Taylor v. Wands

• Decision Date: 10 May 1897
• Citation: 55 N.J.E. 491,37 A. 315
• Parties: TAYLOR et al. v. WANDS.
• Court: New Jersey Supreme Court

37 A. 315

55 N.J.E. 491

TAYLOR et al.

v. WANDS.

Court of Errors and Appeals of New Jersey.

May 10, 1897.

(Syllabus by the Court.)

Appeal from court of chancery.

Bill by Frederick J. Wands against William T. Taylor and others. Judgment for complainant 34 Atl. 142. From the judgment, William T. Taylor and Harry Taylor appeal. Reversed.

G. D. W. Vroom and Chauncey H. Beasley, for appellants.

Peter Backs, for respondent.

MAGIE, J. The decree appealed from was made upon a bill filed by Frederick J. Wands, assignee, the respondent, against John Taylor, Harry C. Taylor, William T. Taylor, the Taylor Provision Company, and others, the general purpose of which was to subject certain real and personal property, charged to be property of John Taylor, to a judgment entered by confession in the supreme court on April 7, 1893, in favor of respondent, and against John Taylor and William C. Brandt. The decree gave the relief prayed for by respondent in various particulars. Harry C. and William T. Taylor have appealed from the whole of the decree, but, since they are only affected by it in two particulars, our attention may be confined to them. It adjudged that the surplus (by which was evidently meant the undivided earnings) of the Taylor Provision Company, so far as such surplus represented 48 shares of its capital stock standing in the name of appellants, was subject to the lien of respondent's judgment, and directed a reference to ascertain what surplus the company has. It further adjudged that the lands described in the bill which formerly belonged to John Taylor were also subject to respondent's judgment, and decreed that conveyances thereof made by John Taylor, under which, by divers mesne conveyances, the title to one of the tracts had come to Harry C. Taylor, and the title to the remaining tracts had come to the Taylor Provision Company, should be annulled and set aside. With respect to the part of the decree which dealt with the undivided earnings of the Taylor Provision Company, the issue made by the pleadings, briefly stated, was this: The bill charged that John Taylor, Catharine M., his wife, and Harry C. and William T. Taylor, who are sons of John and Catharine M. Taylor, organized that company, but that all the stock was the property of John Taylor, and the shares held by Harry C. and William T. Taylor were held for John Taylor, and to protect them from respondent's judgment. The prayer was that appellants should be decreed to transfer all their stock in said company to a receiver to be appointed in the cause. Each appellant answered, and denied the charge of the bill in this respect With respect to the part of the decree which dealt with the lands, the bill charged that John Taylor, with intent to defraud respondent, and to protect said lands from respondent's judgment, had conveyed them to Edward H. Murphy, who afterwards conveyed them to the Mechanics' National Bank of Trenton, which afterwards conveyed them to Benjamin Van Cleve, who conveyed one tract to Harry C. Taylor, and the remaining tracts to the Taylor Provision Company. The prayer on this subject was that the deeds should be set aside. Appellants' answers contained a specific denial of this charge. The Taylor Provision Company did not at first file an answer, and a decree pro confesso was entered against it. But that decree has since been opened, and an answer has been filed by the company containing like specific denials.

It is scarcely necessary to observe that respondent's decree upon these issues can only be supported by sufficient evidence of the fraudulent character of the impeached transactions. Evidence which merely excites suspicion that fraud may have existed will not be sufficient. It must reasonably justify an inference of the actual existence of fraud. As to the organization and stock of the Taylor Provision Company, the only witnesses called by respondent were John Taylor and the appellants. Upon their evidence, the following facts were established: in 1860, upon the marriage of John Taylor with Catharine M. Taylor, a policy of insurance upon his life for $5,000 was (in some mode not disclosed by the evidence) made payable to her. It does not appear who kept the policy alive by the payment of the premiums. It does not appear that John Taylor paid any premium upon that policy after incurring the debt whereon respondent's judgment was founded. In August, 1888, the firm of John Taylor & Co., composed of John Taylor and William C. Brandt, failed for a large amount. At that time Mrs. Taylor had held the policy of insurance in question for 28 years, and there is nothing in the case to justify a doubt as to her absolute right to it, free from any claim by John Taylor's creditors. About the 1st of September, 1889, she surrendered the policy to the company which had issued it, in consideration of a present payment to her of $2,400. On the 4th of September, 1889, the Taylor Provision Company became incorporated by the filing of a proper certificate declaring that its capital stock was to be $25,000, divided into 250 shares of $100 each, but that the company would commence business upon payment of $5,000. It also appears that 50 shares of the capital stock were subscribed, of which Mrs. Taylor took 47 shares, each of the appellants took 1 share, and John Taylor took 1 share. About the same time, appellants obtained some money by the surrender of a policy of life insurance upon the life of their father, payable to them. There is no evidence that the money thus acquired was not their own, free from any claim of their father's creditors. If the fact were otherwise, it has not been made to appear. All the money procured by the surrender of the life insurance policies was paid into the newly-formed company. Mrs. Taylor paid in $2,400, and gave her duebill to the company for the difference between that sum and the par value of her 47 shares. John Taylor paid nothing for his share. It is unnecessary to discuss whether this transaction was conducted in accord with the provisions of the corporation acts, for it could only be questioned in that respect by other stockholders or by creditors of the company. Shortly after the formation of the company, Mrs. Taylor became sick, and continued so until her death, in April, 1890. On January 31, 1890, when her death was expected by herself and her family, she transferred 23 of her shares of its stock to one of appellants, and 23 more to the other appellant, retaining one share in her own name. Her certificate was surrendered, and new certificates issued to appellants. No consideration was paid for the stock. The transaction was a gift from the mother to her sons. The vice chancellor criticised this transaction as having been suggested by John Taylor. I am unable to perceive the justice of such criticism. John Taylor was hopelessly bankrupt. If his wife owned these shares of stock, or an interest in them, and died intestate, his creditors could require them to be applied to the satisfaction of their debts. But his duty to his creditors did not extend beyond such property as he had acquired. It did not require him to refrain from advising her as to the disposition of her property. There was therefore no legal or moral wrong in suggesting to her, or even entreating her, to bestow her property upon their sons, either by will or by gift inter vivos. Such a disposition by gift was made, and, in my judgment, appellants thereby acquired all the rights of their mother.

From this resume of the evidence, it is obvious that the decree prayed for, viz. the transfer of appellants' stock to a receiver for payment of respondent's judgment, was properly denied. There was no evidence to rebut the presumption that the $2,400 acquired by her by the surrender of the policy of life insurance was her own money. It follows...