Lansing v. Woodworth & Gould

The Assistant Vice-Chancellor.

The complainant, who has become vested with Woodworth’s title as receiver under a creditpr’s bill, claims that both the assignment and judgment are fraudulent as against creditors.

The assignment is plainly invalid on account of the trusts for the benefit of future indorsers, and of the payment of the residuum to the assignor instead of his general creditors.

The complainant insists that the judgment is also fraudulent, for the reasons: 1. That it contains the same illegal trust for future indorsers. 2. That the judgment and assignment in fact constitute but one transaction, being made with the same intent, for the same objects and purposes, and in aid of each other,

*45 As to the second objection, there is one essential ingredient wanting ; they were not made at the same time. On the contrary, the judgment was perfect, before the assignment was thought of, and nearly six months before it was executed. They do not therefore constitute one transaction, and the judgment is not impaired by the abortive attempt to aid it by the assignment. It is not like the case of Mackie v. Cairns, (5 Cowen, 547.) There the judgment was given to bolster up a fraudulent assignment, after the execution of .the latter, and after its validity had become suspected.

Then as to the first objection. The confession of judgments to secure indorsements and future advances, is not uncommon, and so far as I know, is of unquestioned propriety. This court has sustained mortgages given for the same purpose, holding as to mortgages, as it probably would in respect of judgments, that advances made, or liabilities incurred, after the attaching of a subsequent lien, would be subject to the priority of the latter. Courts of law assume an equitable jurisdiction over this class of securities, and abuses are corrected and frauds remedied on summary application. (See Brinckerhoff v. Marvin, 5 J. C. R., 320; Roosevelt v. Mark, 6 ibid. 266; Norton v. Whiting, 1 Paige, 578 ; Monell v. Smith, 5 Cowen, 441.)

The provisions of the Revised Statutes as to trusts, are not applicable. The judgment is not an “ estate or interest in lands.” It is a chattel, a mere security for a debt.

In this case, it seems there was no room for the operation of the provision for future indorsements, as the existing debts and indorsements preferred, exceeded the $30,000 secured by the judgment.

This is not a case for a merger. Even if the judgment were an estate in the land and became united with the legal estate by the deed to Gould; still the express intention of the parties was to keep the judgment on foot, so that there should be no merger.

There must be a decree avoiding the assignment and declaring the judgment valid, without costs to either party. The complainant, as receiver of Woodworth’s effects in the creditor’s suit, is entitled to the possession of the real estate assigned and of all demises made by the assignee, and to the income derived from *46 it by him. There may be a reference to ascertain the latter, and on taking the account, the assignee is to be allowed for his disbursements under the assignment, and for payments made in pursuance of it, before the commencement of the suit.