Bigelow v. Ayrault , 46 Barb. 143 ( 1866 )

By the Court, Johnson, J.

The judge, before whom this action was tried, found, as a matter of fact, that the sale and transfer in question was made by the defendant Ayrault, with intent to defraud the plaintiffs Bigelow and Hoagland, but he does not find that the purchaser from him, Aaron Van Hostrand, had any such intent in making his purchase. All that is found on that subject, is that Ayrault was insolvent, and that his insolvency was well known to said Aaron Van Hostrand, at the time of making the purchase, and also that his insolvency was well known to the defendant Luzon Van Hostrand, at the time he purchased from Aaron.

On the subject of the adequacy of the consideration agreed upon and paid, or promised to be paid, the judge finds that the value of the interest of Ayrault, in the estate of his • deceased uncle, which was the subject of the sale, could not be then estimated with reasonable certainty, as only a small portion of the fund, in which he was interested, had been distributed, and the extent of the testator’s estate was not fully known, and the extent of George’s interest could not be determined until his death. But he also finds that at the time of each of said transfers, it was apparent that the value of said interest would probably exceed $1000, and that it might exceed $4400. It is now certain that his interest did then exceed the price agreed to be paid, to an extent considerably beyond the amount of the plaintiffs’ demand against George Ayrault. But the purchase was not made by the purchaser with any intent to defraud creditors, and is perfectly valid as between the parties to the transaction, at any rate, so long as the defendant Ayrault makes no complaint and does not seek to- set it aside. He does not pretend, nor is there any thing in the finding,- or in the evidence, to show that any advantage was taken of his situation, or his necessities, to obtain this transfer of his interest below its real or its supposed value at the time. And as it is found as a fact, that George sold his interest to defraud his creditors, it is manifest he never could reclaim it by any legal proceeding whatever.

The question then arises whether .creditors of George Ayrault can come in and have their debts satisfied out of the interest or fund beyond the consideration actually paid, or agreed to be paid.

If a proper case is made, upon the facts found, there is no doubt that such an action may be maintained by the creditors of the person making the transfer, even though the transaction was not, in fact, fraudulent, so as to authorize the court to set it aside on that ground. The case of Boyd v. Dunlap, (1 John. Ch. 478,) is full authority on this point. In that case the court held that the deed assailed was not, in fact, fraudulent, but that it was obtained under suspicious, or inequitable circumstances, and was not even constructively fraudulent, unless as to the value of the property beyond the consideration paid. Tet the court decreed that, under the circumstances, the deed, as respected the creditors of the grantor, should stand as a mortgage for the amount paid, and the creditors be let in for the balance. Chancellor Kent, in that case, remarks: “Nothing can be more equitable than this mode of dealing with these conveyances of such indecisive and dubious aspect, that they can not either be entirely suppressed, or entirely supported, with satisfaction and safety.” The same principle was adopted and acted upon at a very early day, in England, in the case of Herne v. Meers, (1 Vern. 465,) which case is also stated in 2 Bro. 0. O. 177, note. The principle is analagous to that which prevails in favor of creditors where the conveyance, by the debtor, is voluntary and constructively fraudulent. The learned judge adopted this principle at- special term, and applied it to the facts of this case. Upon well established principles of equity, the defendant Ayrault, but for his fraudulent design in making his transfer, might have obtained the same relief himself, by showing that it was made under the pressure of • his debts, or other importunate needs. (Story’s Eq. Jur. §§ 336, 337.) Certainly, equity should regard, with quite as much favor, the claims of his creditors, especially when it appears that he intended to defraud them by a cheap transfer of his estate.

[Monroe General Term, June 4, 1866.

It is claimed, on the part of the defendants, that neither the facts found, nor the evidence in the case, warrant the application of the equitable rule to the case in hand. But I am of the opinion that the finding and the evidence warrant the application of the rule to the defendants. The insolvency of Ayrault was 'fully known to both the Van Eostrands, at the time of their respective purchases, as were also all the facts rendering it reasonably certain that the interest was very much larger than the amount agreed upon as the consideration of the purchase. ' They certainly, under the circumstances, owed some duty to the creditors of their vendor, not to take all their debtor had, for a compensation clearly and obviously inadequate, leaving nothing out of which their claims could be satisfied. Eo injustice is done to the defendant who made the last purchase. He is fully protected to the amount of his obligation, and his investment; and the creditors get only what in equity and good conscience they ought to have, and which the defendant ought not to retain from them. The just, fair and beneficient result, thus worked out by the application of the equitable doctrine in this case, would seem fully to justify the commendation of Judge Story, of the principles of equity jurisprudence, where he says, that “the beautiful character or pervading excellence” of it, '“is that'it varies-its adjustments and proportions so as to meet the very form and pressure of each particular case, in all its complex habitudes.”

I am of the opinion that the judgment is right, and should be affirmed, with costs.

Welles, J?. Darwin Smith and Johnson, Justices.]