Moore v. Williamson

• Decision Date: 08 October 1888
• Parties: MOORE et al. v. WILLIAMSON.
• Court: New Jersey Supreme Court

15 A. 587

44 N.J.E. 496

MOORE et al.

v. WILLIAMSON.

Prerogative Court of New Jersey.

October 8, 1888.

(Syllabus by the Court.)

Appeal from orphans' court, Somerset county; BARTINE, JEMISON, and THOMPSON, Judges.

George O. Vanderbilt and W. D. Holt, for appellants. George E. Pace and Alvah E. Clark, for appellee.

MCGILL, Ordinary. The decree appealed from overrules exceptions that were filed to a claim presented to the assignee of the property of William H. Gulick for the benefit of his creditors. By the disputed claim the appellee seeks to have paid to him the sum of $1,040, which he claims is secured by a chattel mortgage upon a portion of the assigned property. The assignee has sold the mortgaged chattels under an arrangement with the appellee that the moneys realized from the sale shall stand in the place of the chattels. Enough of money has been realized to pay the $1,040 in full. The exceptions deny the validity of the mortgage on the ground that it was made for the purpose of defrauding the creditors of William H. Gulick. The exceptants are three of those creditors.

It is insisted in behalf of the appellee that the orphans' court is without jurisdiction to declare the mortgage fraudulent and void. By presenting a claim against the estate of William H. Gulick to the assignee, based upon and supported by the chattel mortgage, the appellee puts himself in a position where an attack upon his claim must of necessity be an attack upon his mortgage. The mode of attacking a claim of this kind is by exceptions, and those exceptions are to be heard and determined in the orphans' court. Revision, p. 38, § 6. A fraudulent transfer is void at law as well as in equity. It is treated as a nullity everywhere, and a court of law takes cognizance of the fraud as well as a court of equity. Mulford v. Peterson, 35 N. J. Law, 133; Bump, Fraud. Conv. 529. Where a claim is presented to an assignee for the benefit of creditors, which depends, for its sufficiency, upon the validity of a transfer of property by the assignor as against his creditors, and exceptions to it, which properly aver the transfer to be void for fraud, are filed, it follows that the orphans' court is the proper tribunal to hear the proof and allegations of the parties, and determine the question of fraud. It is further urged by the appellee that the effect of the declaring the mortgage to be void, in this proceeding, will be to secure to the assignee the fruits of an action that he could not maintain; in other words, that the assignee stands in the place of the assignor, and cannot question the validity of the mortgage, and that he should not be permitted by indirection to accomplish that which he could not do directly. The law is settled to the contrary in this state. The assignee is regarded as the representative of the creditors, and, as such, may, for the benefit of creditors, set aside conveyances by the assignor in fraud of them, to the extent that such property is needed for the payment of debts. Pillsbury v. Kingon, 33 N. J. Eq. 287. In this case much more than the moneys that this assignee will have, if this contract shall be decided in favor of the appellants, will be needed for the payment of the debts of his assignor. There is nothing in this objection to the proceedings.

Upon the question as to the validity of the chattel mortgage, I am of the opinion that the mortgage was contrived in fraud to hinder and delay the creditors of William H. Gulick, and is consequently void under the statute. It is true that the appellee and William H. Gulick and his son Willard, who were the parties concerned in making the mortgage, deny fraud; but the contradictions and improbabilities of their testimony so weakens my belief in their statements that I prefer to be controlled in my decision by inferences from established circumstances. Shortly before the execution of the mortgage William H. Gulick told Abraham S. Meyrick, who was afterwards made his assignee, that he was hopelessly insolvent, and that he desired to adopt some method by which he could withhold part of his property from his creditors, so that he would not be left destitute. He insisted that there must be a way to accomplish it, because others, in a similar situation, had successfully acted as he desired to do. He was told by Mr. Meyrick that his purpose was not honest. Shortly after this interview with Meyrick, Willard Gulick, who was in his father's confidence, produced a bill against the father, which he and the father had made up, and consulted Mr. Meyrick as to the possibility of its collection, and was advised against urging it. The bill was based, mainly, upon services of the son to his father. The son became of age on August 20, 1880, and was then living with his father. He had theretofore assisted his father upon the father's farm, and thereafter he continued that assistance until April, 1882, when he went to Texas to reside permanently. He was unsuccessful there, however, and in June, 1883, returned to his father's house, where he resided until April, 1884, when he went upon a farm that he had purchased. After he returned from Texas he married, and his wife lived with him at his father's house. The bill made up and presented to Mr. Meyrick charges the father for his son's services, at the rate of $15 a month, for seven months, to April, 1881; with $1,346.50, one-half the proceeds from farm for the year ending April, 1882; and with eight months' work by the son and his wife, at $25 a month, to March 1, 1884. It also charges for work done by the father after April 1, 1884; for pasturage for the father's cattle; for milk sold; and for cash loaned to the father. Both father and son say that these charges are founded in contract entered into when the services were respectively rendered. Neither the father nor the son appeared to have kept any books of account or any memoranda by which the indebtedness of one to the other appears. From their stand-point, it would appear that, although for the year from April, 1881, to April, 1882, the son was to have one-half of the proceeds of the father's farm in return for his labor, they did not keep any account of the sales from the farm or of the expenses of its management. They say that the $1,346.50, charged in the bill, was ascertained from their recollection, and by reference to diaries that the father was accustomed to keep, and to grain-bills that had been taken from millers when sales had been made to them; but they also say that after the bill was made up the diaries and grain-bills were destroyed, so that now they have not even that data to support the bill. It appears that the father kept diaries for years, and, up to the time of making this bill, had preserved them. It seems unaccountable that when this bill was made they should have been destroyed, except it be that they would afford evidence of fraud. When the son went to Texas it was necessary that he should have money for that purpose. He expected to settle permanently there. If his father then owed him for seven months' service, and one-half of the proceeds of that farm for a year, why did he not ask for an accounting and payment? It is to be remembered that there were no accounts by which the year's business of the farm could be settled. That which he should be entitled to must, in a great measure, be determined from mere memory. Why should he go 2,000 miles away, to reside permanently, without having, at least, ascertained the amount due to him? He needed money to settle in a strange country. Why did he not ask for that which he had earned? But the fact is, he did not ask for a settlement or for his money, and went away with little more than enough to pay the expenses of his journey. But why should he go to Texas, if at the age of 22 he had just made over $1,300 in one year? In 1884 he purchased a farm, and stocked it entirely on credit. When he went into this venture, if his claim be true, his father was indebted to him more than $1,500, yet he did not ask for payment, or even an accounting; and, although so much money was due to him, he gave a mortgage for the entire purchase money of the farm he had bought, and his notes for the stock and implements with which he operated that farm. Not only this, but afterwards, he increased the father's debt to him by doing further work for the father, pasturing his father's cattle, furnishing his father milk, and actually lending him a sum of money. It was not until December, 1884, when the father was contemplating an assignment for the benefit of his creditors, that a settlement was thought of between the father and son, and it was not until then...