Opinion
11-12-1895
SAYRE v. COYNE et al.
F. T. Johnson and Robert H. McCarter, for complainant. Frank J. Swayze, for defendants.
Bill by Marcus Sayre against Patrick Coyne and others. Heard on pleadings and proof. Decree for complainant.
F. T. Johnson and Robert H. McCarter, for complainant.
Frank J. Swayze, for defendants.
PITNEY, V. C. The object of the bill is to subject to the lien of a judgment held by complainant against Patrick Coyne certain lands, the title to which is vested in Mary Coyne, his wife. The foundation of the equity is that the property, as is alleged, was purchased and conveyed to Mary Coyne, and buildings erected thereon, with the money of Patrick Coyne. Judgment was recovered in October, 1876. An execution was issued and a levy made, which wasfruitless by reason of a sale of the premises levied on by virtue of a prior mortgage, which did not produce a surplus to be applied to the complainant's judgment. The allegation of the bill is that the real estate now in question, consisting of two lots, one fronting on Day street and the other on Garfield street, in the city of Orange, was purchased after the recovery of the judgment, and paid for out of the proceeds of the business which the judgment debtor was carrying on under the name of P. Coyne & Co., viz. the business of a master mason taking contracts to build. It is not disputed by the answer that a portion at least of the cost of the lots and buildings afterwards erected thereon came out of the profits of the business of P. Coyne & Co., but the allegation is that the firm of P. Coyne & Co. after some time in 1881 or 1882—the exact date is not given—was composed of the defendant Mary Coyne and her son Charles P. Coyne, and the profits of the business were equally divided between Charles and Mary, and that the father and husband, the judgment debtor, had no interest in the business whatever, but that he worked for the firm of P. Coyne & Co. as a journeyman mason and foreman employed by his son and wife, and was paid stated wages. And this is the first issue raised. It is further alleged by the defendant that part of the purchase money for the lot on Garfield street, and a portion of the lot on Day street, was composed of the proceeds, amounting to $1,300, resulting from the sale in 1890 of a house and lot owned by Mary on Lakeside avenue. The Lakeside avenue lot was purchased (by deed dated February, 1878) of one Condict for $500. It is admitted that this $500 was paid by mason work done on other buildings for Mr. Condict, and that the house was erected in the same way. The mason work was done by the husband and sons, and the carpenter work was done by a master carpenter who accepted pay in mason work done on other jobs. A faint attempt was made to show by the proofs that all this mason work, as well that done upon the house as that done for Condict in payment for the lot, and that done for the carpenter in exchange for work done on the house, was done by Charles and his younger brother without the aid of the father, but I think the attempt fails, and the failure rebounds and throws distrust upon the defendants' witnesses. Patrick Coyne was before his failure a thriving and competent mason and builder in Orange, doing considerable work by contract, and his failure was due to the shrinkage in values of the years 1875 and 1876. The theory of the defendants is that he thereupon became despondent and unable to make a living for the family, and that he was supported by the efforts of his wife and his two oldest sons. Now, the proofs show that in 1877, shortly after his failure, and prior to the purchase of this Lakeside avenue lot, he was doing business under the firm name of Patrick Coyne & Co. At one time, shortly after his failure, he had a partner by the name of Beck (but for how long a time does not appear), and afterwards, as distinctly stated in the answer, his son Charles was his partner, and he was taking large contracts for mason work, several of which were offered in evidence,—one dated August 13, 1877; another October 17, 1877; another in March, 1879; another in March, 1881. On the other hand, his oldest son, Charles, was born about January 1, 1860, and in February, 1878, was just turned 18 years old, and the next son was about 14 years old. These boys undoubtedly worked for their father as soon as they were old enough to work, but the proofs show that the father must have been at that time the manager, brains, and energy of the concern, and the only one of the party who was competent to do this kind of business. Besides, it is absurd to suppose that either Mr. Condict, the seller of the lot, or the carpenter who did the carpenter work, would accept the work of such mere boys in exchange for their property and work. Without going into the details of the evidence on this point, which was elaborately argued on both sides, it is enough to say that there were serious contradictions in that of the defendants, and I am entirely satisfied from all the circumstances that the Lakeside avenue property was paid for with the profits of Patrick Coyne's business. In January, 1881, Charles attained his majority, and shortly afterwards—but just how long does not appear, nor whether in 1881 or 1882—married, and brought his wife home to the Lakeside avenue house; and the question is whether he then entered into a new partnership with his stepmother, Mary, or merely continued the old one with his father. No written articles are produced by the defendant,—not a scratch of a pen to show that the wife had any interest in the business. She had no business capacity, was quite illiterate, and absorbed with her household duties. The business was continued after Charles' marriage precisely as it was before, under the management of Patrick and Charles, and all contracts were made in the name of P. Coyne & Co., and the business carried on under that name up to 1893. All this time the desk containing the partnership papers was kept in the kitchen of Patrick Coyne's house, and all business requiring clerkly labors was conducted there, in all of which Mrs. Coyne took no part and knew nothing of.
Several building contracts were produced, which had been filed in the office of the clerk of Essex county during this period, in, which Patrick Coyne is especially named as the partner. They are: A contract dated the 1st of July, 1882, between Cooper and wife and Patrick Coyne and Charles F. Coyne, partnersunder the name and firm of P. Coyne & Co. The words "Patrick Coyne and Charles P. Coyne, partners under the name and firm of," were interlined before the words "P. Coyne & Co.," and in different ink. It is plain that this was done upon the requisition of some one interested on the part of the builder, who felt that the individual names of the contractors should be declared. Before that amendment was made it had been signed "P. Coyne & Co.," in the handwriting of Patrick Coyne. An attempt was made to deny this, but a comparison with other undoubted standards in the case satisfies me that the words "P. Coyne & Co." were written by Patrick Coyne. Then the "& Co." after the words "P. Coyne" is erased, and "Charles P. Coyne" is written in Charles' handwriting, in the same ink in which the interlineation was made, and that was undoubtedly done by Mr. Kingsbury, the subscribing witness. Next is a contract dated January 30, 1883, made between T. Boup and "P. Coyne and C. Coyne, known as the firm of P. Coyne & Company, masons." This is signed "P. Coyne & Co.," in the handwriting of Charles Coyne. Next is a contract with Mr. Ash, dated the 17th of September, 1883, and is declared to be with "P. Coyne & Co., Patrick Coyne and Charles Coyne." This is signed by Charles, using the name of P. Coyne & Co. The next is a contract dated the 23d of October, 1883, with one Westcott, in which Coyne & Co. are described as composed of Patrick Coyne and Charles Coyne. This is signed by Charles. A similar contract was entered into with Mr. Ball on the 3d of September, 1885; another one, dated the 30th of April, 1890, between the Glen Ridge Building Association and Patrick Coyne and Charles P. Coyne, composing the firm of P. Coyne & Co. Objection to this documentary evidence was made on the ground that it could not bind the defendant Mary Coyne. But it is clearly competent to contradict Charles and Patrick, and I think it is also competent as the contemporaneous acts of the parties, especially in the absence of any documentary evidence of partnership with her, and in face of the admitted fact that Patrick and Charles composed the firm of P. Coyne & Co. before 1881 or 1882, and that Mary admitted that she knew the business was being carried on all the time in the name of P. Coyne & Co. It is impossible to ignore the fact of the relationship between the parties, and the absence of any diversity of interest among them, or of any motive in dealing in their business with third parties in stating Patrick to be the partner, instead of Mary. Thus the actual conduct of the parties during the period in question, and before suit stirred, becomes of the utmost importance and significance. The case discloses no reason why Patrick, after having done business openly and successfully in his own name from 1876 to 1881 or 1882, should suddenly retire and work as a journeyman for his son, a youth just turned 21; nor why, if he did retire, his name should have been, retained in the new firm's name.
The defendant swears that Patrick worked for the firm as foreman, at a weekly wage, in prosperous times, of about $24 per week, which he immediately gave to his wife for family support, the average amount of such contribution being at least $18 per week. But why should Patrick give all his wages to his wife for the family support when she was engaged in a profitable business,—for the proofs show clearly that it was profitable,— and where was the written evidence of such payment to him of wages? None of the partnership books, bank vouchers, bank accounts, or other writings relating to the business are produced. The defendants' case rests upon the unsupported evidence of the defendants Patrick, Mary, and their son Charles, and Patrick and Charles are hopelessly contradicted by the contracts which they have signed. But the defendants allege that in 1881 or 1882, when this new partnership started, the wife put $1,500 in money into the business, as capital, which she obtained from her brother James Fallan, the other defendant herein. An examination as to the truth of this allegation renders it necessary to refer for a moment at this point, in part, to Fallan's connection with the case. He is a plumber residing and doing business in Brooklyn, and may be a thrifty man, and is made defendant because he holds two several mortgages on the two pieces of real estate in question, both dated and executed December 5, 1893. On October 2, 1893, complainant issued an alias execution on his judgment, returnable the first Tuesday of November then next. Under a return of nulla bona he took proceedings, by a judge's order, for the examination of Patrick and others before a commissioner, and that examination was had on December 11 and 17, 1893. Patrick, Mary, and Charles were all examined under oath. Just when the judge's order was made and served upon the defendant in execution does not appear, but it is clear that the defendants herein knew of it before December 5, 1893, for on that day Patrick and his wife went to Brooklyn and executed the two mortgages, one for $3,000 and the other for $4,000. which sums they say were in part made up of moneys previously loaned by Fallan to Mary, and among those sums of $1,500 alleged to have been loaned in 1881 or 1882 when the new partnership was formed. Fallan swears that before these mortgages were executed he heard at Patrick's house in Orange that some old creditors were stirring against Patrick. It is clear, therefore, that the parties went upon the stand upon the examination under supplemental proceedings, a few days later, with their minds refreshed as to all moneyed transactions between Mary and her brother Fallan. Upon that occasion Patrick swore that the working capital of the firm of P. Coyne & Co. was the result of the savings of the whole family,—himselfwife, and son,—and that his wife received presents from her brother which were also used. But his evidence does not indicate, or warrant the conclusion, that any large sum was furnished by his wife, or that the whole amount of moneyed capital amounted to any such sum as $1,500. Mary swore that she received from her brother $1,000 or $1,500 or $2,000,—being quite uncertain as to the amount; that it was paid to her in small amounts, of $100 or $200, from time to time, as it was needed; and her evidence there given does not indicate any large payments at one time, and she expressly declares that they were mere gifts by her brother, and not loans, and she denied that her husband ever contributed a cent. Upon her examination as a witness in her own behalf in this cause, she swears that her brother advanced her at one time, or substantially at one time, $1,500 to put in as working capital in the business of P. Coyne & Co., at its start. Charles Coyne, in his examination in supplemental proceedings, and as a witness for the defense in this cause, says that his mother did contribute to the capital of the firm. But he did not mention any particular sum, nor did his language indicate that it was of any considerable amount. And he further swears that the firm kept a bank account, and that whatever his mother contributed was deposited in the bank, to the firm's credit; and yet the bank account is not produced to show any such credits, nor any reason given why it was not produced. The brother, Fallan, swears that he advanced to Mrs. Coyne, about that time, $1,500, in two sums of $500 and $1,000, for which he took no receipt or acknowledgment, and of which he made no memorandum whatever. Not a scrap of writing is shown in support of this item. No attempt is made to show that the firm needed any such large sum as $1,500, and Charles intimates that it did not. It had been carried on for several years successfully upon the savings of the family, and the question arises, why make such a large addition suddenly at that time? The proofs fail to satisfy me that this or any considerable sum was put in the business as capital by Mary.
Upon a view of this part of the case as a whole, the fact that Patrick did conduct the mason business as a master mason and contractor, under the name of P. Coyne & Co., successfully, from the date of his failure up to the date of the commencement of the alleged partnership; that his son Charles was towards the last of this period his partner therein; that there was no external change in the partnership name or mode of conducting the business at the time of the alleged change; that Patrick continued to take an active part in it; that written contracts continued to be entered into by P. Coyne & Co., declared therein to be composed of Patrick Coyne and Charles Coyne; that no writing is produced indicating that the wife had any interest in it; that she took no part in the business whatever; that no written proof is produced that she furnished any capital,—I conclude that the written contracts speak the truth, and that Patrick Coyne and Charles Coyne, in name and in fact, composed the firm, and were entitled to its earnings, and that the idea of making Mary the partner, instead of her husband, was an afterthought. This conclusion renders it unnecessary to consider the forcible argument made by counsel of the complainant in support of the position that, even if Mary was the nominal partner, yet as she contributed nothing to the capital or to the management, while the business was really carried on by her husband, she cannot claim the proceeds of his management under the law as declared in the line of cases cited and culminating in Manufacturing Co. v. Hummell, 25 N. J. Eq. 45, modified by the fourth section (enacted 1874) of the married woman's act (Revision, p. 637).
The next question is, how much of the earnings of P. Coyne & Co. went into the property and the improvements upon it? And here, again, we are not aided by any documentary proof produced by the defendants. It is admitted that the two properties—both land and buildings—were partly paid for by the firm's money and means, and all by the firm's checks, except so far as the firm did work directly upon them. But no checks are produced. It is asserted that Mary received loans from her brother, which went into it, but not a scratch of a pen is produced in support of it; and she swears that all the money she received she handed to her son Charles, and he swears that it all went into the bank account. And certainly, if that be true, the bank account would show traces of it, and yet no bank account is produced, nor any excuse given for its non-production. The first purchase of property herein directly involved was made on the 19th of March, 1887, by conveyance from Dykman and wife to Mary Ann Coyne of 30 feet front on Day street, in Orange, the consideration being $1,050. At the same time conveyance was made of 30 feet immediately adjoining it to Mrs. Catharine Coyne, wife of Charles, at the same price; total, $2,100. A consideration mortgage for $500 was given back by Mary, which was afterwards assigned to Dr. William Pierson. The cash payment for this property came out of the bank account of the firm of P. Coyne & Co. A year and a half later—September 10, 1888 —Mary and her husband and Charles' wife and her husband joined in a mortgage to Dr. Pierson for $2,000 on the 60-feet front composed of the two lots owned by Mary and Charles' wife. These mortgages were both paid on the 31st of May, 1895, and canceled of record on the 2d of June, 1893. The building comprises two houses under one roof, built together, half on Catharine Coyne's lot, and the other on Mary Coyne's lot, and all paid for at the same time, and out of thebank account of the firm of P. Coyne & Co. It was alleged and sworn to by Charles that, although it was all paid for by checks of P. Coyne & Co., yet that the account of P. Coyne & Co. was kept good by contributions made by his mother of moneys which she alleged she got from her brother Fallan. But the bank account is not produced to show a single dollar coming from Mary Coyne, and as Charles was entitled to only one-half the profits, and there was no pretense that he had not been drawing money for his own living from the firm all the time, or that his profits had accumulated more rapidly than his mother's, there was no reason why her profits should not have been sufficient to pay her her one-half of the property as well as his profits for his one-half. So I conclude that the house and lot in question on Day street, so far as they were paid for prior to 1893, were wholly paid for out of the share of Patrick Coyne in the profits of the firm of P. Coyne & Co.
In 1891 an additional 10-feet front on Day street was purchased of one Cadmus, and added to Mary's part of the Day street property, at a cost of $450. It was alleged that this was paid for out of the proceeds of the sale of the Lakeside avenue property. About the same time—1891—a lot of 30 feet front was purchased on Garfield street, the rear of which adjoined the rear of the Day street property, at a cost of $625. The defendants swear that this lot was paid for by the proceeds of the sale of the Lakeside avenue property, which amounted to $1,300. On his examination in supplemental proceedings Charles Coyne swore that it was paid for with the money of P. Coyne & Co., and this is probably true, because the conveyance to Mary Coyne of the 30 feet included a conveyance of 60 feet front at a price of $1,250, and she immediately conveyed half of it to Charles' wife. So that it would appear that Charles was able out of his share of the firm's profits at that time to pay one-half of the whole purchase; and the same remark made with regard to the Day street purchase applies here. If he could buy and pay for one-half of the Garfield street purchase, why could not Mary? Here, again, we are not aided by the production of any bank accounts or bank vouchers. But the proceeds of the sale of the Lakeside avenue property were undoubtedly received about that time, and the fair inference from all the evidence is that they were used as a common fund to pay for the whole purchase, 10 feet on Day street, and the 60 feet in all on Garfield street,—amounting in the aggregate to $1,600 or $1,700. A year or two later a house was built on Mary's Garfield street lot at an expense of about $3,000. Whether one was built on Charles' part does not appear. In the examination under supplemental proceedings, Mary—and I think Charles, also—swore that $2,000 of the firm's money went into the building of this house. An attempt was made to vary this evidence on the hearing in this case. But I think the probabilities are all in favor of the truth of the former evidence. It was given at a time when the effect of its truth was not so clearly apparent as it became at a later date. So that I conclude that the proofs show satisfactorily enough that both of these properties, so far as they were paid for, were paid for with the earnings of the firm of P. Coyne & Co., of which one-half belonged to Patrick Coyne. The two mortgages held upon the Day street property by Dr. William Pierson were paid and discharged, as before remarked, about the 1st of June, 1893. The share of Mary's house in those was $1,000. She says that she borrowed the money of her brother Fallan to pay those mortgages, but no assignment of them was made to Fallan, nor any memorandum given to him for the money loaned, nor any entry made by him of the amount in any book, nor even upon a loose piece of paper.
This brings us to the Fallan mortgages, which are attacked by the bill on two grounds: First, that they were taken with notice of complainant's equity; and, second, that they were made for the express purpose of defeating it.
As to the notice of complainant's equity: The proofs show that Fallan was, during all the years since the recovery of complainant's judgment, on intimate terms with his sister; fully cognizant of the business affairs of her husband and herself and their son Charles. His evidence indicates in the clearest manner that before taking these mortgages he knew that some old creditor of Patrick was pressing him, and was likely to make claim to the premises here in question, and he took the mortgages with a view to securing himself in advance of this old creditor. Now, the old creditor could have no possible ground of relief against these properties, except that they were in equity the properties of Patrick Coyne. If they belonged in good faith to the wife, then they were clearly beyond the reach of any creditor of Patrick. As he got the information from Patrick and Mary by visiting them at their house in Orange shortly before December 5, 1893, he must have learned who the creditor was, and that he held a judgment and was trying to collect it. In fact he admits that the affair was talked over, and that "there was a possibility of old claims coming against the property." And this raises the question whether, admitting Fallan's mortgages to have been given in good faith for a proper consideration, and simply for the purpose of securing him an honest debt, they can be awarded in equity priority over the complainant's judgment.
But the complainant alleges that the mortgages are fraudulent and void against him for the additional reason that they were given for a larger sum of money than was actually due, if anything was due, and so purposely inflated, and that their object, as far as relates to any money presently advanced, was to assist Patrick Coyne in preventing complainant from realizing on his judgment, thus bringingthem within the reach of the principle acted upon in Holt v. Creamer, 34 N. J. Eq. 181. The two mortgages aggregate $7,000. The answer of Mary Coyne states the consideration as follows: June 28, 1877, $500; April 23, 1881, $1,500; February 26, 1887, $1,000; May 10, 1803, $1,000; and December 5, 1893, when the mortgages were executed, $2,097; in all, the sum of $6,097 besides interest. Fallan's answer, prepared by the same solicitor, gives the same items, and adds $550 loaned to purchase the Day street lot, making his sums total $6,647. On the hearing Mary swore that on the occasion of the execution and delivery of the bonds and mortgages her brother paid her $2,500 in cash, and subsequently paid her $500, making altogether $3,000. Her brother produces not a check or scrap of writing to prove either of these payments. He swears that he never received any note, duebill, receipt, or other memorandum from his sister, and never made an entry anywhere of any of the moneys he advanced to her; that he on one occasion made from memory a memorandum, upon a loose sheet of paper, of moneys which he advanced to her, which he put on a file among other papers and vouchers, and which has been lost; that on the day of the execution of the mortgages he paid her $2,097 in money; and fails to state that he ever paid her any afterward. With regard to the payment on the day of the delivery of the mortgages, his story does not agree with Mary's. With regard to the cash down at the delivery of the mortgages, Mary does not state why she borrowed so much, except that she needed a small portion to finish the building on the premises, and the remainder she proposed to keep to live upon. She does not show what disposition she made of any of it. Now, the proof of the advance of these large payments might, since the year 1887 at least, easily have been supported by the production of the checks with which the money was drawn from the bank. No attempt of that kind was made, nor any reason assigned why it should not have been made. The parties seem to have relied upon the value of their own oaths, unsupported by any other evidence. I have weighed this evidence carefully, and I feel constrained to say that it does not convince me that these large sums were ever advanced; and, if the $2,097 payment was actually made to Mary at the date of the mortgages, its object was so palpably to put the property within her reach, so that Patrick's creditors could not get it, that it brings it directly within the familiar principle that even if full value be given for property, and the object, known to the grantee, is to enable the grantor to set his creditors at defiance, the conveyance is void. Of this the case of Green v. Tantum, 19 N. J. Eq. 105, 21 N. J. Eq. 364, Is an illustration.
The judgment, principal and interest, in this case, will amount to less than $1,500, and the property is of ample value to pay that sum, and also all that I am able to believe can be honestly due James Fallan on his mortgages. I therefore feel no hesitation in advising that complainant's judgment be declared to be a lien prior to Fallan's mortgages.