Robert Sands, Appellant, against Patrick G. Hildreth, Respondent.
ALBANY,
March, 1817.
Where an insolvent st whom suits were pend* me, conveyed land to uia t>ro®í|q™the0]Pr,c(®f p”,®®^ appeal to tmva ««“conveyance «me ‘bépt°^ big no proof that “hen3 eiteCbore g™n!n™tuiConsession, making erections andrectiiviogtiterente and profits, ft that vowIUasnaram“t purchS^onhe iSral execu.gr°“to?”“3t the atAaP“sberiff'3 jndgmeirtdeoft6a titled to the betute or frauds, equally as the creditorhimself, and maysupporfc a bill to set aside a previous fraudulent conveyance. The statute of frauds, as far as relates to fraudulent conveyances, is an exposition ot the common law. Whether a deed, fraudulent on the part of the grantor, can be set aside, where the grantee is a bonajide pire*
THIS was an appeal from the court of chancery. The bill - 1 1 _ . _ , _ _ was filed by the respondent against Robert bands, the appelv ° j 1 lant, Comfort Sands. and Anne J. Barbarine, to set aside a conveyance made by Comfort Sands to Robert Sands, of certain lands in Brooklyn, on which a rope-walk is situated, as fraudulent against the plaintiff, who purchased the same at a sheriff’s sale, under an execution against Comfort Sands. Anne J. Barbarine, the other defendant, was a tenant in possession, The bill was taken pro confesso,t against Comfort Sands, for want of an answer. Robert Sands put in his answer; and as it regarded Barbarine, the cause came on upon bill and answer, he having been examined as a witness on the part of the plain-tin» #
In March, 1801, Comfort Sands was declared a bankrupt, under the then existing law of the United States, and finally ot>tained his certificate of discharge. The bill charged, that Comfort Sands, previous to his'bankruptcy, made sundry fraudulent conveyances of his real estate to his sons, Henry and Lewis, and to others.; that Kibbe, his assignee, refused to take measures, orto allow the creditors, to institute a suit in his name, to set aside these conveyances ; that George Codwise and others, creditors of the bankrupt, in November, 1801, filed their bill 1 ' *498against Comfort, Henry, and Lewis Sands and others, to set aside those,conveyances, in which costs and mesne profits were decreed to the plaintiffs: that pending that suit, in January, 1805, Comfort Sands purchased, at a master’s sale, under a mortgage given to the bank of New-York, the real1" estate now in question, for the consideration of 500 dollars, which was'conveyed, by his direction, to Joseph Sands, who held the same in trust, until he conveyed it to Comfort Sands. That Comfort Sands remained in possession, and erected a rope walk thereon, which he paid for out of the rents and profits, and continued in possession until he fraudulently conveyed it to Robert Sands, in February, 1807, while the suit of Codwise and others was in rigorous prosecution, for a nominal consideration, and with a view to delay and defraud Codwise and other creditors; that Robert Sands did not take possession of the premises, nor receive the rents and profits, but allowed Comfort Sands to keep possession, and receive them, though he held himself out as the agent of Robert Sands ; that the deed, was not delivered at the time of the date, nor until about the time that the plaintiff’s title was set up, and that the premises are worth about three times as much as is expressed in the deed. The property was sold by the sheriff, on the 3d of December, 1811, under two executions, one out of the court of chancery, at the suit of Cod-wise and others, aud the other out of the supreme court, at the suit of E. Whitney; and the plaintiff, whobecame the purchaser at such sale, for 215 dollars, received a- deed from the sheriff, dated the 4th of January, 1812, conveying all the right of Comfort Sands to the premises, on the 13th of February, 1808. Barbarme was in possession, at the time, as a tenant for years.
Robert Sands, in his answer, admitted that Joseph Sands conveyed the premises in 1806; that Comfort Sands, in 1806 and 1-807, built a rope-walk and store on the land, which he paid for partly in money, and the residue out of" the rents and profits, and he said that Comfort Sands stated the cost to be 3821 dollars and 94 cents, which he believed to be true. He then stated that on the 21st of February, 1807, he purchased the premises of Comfort Sands, and that the same were conveyed to him by a deed of that date, duly acknowledged and recorded; that, at that time, Comfort Sands was, and, as the defendant believed and understood, had, for a long time, been, in possession thereof; that on the 10th of February, 1807,. Comfort Sands had leased the prem*499isses to John Smith, for seven years, from the 1st oí May, 1807, at the rent of 750 dollars per annum ; that, on the 10th of February, Comfort Sands received two years’ rent from Smith, in advance, on the 15th, one years’ advance, and on the 18th, the further sum of 312 dollars; all which payments were endorsed on the lease, and the lease, with these endorsements, assigned to the defendant when he made the purchase ; that 4500 dollars wras the value of the property; that when the conveyance was made to him by Comfort Sands, the latter was indebted to him 500 dollars, and that he has since paid him, on account of the purchase money, 1052 dollars, in cash, and assumed the payment of debts due from Comfort Sands to sundry individuals, amounting to 2948 dollars, which sums made up the consideration of 4500 dollars; that he made the purchase with a view to secure 51*0 dollars due to him, and to assist Comfort Sands with money to pay off his small debts ; that in October, 1810, a settlement took place; but the defendant took no regular receipts for the moneys paid, but kept a memorandum thereof, and relied on an adjustment thereof between them. The defendant admitted that he never promised the creditors to pay them, nor rendered himself liable to pay, or otherwise, than by promising Comfort Sands to pay them. The payments to Comfort Sands are stated to have been made in 1807, 1808, 1809, and 1810, and the assumption to pay the debts of Comfort Sands in September, 1810. The defendant stated that he had only paid three debts, one of 270 dollars, one of 100 dollarr, and another of 76 dollars 21 cents; that Barbarme was directed to pay others of their debts, amounting to 153 dollars 42 cents; that in May, he delivered Comfort Sands 675 dollars, and in September of the same year, 474 dollars 50 cents, to be applied to pay the debts, but whether these sums were so applied, the defendant did not know ; that on the 10th of March, 1811, a settlement was effected between Barbarme, as partner of John Smith, the lessee and the defendant, by Comfort Bands, as the defendant’s agent, when the old lease was surrendered, and the defendant gave Barbarme a new lease for seven years; that from the date of his deed, in February, 1807, he had been in the actual possession of the vacant half of the premises, and Barbarme was in the possession of the other half, as his tenant; that Comfort Sands superintended the building of the rope-walk on the premises leased to Smith, between February and May, 1807; that *500when he assumed to pay the debts of Comfort Sands, in 1810, he understood that they were just debts, and some of them to be for the expenses of building thp rope-walk ; and that all the improvements, between the 21st of February and May, 1807, were made, at the expense of Comfort Sands ; that the deed, about the time of its date, was delivered to John R. Sands, son of Comfort Sands, as agent of the defendant, and that the deed from that time had remained in his possession, or under his control; that John R. Sands had no special authority from him to receive the deed, but acted as his general agent, and he did not receive from him any immediate notice of the delivery of the deed.
Barbarme, who, by an order of the court of chancery, was examined as a witness, said, that the property claimed by Robert Sands was worth between six and seven thousand dollars; that he became a tenant in possession, in August, 1807, in connection with Smith, who had alease from May 1st, 1807, from Comfort Sands, and that be considered himself as a tenant of Comfort Sands, until October or November, 1810; that the first time he heard of the deed was in the summer of 1809, when it was mentioned to him by Lewis Sands, a son of Comfort Sands, as a secret; that in October or November, 1810, Comfort Sands first mentioned the deed to him ; that in 1807, Smith paid Comfort Sands the rent in advance for 1807, 1808, 1809, and part of 1810, - amounting to 2,562 dollars and 14 cents, which was endorsed on the lease; that in the spring of 1811, he settled with Comfort Sands, who represented himself as the agent of Robert Sands, and the witness did not see or converse with Robert Sands on the subject; that the new lease which was in the hand writing of Comfort Sands, was first executed by the witness, and sent into the country, to be executed by Robert Sands ; that he gave his promissory note for the rent reserved on the leas'e to him, in the name of Robert Sands, payable on the 1st of November, 1811, to Robert Sands or order, and when it fell due it ivas paid into the bank to the credit of Comfort Sands, as the last endorser; that Comfort Sands sent to the witness the receipt of Robert Sands, for two quarter’s rent, which .would become due in August, 1812, with a list of debts due by Comfort Sands to several persons, and requesting the witness, out of these two quarter’s rent, to pay those debts for him; which debts were referred to in the receipt: ,but this the witness declined to do< *501That since August, 1812, he had understood from Comfort Sands, that one of the debts, that for 76 dollars 21 cents, had been settled, and the witness believed the rest were still due, as the creditors had applied to him for payment.
It appeared that Isaac Heyer, on the 21st January, 1807, commenced a suit in the supreme court against Comfort Sands, to recover 1,510 dollars, and that he prosecuted the same to judgment; and that Comfort Sands was, on the same day, indebted to Archibald Grade, in the sum of 984 dollars and 25 cents, which remained unpaid.
The cause coming on to be heard in the court below, in August term, 1814 ; and none of the defendants appearing, but all making default, a decree was pronounced for the plaintiff; (which see, in 12 Johns. Rep. 494, 495.;) an appeal was entered from that decree, and the appeal dismissed by this court, without entering into the merits. (See 12 Jobs. Rep. 493. 497.) A rehearing, in the court below, was afterwards petitioned for, by the defendant, Robert Sands, and granted by the chancellor. After the rehearing, the chancellor decreed that the deed from Comfort Sands to Robert Sands was fraudulent and void as against the plaintiff; that he was entitled to the rents, under the lease to Barbarme, and ordered him to pay Barbarme his costs ; and that the defendants, Comfort and Robert Sands, pay the plaintiff these costs, as well as his costs of suit. This decree was, in fact, no more than an affirmance of the decree before pronounced. An appeal having been entered from the second decree, and the cause brought on to argument, the chancellor assigned his reasons for his decree. •(See 2 Johns. Ch. Rep. 41.50.)
Woodworth, for the appellant.
Riggs, for the respondent.
Spencer, J.
Several questions have been discussed on the bearing, which 1 shall merely glance at. It has been contended that the respondent is not invested with the rights of Whitney; Codwise, and others, under whose judgments he became a purchaser, at a public sale, made by the sheriff of King^s county,. under executions, issued on those judgments. The statute, it is urged, protects creditors only from fraudulent deeds, and not a person standing in the situation of the respondent.
*502This proposition is, in my judgment, without any foundation. All the respondent’s right to the land in controversy is derived from and under the judgment under which he purchased ; the judgments are his title; and he is placed, by the judicial sale which took place, precisely in the place of the creditors. If the title acquired under the sheriff’s sale fails, for want of title in the person against whom the execution issues, the purchaser is entitled a to restitution of the money paid.(l N. R. L. 504.) How can it then be pretended, that the respondent is not cloathed with all the rights of the judgment creditors, if they are liable to refund all that has been advanced by. the respondent, on the failure of the title he bought? The idea itself is novel, and unsupported by reason or authority.
It has been incidentally stated by his honour, the chancellor, in the opinion given by him in this cause, that if the deed sought to be avoided as fraudulent, was to be considered fraudulent on the part of C. Sands, the grantor, there would be great difficulty in supporting it, even if the grantee was innocent of any fraud.
I do not understand his honour, as intending to give a decided opinion upon this point; nor was it necessary. I cannot, howqver, refrain from expressing a different inclination of opinion. It seems to me that the statute for the prevention of frauds, which has been universally considered as an exposition of the common law, was intended to avoid deeds contrived and devised fraudulently, for the delaying and defrauding of creditors, in those cases only where both parties participated in the fraud; and, in my apprehension, the 6th section of the statute (1 JV. R. .L. 77.) is a full manifestation of the sense and meaning of that statute : it provides, that that act shall not be construed to impeach or make void any conveyance of lands, made upon good consideration, and bona fide, to any person not having notice or knowledge of the covin or fraud specified in the act. The grantor then may intend a fraud, but if the grantee is a fair, bona fide, and innocent purchaser, his title is not to be affected by the fraud of his grantor. I forbear pursuing this part of the subject any further, and mean only to be understood as not sanctioning the doctrine advanced in the argument, that the fraud of C. Sands is to be visited on the appellant, even if he be a fair and bona fide purchaser.
*503This brings me to the only remaining part of the case: Is the deed from €• Sands to the appellant of the 21st of February, 1807, under all the facts proved and admitted, to be deemed fraudulent ? I agree so entirely with his honour, the chancellor, in the opinion he has delivered, as to find myself wholly relieved from the necessity of discussing the point, at any great length. His reasoning is so satisfactory, and his elucidations so convincing, that nothing can be added to them : and, in fact, without treading the very ground he has occupied, nothing can be said. We find C. Sands, ir. 1807, under considerable embarrassments. Whitney’s judgment, it is true, was not obtained until February, 1808; but we have a right to infer, that it was obtained in regular course of law, and that the debt must have been due when the deed in question was given; and it is in proof that the suit of Codwise and others was pending when the deed was given. It has been urged, that C. Sands might have had property abundantly sufficient to satisfy his creditors, independently of the lands sold to the respondent. This, however, is not proved; and if it were true, the appellant was bound to make out the fact. Not having done so, the inevitable conclusion is, that C. Sands had no other property out of which his creditors could obtain satisfaction. Under these circumstances, the deed is given by one brother to another, accompanied by circumstances evincive of the most fraudulent intentions. To say nothing of the inadequacy of the consideration, let us see whether a bona fide purchaser would have conducted himself as the appellant has done, in almost every important particular of the transactions. It is not pretended by the appellant, that the consideration money, wffiich was to be 4,500 dollars, was paid at the time the deed was executed, or that it was secured, by any voucher, as evidence of the debt. The appellant states, that 500 dollars was then due him from C. Sands, and that the residue was to be paid as C. Sands should require, either in money or the assumption of his debts; but this pretended arrangement was left in this uncertain state, without any written evidence whatever ; and the appellant says, in his answer, that he paid small sums in 1807, 1808, 1809, and 1810; and" that in the fall of the latter year, he assumed to pay debts owing from C. Sands, to the amount of 2,948 dollars ; not, however, to his creditors, but to C. Sands himself; and it is a very striking feet, that no interest was required by C. Sands for this long de*504lay- of payment. The appellant took no receipts for three pay-; ments, and the debt, as well as the payments, were left in that loose and unusual way. C. Sands no.t only continued as the ostentible owner, but the deed was not known to exist, until the autumn of the year 1810, nearly four years after its execution. The defendant’s answer as to the time when the deed was executed, and the first knowledge he had of it, is liable to severe remark; and, in my judgment, indicates very clearly the fact, that if it was executed when it bore date, it was done without the appellant’s agency or assent.
C. Sands received the rents, and made erections On the premises, after the date of the deed; and, pending the bargain by which the appellant was to acquire the premises, he covenanted to -make these erections. It is pretended that he acted as an agent to the appellant, but no authority for that purpose is produced ; and, like the rest of the facts, it stands on the naked assertion of the appellant. I cannot take the trouble to go through all the evidence of fraud, nor shall I cite a single adjudged case, but content myself with saying, that I never met with a more marked case of actual, positive fraud; and if such a deed, so contaminated, is allowed to stand, there would be an end of all upright and honest dealing between man and man,, and no creditor would, hereafter, have the least chance of coercing a dishonest debtor to pay his debts.
This being the unanimous opinion of this court, it was, thereupon, ordered, adjudged, and decreed, that the decree of the court of chancery, appealed from in this cause, be affirmed, and that the appellant pay to the respondent their costs to be taxed, and that the record be remitted, &c.
Decree of affirmance»