Dimon v. Delmonico , 35 Barb. 554 ( 1861 )

Sutherland, J.

If it appeared on the face of the assignment in this case, that the insolvent assignor intended, by his assignment, or by his direction in it to the assignees, to pay P. A. Delmonico the mortgage of $>79,000, to restore to Ms wife her inchoate right of dower in the mortgaged premises, discharged of the mortgage, it would be cifficult, I think, to find a principle upon wMch it could be held, that the assignment for that reason was' fraudulent and void as to creditors.

Ho doubt, as between the creditors, the mortgaged property was the primary fund or property for paying the mortgage debt; but as between the creditors, other than the mortgage creditor, and the wife, I do not see why the equity of the wife to have her right of dower restored to her free of the mortgage, by the application of other funds or property of the husband, is not as strong, and entitled to as much favor, as the equity of the creditors to have the mortgaged property appropriated to the payment of their debts, free and clear of her right of dower, to the extent of the mortgage and the rights of the mortgagee under it.

Although insolvent, if the assignor, previous to the assignment, had paid the mortgage, such payment would have restored his wife’s right of dower in the whole estate or interest, free and clear of the mortgage, and made it good and valid to its restored extent, as against judgment creditors subsequent to the marriage, or to the original vesting of her inchoate right of dower.

Why could not the assignor lawfully authorize his assignees to do that which he could lawfully do himself ?

But it is not necessary to decide that question, in this case, for it does not appear on the face of the assignment that the assignor had a wife when he made the assignment; and I think the direction by the assignment to pay P. A. Delmonico, one of the preferred creditors, the amount of the seventy-nine thousand dollar mortgage, as part of his preferred debt of $85,763.30, should be considered as made subject to the equity, as between the creditors, to have the mortgage debt paid out of the mortgage property.

Placing P. A. Delmonico among the preferred creditors, as to his bond and mortgage, should not be considered as an absolute direction that the mortgage debt should be paid out of other assigned -property, but as a direction to pay the bond and mortgage out of the whole of the assigned property, including the equity of redemption in the mortgaged premises, subject to the control of the court over the assignees as trustees, and subject to the usual and well recognized rules of equity in the application of the assigned property to the payment of the debts, as between the creditors. (Kellogg v. Slauson, 1 Kern. 302. Ogden v. Peters, 21 N. Y. Rep. 23. Jessup v. Hulse, Id. 168.)

The remaining question then is, whether in fact the assignment was made or accepted with a fraudulent intention.

Intention is generally shown by acts. The testimony of the assignor and of the assignees, not only substantially negatives the idea that the assignment was made or accepted with the particular intent to have the mortgage paid out of property other than the mortgaged property; hut the acts of the assignees under the assignment were inconsistent with such intention, and were conformable to the equity of the creditors, as between themselves.

As to the assignees and the creditors, the mortgage was in fact paid by a sale of the mortgaged property. The mortgaged property was sold at public auction, subject to the mortgage and the dower right of Mrs. D. to Constant, the brother of the assignor. The sale appears to have been fair, and the price paid, the full value. Mo particulars were declared at the sale, as to ages, &c. from which the bidders could estimate the value of Mrs. D.’s right of dower; but from aught that appears., the bidders, and every person at the sale; were sufficiently informed as to these circumstances. It does not appear that any information in regard thereto was asked for, or withheld, or concealed. From aught that appears, the sale was open and fair. Meither the assignor nor his assignees, nor judgment creditors subsequent to the marriage, or the vesting of her dower right, could, by any act of his, or .of theirs, deprive Mrs. D. of her right of dower. The mortgaged property was therefore necessarily sold subject to her right of dower, This right of dower was an inchoate right, or interest, in the whole estate or interest of the assignor in the mortgaged property, except as against the mortgagee, and those claiming through or under the mortgage, in the execution of which she had joined with her husband. The judgment creditors could not deprive her of her right to redeem, and thus restore to herself her right of dower in the mortgaged property, free and clear of the mortgage.

What cause of complaint, then, have the judgment creditors, on account of the arrangement which took place between Constant Delmonico, the purchaser, P. A. Delmonico, the mortgagee, and the assignees ? Peter A. Delmonico agreed to look exclusively to the mortgage, and the bond of the assignor, and the collateral bond of the purchaser, Constant, for the payment of the mortgage debt, and to exonerate, and he did exonerate, the assigned estate from the payment of the same. By this arrangement the mortgaged property was in fact appropriated to pay, and did pay, as to the judgment creditors, and the assignees, the mortgage debt, and the remainder of the assignor’s estate, including the assignor’s equity of redemption in the mortgaged property, was appropriated to the payment of his other debts under the assignment. Do the judgment creditors complain that by this arrangement Peter A. Delmonico was prevented from foreclosing his mortgage at once, and thus depriving Mrs. D. of her right of redemption P How could a foreclosure have benefited the judgment creditors ? It would be paying them a poor compliment to suppose that a forced foreclosure would have given them pleasure, not to say, profit.

I do not see that the effect of the arrangement has been to restore to Mrs. D. her right of dower in the premises discharged of the mortgage. But if this is so, what have the judgment creditors to do with that ? If the mortgagee chose voluntarily, and without valuable consideration, to release Mrs. D.’s dower right from his mortgage, what have the creditors to do with that ?

If there was not in fact an actual and continued change of the possession of the assigned property, it was for the plaintiff to show it. I think the evidence does not show it, nor any bad faith on the part of the assignor or assignees.

There is nothing in the case, in my opinion, to impeach the honesty and fairness of Constant’s debt of $26,500. The percentages on the profits allowed him were, I think, allowed him by way of additional salary, and were allowed in that form, to stimulate his exertions, and not with the intention Of making him a partner ; and such arrangement, as to the mode of paying him for his services, did not, I think, make him a partner. (See Champion v. Bostwick, 18 Wend. 175, and cases cited.)

[New York Special Term, December 9, 1861.

If Constant chose to let these allowances rest in the form or condition of credits on the books of the assignor, without exacting any other evidence or security, that was a matter between the brothers, and merely shows Constant's confidence in his brother. There is no evidence that the assignor was not perfectly solvent when these credits were given.

There must be judgment for the defendants, dismissing the complaint, with costs.

Sutherland, Justice.]