Opinion
07-08-1905
VREELAND v. ROGERS et al.
James Steen, for complainant Benjamin P. Morris, for defendants.
Bill by Charles Vreeland, a judgment creditor, against Elizabeth Rogers and others. ] Dismissed.
James Steen, for complainant Benjamin P. Morris, for defendants.
STEVENSON, V. C. (orally). The bill is filed by a judgment creditor of Mrs. Elizabeth Rogers to obtain satisfaction of his judgment out of a house and lot in Long Branch, N. J., conveyed by Mrs. Rogers to her four daughters, by deed dated July 10, 1896, and recorded July 13, 1896. The complainant's judgment, which was for $337.13, was recovered in the New Jersey Supreme Court on March 1, 1898. The bill charges that the conveyance was made without any consideration, and for the purpose of hindering, delaying, and defeating the collection of the complainant's judgment. The answer sets up on behalf of the grantees, the four daughters of Mrs. Rogers, that Mrs. Rogers did not owe the debt upon which the complainant's judgment was recovered at the time the conveyance in question was made, and that the conveyance was supported by a good and valuable consideration, viz., moneys loaned to the grantor by the grantees.
1. The first question to be determined is whether this conveyance must be deemed a voluntary conveyance, or made, as the answer alleges, for the purpose of repayingto the four daughters of Mrs. Rogers money which was due to them. Evidence was offered on behalf of the defendants to show that two of the daughters, while minors, made contracts with their mother by which they were to receive a weekly wage for services rendered to their mother while keeping a boarding house in Princeton, N. J. When these alleged contracts were made, in the year 1804, one of the daughters was 17 years of age and the other 19 years of age. They were living with their parents on the property in question at Long Branch. The premises consist of a single lot of land, 50 feet by 150, upon which is erected a rather small frame dwelling house. The value of the whole appears to have been about $2,000 or $2,500, and there was a mortgage upon it of $500, which remained unpaid when the conveyance to the daughters was made in June, 1896. The family consisted of the four daughters and their parents, and it appears that the father was the breadwinner, who practically supported the whole establishment. In order to benefit the health of one of the daughters, the mother, Mrs. Rogers, planned to go inland, and, finding that Princeton agreed with her daughter's health, she established a boarding house for the students in that town. For about three years this boarding house was maintained. The place was practically a restaurant, where 50 or 60 students daily took their meals. It is manifest that the cooking and serving of meals to so large a number of persons would call for quite an amount of furniture, cooking apparatus, dishes, linen, etc. The testimony on behalf of defendant shows that Mrs. Rogers used for the fitting up of her restaurant or boarding house some $1,200 or $1,500, which had been placed in her hands by the grandfather of these young women for their benefit.
There are difficulties about finding, against this creditor of Mrs. Rogers, that there was a valid debt due from her to her daughters, or any of them, in July, 1800, when she made this conveyance—a debt, I mean, which these daughters, or any of them, could have enforced by an action at law or in equity. There may have been talk between the mother and the two daughters in 1894, when the mother embarked in this boarding house enterprise in a distant town, from which these women now derive the impression that the daughters earned wages, which they never charged against their mother, and which, in fact, were never paid. I think it is extremely doubtful that these minor children, the younger of whom was still a minor when the period of service ended, could in 1896 have recovered from their mother judgments or decrees which would allow one of them $5 a week and the other $8 a week for that portion of three years during which the college boarding house was maintained. It is hardly to be supposed that Mrs. Rogers was running this boarding house and boarding her daughters, while their father was clothing them, as they admit, and at the same time Mrs. Rogers was creating a debt to these daughters amounting to about $450 a year. The status of these daughters as minors I do not pause to consider at length. In regard to the alleged money which has been placed in the hands of Mrs. Rogers for her daughters' benefit, I am loath to conclude, especially in view of the apparent frankness with which these women testify, that there is no foundation for this claim. It may be that the grandfather gave sums of money aggregating $1,500 to Mrs. Rogers to be expended for the benefit of these children, or with that intent in view; but it does not follow that such a contribution of money to a parent, made for the purpose of enabling the parent to perform his or her duty to a child or to children in a more efficient manner, creates a trust in favor of such child or children. Without stating the evidence more in detail, I may say that I do not think that this conveyance can be sustained by any proof of a consideration in the shape of a valid indebtedness due from this mother to her daughters; but I think it is highly probable that Mrs. Rogers had received moneys which were intended for the benefit of her children, which she applied to other purposes with their consent, and it is also quite plain from the evidence that Mrs. Rogers had, for two years before this conveyance was made to her four children, received the continuous and faithful service of two of these daughters in the operation of this boarding house at Princeton. Without regard, therefore, to legal obligations on the part of Mrs. Rogers to her daughters, or to some of them, I think the undisputed evidence on behalf of the defendant, even when all the elements of exaggeration and improbability are carefully eliminated, may be deemed to establish the proposition that Mrs. Rogers in June, 1896, felt, and properly felt, that she was under an obligation to her daughters to recompense them for the services which two of them had rendered to her, and for the property in which they had certain moral claims which she (Mrs. Rogers) had applied to her own purposes. It is evident that Mrs. Rogers is not a person who can accurately distinguish between legal and moral claims relating to money, and, indeed, all these women perhaps more or less confuse these claims, which in the minds of lawyers and well-trained business men are kept widely separated from each other.
2. The second question is whether, assuming that this conveyance must be deemed a voluntary one, it is open to attack on behalf of the complainant, as a creditor whose debt was in existence at the time the conveyance was made. I think the proofs establish beyond doubt that no part of the debt included within the judgment for the complainant was owing at the time this deed was made. The judgment of the complainant is basedupon a bill for meat furnished by a firm in Philadelphia, having an agent in Princeton, to the defendant, Mrs. Rogers, while she was conducting her boarding house in Princeton. Mrs. Rogers appears to have dealt with these meat merchants for a very considerable period of time. The custom was to have the bills rendered every five weeks. Payments were made by check. Sometimes these checks paid the whole bill, and sometimes a portion of the bill would remain over and be paid when the next bill was paid. At the conclusion of Mrs. Rogers' boarding house year, in the early summer of 1896, a small balance, which appears to have been less than $40, remained due to these meat merchants. The testimony is uncontradicted to the effect that the boarding house was, as a business, in a prosperous condition. Mrs. Rogers, however, was taken ill at the time the boarding house would naturally have closed in the summer of 1806, or a short time theretofore, and in July, 1896, when the family were all together at Long Branch in their home, she anticipated that she might not recover. A lawyer was called in, and the conveyance was made which is the subject of this controversy. Subsequently Mrs. Rogers appears to have improved in health, and she resumed her boarding house business in Princeton when the college opened in the fall of 1896, and continued that business, as the testimony shows, in a successful manner from a financial point of view until March, 1897. At that time (March, 1897) a case of scarlet fever appeared in her house, and the result was that there was a short quarantine, the premises were taken possession of by the health authorities and were fumigated, large numbers of her boarders deserted her, and her business was ruined. Notwithstanding this unfortunate end, it does not appear that any large amount of indebtedness remained unpaid. I do not recall any distinct evidence which shows that any debt was finally left unpaid, excepting the butcher's bill for which the complainant's judgment was recovered. The evidence, however, establishes that Mrs. Rogers made three payments in the ordinary course of business to this firm of butchers after she opened her boarding house in the fall of 1896, amounting in the aggregate to about $275. These payments appear to have been made generally, and, in accordance with the familiar rule, were applicable to the oldest charges on the account. All of the debt that was due to these butchers at the time this conveyance was made was thus paid, and a substantial additional indebtedness was contracted and also paid. The complainant brings no books and shows no items. For all that appears in this case, no part of the debt included within the complainant's judgment was contracted earlier than January or February, 1897. The complainant gives no data from which a calculation can be made to fix the time when his debt began to be contracted. I cannot accept the view of the counsel for the complainant that this indebtedness must be deemed to reach back to a time prior to the making of the conveyance in dispute, because certain other debts of Mrs. Rogers to this firm of butchers were contracted during that earlier period and were subsequently paid. The business may have been continuous, but the rule which makes a voluntary conveyance constructively fraudulent as to an existing indebtedness cannot be stretched so as to make it apply to debts which are the successors of earlier debts incurred in the same course of business.
3. The last question is, was this conveyance infected with actual fraud on the part of Mrs. Rogers, of which the complainants can take advantage? After a careful consideration of the whole testimony, I think this question must be answered in favor of the defendants. On the charge of actual fraud— of the existence of an actual intent to delay, hinder, or defraud future creditors—the burden is upon the complainant who charges fraud to prove the existence of the fraud which he charges as a fact. Cort v. Skillin, 29 N. J. Eq. 70; Hagerman v. Buchanan, 45 N. J. Eq. 292, 17 Atl. 946, 14 Am. St. Rep. 732; Gardner v. Kleinke, 46 N. J. Eq. 90, 18 Atl. 457; Zinn v. Brinkerhoff, 48 N. J. Eq. 513, 22 Atl. 353; Bouquet v. Heyman, 50 N. J. Eq. 114, 24 Atl. 266; Kinsey v. Feller, 04 N. J. Eq. 307, 51 Atl. 485; Carpenter v. Carpenter's Ex'rs, 27 N. J. Eq. 502. In the case last cited Mr. Justice Dixon, in delivering the opinion of the Court of Errors and Appeals, states that it was sufficient to find that all the circumstances which attended the transaction under review, when considered, left the mind of the court "unsatisfied of fraud." Although there may be room to question the exact motive of Mrs. Rogers in making this conveyance at the time she made it, my mind remains quite "unsatisfied of fraud," after carefully considering all the circumstances which attended the transaction. The bill alleges that Mrs. Rogers represented herself to the firm of butchers as the owner of the premises in question at the time she contracted the debt for which the judgment was subsequently recovered by the complainant. The answer denies this allegation, and there is not a particle of evidence produced to support it. The deed in question was on record evidently for months prior to the contraction of any part of this debt. There is no evidence that the creditors ever heard in any way that Mrs. Rogers, who was keeping a boarding house in Princeton, owned a house and lot in Long Branch. In view of the entire absence of proof on the subject offered on behalf of the complainants, the inference should be drawn that Mrs. Rogers obtained the very short credit which she enjoyed with these Philadelphia butchers merely upon the indications which she presented that she was conducting a fairly successful student's boarding house in Princeton, andas such would be obliged to pay her bills, should she expect to continue in business. The conveyance transferred property which was worth perhaps something over $1,500, but this was not all the property which Mrs. Rogers owned. She and her daughters testified that she expended about the same amount of money in equipping her boarding house in Princeton. There is nothing to show that the plant for keeping a boarding house or restaurant for giving meals daily to nearly 60 persons, which Mrs. Rogers had at Princeton in July, 1896, was not abundantly sufficient to pay every dollar that she Hired.
In regard to the claim that Mrs. Rogers anticipated contracting debts, and must be charged with having made this conveyance in question in order to put her Long Branch home beyond the reach of future creditors, It must be borne in mind that the boarding house business in July, 1806, had an altogether prosperous outlook. At that time, however, Mrs. Rogers was seriously ill. She might not be able to resume this boarding house business. If the business was to be closed up in the event of her death, then, as I have stated, it does not appear that there would not have been an abundance of property at Princeton to pay whatever indebtedness was then due, if, indeed, it is to be assumed that there was anything due to any persons, excepting a small sum, less than $40, due to the Philadelphia butchers. There are many circumstances which indicate that when Mrs. Rogers made this conveyance, in July, 1890, she may have foreseen that her act might in the future have the effect to subject the Long Branch property, or at least a part of it, to debts like those of these butchers created in the future prosecution of the Princeton business. As the business was fairly prosperous, and the elder daughter apparently had learned to manage it, and this same daughter's health prevented her from living comfortably in Long Branch, and made it highly advantageous to her to reside in Princeton, the natural expectation in July might well have been that this elder daughter alone, or in association with her sister, or her father, would take up and continue the Princeton business when the time came to open the restaurant in the following fall. But the important point is that, when Mrs. Rogers made this conveyance in July, it is very improbable that she was actuated by a desire to place the property where it could not be reached in satisfaction of debts which she (Mrs. Rogers) contemplated contracting, either in this Princeton business or in any other way. The house and lot had come to Mrs. Rogers by gift from her husband at a time when he was seriously ill, about 10 years before this conveyance to the daughters was made. Mrs. Rogers, therefore, might well regard this little home very differently from the way in which she would have regarded it, if she had earned in her business the money which had procured it, or it had come to her in some other way. The home had been for 10 years vested in her, and had been thus preserved from the effect of anything which her husband might do or neglect to do. Her husband's creditors, if he had any, could not dispossess her. It was not unreasonable, therefore, that Mrs. Rogers, when contemplating her early death as a highly probable event, would seek to vest the title of this home in her children. If Mrs. Rogers had conveyed her Long Branch home to her children in 1894, when she first embarked in this restaurant business in Princeton, the case would have been very different, indeed, from the one which is actually presented, and the inference might have been drawn that such conveyance was made in order to protect the property from the chances of the business venture which Mrs. Rogers was about to make. But Mrs. Rogers kept her Long Branch property during the two years in which the Princeton experiment was being tried, and, according to the testimony, until the reasonable success of that experiment had been demonstrated. The conveyance is made when Mrs. Rogers is in a condition of health which causes her to deem it probable that she may not live to resume her Princeton business. There is very little force in the argument that Mrs. Rogers, in July, 1896, made this conveyance to her daughters in order to put the property where her future creditors could not reach it, when the evidence all seems to indicate that Mrs. Rogers was then not contemplating the continuation of her business or the creation of future obligations.
The complainant, in my opinion, has failed to show affirmatively, as be was bound to do, that the conveyance which he attacks is tainted with actual fraud.