McCartney v. . Bostwick

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 57 Under our present constitution the Supreme Court is invested with general equity jurisdiction. It exercises all the powers of the old Court of Chancery, except those which have been shorn away by legislative enactment. One of the most familiar of these inherent powers, is that of granting equitable relief in cases of fraud, by enforcing the rights springing from mere trusts, whether created by will, by deed or by operation of law. This is the authority exercised by the court, when it grants relief to a creditor at large, against trustees in a general assignment made by an insolvent debtor. It is a jurisdiction entirely independent of that, exercised under the special authority of the statute, to grant ancillary relief to judgment creditors in aid of their remedies at law. In both classes of cases, the court has power to relieve from fraud, whether established by direct proof or by legal presumption. The right of the party who invokes the exercise of this anterior and general jurisdiction, depends on his establishingthe relation of trustee and cestuis que trust. The right of the judgment creditor to the ancillary aid of a court of equity, depends on his compliance with the statutory condition, which requires him first to exhaust his legal remedy. In one case, the party has no remedy at law; in the other, he has none in equity, until his remedies at law are exhausted. *Page 58 The land, upon which the plaintiff in the present suit seeks to enforce his statutory lien, was never the property of the judgment debtor, and never subject to execution for the payment of his debts. It is a farm of one hundred and fifty acres, situate in the county of Cayuga, which was conveyed by the former owner to the debtor's wife, in April, 1858. The grantor, the debtor and his wife, were all residents of Minnesota. The plaintiffs, who resided in Missouri, then held the demand in question, which amounted to over $4,000. The consideration of the deed to the wife was paid by the husband. Two months afterward, the premises were conveyed to her father, the respondent, who resides in the county of Cayuga, and who received the deed without consideration, and with notice of all the facts. On the 25th of October, 1858, the plaintiffs recovered judgment for the amount of their debt in the courts of Minnesota; and execution was returned unsatisfied, by the sheriff of the county in which the debtor resided. It is obvious, upon this state of facts, that the plaintiffs had no remedy at law, either there or here. The property never belonged to the debtor, and was never subject to execution at the instance of his creditors. There were no laches on the part of the plaintiffs, through which the claim of the respondent could ripen into a right. The debtor was not here, to be sued, and he had nothing in this State subject to seizure by attachment. (Olcott v. Tioga Railroad Company, 20 N.Y., 210, 226;Loomis v. Tifft, 16 Barb., 541; Montalvan v. Clover, 32 Barb., 190.) If the conveyance had been made to the wife before the revision of our statutes, the debtor, who paid the consideration, would have been entitled to a resulting trust; which could have been asserted either by him, or by judgment creditors, in virtue of his clear and absolute right. By operation of law, he and the grantee would have stood in the relation of cestuis que trustand trustee. In this particular instance, he might have been embarrassed in the assertion of his claim, by the fact that he united with his wife in the subsequent voluntary conveyance to the respondent; *Page 59 but if the deed had been executed by her alone, he could have claimed in equity, the exercise of the jurisdiction now invoked by the plaintiffs, and in precisely the same character, that ofcestuis que trust by operation of law. (Finch v. Finch, 15 Ves., 43; Lloyd v. Spillet, 2 Atk., 148; Lane v. Dighton, Ambl., 409; Boyd v. McLean, 1 Johns. Ch., 582; Harder v.Harder, 2 Sandf. Ch., 17.) This rule of the common law was completely subverted by our statute of uses and trusts. Before the revision, when lands were conveyed to one, which were purchased with the money of another, the grantee was deemed a mere trustee for the actual purchaser; and unless he could bring himself within a recognized class of exceptional cases, he could be compelled in equity to convey and account. This resulting trust, in favor of the party paying the consideration, and of those claiming in his right, was annihilated by the statute of uses and trusts; and the absolute title, as between the original parties, was vested in the nominal grantee. No interest whatever, either legal or equitable, inured to the party paying the price; and he had no remaining right on which, through judgment and execution, creditors could by any process fasten a specific lien. All claims in or through the actual purchaser were utterly extinguished; and if the statute had gone no farther, his creditors would have been without redress in the courts, whether of law or equity. But to prevent this precise abuse, the statute proceeds to declare a new and independent resulting trust, in favor of the general creditors of the party paying the consideration, in every case where the conveyance is fraudulently made to another with his assent; and, to render the provision still more effectual, the burden of proof is cast upon the grantee, to repel the presumption of fraudulent intent, which is attached to the transaction by operation of law. (1 R.S., 728, §§ 51 to 54.) The distinction between this case, and that of a judgment creditor under the general statute, is very definite and obvious. There, the proceeding is to remove impediments in the way of reaching the debtor's property. Here, it is to *Page 60 charge with a statutory lien, the property of a third party, which the debtor never owned. There, it is to exerciseauxiliary jurisdiction in aid of legal process. Here, it is to enforce a trust, of which the courts of law have no jurisdiction. That courts of equity possess original and inherent authority, to decree the performance of obligations springing from valid and effectual trusts, is too well settled to be considered anew as matter of grave judicial inquiry. (Chautauqua County Bank v.White, 2 Seld., 252; Hagan v. Walker, 14 How. U.S., 29;Loomis v. Tifft, 16 Barb., 541; Darrington v. Borland, 3 Porter, 9, 31; McElwain v. Willis, 9 Wend., 566; Innes v.Lansing, 7 Paige, 586; Bodine v. Edwards, 10 Paige, 504;Earl of Chesterfield v. Jansen, 2 Ves., Sr., 155.) That the debtor in this case had no interest in the farm in question, either in law or in equity, and that the creditors had no remedy except to enforce their lien against the property in the hands of the grantee, in virtue of the "pure trust" in their favor, created by the statute of uses, was adjudged by this court in the case of Garfield v. Hatmaker (15 N.Y., 475). That the present action does not stand upon the footing of a creditor's bill — that it simply presents a case for the exercise of the original jurisdiction of a court of equity, in enforcing a trust declared by law — and that the respondent, in accepting a voluntary conveyance of the property with notice of all the facts, took his title subject to the trust impressed on it bylaw, was also settled by the judgment of this court in the case of Wood v. Robinson (22 N.Y., 564). The case presented being one of pure trust, we are not prepared to say that the action might not have been maintained, without recourse in the first instance to all attainable legal remedies against the principal debtor; but it is unnecessary to determine this question, as the fact is admitted, for the purposes of the demurrer, that all remedies at law were exhausted against the debtor, in the State in which he resided; and that in this State no legal remedy was available, *Page 61 as neither his person nor his property were within our jurisdiction. "Lex neminem cogit ad vana, seu inutilia." (Coke's Lit., 197, b.) The judgment of the Supreme Court should be reversed, with costs, and with liberty to the respondent to answer within twenty days after notice of the judgment, on payment of costs in the court below.