Hollander v. Gautier

• Decision Date: 25 October 1933
• Citation: 168 A. 860
• Parties: HOLLANDER v. GAUTIER et al.
• Court: New Jersey Court of Chancery

168 A. 860

HOLLANDER

v. GAUTIER et al.

Court of Chancery of New Jersey.

Oct. 25, 1933.

Syllabus by the Court.

1. When a husband purchases land and has title put in his wife's name, or when first taking title in his own name he later transfers it to his wife, a gift to the wife is presumed.

2. To rebut the presumption arising from the deed to the wife, the evidence must be definite and convincing.

3. Under the Uniform Fraudulent Conveyance Act, § 3 (Comp. St. Supp. § 44—144), a fair consideration may be an enforceable promise made by the grantee at the time of the transfer.

4. A promise to be enforceable must be certain.

5. Under the Uniform Fraudulent Conveyance Act, § 9 (Comp. St Supp. § 44—150), a conveyance will not be set aside as against one who takes a mortgage from the fraudulent grantee without knowledge of the fraud, when the mortgage is based upon a fair consideration, but the mortgage will be upheld to the extent of that consideration and no further.

6. A fair consideration may be an antecedent debt due by the mortgagor to the mortgagee but not the debt of a third party.

Suit by Edward Hollander, trustee in bankruptcy for Elizabeth Ida Gautier, against Elizabeth Ida Gautier and others.

Decree in accordance with opinion.

George I. Marcus, of West Englewood, for complainant.

Lichtenstein, Schwartz & Friedenberg, of Hoboken, for defendant Elizabeth Ida Gautier.

Bauer & Ranker, of Union City, for defendant Solome Dickmann.

BIGELOW, Vice Chancellor.

This is a suit by the trustee in bankruptcy of Elizabeth I. Gautier to set aside an alleged fraudulent conveyance made by her to her husband, Peter Gautier. The husband and wife answer that the land conveyed never belonged in equity to the wife and that she held the bare legal title in trust for her husband.

The premises consist of ten contiguous lots on which stands a large dwelling house, the home of the Gautiers. In 1915, Peter purchased the first three lots and took title in his own name; two years later, two more lots were deeded to Mrs. Gautier, and in 1925, the remaining five lots were conveyed to husband and wife. Mr. Gautier testifies that the consideration for all the lots was paid by him and I have no reason to believe that the fact was otherwise. In 1923, title to the five lots first purchased was put in husband and wife, and in 1928, the entire tract of ten lots was transferred, through an intermediary, to Mrs. Gautier alone. No consideration passed on these changes of title. In 1929, the Gautiers mortgaged the property for $10,000 and Mr. Gautier invested the proceeds in corporate stocks and bonds taken in the name of his wife and delivered to her and kept in her safe deposit box. Mrs. Gautier some time thereafter began to speculate in the stock market. To secure funds for this purpose, she pledged the securities which had been bought in 1929, as well as other stock which her husband had bought earlier and had put in her name. She also borrowed money on her general credit and to this end stated that she owned the property in question. By April, 1931, Mrs. Gautier's resources were exhausted; her creditors were demanding payment, and she was unable to respond. In this situation, she conveyed to her husband her equity in the land and in the stocks and bonds.

When a husband purchases land and has title put in his wife's name, or when first taking title in his own name he later transfers it to his wife, a gift to the wife is presumed. Andreas v. Andreas, 84 N. J. Eq. 375, 94 A. 415; Id., 85 N. J. Eq. 210, 96 A. 39. Mr. Gautier attempts to rebut the presumption by showing an agreement by his wife to hold title for him. His testimony is uncertain and is unsupported by any disinterested evidence. It is contradicted by the circumstance that the securities bought with the proceeds of the mortgage were likewise put in the wife's name and also by the fact that the wife represented the property to be hers. To rebut the presumption arising from the deed to the wife, the evidence must be definite and convincing. Furthermore, Gautier clothed his wife with apparent title and credit has been extended to her in reliance thereon. He cannot now say that title was not hers. I find that the property belonged to the wife.

The husband further answers that even if he did not own the land until the conveyance to him in 1931, still the deed to him was supported by a fair consideration within the meaning of the Uniform Fraudulent Conveyance Act, Comp. St. Supp. p. 647, § 44—142 et seq. About the middle of April, Mrs. Gautier was taken sick and sent to a hospital. Some of her creditors demanded payment of her husband. He says that until then he had no knowledge of her speculations or of her financial straits and he did not know until much later the extent of her indebtedness. He went to the hospital and told her that if she would transfer back to him the property and the securities, he would pay her debts so far as he was able to do so. This promise is the alleged consideration.

A "fair consideration" is defined in section 3 of the Uniform Fraudulent Conveyance Act (Comp. St. Supp. § 44—144, subd. (a) in terms which do not expressly include a covenant or promise on the part of the grantee: "Fair consideration is given for property, or obligation, (a) When in exchange for such property, or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or an antecedent debt is satisfied." The Supreme Court of Minnesota, in Schlecht v. Schlecht, 168 Minn. 168, 209 N. W. 883. held that an enforceable promise made at the time of the transfer is a consideration within the meaning of the act. I will follow that construction of the act.

In order that a promise may be enforceable, it must be certain. Anson on Contracts, p. 108. What is the extent of the liability that Mr. Gautier assumed? Can the trustee in bankruptcy pursue him until all Mrs. Gautier's then existing creditors are fully paid? When I put this question to his counsel, he replied that Mr. Gautier...