Harris v. Osnowitz

Rumsey, J.: An examination of the case satisfies ns that the conclusion of the learned court below was correct, and that the only construction to be given to the transaction between the parties was that the real estate which was the subject of the action was transferred to Buchner upon a secret trust, such as is mentioned in the contract executed immediately after the delivery of the deed, by virtue of which Buchner agreed to convey the premises to the wives of the two grantors. The transaction cannot be sustained as a mortgage, because it is expressly testified by Buchner that the property was taken in payment of his debt, and so taken with the understanding between the parties that the land was to be reconveyed to the wives [595] of the grantors upon payment of the debt and interest, it is clearly fraudulent as against the creditors. (McCulloch v. Hutchinson, 7 Watts, 434; Robinson v. Stewart, 10 N. Y. 190; Winkley v. Hill, 31 Am. Dec. 215; Young v. Heermans, 66 N. Y. 374, 382.) The conclusion of the learned trial court that this transaction was fraudulent as against the plaintiffs was, therefore, well founded and must be sustained. But we think that the form of the judgment was erroneous. The action was brought to set aside the deed, because it was an obstruction to the plaintiffs in the collection of their judgments. As between the parties to the transaction, the deed itself was valid (Moseley v. Moseley, 15 N. Y. 334), and it is only voidable when it is attacked by creditors, and then only to be set aside to the extent necessary to enable the creditors attacking it to realize out of the property the amount of their judgment. (Anderson v. Roberts, 18 Johns. 515.) It has been held that where the action was brought by creditors in their own behalf, to set aside a transfer of real estate as fraudulent against them, the proper judgment was to set aside the conveyance, so far as it obstructed the plaintiff’s judgment, and permit him to pursue his remedy on his judgment in the usual way. (Bryer v. Foerster, 14 App. Div. 315.) In the same case it was held that it was not proper, ordinarily, in such cases, to appoint a. receiver and require a transfer of title to him, that he might sell the real estate and pay the judgment out of the proceeds. In that case, while the conclusion of the court that the transfer was fraudulent was affirmed, the judgment was modified by striking out so much of it as required the appointment of a receiver and the transfer of the title of the real estate to him, and directing him to sell it and apply the proceeds; and, in the place of that provision, giving leave to the judgment debtor to issue an execution upon his judgment in the manner prescribed by section 1380 of the Code of Civil Procedure, and directing the sheriff to sell the property described in the complaint upon that execution, with the same effect and in the same manner as though the fraudulent conveyance had not been made. This judgment should be modified in the same way. The provision in the judgment appointing a receiver was excepted to and, therefore, it is here for review. The exception was not urged in this court, and there is no reason, therefore, why the [596] respondent, who has substantially succeeded in the action, should not have his costs in the case, although the judgment has been modified. The judgment, therefore, should be modified in the manner suggested above, and, as modified, should be affirmed, with costs to the respondents. Van Brunt, P. J., Barrett and McLaughlin, JJ., concurred. Patterson, J.: I concur on the ground that it was unnecessary to appoint a receiver in this case. It is altogether proper in many creditors’ actions to appoint a receiver, but this is not one of them. Judgment modified as directed in opinion, and, as modified, affirmed, with costs to respondent.