Opinion
12-06-1929
WILLIAMSON v. BENDER et al.
Samuel Daniels, of Newark, and Albert C. Jordan, of Yonkers, N. Y., for complainant. Corn & Silverman, of Newark (C. Wallace Vail, of Newark, of counsel), for defendants.
(Syllabus by the Court.)
Suit by Jacob Williamson against Davis Bender and others. Decree for complainant.
Samuel Daniels, of Newark, and Albert C. Jordan, of Yonkers, N. Y., for complainant.
Corn & Silverman, of Newark (C. Wallace Vail, of Newark, of counsel), for defendants.
CHURCH, Vice Chancellor. This is a suit to set aside the following conveyances as fraudulent:
A. Deed to Harry Bender dated April 22, 1926, to 92 Goldsmith avenue, Newark, N. J., recorded in Book G 74—269.
Deed of Harry Bender on same property to Profit Realty Company on April 11, 1927, recorded in Book G 76—164.
To set aside a mortgage of $15,000 by Profit Realty Company to Harry Bender, which is a purchase-money mortgage on same property, and have this mortgage decreed to be the property of Davis Bender and subject to the complainant's judgment. This mortgage is recorded in Book R 60—210.
B. Deed to Harry Bender dated April 22, 1926, recorded in Book G 74—269, covering:
(1) Plot on easterly side of South Broad street, Newark.
(2) Two plots on King street, Newark.
(3) Plot on South Broad street, adjoining 1.
(4) Plot on Essex turnpike.
All of these properties were conveyed by Harry Bender to Bender Construction Company by deed dated April 6, 1927, and recorded May 17, 1927, in Book I 76—161.
C. Mortgage of $4,000 of defendant G. L. & S. Holding Company to Davis Bender, dated January 25, 1926, recorded in Book P 56—100 in Essex county, which was assigned by Davis Bender to Harry Bender on April 22, 1926, by assignment, recorded in Book 179—290. By stipulation the sum of $2,035 is held by defendants' attorneys, representing the balance due on this mortgage, and which shall be subject to the disposition of this court.
The defendants Harry Bender and Hortense Bender are children of Davis Bender, and Mollie Bender is Davis Bender's wife.
The complainant, Jacob Williamson, recovered a judgment against Davis Bender on February 3, 1928, for $11,661.52.
The Profit Realty Company is a New Jersey corporation organized by Louis J. Feit, attorney, on March 26, 1927, and its incorporators were Abraham Kaplan, one share, Samuel Kaplan, eight shares, and Celia Kaplan, his wife, one share. The Kaplans are friends of Davis Bender and Feit was Bender's personalattorney. None of its stock was ever transferred.
The company was controlled by Samuel Kaplan; it never had a meeting of stockholders or directors, never paid a dividend nor filed a statement of earnings, and never had any business except as a title receptacle of 92 Goldsmith avenue, Newark. It had a bank account, where only money received as rents from 92 Goldsmith avenue were deposited and checks signed by Samuel Kaplan were paid in various and irregular amounts to Harry Bender and Bender Construction Company.
Bender Construction Company was likewise a domestic corporation in which the incorporators were Harry Bender, twenty-eight shares, Mollie Bender, one share, Hortense Bender, one share. Its principal place of business was 92 Goldsmith avenue. Harry Bender was in control, no meetings of stockholders or directors were ever held, no dividends were paid, no stock transferred. Its sole purpose was to take title to certain of Davis Bender's property through Harry Bender,
Sivad Realty Company is not a defendant, but is mentioned prominently through the testimony; this was composed of Harry Bender, Samuel Kaplan (of Profit Realty Company), and Harry Hoffman, a quondam partner of Harry Bender and an intimate friend of the Bender group. Harry Bender controlled this corporation, which spells the name "Davis" backward. This company, with a nominal bank account of $137 in 1926, suddenly became enriched with checks of $3,000, $10,000, etc., loans from Harry Bender, who borrowed the money from his mother, Mollie Bender. Almost from its organization, the company was in the hands of Louis Felt.
In April, 1925, Davis Bender sold property on Vanderpoel street, Newark, to the Fidelity Title Company. Although the contract of sale was signed by Davis Bender and Harry Bender, the deposit of $5,000 was deposited in Davis Bender's account. Title was closed on June 17, 1925, and a check for $31,323.50 was deposited in Davis Bender's account, which amounted to $44,426.53 on that day. The check was made out to Davis Bender, Harry Bender and Mollie Bender, but the actual money came to Davis Bender.
On June 16, 1925, Davis Bender executed the note to Williamson. On April 22, 1926, Davis Bender by a bargain and sale deed, conveyed to Harry Bender everything he owned in the way of real estate. No consideration was given by Harry for this deed or the assignment of the $4,000 mortgage which was simultaneously executed.
On June 11, 1926, Davis Bender and his wife executed a chattel mortgage covering his entire household furniture at 92 Goldsmith avenue and his automobile. This was done to secure a loan of $2,000 to the Sivad Realty Company, which was entirely controlled by Harry Bender. Harry says he gave the Sivad money to his father. Davis says he does not know who gave it to him. The furniture remained in Davis Bender's home, and still is used by him. At the time he executed this mortgage, Davis Bender had on deposit $27,447.99.
On March 2, 1926, Davis Bender contracted to sell his garage property, which he owned, for over $75,000. He was under this contract when he transferred to Harry all his real estate.
On June 16, 1926, the Williamson note became due, and was protested. From that time on Davis Bender's bank account shrank to nearly nothing. The bank statement shows checks drawn as follows:
| May 24, 1926 | $40,000 00 |
| June 4, 1926 | 3,500 00 |
| June 9, 1926 | 1,000 00 |
| June 12, 1926 | 6,000 00 |
| June 14, 1926 | 12,000 00 |
| June 17, 1926 | 3,000 00 |
| June 26, 1926 | 3,590 00 |
None of these checks was produced. Davis Bender says they were lost. At the same time the Sivad Realty Company's bank account increased very largely, as did that of Harry Bender.
This is a very brief statement of the voluminous testimony taken in this case, but it clearly appears from this and the other testimony which I have read that these conveyances were made for the express purpose of defrauding creditors, particularly the $10,000 note. A grant by a parent to a child, based on services rendered, has been held invalid as to creditors. See Dodson v. Severs, 54 N. J. Eq. 305, 38 A. 28. Moreover, a voluntary conveyance by one indebted raises an irrebuttable presumption of fraud. Horton v. Bamford, 79 N. J. Eq. 356, 81 A. 761. I do not think it necessary to go further into a discussion of the numerous cases that sustain the above statement of law.
I think, under the evidence, as a matter of fact, that these conveyances were made to avoid the payment of this judgment, and I will advise a decree that they be set aside.