Smith v. . Reid

31 N.E. 1082, 134 N.Y. 568, 48 N.Y. St. Rep. 156, 89 Sickels 568, 1892 N.Y. LEXIS 1556

Opinions

Brown, J.

The purpose of this action was to have certain deeds, under which the defendant claimed to be the owner of an undivided interest in the lands described in the complaint, declared to be a cloud upon the plaintiff’s title and to have the same adjudged void and illegal.

There is no dispute as to the facts of the case and, excepting the possession by plaintiff of the property in question, they appear by admission in the pleadings or from records introduced in evidence upon the trial by the plaintiff.

The defendant makes his title through a deed from Carrie Lowitz, one of the devisees of the land under the last will and testament of her mother, Caroline Taylor.

Mrs. Taylor’s title was derived from her husband, William H. Taylor, who is admitted to have been the owner of the property on November 20, 1874. On that day he conveyed it to one Chauncey M. Felt, who immediately conveyed to Mrs. Taylor.

The plaintiff derived his title through a sheriff’s deed, executed pursuant to a sale under an execution issued upon a judgment recovered against William H. Taylor, by the Nassau Bank of New York city, on April 9, 1875, and docketed in Kings county on the following day.

The plaintiff’s contention is and such was the allegation of the complaint that said deeds from Taylor to Felt and from Felt to Mrs. Taylor were without consideration and were made with intent to hinder, delay and defraud said bank, and were fraudulent and void.

The sale by the sheriff was on December 20,- 1880, and the execution under which it was made was issued October 9, 1880, pursuant to an order of the Supreme Court and a decree of the Surrogate’s Court of Kings county, Mr. and Mrs. Taylor prior to that date having both died.

This action was commenced in January, 1890. The answer put in issue the plaintiff’s title, alleged the validity of defendant’s title, and pleaded the Statute of Limitations. From this statement it is apparent that the defendant showed a clear paper title to the share in the land claimed by him, and it was incumbent upon the plaintiff and essential to his recovery to establish his allegation that the deeds which conveyed Taylor’s title to his wife were fraudulent and void as against the Nassau Bank, through whose judgment he claimed. To establish the fraudulent character of ■ that conveyance, plaintiff put in evidence a judgment-roll in an action originally commenced by said bank against Mr. and Mrs. Taylor and Chauncey Felt to have said deeds set aside.

That action was commenced in October, 1875, but before .it was brought to trial Mr. and Mrs. Taylor died, and in February, 1878, it was revived against the three children of Mrs. Taylor, who were devisees under their mother’s will. ' At that time, as it appears from the moving papers, Oarrie Taylor, the defendant’s grantor, who was the eldest child, was about seventeen years of age, and all of the children resided in the city of Brooklyn.

A judgment was 'subsequently entered in that action adjudging said deeds to be void on the ground that they had been executed with intent to defraud the creditors of said William H. Taylor, and that the land therein described was bound by the lien of the judgment recovered against said Taylor by the Nassau Bank, and granting leave to said bank to proceed upon execution theretofore or thereafter to be issued upon the judgment, and sell said land in satisfaction thereof.

This judgment was conclusive upon the defendant as to the fraudulent character of the conveyance from Taylor to his wife, providing the court rendering it acquired jurisdiction of the person of the infant defendants therein, and whether or not it did acquire such jurisdiction was the crucial question presented upon the trial upon this branch of the case.

The trial court found that the infant defendants were not served with the summons, but that a guardian ad litem was appointed and answered for them without service of the summons, and that the judgment rendered therein as against said infants was void.

The judgment contained a recital that said infants had been served with the supplementary summons in the action on March 11, 1878, and such recital was prima faeie evidence of the truth of that fact. But it was not conclusive, and the defendant was at liberty to show that service of the summons was not in fact made. (Potter v. Merch. Bank, 28 N. Y. 641; Bosworth v. Vandewalker, 53 id. 597; Ferguson v. Crawford, 70 id. 253.)

Mo oral evidence was offered upon the question, but the. appellant claims that the finding of the trial court is sustained by the inferences necessarily drawn from the papers comprising the judgment-roll, and with this conclusion we agree.

The order making said infants parties to the action was granted February 23,1878. It provided that they be brought in and made party defendants, “ and appointed Alexander Cameron, Esq., a guardian ad litem for them, unless they should procure the appointment of a guardian within ten days after the service on them of copies of the order.

The order appears to have been served on February twenty-seventh and no guardian was thereafter appointed on the application of the infants. A supplementary summons dated March eleventh was issued pursuant to section 453, Code C. P., and upon that day was served upon Mr. Cameron, who thereafter answered in behalf of the infants.

This evidence permits the inference that the only service was on the guardian. JSTo reason is apparent why the summons should have been served upon him if prior or subsequent to March eleventh it was served upon the infants. It is also apparent that the guardian acted under the appointment contained in the order of February twenty-third. This negatives the idea of service on the infants after that date, and as the summons was not issued until March eleventh no service could have been made before it. Jurisdiction over the infant defendants, therefore, if acquired at all, must rest upon the validity of the order of February twenty-third. Section 473 of the Code of Civil Procedure, to which we are cited by the respondent, provides in substance that when an infant defendant resides in this state and is temporarily absent therefrom, the court may in its discretion make an order designating a person to be his guardian ad litem, unless he or some one in his behalf procures such a guardian to be appointed within a specified time after service of a copy of the order, and that in such case the summons may be served by delivering a copy to the guardian so appointed, with like effect as when a summons is served without the state upon an adult defendant pursuant to an order for that purpose.

It is claimed that the order of February twenty-third and the service upon the guardian was a valid service of the summons under this section. Service of process upon the infants was not essential to confer jurisdiction, and if the order was properly granted and served under the section quoted service upon the guardian was equivalent to personal service upon the infant. (Schell v. Cohen, 55 Hun, 207.)

Notice in some form to an infant is essential to confer jurisdiction upon a court to hind his property. But the legislature inay prescribe that it he constructive instead of actual, and proceedings in conformity with such a statute will he valid and hind the infant. (Ingersoll v. Mangam, 84 N. Y. 622; Crogham, v. Livingston, 17 id. 218; Gotendorf v. Goldschmidt, 83 id. 110.)

Section 473 covers a case in which personal service cannot be made and which is not within the provisions of the Code relating to service by publication.

But the difficulty of upholding the jurisdiction of the court to render the judgment against the infants under the order of February twenty-third, and the- service on the guardian is that the moving papers upon which the order was made do not make a case within section 473. That section permits service of the summons to he made upon the guardian ad litem with like effect as if made on the infant, hut unless the court had jurisdiction to appoint the guardian the service was wholly ineffectual. To authorize the appointment of a guardian ad litem for an infant defendant the moving papers should set forth the facts conferring authority upon the court to make the order. (Grant v. Van Schoonhoven, 9 Paige Ch. 255.)

The petition of the Nassau Bank, upon which the order of February 23, 1878, was made, contains no statement that any of the infant defendants were temporarily absent from the state. It states the age of all of them and that they were “ residing at 184 Clinton avenue, in the city of Brooklyn.”

The petition was dated February thirteenth. Copies of the order granted therein were served personally on all the infants at 184 Clinton avenue, on February twenty-seventh, four days after it was granted.

There could be no presumption of absence between those dates and existing on February twenty-third. Moreover, neither the petition nor the order to show cause upon which the motion was made asked for the appointment of a guardian ad litem for Carrie Taylor, or that she be made a defendant in the action.

The theory of the plaintiff, as appears from the petition referred to, was that Carrie Taylor was not a necessary party to the action. The petition alleges that James Cleland was her general guardian, but that there was no general guardian for the other two infants. It then prays that Cleland, as the general guardian, be made a defendant, and that a guardian ad litem be appointed for Demetrius Taylor and Henrietta Taylor, the other children of Caroline Taylor, deceased. And there is proof of service of the petition on Cleland as general guardian, and on the infants Demetrius and Henrietta, but none on Carrie Taylor.

The order granted was broader than the prayer of the petition and made Carrie Taylor a defendant in the action; and while it was undoubtedly within the power of the court to make her a party upon an expa/rte application, there was no jurisdiction to appoint for her a guardian ad litem and provide for a substituted service of the supplemental summons upon him in the absence of proof of the essential fact that she was temporarily absent from the state.

The recital contained in the judgment to the effect that Carrie Taylor had been served with the supplemental summons on March 11, 1878, in view of the facts appearing from the papers in the judgment-roll, from which I have quoted, is not sufficient to sustain in the jurisdiction of the court to render the judgment. It appears very clear, we think, from an inspection of the roll, and also from other recitals of the judgment, that the service which it is there recited was made, was not personal, but was upon the guardian ad litem, and that his appointment was void from lack of proof of the facts essential to the jurisdiction of the court to make it. The finding of the trial court, therefore, that the infants were not served with the summons, and that the judgment setting aside the conveyance of the property from Taylor to his wife was, as to said infants, void, was fully sustained by the evidence.

The respondent, however, contends that the evidence in the case, independent of the judgment in the action brought to set aside said deeds, was sufficient to establish the fraudulent character of those conveyances, and that the trial court should have so found.

The reversal of the General Term was upon the facts as well as the law, and the whole case is, therefore, before us for review.

The evidence upon this question is that the conveyances referred to were quit-claim deeds expressing a nominal consideration of one dollar, and that at the time of their execution and delivery William H. Taylor was indebted to the Nassau Bank upon a promissory note of twenty-three hundred dollars, and to the Germania Bank upon a promissory note of two thousand dollars, both of which notes were overdue.

That subsequent to such conveyances judgments were recovered upon said notes against said Taylor, and execution was issued thereon in Kings county and returned wholly unsatisfied.

Our statute (2 R. S. p. 137, § 4) provides that the fraudulent intent to hinder, delay and defraud creditors by a conveyance of land shall be deemed a question of fact and not of law, and that no conveyance shall be judged fraudulent as against creditors solely upon the ground that it was not founded upon a valuable consideration. But the rule is well settled that a voluntary conveyance by one indebted at the time is presumptively fraudulent. (Seward v. Jackson, 8 Cow. 406; Erickson v. Quinn, 47 N. Y. 410; Dunlap v. Hawkins, 59 id. 346; Cole v. Tyler, 65 id. 78.)

There was no evidence introduced by the defendant upon this question, and we are of the opinion that the facts stated raised a presumption that the deeds were executed by Taylor with intent to defraud his creditors, and in the absence of any explanation thereof it was the duty of the court to have determined the fact of the grantee’s intention in accordance with such presumption. (Coleman v. Burr, 93 N. Y. 17-31.)

Having established the fact of the fraudulent character of the conveyances from Taylor to his wife, the plaintiff was entitled to a judgment adjudging the defendant’s deed to be a cloud upon his title and illegal and void.

The plaintiff makes his title through the sale under the execution issued upon the judgment obtained by the Nassau Bank upon the promissory note held by it, and it was not at all essential that the conveyances from Taylor to his wife should have been adjudged fraudulent and void before that execution was issued.

The trial court found upon plaintiff’s request that the execution was duly issued to the sheriff of Kings county, and that the order of the Supreme Court and the decree of the Surrogate’s Court granting leave that it issue were duly made.

Ho question was of course raised at the General Term upon the plaintiff’s appeal that these findings did not have support in the evidence, and they are conclusive upon the appellant here. The point taken at the General Term that the execution could not under section 1380 of the Code be issued until the expiration of three years after letters of administration had been issued upon the estate of William H. Taylor is not now urged by the appellant, and I do not understand him now to assail the regularity of the execution and the sale thereunder upon any ground, except that the judgment could not be enforced against the real estate in question until the conveyance from Taylor to his wife had by a valid judgment been decreed to have been fraudulent and set aside; and that in the absence of such a decree the judgment was not a lien on the land for the reason that the title at the time of its entry was in Mrs. Taylor.

This argument has no support in the authorities in this state. A judgment creditor cannot be deprived of Ms legal right to enforce collection of his judgment against the lands of his debtor by a fraudulent conveyance thereof prior to the entry of the judgment, nor can he by such a conveyance be forced to pursue an equitable remedy for the collection of his debt, instead of a legal one, and the whole current of authority in this state is to the effect that notwithstanding the fraudulent conveyance the judgment creditor may sell the land under execution upon his judgment, and the purchaser may impeach the conveyance of the land in a suit at law to recover possession, or if he can gain possession defend the title thus acqmred against the fraudulent grantee or those claiming under Mm. (Chautauqua County Bank v. Risley, 19 N. Y. 369; Bergen v. Carman, 79 id. 153.)

Of course it can be said that the conveyance of the debtor is not absolutely void but only voidable. That it is good interpa/rtes, and the fraudulent grantee may convey a good title to a bona fide purchaser, and such a conveyance would destroy the lien of the judgment.

But while the title remains in the fraudulent grantee the lien of the judgment exists and may be enforced against the land with the same effect as if the conveyance had not been made. As against the creditor the conveyance while the fraudulent grantee holds the title is a nullity.

In this case the defendant does not occupy the position of a bona fide purchaser for the reason that at the time of the sale by the receiver of Mrs. Lowitz the plaintiff was in posses-sion of the land claiming title under the sheriff’s deed and such possession was notice to the defendant of his claim thereto.

The plea of the Statute of Limitations is not available to the defendant.

The action is not to recover possession of the land, that being already in the plaintiff, but to compel the removal of an instrument which apparently impairs and injuriously affects the plaintiff’s title. An owner has a right to invoke the aid of a Court of Equity at any time while he is the owner to have an apparent though in fact not a real incumbrance discharged from the record and this right is never barred by the Statute of Limitations. It is a continuing right which exists as long as the occasion for its exercise. (Miner v. Beekman, 50 N. Y. 337-343; Schoener v. Lissauer, 107 id. 111.)

The right to this remedy is, however, denied if the invalidity of the defendant’s deed or incumbrance appears upon its face and a resort to extrinsic evidence to show such invalidity is unnecessary, and hence the final inquiry on this appeal is whether the plaintiff’s case is within the rule upon which the courts interfere in this class of actions. We think that it is.

The defendant does present an apparent title through the deeds from Taylor to his wife, the death of Mrs. Taylor and the devise to her children and the receiver’s deed to himself. In thus presenting the claim of title from Taylor to himself he would not necessarily disclose the defect arising from the fraudulent intent existing in the conveyance by Taylor to his wife. He would disclose it is true the fact that these deeds expressed nominal consideration only, but that fact under the statute, which I have quoted would not indicate their fraudulent character. That would only appear upon evidence of Taylor’s indebtedness at the time of the conveyance. But while that evidence would exist upon the record in the form of judgment, it would not be any part of the record of the title to the land, but would be extrinsic thereto.

And in ejectment against the plaintiff the appellant could make out a prima facie case without developing the defects in his title.

From these facts, all the elements exist to make this a proper case to invoke the aid of a Court of Equity to remove a cloud.

We are of the opinion, therefore, that the plaintiff was entitled to the relief sought, and the order of the General Term should be affirmed and judgment absolute rendered against the appellant with costs in all courts.