Hagerman v. Buchanan

• Decision Date: 17 June 1889
• Citation: 17 A. 946,45 N.J.E. 292
• Parties: HAGERMAN et ux. v. BUCHANAN et al.
• Court: New Jersey Supreme Court

17 A. 946

45 N.J.E. 292

HAGERMAN et ux.

v. BUCHANAN et al.

Court of Errors and Appeals of New Jersey.

June 17, 1889.

(Syllabus by the Court.)

Appeal from court of chancery.

H. G. Clayton, for appellants. Hawkins & Durand, for appellees.

REED, J. The complainants below furnished lumber to J. H. Hagerman and son between the dates of July 24, 1886, and November 29, 1886. On March 4, 1887, a judgment was recovered in the supreme court for the sum of $958.53, the price of said lumber. Under a ft. fa. issued thereon a certain house and lot in Asbury Park was levied upon. The title to this property stood in the name of Sarah Hagerman, the wife of the defendant John H. Hagerman. It was conveyed to her by her husband, through an intermediate person, on July 17, 1883. The bill in this case was filed by Buchanan & Co., the judgment creditors, for the purpose of having the conveyance made by Hagerman to his wife declared void, upon the ground that it was made to hinder and delay creditors; and to have the property sold, and the proceeds applied to the payment of their judgment. The court below advised that the case stood in the same posture as that of Demarest v. Terhune, 18 N. J. Eq. 532, and that the rule adopted in that case was properly applicable to this. A decree was accordingly made that the deed made by Hagerman to his wife should be regarded only as a security for the consideration actually paid by her. It is perceived that the debt of the complainant was contracted over three years after the conveyance was made which is attacked. If the conveyance is to be regarded as in a degree voluntary, the creditor has a burden imposed upon him which would not exist had his debt antedated the deed. The character of a voluntary conveyance, when attacked by a creditor having a pre-existing claim, is definitely settled in this court. In the case of Haston v. Castner, 31 N. J. Eq. 697, after an elaborate review of the course of judicial sentiment in this state, it was decided that, in respect to debts existing at the date of a voluntary conveyance, the deed was void by force of the statute relating to frauds and perjuries. Against the attack of a creditor belonging to this class, neither the motive which induced the deed, nor the solvency of the grantor at the time of its execution, nor any other circumstance which might bear upon the bona fides of the parties to the conveyance, is important. Fraud is the legal conclusion arising from the contemporaneous concurrence of the two facts, namely, a voluntary deed, and an existing debt due by the contractor. In respect to the attitude which subsequent creditors bear towards a voluntary conveyance there has not been, so far as I recall, a deliverance by this court. But the sentiment, both judicial and professional, is hardly less doubtful upon this than upon the former question. The rule which has been recognized is that a voluntary settlement can be attacked by a subsequent creditor only upon the ground of the existence of an actual intent in the mind of the parties, at the time of the execution of the conveyance, to hinder, delay, or defraud creditors by means of the deed. In the case of Ridgeway v. Underwood, 4 Wash. C. C. 129, Judge WASHINGTON, after stating that he had examined the numerous cases which related to the operation of the statute, (13 Eliz.,) remarked that, with entire satisfaction to himself he had reached the following result: "A voluntary deed by a person indebted at the time to any amount is fraudulent and void as to such prior creditors, merely upon the ground that he was so indebted; but, as to subsequent creditors, the deed is not void for that reason, because it does not necessarily or even rationally follow that the conveyance was fraudulently made with intent to hinder or delay creditors who became such long after the deed was made; but, if the case presents other circumstances from which fraud can legally be inferred, the voluntary conveyance will be avoided in favor of a subsequent creditor." This case was cited with approval by Chancellor GREEN in his opinion in the case of Beeckman v. Montgomery, 14 N. J. Eq. 106. In the case of Reade v. Livingstone, 3 Johns. Ch. 481, Chancellor KENT, after an elaborate view of the authorities, came to the conclusion, also, that, in respect to pre-existing creditors, a voluntary conveyance was fraudulent as a legal inference, and ought to be so as far as it concerned existing debts; but that, as to subsequent debts, there was no such necessary legal presumption, and there must be proof of fraud in fact. Indebtedness existing at the time, although not amounting to insolvency, must be such as to warrant that conclusion. The view of the learned chancellor was that, while fraud would be imputed to the voluntary grantor, so far as the grant affected pre-existing debts, yet that the fact of the existence of such debts, and their relative amount in comparison with the property of the grantor remaining, were, as to debts subsequently arising, only facts which were important in determining whether there was an actual intent, at the time of the conveyance, to hinder and delay creditors. The doctrine of this case, so far as it dealt with the attitude of a voluntary grantor towards prior creditors, was adopted by this court in the case of Haston v. Castner, supra. The opinion in the former case was also noticed in the opinion in Haston v. Castner as one delivered by a distinguished judge upon a review of all the decisions then extant, and as one which had largely shaped the jurisprudence of this country upon this branch of equity jurisprudence. While it is true that the court was not dealing with the feature now under consideration, yet the distinction between the status of the two classes of creditors was a conspicuous feature in the opinion of Chancellor KENT. It promulgated a doctrine which embraced within its scope all creditors. The approval of the opinion of Chancellor KENT went far in the direction of an indorsement of his whole declaration, which constitutes a single and complete system touching the doctrine of voluntary settlements in respect to creditors of all kinds.

By reason of these recognitions of cases in which the distinction above mentioned has been formulated, and by reason of the rational grounds upon which such a distinction rests, I regard the complainant in this case as having the burden of showing that, at the time the...