Spicer v. Hunter

Fraudulent Conveyance.—Proper Parties. Where the purchaser of land at a foreclosure-sale, on receiving arrears of interest, with costs, and expenses of foreclosure, allowed the defendant to continue in . possession, under a parol agreement that the defendant should occupy the land so long as he paid taxes, assessments, and interest on the mortgage debt; —Held, that the purchaser had at least a valid lien upon the land, which would pass by grant, and which could not be impeached by a subsequent creditor of the defendant in the foreclosure. In an action by a creditor to avoid a conveyance, one who innocently accepted a deed of the property for the benefit of the alleged fraudulent grantee, and who has conveyed in accordance with the trust, is not a proper party.*

Demurrer to the complaint by the defendant, Jacob Hunter. The complaint alleged, that December 4,1843, the plaintiff recovered a judgment in the Supreme Court against John Sniffen, deceased, for $7,301.25; upon which, there was owing to' plaintiff $1,017.27, with interest; and that he filed a transcript thereof in Kings county. That August 20, 1845, execution was issued thereon to the sheriff of the city and county of New York and returned unsatisfied, except as to $148.67, which sum was collected. That John Sniffen died January 13,1853, and letters of administration were granted to his widow on January 17,1853, by the surrogate of Kings county. That on and prior to April, 1836, Sniffen was owner in fee of certain tracts of land in Front-street, Brooklyn, which were incumbered, in portions, by four mortgages, to secure in all the sum of $4,970. That in April, 1836, Richard Hunter (who had become the owner of two of the mortgages, to the amount of $3,270), on the application of Sniffen, agreed to foreclose them, and upon a sale to purchase and hold the premises, and permit Sniffen to retain possession and receive the rents, upon condition that thereafter Sniffen would pay the interest on the amount secured by the mortgages, and all taxes and assessments, and keep the premises free from all incumbrances. That thereupon, on February 2, 1837, under foreclosure proceedings instituted by Richard Hunter, the premises were sold at public auction to him, he being the highest bidder; and Frederick De Peyster, the master in chancery, appointed in the proceedings, gave a deed of the premises to the defendant Jacob Hunter, for the benefit of Richard Hunter. That Sniffen during his life continued in possession of the premises, claiming to be the owner, and received the rents and profits of the lands, with the knowledge and consent of Richard Hunter, and paid the costs of foreclosure and the interest on the mortgages to February 14, 1849, and from that period the sum of $400, on account, of further interest on the mortgages to the time of his death. He also paid interest on plaintiff’s judgment to Hovember 1, 1852, and the taxes and assessments until 1846, but he afterwards, contrary to his agreement, suffered the premises to be sold for taxes and assessments to the .aggregate amount of $228.66; and upon the sales, Charles W. Lynde became the purchaser and received four certificates, for the aggregate term of 1,927 years, which certificates Lynde, in July, 1853, assigned to Addison Yail, who received the leases, and in September, 1856, assigned them to John Sniffen, Jr., his brother-in-law. That on July 31,1855, the accounts of the administratrix of John Sniffen’s estate were finally settled; and on the accounting, among other things, she was credited with $189, paid to plaintiff for interest on her judgment since Sniffen’s death to August 1, 1853, and she was ordered to pay $276.21 to plaintiff, being the balance then in her hands. That previous to this accounting, Richard Hunter, on application of the administratrix, furnished to her a written statement of Sniffen’s indebtedness, in which he claimed Sniffen’s estate was indebted to him in the sum of $4,013.92, for principal and interest on the mortgages to February 14, 1853, less $400, received for interest, on account; and the statement was served on Richard Hunter, and adopted on the final accounting. That on June 16,1854, the defendant Jacob Hunter conveyed the premises to Richard Hunter; and the master’s deed to Jacob, and his deed to Richard, were then both simultaneously recorded. That in October, 1856, Richard Hunter commenced an action against Addison Yail and the widow and heirs of John Sniffen, to set aside the decree of foreclosure and sale to Jacob Hunter for Richard Hunter, and to declare the master’s deed to Jacob Hunter, and his deed to Richard Hunter, liens by way of mortgage for the amount due on the mortgages assigned to Richard Hunter, and for a sale of -the premises to satisfy his debt, or to obtain possession of the premises under the conveyance to him, and the payment to him of the rents, in the mean time, from the parties having the possession, and to set aside the certificates of sales to Lynde, as irregular and void. That in March, 1857, the allegations in the complaint being denied, a judgment by consent of parties was entered, directing the defendants to execute and deliver to Richard Hunter a release of the premises from all claim they might have, and directing John Sniffen, Jr., to assign the corporation leases to Richard Hunter, and that he be let into the possession of the premises. That in September, 1856, the widow of John Sniffen died intestate, and no one had since administered on his estate. That Bichard Hunter died January 8,1859, having by will bequeathed the income of the premises to his wife, and all his real and personal estate to George H. and J. B. Hunter, his sons, subject to her life-estate. The plaintiff thereupon alleged that the agreement between Bichard Hunter and John Sniffen, whereby Hunter was to foreclose the mortgages for Sniffen’s benefit, and the master’s deed to defendant Jacob Hunter, and Jacob’s deed to Bichard Hunter, were fraudulent and void as against, and made with intent to hinder and delay, Sniffen’s creditors, and prayed that the decree of foreclosure, and the master’s deed to Jacob Hunter, and his deed to Bichard Hunter, and all proceedings in the suit be set aside as fraudulent, and the premises be declared subject to the plaintiff’s judgment against Sniffen, and be sold, and out of the proceeds of sale the plaintiff be paid her judgment, with interest and costs. The grounds of demurrer assigned by Jacob Hunter were as follows:—First. That the said complaint does not state facts sufficient to constitute a cause of action. Second. That the complaint does not state facts sufficient to constitute a cause of action against the defendant Jacob Hunter. in support of the demurrer (after discussing other points).—I. The transaction was not fraudulent or void as respects the plaintiff. 1. Hnless the transaction was fraudulent se, it is not void against the plaintiff as a subsequent creditor. (Reade a. Livingston, 3 Johns. Ch., 481; Every a. Edgerton, 7 Wend., 259; Jackson a. Brownell, 3 Cai., 222.) 2. Sniffen had no creditors in 1837, and was not insolvent. Therefore, the title of Hunter was not void as against the plaintiff. (Tripp a. Vincent, 3 Barb. Ch., 613.) H. The transaction was not fraudulent as respects existing or subsequent creditors. 1. The arrangement to allow Sniffen to occupy the premises, and pay, as an equivalent for rent, the interest, &e., were, as respects duration, a mere charity, which Sniffen could not enforce, and which Hunter might at any time terminate. Sniffen was a mere tenant at will, or from year to year, as respects third persons. (Hunt a. Comstock, 15 Wend., 665.) 2. The agreement being by parol, was not binding' upon Hunter, and also was overridden by the master’s deed. (Hall a. Shultz, 4 Johns., 240; Sherrill a. Crosby, 14 Ib., 358; Bander a. Snyder, 5 Barb., 63, 71.) There was no agreement to convey to Sniffen, giving him a possible title to retain possession. 3. The agreement between the parties could not prevail (against the terms of the master’s deed) to make Hunter a mortgagee as respects third parties. (Lathrop a. Hoyt, 7 Barb., 59; Ryan a. Dox, 25 Ib., 440.) III. Sniffen having violated the agreement by non-payment, &c., Hunter had a right to revoke it, and insist upon the legal title, as he did. Sniffen and his estate were benefited by his non-payment of any equivalent for the rent of the premises for several years. The creditors of Sniffen cannot complain of this. IV. Jacob Hunter is not a proper party to this action. (Story’s Eq. PI., §§ 549, 569.) By the plaintiff’s own showing, he has no right, title, or interest in the estate in any manner whatever. (Muir a. Leake & Watts Orphan House, 3 Barb. Ch., 477; Jessup a. Hulse, 29 Barb., 539.) Y. The plaintiff could not have any relief in this action. A creditor’s bill cannot be sustained to reach the equitable interest of a judgment-debtor in lands, where the debtor is deceased. The creditor must apply to the surrogate to compel the administratrix to sell. (Wilber a. Collier, 3 Barb. Ch, 427.) I. The agreement made between Eichard Hunter and Sniffen, and all the proceedings in the foreclosure-suit, including the master’s deed to Jacob Hunter, and the deed from him to Eichard Hunter, were and are fraudulent and void as to the creditors of Sniffen. II. The receipt of the costs in the foreclosure-suit by Eichard Hunter, and the interest due on the mortgages sought to be foreclosed in that suit, and the subsequent acts of Eichard, in receiving interest on those mortgages, were a waiver of the decree of foreclosure, and estop Eichard, or his heirs or devisees, from claiming title through the foreclosure and under the deed from Jacob. HI. The defendant Jacob was a party to the fraud against the creditors of Sniffen, by taking the deed from the master, and, after Sniffen’s death, conveying the premises to Eichard.