Katz v. Richman

• Decision Date: 19 January 1932
• Citation: 158 A. 219,114 Conn. 165
• Court: Connecticut Supreme Court
• Parties: KATZ v. RICHMAN et al.

158 A. 219

114 Conn. 165

KATZ v. RICHMAN et al.

Supreme Court of Errors of Connecticut.

January 19, 1932

Appeal from City Court of Hartford; Herbert A. Ross, Judge.

Action by Joseph Katz against Samuel Richman and others, to recover on a mortgage note and to set aside as in fraud of the plaintiff a transfer of real estate in Hartford, and certain shares of stock, which action was tried to the court. From a judgment for plaintiff on the note, but for all defendants on issues of fraud, plaintiff appeals.

No error.

Josiah H. Peck, Louis H. Katz, and I. Oscar Levine, all of Hartford for appellant.

John T. Robinson and Reuben Sudarsky, both of Hartford, for appellees.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY JJ.

AVERY J.

The plaintiff has set up eighty-two reasons of appeal, of which fifty-seven deal with claimed corrections of the finding twenty-two claimed errors in the court's judgment as rendered, and eleven rulings on evidence in the course of the trial. By reason of the great number of errors assigned, the facts set forth in the finding are numerous and too complicated to be condensed into a statement briefer than that contained in the finding itself. Without attempting, therefore, a full statement, the facts may be summarized as follows:

The action was brought by the holder of a mortgage note against Samuel Richman and David Handler, the makers, and against Ida Richman, Celia Handler, and the Richman & Handler Company, to whom the plaintiff claims property was conveyed fraudulently by the makers. July 14, 1923, Samuel Richman and David Handler purchased from the plaintiff and one Samuel Bergman premises on the corner of West Suffield and Main streets in Hartford (referred to in this case as the " Suffield Street property" ), paying therefor the sum of $63,000 as follows: By cash $7,000, by assuming a first mortgage of $25,000, by assuming a second mortgage for the unpaid balance of $12,750, and by executing their two joint and several promissory notes, each for $9,125, one payable to the order of the plaintiff, and the other to the order of Samuel Bergman. To secure these notes, they executed a third mortgage on the premises. October 1, 1923, the plaintiff and Bergman transferred their notes and assigned the mortgage to the Hartford National Bank & Trust Company. May 10, 1930, the bank transferred one note back to the plaintiff, and transferred the other to the plaintiff's son, Milton Katz, and executed an assignment of the mortgage to the plaintiff and his son.

January 30, 1924, Richman and Handler purchased another piece of property on the corner of Main and Capen streets in Hartford (referred to in this case as the " Capen Street property" ). The building on the premises was used as a residence for the two families, and Richman and Handler also set up a gasoline and automobile accessory business on part of the premises. This business was conducted by them as partners from 1924 until May, 1929. May 15, 1929, a corporation, the Richman & Handler Company, was formed. The Capen street property and the business conducted therein was transferred to this corporation by them. May 31, 1929, the organization of this corporation was completed, and Richman and Handler each received 182 shares of stock; their wives each received one share. June 10, 1929, Richman, for a valuable consideration, transferred 175 shares of his stock to his wife, Ida; and Handler transferred 175 shares of his stock to his wife, Celia. This was done in accordance with a prior understanding between the parties as compensation for the real and personal property turned over to the corporation.

The Suffield street property was not conveyed to the corporation. After the incorporation, Richman and Handler, individually, continued to pay the bills on that property. They made permanent improvements and repairs thereon, and continued to pay the principal and interest on the mortgage on the premises. They even paid some bills against the property after this action was instituted. By the terms of the plaintiff's note, no part of the principal was to be paid until six months after the second mortgage in the unpaid balance of $12,750 was fully paid. The final payment on the second mortgage, together with interest in the sum of $1,030, was made on September 18, 1929; and March 18, 1930, an installment of principal and interest, amounting to over $1,700 on the mortgage held by the plaintiff and his son, became due. Richman and Handler were not able to meet this payment. May 12, 1930, the plaintiff brought this action, demanding the full amount of the note in the sum of $9,125, and the plaintiff's son brought a similar action on the other note for the same amount. The claim of the plaintiff in this action is that the transfer of property on May 31, 1929, from Richman and Handler to the Richman & Handler Company, and the transfer of the shares of stock on June 10, 1929, to their wives, were made without consideration, and with intention to hinder, delay, and defraud the plaintiff, and were fraudulent and void as against him.

The trial court found that at the time of the incorporation and transfer of shares of stock, all business debts of Richman and Handler were meticulously provided for; that at that time, they owed no other debts, except their mortgage debts and that these were reasonably well soured. The court found that the value of the Suffield street property, at that time, was ample to secure the mortgage then held by the plaintiff and his son; that Richman and Handler were not rendered insolvent by the transfer; that in making the transfers, there was no intention on the part of the grantors or grantees to hinder, delay, or defraud the plaintiff; and that the transfers were made upon valuable consideration; and rendered judgment for the plaintiff as against the defendants Richman and Handler only in so...