Silvers v. Potter

• Decision Date: 17 August 1891
• Citation: 48 N.J.E. 539,22 A. 584
• Parties: SILVERS v. POTTER et al.
• Court: New Jersey Court of Chancery

22 A. 584

48 N.J.E. 539

SILVERS

v. POTTER et al.

Court of Chancery of New Jersey.

Aug. 17, 1891.

(Syllabus by the Court.)

On bill, answer, replication, and proofs an open court.

Mr. Engelbrecht and S. B. Ransom, for complainant.

Henry S. White, for defendants.

GREEN, V. C. This action was originally brought by George M. Silvers as an attaching creditor of the defendant Lewis O. Potter to set aside a conveyance made by Lewis C. Potter to the other defendant, Grace Potter, of certain lands at Rutherford, in this state. The attachment was issued April 25, 1888, and levied on the property in question. Waldorf H. Phillips, a creditor, applied under the attachment in the suit, and judgment was entered March 12, 1889, in favor of Silvers and Phillips for the amount of their claims, respectively, as proved. Subsequent to the commencement of this suit, Waldorf H. Phillips was admitted as a party complainant herein. The property in question originally belonged to Sarah L. Potter, the mother of the defendants, who, by a deed dated May 24, 1881, conveyed the same to the defendant Lewis C. Potter. This deed is expressed to have been in consideration of "one dollar and other good and valuable consideration." It was not recorded until November 20, 1886. The deed sought to be set aside as fraudulent was made by Lewis C. Potter to Grace Potter, and is dated November 18, 1886, and was recorded November 23, 1886, and is, as expressed, "in consideration of one dollar and other valuable consideration." A release from taxes, given by the inhabitants of Bergen to Lewis C. Potter, dated December 12, 1881, and recorded November 20, 1886, was also put in evidence. The bill claims that the conveyance of this property by Lewis C. Potter to his sister by the deed dated November 18, 1886, was fraudulent and void as against creditors, and particularly as against them. The answer of the defendants is that this property was originally owned by their mother, and was by her conveyed to her son Lewis, to be by him held in trust for himself and his brother and sisters, two of whom were infants, in order to enable the property to be sold without much expense and trouble, he being the only male member of the family who was of age; and that he, being perfectly solvent, and about to change his residence from the state of New Jersey and begin business elsewhere, deemed it better to put the title of the property in the name of his sister, who was at home taking charge of the children, and who could execute a deed for the property, if a purchaser could be found therefor, with less trouble and expense; and that the understanding was and is that Grace Potter is to hold the land and premises subject to the same trust that he held them, and that each of the said children had an equal interest in the lands and premises, namely, one-sixth. That before the time of the conveyance to his sister, he had used money which belonged to his brother and sisters, and was indebted to them, and that his interest in the premises was to be held by his sister for herself and her other brother and sisters; and that said conveyance was given, so far as his one-sixth interest was concerned, to pay and satisfy that indebtedness. In short, this defense is that Lewis C. Potter held the title to this property for the purpose of making title to any purchaser who might be obtained, for the benefit of his mother, his brother, sisters, and himself; that he was indebted to them, and conveyed this property to his sister, charged with the same trust under which he held it; and that, so far as he might have had any interest in the property, it was to pass under the deed, in payment of his obligation. The conveyance to the sister was in the life-time of the mother. The complainant insists that this was a voluntary conveyance, which, under the decision of Hagerman v. Buchanan, 45 N. J. Eq. 292,17 Atl. Rep. 946, was absolutely void as against creditors whose debts existed at the time. So far as the indebtedness to the complainant, Silvers, is concerned, it was not incurred until after the conveyance, and the principle invoked does not apply. The judgment of Phillips is based upon a claim for services, as a member of the bar of New York, rendered by him through a series of years anterior to the date of the deed. These services were performed, as he says, in his capacity as counsel for these parties in litigations, and advice with reference to their property. It would appear, although not clearly, that this property had been once owned by the father of these defendants, and had been conveyed by him through a third party to his wife, their mother; that subsequently he had made an assignment, and that that assignment had been filed in New Jersey. The litigation in which Mr. Phillips was employed had taken place in New York, I assume, against the assignee. The defendants insist that the principle referred to does not apply in this case with reference to the claim of Phillips, nor can the complainant, Silvers, have relief on the ground that the conveyance attacked is tainted with actual fraud, because they say the deed from Lewis O. Potter to Grace Potter was not a voluntary conveyance, and that it was but a transfer of a trust-estate, upon which neither of them ever had any lien at law or in equity.

The important question is with reference to the character of the interest which Lewis had in this property. The deed from his mother to himself is on its face an absolute conveyance of the property with covenants of warranty. It is claimed that parol evidence is not admissible to establish the fact that this was a conveyance by the mother to the son of this property, to be held in trust by him for her and his brother and sisters. If the effort on the part of the defendant at this time was to establish such a trust, then the contention of the complainant would be well founded. Neither the mother, nor any one claiming under her, could, under the statute of frauds, in the face of this absolute conveyance, establish by parol testimony that it was only a conveyance of the property to Lewis in trust. Nor could Lewis, under the statute of frauds, make an effective parol declaration of trust of the lands conveyed to him by such a deed. But it was entirely competent for for Lewis, so long as he held the title to the property, to make a bona, fide declaration of trust in writing; and, if so made, the same would have been valid against his heirs and against his creditors. If he had not made this deed, but had bona fide executed a proper declaration of trust, it would have been good against these creditors, even if made after their attachments had been levied. Gardner v. Rowe, 2 Sim. & S. 346, on appeal, 5 Russ. 258. "A lease was granted to W., who afterwards committed an act of bankruptcy, and then executed a deed stating that his name had been used in the lease in trust for R., and declaring the trust accordingly. "A bill was filed on behalf of the creditors of W. under the commission in bankruptcy, claiming the lease as part of his estate; and the court directed an issue to try whether W.'s name was used in the lease as a trustee for R. The jury having found a verdict in the affirmative, it was held that the declaration of trust was valid, though executed after bankruptcy, and that the lease did not pass to W.'s assignee. The question in such a case, of course, is whether the estate was in fact conveyed in trust. The statute of frauds covering this point is a rule of evidence. It provides that the trust must be manifested or proved by a sufficient writing; but a trust can still be created by parol it cannot be enforced in a court while it rests in parol alone, because the statute then intervenes, and says that it must be manifested or proved by writing. There is, however, nothing which requires that the writing should be executed at the time that the trust is created. In fact it may continue to rest in parol and not be declared until the trustee dies, and then may be so declared by his will. 1 Lewin, Trusts, (Text-Book Series,) p. 138. "The statute will be satisfied if the trust can be manifested and proved by any subsequent acknowledgment by the trustee, as by an expressed declaration by him, or any memorandum to that effect, or by a letter under his hand; by his (signed) answer in chancery, or by an affidavit, or by a recital in a bond or a deed; and the trust, however late the proof, operates retrospectively from the time of its creation." Dean v. Dean, 9 N. J. Eq. 425; Ownes v. Ownes, 23 N. J. Eq. 60; Jamison v. Miller, 27 N. J. Eq. 586; McVay v. McVay, 43 N.J. Eq. 47, 10 Atl. Rep. 178; Newkirk v. Place, (N. J.) 21 Atl. Rep. 124. We have, then, this condition: Mrs. Potter conveyed this properly by an absolute deed to her son. It may have been that at the time of such conveyance a trust was created by parol, which trust would continue impressed upon Lewis' estate in conscience, but which could not be enforced in any court, because not...