has it, or has applied it to some undisclosed purpose. His failure to put this money in the bank, assuming that he got it, was not because he did not wish to have a bank account, for he had had one in Trenton, and he opened one in Plainfield, but it was because he did not wish to have it known that he bad so much money. With this money concealed, with his real estate mortgaged up to its full value, and with substantially no personal property, he was armored against all claims of future creditors.
The question, however, is not whether he lost the money, but whether Lena Levy loaned him $5,000 in good faith, with no arrangement that it should be returned? If she did so, then it matters nothing to her what Simon Levy did thereafter with the money. The story of her trip to Trenton with $5,000 in bills in the bosom of her dress is calculated at least to excite surprise. While it is not unusual for ladies to thus carry money, as Mrs. Lena Levy says she carried the rent which she collected, it is not usual for ladies to carry thousands of dollars in this way. Then the query is suggested, why should she bring, rather than Simon Levy go for, this money? He had visited her frequently before and after this transaction, and so had had opportunities to receive all or a part at the time of this loan of $5,000. Why put upon her the risk of transporting this money to a city which she had never visited, to be delivered to one who had not even been apprised of the time of her coming, and whose place of residence was unknown to her? It is obvious that her trip was not for the purpose of inspecting the property to be mortgaged, or to see that the mortgages were correctly executed. She says that she is no business woman. Her whole testimony shows that she relied entirely upon the word of Simon Levy, and trusted everything to his honesty. She is in doubt whether she saw the property mortgaged, and it is quite clear. I think, that she did not. In fact, all the details of the visit seem to have made the slightest impression upon her. She cannottell whether she ate in the house; whether she got beyond the store part of the building; whether she intended to stay all night, or to return the same day. Now, it is strange that the details of this single trip, made uuder such unusual circumstances, should have made upon her mind so faint an impression. Then again, the manner in which she became possessed of the $0,000 is calculated to excite surprise. As already remarked, she says that a part of this money was the proceeds of the tenement house standing in the name of herself and her husband, of which the rentals had accrued for some time—possibly from four to six months—and the balance was contributed by her husband. There were upon this tenement house two mortgages—one for $26,000, and another for $3,500. Her husband paid the interest upon these mortgages. All the rents for these months would have amounted to less than $2,000, so that the husband took $3,000 of his own money to make up the amount loaned. Her husband is a business man, but, instead of making a draft or a check, he delivers to his wife $5,000 in bills, and permits her to make the trip alone with the money. He is a business man, and he knew, also—for Mrs. Levy says she told him—that this money was to be invested in second mortgages upon property he had never seen, and of which he knew nothing but what the borrower had told his wife. Now, he puts $3,000 of his own money in, and allows his wife to invest $2,000 which he had given her or permitted her to receive, without even seeing the property or the mortgages, or knowing practically anything about the security which Simon Levy proposed to make. It is further to be remarked that the answer challenges the bona fides of this transaction, and denies that this money ever passed. In the face of this challenge, the husband does not appear as a witness to support the story of his wife that he passed over to her $5,000 the evening before or the morning she left for Trenton. If he handed her that amount of money, $3,000, at least, of it must have been drawn from the bank by his check. It is true that his wife speaks of his keeping the rents in the safe, but I do not believe that any business man would have kept $3,000 of any money in his safe for any period of time, when he had a bank account. Now, if he drew $3,000 or more of this $5,000 from the bank, his return check would show it. While it would not be conclusive that the money so drawn was passed to his wife, or, if passed to the wife, was retained by her, still it would be an important factor in showing, as a part of the res gestæ, that the husband did take that amount of money from the bank to do something with. In respect to this question whether the money was actually paid by Lena Levy to Simon Levy, his testimony goes for nothing. While it is possible that Lena Levy was at Trenton in the spring of 1901, and it is possible that she may have paid him some money, which Dora Levy saw, I do not believe it. The probability is that she paid him nothing, and it is in the highest degree improbable that she paid him $5,000.
My conception of the affair is that Simon Levy did think of opening a store in Plainfield, and of making a test of that locality for the purpose of business. It may be that he had asked Lena Levy for a loan, and it may be she let him have some money. But in my judgment, his primary purpose of making these three mortgages to the full value of the property was to secure himself against any hazard resulting from his new venture. He offered to sell the Perry street property for $4,000, yet the first mortgage of $1,500 and Lena Levy's mortgage of $3,000 incumbered it to the amount of $4,500. When he made that offer to sell, he evidently regarded himself as having the right to deal with the property regardless of the interests of Lena Levy. Then, again, he paid the interest upon the first mortgages after he went into bankruptcy, saying to the agent of the mortgagee that he was compelled to go into bankruptcy, and that he thought the property in time would revert back to him; that he thought such an arrangement would be made. While the acts and words of Simon Levy, after the mortgage was made, of which Lena Levy had no knowledge, are not evidential against her, yet it entirely discredits Simon Levy's story, and exhibits what his intention was at the time, and after the execution of the mortgages. Not only as to him, but as to Lena Levy, 1 am constrained to the conclusion that the mortgages were made primarily for the purpose of defrauding future creditors, and that there should be a decree on the cross-bill declaring the mortgages fraudulent as to the trustee.