Byrnes v. Owen

• Decision Date: 09 July 1926
• Parties: BYRNES v. OWEN et al.
• Court: New York Court of Appeals Court of Appeals

243 N.Y. 211

153 N.E. 51

BYRNES

v.OWEN et al.

Court of Appeals of New York.

July 9, 1926.

Action by Anna Byrnes against Clifford H. Owen and others. An order denying the motion of defendants Owen to dismiss the complaint was reversed on the law, and the motion granted by the Appellate Division (213 App. Div. 352, 210 N. Y. S. 510), and plaintiff appeals.

Judgment of the Appellate Division affirmed in part and in part reversed, and order of the Special Term affirmed.

McLaughlin and Crane, JJ., dissenting in part. dissenting in part.

Appeal from Supreme Court, Appellate Division, Second Department.

Florence J. Sullivan, and John F. Couts, both of New York City, for appellant.

Clifford H. Owen, of New York City, for respondents.

HISCOCK, C. J.

The Appellate Division, reversing the Special Term, has granted respondents' motion to dismiss the complaint as not stating a cause of action, and the subject presented to us for consideration is the correctness of this decision. I shall pass for the moment the question whether the defendants Owen are proper parties, and consider the more important questions involved in the appeal.

The plaintiff for several years has been the wife of the defendant Byrnes, and the object of her action is relief from what she alleges has been a fraudulent transfer of real estate of which her husband had the ownership and title during their marriage. The complaint makes some approach to the statement of a cause of action to set aside the transfer of this real estate because made with intent to defraud her as a creditor. This approach, however, is probably inadvertent, because no attempt is made upon this appeal to sustain the complaint as setting forth such a cause of action. The effort to uphold its sufficiency is based rather upon the claim that it shows that the husband, with the aid of other defendants, caused himself to be divested of the legal title to his real estate for the purpose of fraudulently depriving plaintiff of her dower right therein, while at the same time retaining for himself the beneficial ownership of the land, and I shall consider solely that claim. For the purpose of setting forth this latter cause of action, the complaint by its material allegations, in substance, alleges the marriage of plaintiff and defendant Byrnes, and the ownership with legal title by the latter of the real estate; that, with the object of effecting the alleged fraudulent destruction of plaintiff's dower right, the husband procured her to join with him in the execution of a mortgage upon the premises to secure the payment of a sum of money which he personally undertook to repay; that subsequently, and in furtherance of his unlawful purpose, he purposely refrained from paying his obligation, although able to do so, and caused to be instituted and prosecuted to judgment an action for the foreclosure of said mortgage; that on the sale under said judgment the respondent Owen, acting as agent and attorney for the husband and with money furnished by the latter, bid off and purchased the premises which he thereafter conveyed without any consideration to the defendant's sister, who also acted as his agent in his fraudulent scheme, and who now holds the title to the property; that the equity in the property above said mortgage was of substantial value. Thrown in with these allegations, and of no particular importance except as they furnish the background against which stand out the alleged fraudulent acts of the defendant, are allegations that the plaintiff brought an action for a separation against her husband, in which there was an allowance of alimony which, owing to the successful evasion by defendant of his obligations, has reached an accumulated unpaid amount of over $14,000. It has been held that this treatment by the defendant of his wife, if not faultless, is nevertheless beyond the corrective and relieving powers of a court of equity, but I am not able to take this view.

There can, of course, be no question under the allegations of the complaint that plaintiff's husband was legally seized of the premises in question and that thereby the plaintiff acquired an inchoate right of dower therein of which she now stands deprived by means of the acts which are set forth. Neither is there any occasion to expect dispute of the proposition that such right of dower is perhaps the most highly and widely cherished property right resulting from marriage and one which the courts have been alert to protect from fraudulent destruction such as is alleged in this action. This protective attitude on the part of courts extends to an inchoate right of dower equally with a perfected one, because it is well settled that an inchoate right during the life of the husband furnishes a basis for relief such as is here being sought. Youngs v. Carter, 10 Hun, 194, 200; Douglas v. Douglas, 11 Hun, 406, 408.

[2] As I understand it, there is no doubt of all this, and there would be little or no question in this case of plaintiff's right to be relieved from the fraudulent deprivation of her right of dower if such deprivation had been accomplished by ordinary steps which were not covered by the cloak of legal proceedings. But, whether I am correct in this understanding or not, there can be no real question that such is the law, for it is to be remembered that we are not at all dealing with a case where a husband in good faith and in the exercise of an honest judgment has refrained from paying a mortgage superior to his wife's dower right, but with a case where the conduct of the husband exhibits no feature of honesty or good faith but is thoroughly saturated with a fraudulent purpose which subjects to condemnation acts which otherwise might have been justifiable. Under such conditions the action of the courts in protecting the rights of the wife has not been tinctured by any uncertainty. Youngs v. Carter, supra; Bookout v. Bookout, 150 Ind. 63, 49 N. E. 824,65 Am. St. Rep. 350;Walker v. Walker, 66 N. H. 390, 31 A. 14,27 L. R. A. 799, 49 Am. St. Rep. 616;Brownell v. Briggs, 173 Mass. 529, 54 N. E. 251.

[3] It seems to be thought, however, that, because a judgment of foreclosure and sale was one of the steps in the fraudulent scheme to deprive plaintiff of her dower right, the result is immune from attack, and the plaintiff barred from any relief against the injury which has been perpetrated upon her. That is where the important difference of opinion seems to arise, and, for the better analysis of the question, the facts, as alleged in this immediate connection, will bear repetition. They are to the effect that the defendant husband, for the purpose of accomplishing his plan to deprive his wife of dower right, procured her to execute a small mortgage on premises worth much more than the amount of the incumbrance; that subsequently, and for the purpose of accomplishing his unlawful purpose, he refused, although able to do so, to pay the indebtedness secured by such mortgage and for which he was directly and primarily liable, and actively urged and procured the mortgage to be foreclosed, and on the sale, with money supplied by him, procured the defendant Owen as his agent and attorney to bid off the premises which were subsequently transferred without consideration to the sister, who now holds the title.

Thus the real estate of which the husband was seized subject to plaintiff's dower right has been worked around to a point where it is held for his benefit free from this right, and I am aware of no principle or rule that a judgment procured on such facts as a step in the accomplishment of a fraudulent purpose is a defense to the person fraudulently procuring it to be recovered or a bar to equitable relief either against him or those who acted as his agents and representatives in attempting to capture for his benefit the proceeds of the fraud. I assume that the judgment was a valid and effective adjudication in behalf of the mortgagee that he was entitled to have foreclosure and collection of his mortgage by sale of the premises. I also assume that a bona fide purchaser bidding off the premises on the sale would have acquired a title free of plaintiff's rights. But those assumptions do not impair the strength of plaintiff's claim. That claim involves consideration of the use which the defendant is attempting to make of the judgment, and presents the question which I think must be answered in the negative, whether a fraudulent scheme like this can be any more successfully consummated by the use of a judgment forced by the fraudulent actor, than by the employment of some other means. No attack is made upon the decree so far as it decides the legitimate issues involved in the action leading up to it. It is only its use as a means of accomplishing an unlawful object which is assailed, and, so far as that is concerned, I do not see that it is any more effective than would be deed or other transaction which was made a fraudulent means to the accomplishment of forbidden end. The fraudulent purpose affects and condemns the use, and to that extent limits its effect.

Nor in my opinion is the problem at all affected by the fact that this plaintiff was a party to the foreclosure action. It is alleged that at that time she was ignorant of the fraud which was being perpetrated upon her. But, independent of that, the facts which she now alleges would not have raised an issue or presented a defense in the foreclosure action. They were outside the issues in that action, and it would have been no answer to the attempt of the mortgagee to collect his mortgage that the husband who was bound and able to pay his obligations was purposely refraining from so doing in order to accomplish the result which has been pointed out. It was no valid defense or equitable offset to the mortgagee's right to collect his debt that the husband fraudulently refrained from paying it. Decker v. Decker, 108 N. Y. 128, 15 N. E. 307;Lilienthal v. Betz, 185 N....