Cohen v. Dwyer

• Decision Date: 27 April 1943
• Docket Number: 149/232.
• Citation: 31 A.2d 764
• Parties: COHEN v. DWYER et al.
• Court: New Jersey Court of Chancery

31 A.2d 764

COHEN

v.DWYER et al.

149/232.

Court of Chancery of New Jersey.

April 27, 1943.

Suit by Charles B. Cohen against Rose K. Dwyer, judgment debtor, and Rosda Corporation for a decree appropriating to payment of a judgment an equitable interest ostensibly acquired by last named defendant in a property occupied by the judgment debtor, and to obtain discovery in aid of the unsatisfied judgment.

Decree in accordance with opinion.

1. Whatever may be the style of the disguise, equity adapts its remedial or corrective decrees to the essential and substantive nature of the transaction.

2. The statutory power of this court to discover and subject equitable interests of a debtor to the payment of an unsatisfied judgment is well established.

3. The law processes should be exhausted in aid of a law judgment before the Chancery jurisdiction is invoked.

4. The existence of an original fraudulent purpose is not an indispensable element in order to ignore the bald nominal interest of the subservient corporate entity where equity and justice so require. In such circumstances the vicarious use of the corporate title as an expedient will not effectively obscure and liberate in equity, the debtor's property from seizure in payment of just debts.

Edward A. Kopper, of Perth Amboy (Leo S. Lowenkopf, of Perth Amboy, of counsel), for complainant.

Harry Katz, of New Brunswick, for defendants.

JAYNE, Vice Chancellor.

Whatever may be the style of the disguise, equity adapts its remedial or corrective decrees to the essential and substantive nature of the transaction. A judgment at law in the sum of $4,220 has been obtained by the complainant against the defendant, Rose K. Dwyer. The complainant seeks a decree appropriating to the payment of his judgment an equitable interest ostensibly acquired by the defendant, Rosda Corporation, in a residential property occupied by the judgment debtor and known as No. 614 Linden Avenue at Woodbridge, New Jersey.

An auxiliary purpose of the bill is to obtain discovery in aid of the unsatisfied judgment. R.S. 2:29-110, N.J.S.A. 2:29-110. This assortment of relief can be solicited under one bill. Baader v. Mascellino, 116 N.J.Eq. 126, 172 A. 549.

A narrative of the dominant facts accumulated from the depositions taken before the master (R.S. 2:29-116, N.J.S.A. 2:29-116) and from the evidence adduced at the final hearing, will be abridged. Mrs. Dwyer has been an actively employed woman, and at or before her marriage in 1924 she acquired the premises at Woodbridge. Upon her marriage, she and her husband established their home there and, significantly, they have ever since continued to occupy the property. On July 6, 1932, the incorporation of the Rosda Corporation was instigated by Mrs. Dwyer, to which company she and her husband on the same day conveyed their real estate. A subsequent delinquency in the payment of taxes occasioned a sale of the Linden Avenue property to the Township of Woodbridge on or about July 10, 1939. On July 27, 1939, there was submitted to the township committee an offer in writing to purchase the premises, signed ‘Rose K. Dwyer, for Rosda Corporation.’ The proposal form contained the following term: ‘Bargain and sale deed to be taken in name of _____.’ In the space reserved for the designation of the grantee, appears an interrogation mark. The clerk in the office of the real estate director of the township explains that Mrs. Dwyer was then undetermined concerning the name of the eventual grantee.

The offer received the approval of the township committee and a contract was prepared on June 15, 1940, between the township and Rosda Corporation, wherein the latter engaged to purchase the premises for a specified price payable in periodical installments. This contract was executed on behalf of the Rosda Corporation by Rose Dwyer as president, and attested by her sister, Anna Donegan, as secretary of the company. Mrs. Dwyer thereafter made the requisite payments on account of the purchase price until the institution of the present suit.

Nothing more than the utility of its barren existence can be claimed for the Rosda Corporation. Upon its organization ten shares of the authorized capital stock were issued, eight of them to Mrs. Dwyer, one to her sister, Mrs. Donegan, and one to her brother. Never having had any money, the corporation has never required a bank account. Never having transacted any business, its minute book is empty. Assuredly, the only noticeable efficiency of the corporation has been that of a receptacle.

The complainant insists that the equitable interest in the property or ‘thing in action’ acquired ostensibly in the name of Rosda Corporation in truth belongs to the defendant, the judgment debtor, Rose K. Dwyer.

It is refreshing to state that in the present cause it is not apparent that Mrs. Dwyer was motivated to incorporate and utilize the company for any fraudulent purpose. Her last business venture was imprudent, resulting in the entry of the judgment against her on July 22, 1942. It is therefore at once discernible that here the satisfaction of the judgment at law is sought to be made out of an alleged equitable asset of the debtor which is beyond the reach of an execution at law.

The statutory power of this court to discover and subject equitable interests of a debtor to the payment of an unsatisfied judgment is not of recent origin. P.L. 1845, p. 141; P.L. 1864, p. 704; R.S. 2:29-110 et seq., N.J.S.A. 2:29-110 et seq. Of course, it cannot absorb for such an object property which is reserved therefrom by law. Cf. R.S. 2:26-99, 2:26-110, 30:5-12, 43:18-12, 34:15-29, 8:2-28, N.J.S.A. 2:26-99, 2:26-110, 30:5-12, 43:18-12, 34:15-29, 8:2-28. Excluded also are trusts created by and proceeding from some person other than the debtor. Frazier v. Barnum, 19 N.J.Eq. 316, 97 Am.Dec. 666; Hardenburgh v. Blair, 30 N.J.Eq. 645; Force v. Brown, 32 N.J.Eq. 118; Lippincott v. Evens, 35 N.J.Eq. 553; Halstead v. Westervelt, 41 N.J.Eq. 100, 3 A. 270; Stout v. Apgar, 69 N.J.Eq. 337, 60 A. 52.

‘In equity, upon an agreement for the sale of lands, the contract is regarded, for most purpose, as if specifically executed. The purchaser becomes the equitable owner of the lands, and the vendor of the purchase money. After the contract, the vendor is the trustee of the legal estate for the vendee.’ Such was the rationalism of the Court of Errors and Appeals in Haughwout & Pomeroy...