Krafte v. Belfus

• Decision Date: 20 October 1933
• Citation: 168 A. 755
• Parties: KRAFTE v. BELFUS. SAME v. RUBIN. JOACHIM et ux. v. BELFUS.
• Court: New Jersey Court of Chancery

168 A. 755

KRAFTE

v. BELFUS.

SAME

v. RUBIN.

JOACHIM et ux.

v. BELFUS.

Court of Chancery of New Jersey.

Oct. 20, 1933.

Syllabus by the Court.

1. A gift of property by a solvent debtor is not presumed fraudulent as to existing creditors.

2. A party calling his adversary as a witness vouches for his integrity, and is bound by his uncontradicted testimony; but the testimony must be coherent, believable evidence. The truth may be found in its corruption and fraud uncovered by its falsity.

3. Commitment for disobedience of a turnover order in supplemental proceeding, while its object is to enforce the payment of money, is not imprisonment for debt.

Suits by Matthew Krafte, trustee, against Eva Belfus and against Benjamin Rubin, and by Samuel Joachim and wife against Abraham Belfus. Bill by Matthew Krafte, trustee, against Eva Belfus dismissed, decree for Matthew Krafte, trustee, against Benjamin Rubin, and petition by Samuel Joachim and wife against Abraham Belfus dismissed.

See, also, Joachim v. Joachim, 108 N. J. Eq. 622, 156 A. 121.

Sidney Finkel, of Newark, for complainant.

Nathan Berger, of Newark, for defendants Belfus.

William L. Greenbaum, of Newark, for defendant Rubin.

BACKES, Vice Chancellor.

Belfus agreed, July 15, 1929, to purchase a house from Joachim, and was decreed to perform (Joachim v. Belfus, 107 N. J. Eq. 240, 152 A. 161; Id., 108 N. J. Eq. 199, 154 A. 530; Joachim v. Joachim, 108 N. J. Eq. 622, 156 A. 121), and, defaulting, a money decree was taken against him, and the house was sold and purchased by Joachim at a nominal figure, leaving a deficiency of $12,000. Belfus went into bankruptcy to escape the debt. He listed $14,500 of liabilities, of which $12,500 was Joachim's decree, and nominal assets.

1. Krafte, trustee in bankruptcy, filed a bill to compel Mrs. Belfus to account for $4,500, one-half the proceeds of sale of a house in Stratford place, Newark. Title to the property had been in Belfus and wife and 'Friedland and wife since 1918. In September, 1929, the Belfuses sold their interest to the Friedlands, and Mrs. Belfus got the price, as she asserts, because it' was with her money the half interest was bought. Whether that be true or not is immaterial. There is not a thing to justify even a suspicion that, if Belfus gave the proceeds to Mrs. Belfus, he did so with intent to cheat creditors and especially Joachim. On the contrary, he was at that time disputing Joachim's title and claiming a return of his down money. And the circumstances do not show a constructive fraud, under the Uniform Fraudulent Conveyance Act (Comp. St. Supp. 1924, p. 647, § 44— 142 et seq.). Belfus was then a trader in second mortgages, speculated in real estate, and was in good financial condition, and the gift, if that is what it was, did not render him insolvent. Kearny Plumbing Supply Co. v. Gland, 105 N. J. Eq. 723, 149 A. 530; Finger v. Kemp, 112 N. J. Eq. 14, 163 A. 153; TrusfCo. of Orange v. Garfinkel, 107 N. J. Eq. 20, 151 A. 858. The bill will be dismissed.

2. The second suit by the trustee is to recover from the defendant Rubin a $3,000 second mortgage made to him by one Cooperman July 1, 1931. Belfus at that time owned a $3,000 second mortgage on Cooperman's property which he canceled when the Rubin mortgage was given. Rubin gave Cooperman his check for $3,000, Cooperman indorsed it to Belfus, and it was paid by the bank. Rubin deposited $3,169 in cash July 1, 1931, the day the check was drawn. Did Belfus furnish the cash to meet the check? That is the question.

Belfus at the time was vigorously resisting Joachim's suit; he had by then made away with most of his property. Rubin is a small shopkeeper in Newark. He says he kept $1,000 in a black metal box in his bedroom in the rear of his store, to cash checks for customers—it helped along business. To make up the $3,000 for Cooperman's mortgage, he borrowed $1,500 from his sister in New York (the sister was not called), which lie also kept in the box, and the balance was gathered from other sources. Now let us pause: Rubin at the time had a safety deposit box; he also had a bank account, and it was active during June. He made eight deposits, $372, $255, $260, $453, $344, $250, $300.18, and $125, the last two on the 30th. Yet he chose to risk $2,500 in the tin box? The tin box story is not original.

The rest of the story is quite as' fanciful. Rubin was not a money lender, nor an investor in second mortgage loans. He did not know Cooperman, and had but a passing acquaintance with Belfus. Cooperman did not seek the loan, nor did Belfus; Belfus simply called a few times on Rubin to recommend it. Rubin did not know Belfus held a mortgage on Cooperman's property, and that he was substituting for Belfus. The property was not appraised; Rubin looked at it, but he was not a judge. (Property had no market value; there was no market in July, 1931.) Belfus' mortgage had nine months to run; Rubin's mortgage is for one year and nine months. Interest and amortization of $250 in March and September were conditions of Belfus' mortgage; so were they of Rubin's. Cooperman's compensation for his part was a year's extension. Rubin got none, no bonus, nothing, and was so unfamiliar with the mortgage business as not to know that at that time, in the depth of the real estate depression, when money on first mortgages was at a premium or altogether unobtainable, second mortgages were being hacked about at heavy discounts. And this second mortgage, of precarious value, as...