Duttkin v. Zalenski

54 A.2d 227, 140 N.J. Eq. 200
CourtNew Jersey Court of Chancery
DecidedJuly 5, 1947
DocketDocket 148/174
StatusPublished
Cited by2 cases

This text of 54 A.2d 227 (Duttkin v. Zalenski) is published on Counsel Stack Legal Research, covering New Jersey Court of Chancery primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Duttkin v. Zalenski, 54 A.2d 227, 140 N.J. Eq. 200 (N.J. Ct. App. 1947).

Opinion

Counsel advocating the present application represents it to be "one of novel impression both in the State of New Jersey and in the country at large." Its oddity seems to be more conspicuous than its perplexity. *Page 201

A summarized statement of the antecedent circumstances is indispensable. The complainant in the status of a judgment creditor instituted this cause to nullify a deed of conveyance dated October 16th, 1939, alleged to have been fraudulently made by the judgment debtor, Stanley Luzinski, to one Carrie Zeltorowicz. Other relief irrelevant to the present application was also sought. During the pendency of the suit Luzinski died, and his executrix, Michalina Zalenski, became a substituted party defendant. In her representative capacity as executrix of the decedent's estate she filed a counter-claim against the co-defendant Zeltorowicz in which she also assailed the conveyance as having been made in fraud of the decedent's creditors.

It was in that exigency that the right of the executrix of an alleged fraudulent grantor, in the absence of statutory authority, to impeach such a transfer was impugned by a motion to strike the counterclaim. 136 N.J. Eq. 81; 40 Atl. Rep. 2d357.

After alluding to the conflicting state of the authorities in other jurisdictions, I stated (on p. 84): "I have resolved to adopt the minority view. First, I am unable to concur in the premise that executors and administrators in the discharge of their duties are never representatives of the creditors of their decedent. The insolvency of the estate frequently casts upon the executor or administrator duties, the performance of which is designed and accomplished in large measure and often entirely for the benefit of the creditors, notably the sale of the decedent's real estate to pay debts. R.S. 3:25-62; N.J.S.A. 3:25-62. Secondly, I cannot entertain the persuasion that the maxim of unclean hands has any application to one who seeks only to enforce the rights of innocent creditors who have been wrongfully prejudiced by the deception of the deceased transferor, whose debts should be discharged, if possible, in the administration of his estate. Thirdly, I am devoted to the conviction that this court should within the boundaries of its jurisdiction make itself as useful and serviceable to the expeditious solution of litigious controversies as the processes of its functions will permit. The singleness of the administration of an estate in such particulars *Page 202 is assuredly preferable to a multiplicity of suits by individual creditors. Cooley v. Brown, 30 Iowa 470, 473. Fourthly, although the factual circumstances did not invoke such a ruling, the dictum noticeable in the opinion of Vice-Chancellor Grey inSchwalber v. Ehman (1901), 62 N.J. Eq. 314;49 Atl. Rep. 1085, has undoubtedly generated the assumption by the members of our bar that this court, if required to definitely decide the point, would conclude that where the estate is insolvent an administrator asserting the rights of the decedent's creditors may, to the extent necessary to pay them, recover assets fraudulently transferred by the deceased in his lifetime. See, also, Higgins v. Gillesheiner, 26 N.J. Eq. 308; Lembeck BetzEagle Brewing Co. v. Kelly, 63 N.J. Eq. 401; 51 Atl. Rep. 794;Bose v. Meury, 112 N.J. Eq. 62; 163 Atl. Rep. 276;Central-Penn., c., Bank v. New Jersey Fidelity, c., Co.,119 N.J. Eq. 265; 182 Atl. Rep. 262; Borg v. McCroskery, 120 N.J. Eq. 80; 184 Atl. Rep. 187; Federal Reserve Bank of Philadelphia v. Welch, 122 N.J. Eq. 90; 192 Atl. Rep. 431. There is no cogent reason to overthrow that accepted impression of our law." The motion to strike the counter-claim was accordingly denied.

It was also during the pendency of the complainant's cause that an immediate conversion of the real estate into cash was regarded by all parties to be prudent and advantageous. The property was sold and the proceeds entrusted pendente lite to this court.

On the date designated for the final hearing of the cause a cessation of hostilities between the complainant and the defendants occurred by virtue of a conciliatory agreement pursuant to which the complainant accepted from the fund in court the sum of $3,150 "in full and complete satisfaction" of his judgment at law and of his interest in the present cause. The bill has been dismissed "without prejudice" to the prosecution of the counter-claim. The destiny of the balance of the fund remains in controversial doubt.

Conflict has now originated on another field. It was known on the occasion of the compromise of the complainant's claim that one Stanislaw Wojnarowski held a bond and mortgage *Page 203 deficiency claim against the alleged fraudulent grantor which, however, had not been prosecuted toward judgment within the time limited by our applicable statute. R.S. 2:65-7.1; N.J.S.A.2:65-7.1. That creditor nevertheless filed his claim with the executrix who upon the submission of her account for approval appears to have allowed it. The defendants to the counter-claim, Carrie Zeltorowicz, the alleged fraudulent grantee in this cause, and her husband, have presented to the Middlesex County Orphans Court an exception to the failure of the executrix to invoke the statute of limitations and to her affirmative allowance of the claim.

Thus, the eventualities have supplied a fund on deposit in this court from the sale of the property of an alleged fraudulent grantor which the alleged fraudulent grantee, the executrix of the grantor, and a creditor of the alleged fraudulent grantor whose claim can be barred from recovery by the averment of the statute of limitations, each seeks to capture in whole or in part.

I accede to the assertion that it is not to be conclusively understood that in the negotiations resulting in the settlement of the complainant's cause of action, the alleged fraudulent grantee acknowledged that the conveyance to her was in fact made without consideration and in an effort deceitfully to frustrate the recovery of the claims of the creditors of the grantor. Yet, it is evident that guided by the advice of competent counsel, the grantee preferred to pacify the complainant rather than to exchange blows with him.

Counsel for the alleged fraudulent grantee returns to this court for an order, the tendency of which can be revealed most accurately by a quotation, verbatim et literatim, from the notice of his motion:

"1. Determining whether statements made in open court March 26th, 1945, by counsel respectively for the parties hereto which were not followed by a draft filed in the cause, constitute any binding agreement or stipulation among the parties hereto.

"2. Fixing and determining the draft of stipulation, based upon said statements, to be filed herein. *Page 204

"3.

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Bluebook (online)
54 A.2d 227, 140 N.J. Eq. 200, Counsel Stack Legal Research, https://law.counselstack.com/opinion/duttkin-v-zalenski-njch-1947.