Pope v. Bain, A--284

• Decision Date: 19 June 1950
• Docket Number: No. A--284,A--284
• Parties: POPE et al. v. BAIN et al.
• Court: New Jersey Superior Court — Appellate Division

Page 263

8 N.J.Super. 263

74 A.2d 317

POPE et al. v. BAIN et al.

No. A--284.

Superior Court of New Jersey Appellate Division.

Argued May 22, 1950.

Decided June 19, 1950.

Aaron Heller, Passaic, argued the cause for the defendant-appellant, Betty Bain (Heller & Laiks, Passaic, attorneys).

Martin Klughaupt, Passaic, argued the cause for the plaintiffs-respondents.

Before Judges McGEEHAN, COLIE and EASTWOOD.

The opinion of the court was delivered by

EASTWOOD, J.A.D.

Appellant, Betty Bain, appeals from a judgment of the Superior Court Chancery Division, 5 N.J.Super. 541, 68 A.2d 569, setting aside conveyances of several parcels of real estate made to her by Joseph Pope, now deceased; and, alternatively, from the trial court's refusal to allow appellant a lien against one of the properties for monies advanced and paid by her for the maintenance thereof.

Joseph Pope died intestate on June 27, 1947, leaving him surviving his widow, Helen Pope and three minor children Randolph, Diane and Joseph Pope. For the purpose of this appeal, appellant concedes the correctness of the factual situation, viz.: On August 11, 1944 and on March 4, 1946, Joseph Pope purchased premises known as 170 and 172 Lafayette Avenue in the City of Passaic. Title thereto was taken in the name of his sister, Betty Bain. Pope similarly purchased a vacant lot situate on Paulison Avenue in the City of Passaic, taking title thereto in the name of the appellant, Betty Bain. The defendant, Saul Cohen, concedes that on July 19, 1946, Betty Bain, at the direction of Joseph Pope, conveyed a portion of the Paulison Avenue lot to him merely as security for a loan of $5,000 made by Cohen to Pope. All of the real estate was purchased by Joseph Pope and title thereto taken in the name of Betty Bain to avoid an existing judgment of record against Pope in the sum of $30,000. This judgment was later wiped out by voluntary bankruptcy proceedings taken by Pope. The trial court determined that Betty Bain and her husband, Henry Bain, III and Saul Cohen held title to the aforementioned properties in trust for the plaintiffs, Randolph, Diane and Joseph, infants and heirs at law of the decedent, Joseph Pope, subject first to the dower interest of Helen Pope, widow, and subject secondly to the rights of creditors of decedent. Saul Cohen has not taken an appeal nor has Henry Bain, III, joined in his wife's appeal.

Appellant contends that the court found as a fact that title had been taken in her name for the purposes of perpetrating a fraud upon his creditors and that as between the parties, or his heirs at law and creditors, no relief may be granted.

Respondents contend that the trial court correctly determined that, even assuming that decedent was guilty of conduct which would bar recovery in an action started by himself, his dereliction cannot be charged against plaintiffs; that the creditors are not barred from inquiring into the circumstances regarding the conveyances and the cry of unclean hands cannot be raised against the widow and minor children who had no part in the alleged fraud.

No principle of law is better settled in this State, nor does any doctrine of law rest upon higher principles of morality, or more obvious considerations of public policy, than that which declares a transfer of property made in fraud of creditors, while void as to them, is good between the parties, their heirs at law and legal representatives. Bankers Trust Co. v. Bank of Rockville, etc., 114 N.J.Eq. 391, 168 A. 733, 89 A.L.R. 697 (E. & A. 1933). Cf. Lieb v. Griffin (unreported in State Reports), 147 A. 634 (N.J.E. & A. 1929). As stated in the maxim quoted by Judge Jayne (then Vice Chancellor), in Blaine v. Krysowaty, 135 N.J.Eq. 355, 38 A.2d 859 (Ch.1944): "He who doth fraud may not borrow the hands of the Chancellor to draw equity from a fountain his own hath polluted.' * * *.' This rule of law was re-affirmed by Vice Chancellor Jayne in Culley v. Carr, 137 N.J.Eq. 516 at pp. 518, 519, 45 A.2d 850, at page 851 (Ch.1946), wherein he stated: 'If the ancestor has corruptly drained his reservoir of equity, how can his heirs, as such, legitimately obtain any derivative...