Schreyer v. Platt

• Decision Date: 24 March 1890
• Parties: SCHREYER v. PLATT. 1
• Court: U.S. Supreme Court

10 S.Ct. 579

134 U.S. 405

33 L.Ed. 955

SCHREYER v. PLATT.¹

March 24, 1890.

F. R. Coudert, for appellant.

[Argument of Counsel from page 406-407 intentionally omitted] T. Mitchell Tying, for appellee.

BREWER, J.

The question in this case is whether certain transfers of property made by John Schreyer to his wife, Anna Maria Schreyer, were fraudulent and void as against Peter J. Vanderbilt, a creditor of John Schreyer. The case is here on appeal from a decree of the circuit court for the southern district of New York, brought by the assignee in bankruptcy of Schreyer against Schreyer individually, and as executor, etc., of his wife, now deceased. The circuit court (25 Fed. Rep. 83) found that the transfers were fraudulent, and decreed that the bankrupt, as executor and trustee, convey the real estate and bonds and mortgages hereafter described to the assignee in bankruptcy. From such decree this appeal has been taken. The facts are these: On Janaury 21, 1871, Schreyer conveyed to his wife the following real estate situated in the city of New York: Nos. 348 and 350 West Thirty-Ninth street, and Nos. 351, 353, and 355 West Forty-Second street. The title was passed from Schreyer to his wife by conveyance to Edward Sharkey, and from him to Mrs. Schreyer. On October 15, 1870, Schreyer and his wife conveyed No. 420 West Fortieth street to George Gebhart and No. 422 West Fortieth street to Matthew L. Ritchie, who each thereupon executed mortgages for $5,000 to Mrs. Schreyer. These conveyances and mortgages were all recorded in 1871. Notice was thus given by public record of title in Mrs. Schreyer to both the real estate and the mortgages. Thereafter, and in 1874, buildings were erected on the twolots last mentioned, the mortgages for $5,000 surrendered, and two new mortgages taken,—one from Gebhart to Mrs. Schreyer for $7,750 on premises No. 420 West Fortieth street, and one from Ritchie to Mrs. Schreyer for $8,850 on premises No. 422 West Fortieth street. The claim of Vanderbilt arose in this way: On February 2, 1874, a building contract was entered into between George Gebhart and Matthew L. Ritchie, as owners of premises Nos. 420 and 422 West Fortieth street, with Vanderbilt, whereby he covenanted to erect two buildings on said premises for the sum of $8,175, to be paid in the following manner: 'When the said houses are topped out, the payment of five thousand ($5,000) dollars, by assignment of mortgage held by John Schreyer on the property of Anna Maria Schreyer, No. 350 West 42d street, in the city of New York; three thousand one hundred and seventy-five ($3,175) dollars when the houses are fully completed as above.' On May 5, 1874, Vanderbilt had so far completed his contract that he was entitled to an assignment of the bond and mortgage. He then demanded and received from Schreyer, not only an assignment, but a guaranty, of the bond and mortgage. There was no new consideration for this guaranty. In 1876 a prior mortgage on the premises covered by the bond and mortgage assigned as above set forth was foreclosed, and swept away the entire property, so that this bond and mortgage became worthless; whereupon Schreyer was sued on his guaranty, and judgment recovered thereon. On September 17, 1878, John Schreyer was adjudged a bankrupt upon a creditor's petition filed August 23, 1878. Several claims were proved against his estate in bankruptcy, but all have been satisfied except that of Vanderbilt; so that, while this action was brought by an assignee in bankruptcy, it was really for the sole benefit of Vanderbilt. On September 6, 1876, Mrs. Schreyer died, leaving a will be which her property was devised and bequeathed to her children. Her husband was named § executor; and he, individually and as executor was the defendant in this suit.

And now the contention of the plaintiff below is that the conveyances of January 21, 1871, and the two mortgages from Gebhart and Ritchie to Mrs. Schreyer in 1874, were fraudulent and void as against the claim of Vanderbilt. The conveyances were made and recorded more than three years prior to the building contract out of which Vanderbilt's claim arose; and, while the mortgages to Mrs. Schreyer were executed and recorded during the same year with the building contract, yet the obligation assumed by Schreyer was a voluntary one, without consideration, and after a contract expressly providing for payment in another way, was conditional, and only became a fixed indebtedness two years thereafter, when by the foreclosure proceedings the worthlessness of the guarantied bond and mortgage was developed. Obviously, very clear and direct testimony is essential to support an adjudication that these various transfers were fraudulent and void as against this subsequent creditor. In determining the rules applicable to such transactions, reference should be had, not only to the decisions of this court, but also to those of the courts of New York, where the parties lived, and the transactions took place. Allen v. Massey, 17 Wall. 351; Graham v. Railroad Co., 102 U. S. 148; Wallace v. Penfield, 106 U. S. 260, 263, 264, 1 Sup. Ct. Rep. 216.

In a recent case in the court of appeals of New York, Todd v. Nelson, 109 N. Y. 316, 327, 16 N. E. Rep. 360, that court thus stated the law: 'The theory upon which deeds conveying the property of an individual to some third party have been set aside as fraudulent in regard to subsequent creditors of the grantor has been that he has made a secret conveyance of his property while remaining in the possession and seeming ownership thereof, and has obtained credit thereby, while embarking in some hazardous business requiring such credit, or the debts which he has incurred were incurred soon after the conveyance, thus making the fraudulent intent a natural and almost a necessary inference, and in this way he has been enabled to obtain the property of others, who were relying upon an appearance which was wholly delusive. Such are the cases cited by the learned counsel for the appellants.' See, also, Phillips v. Wooster, 36 N. Y. 412; Curtis v. Fox, 47 N. Y. 299; Dunlap v. Hawkins, 59 N. y. 342; Carr v. Breese, 81 N. Y. 584; and Bank v. Stafford, 89 N. Y. 405. Turning now to the cases in this court: It was said in Smith v. Vodges, 92 U. S. 183: 'The law of this case is too well settled to admit of doubt. In order to defeat a settlement made by a husband upon his wife, it must be intended to defraud existing creditors, or creditors whose rights are expected shortly to supervene, or creditors whose rights may and do so supervene; the settler purposing to throw the hazards of business in which he is about to engage upon others, instead of honestly holding his means subject to the chance of those adverse results to which all business enterprises are liable. Sexton v. Wheaton, 8 Wheat. 229; Mullen v. Wilson, 44 Pa. St. 413; Stileman v. Ashdown, 2 Atk. 481.' In Graham v. Railroad Co., 102 U. S. 148, 154, it was said: 'It seems clear that subsequent creditors have no better right than subsequent purchasers to question a previous transaction in which the debtor's property was obtained from him by fraud, which he has acquiesced in, and which he has manifested no desire to disturb. Yet, in such a case, subsequent purchasers have no such right.' In Wallace v. Penfield, 106 U. S. 260, 262, 1 Sup. Ct. Rep. 216, in which it appeared that the husband transferring property to his wife was indebted at the time of the transfer, though not to the party complaining of the transaction, the court observed: 'His indebtedness existing at the time of the settlement upon the wife, as well as that which arose during the period of the improvements, was subsequently, and without unra sonable delay, fully discharged by him. The improvements were commenced in 1868, and were all, with trifling exceptions, completed and paid for before the close of the summer of 1869. So far as the record discloses, no creditor, who was such when the settlement was made, or while the improvements were going on, was hindered by the withdrawal by Williams, from his means or business, of the sums necessary to pay for the land and the improvements. Those who seek, in this suit, to impeach the original settlement, or to reach the means invested by the husband in improving the wife's land, became creditors of the former some time after the improvements (with slight exceptions not worth mentioning) had been made and paid for. If they trusted the husband in the belief that he owned the land, it was negligent in them so to do; for the conveyance of February 11, 1868, duly acknowledged, was filed for record within a few days after its execution.' And in Horbach v. Hill, 112 U. S. 144, 149, 5 Sup. Ct. Rep. 81, this language was used: 'The complainant, not showing that he was at the time a creditor, cannot complain. Even a voluntary conveyance is good as against subsequent creditors, unless executed as a cover for future schemes of fraud.' From these authorities, it is evident that the rule obtaining in New York, as well as recognized by this court, is that even a voluntary conveyance from husband to wife is good as against subsequent creditors unless it was made with the intent to defraud such subsequent creditors; or there was secrecy in the transaction by which knowledge of it was withheld from such creditors, who dealt with the grantor upon the faith of his owning the property transferred; or the transfer was made with a view of entering into some new and hazardous business, the risk of which the grantor intended should be cast upon the parties having dealings with him in the new business. Tested by these rules, it is impossible to sustain an adjudication,...