Harvey v. McDonnell

Learned, P. J. The appellant admits that, if McDonnell were living still, an action could not be maintained except by a judgment creditor; but he urges that both before and since the statute of 1858, c. 314, that the administrators might have brought this action; hence that, on their refusal so to do, he, as one of the eestuis que trustent, may bring it, making the administrators parties. We do not think it important to examine the rights of administrators in this respect prior to the act of 1858; and we may notice, in passing, that that act speaks of “estate or property so held in trust;” and, again, of “property held by or of right belonging to any such trustee.” Whether an administrator, in any such sense, holds the real estate of the deceased that he can disaffirm conveyances thereof under this act, we need not inquire at this time. It seems to be assumed in Lichtenberg v. Herdifelder, 103 N. Y. 302, 8 N. E. Rep. 526, that the administrators may disaffirm conveyances of real estate. In regard to the real estate conveyed by Morris to Lucy, and for which the consideration was paid by McDonnell, the plaintiff relies on section 52, 1 Rev. St. 728, creating a trust in such property for creditors; but it has been decided that a receiver in supplementary proceedings cannot enforce that trust. Underwood v. Sutcliffe, 77 N. Y. 58. The opinion refers to the statute of 1858; and while it admits that a receiver may set aside fraudulent transfers, it holds that he cannot enforce this statutory trust. By analogy an administrator cannot. The creditor must enforce it directly by an action, (Garfield v.Hatmaker, 15 N. Y. 475;) but only after exhausting his legal remedies, (Bank v. Olcott, 46 N. Y. 12.) Therefore, in respect to this part of the complaint, it is plain that the plaintiff cannot maintain the action, both because the administrators could not have enforced the statutory trust created by section 52, ut supra, as it is not derived through the debtor, and also because the plaintiff has not exhausted his legal remedies, as was decided in Estes v. Wilcox, 67 N. Y. 264. Another claim of the complaint is that Lucy McDonnell, one of the defendants, has received, from life policies payable at the death of her husband, more than she might lawfully. Laws 1870, c. 277. Yow, this money must-have been paid .after the death of the intestate. We do not see why any liability to account for such money could not have been heard by the surrogate, in the accounting of the administrators. Code, § 2739; Shakespeare v. Markham, 72 N. Y. 400; Boughton v. Flint, 74 N. Y. 476. That accounting seems to be the proper place to determine the question as to the insurance money; whether it belongs to Lucy McDonnell individually, or to her as administratrix. Then, as to the real estate of which McDonnell executed a deed to O’Brien, and O’Brien to Lucy. According to the averrment of the complaint, these deeds were not delivered in McDonnell’s life-time. If so, it would seem to follow that they never took effect, and the land descended according to law. [85] Then the plaintiff should reach it as he would reach any land of a deceased person. But that is not the course he has taken in this action. If, according to another allegation, the deeds were delivered, but with intent to defraud ■creditors, then it is a settled rule that the creditor must first exhaust his legal remedies by judgment and execution, or, at least, must have acquired, by judgment or execution, a lien on the property said to be fraudulently assigned. Adsit v. Butler, 87 N. Y. 585; Estes v. Wilcox, ut supra; Bank, v. Mead, 18 Hun, 303; Reubens v. Joel, 13 N. Y. 488; Gardner v. Lansing, 28 Hun, 415; Bank v. Wetmore, 42 Hun, 359. In the case of Bate v. Graham,, 11 H. Y. 237, the plaintiff was a judgment creditor. He sued to recover for the estate certain personal property fraudulently transferred by the deceased. How, before the statute, 2 Rev. St. 449, .§ 17, it had,been held that where a fraudulent vendee had taken possession of goods prior to the death of the vendor, and remained in possession, he might be charged as an executor de son tort, though there was a rightful executor. Hence it had been held that, after that statute, the executor might sue the fraudulent vendee for the goods thus taken, (Babnock v. Booth, 2 Hill, 181;) and the plaintiff’s action was sustained. He was, as above observed, not a .simple contract creditor. The eases of Dewey v. Moyer, 72 N. Y. 70; Bank v. Leggett, 51 N. Y. 554; Crouse v. Frothingham, 97 N. Y. 105; and Sands v. Codwise, 4 Johns. 536,—were also cases of judgment creditors. The case cf Bates v. Bradley, 24 Hun, 84, was one of simple contract creditors. The debtors had filed a petition in bankruptcy, and therefore the creditors could not put their claims into judgment. Rev. St. U. S. § 5106. The case of Overton v. Olean, 37 Hun, 48, was an action for an injunction to restrain the village from permitting a railroad company to erect a permanent structure in the street. Of course, there could be no prior judgment. It was not a case of contract, but of tort. It is no exception, then, to the doctrine we have stated. It may be asked, why should a judgment first be obtained? Because .a court of equity is not a place in which to recover or to establish debts. The ■existence and the amount of the debt should be established in a court of law, and legal remedies to collect should be taken before resort is had to equity to remove fraudulent obstructions. So it was said, Estes v. Wilcox, ut supra, 266, that the reason of the rule “does not fail by the death of the debtor before judgment recovered for the debt.” The judgment “ would conclude the creditor as to the amount of the debt. ” The plaintiff’s argument is that the administrators are trustees for the ■creditors; and, if the administrators will not act, the creditors may. It is rather a new doctrine that an administrator is a trustee of the real estate of the deceased. Even over the real estate of which the deceased was seized at his death the administrator has no power. He can institute proceedings to .subject it to the payment of debts; so can creditors. It seems somewhat strange that an administrator, who is not trustee of the real estate of which the deceased died seized, should be called trustee of that of which the deceased did not die seized; and a careful examination of the section of 1858 will show that the right of the administrator, as of other trustees, is limited to such property as is held by, or of right belonging to, such trustee or estate. So it was held in Underwood v. Sutcliffe, ut supra, that the statutory trust did not belong to a receiver, and could not be enforced by him, although it might be enforced by a judgment creditor. So, in the present case, if there had been no conveyance of McDonnell to O’Brien, and of O’Brien to Lucy, would the land belong to the administrators? They could not even allow the claims of creditors against heirs and devisees. In re Haxtun, 102 N. Y. 157, 5 N. E. Rep. 111. If not, how can the execution of those deeds make the land belong to the administrators? Or how can the setting aside the deeds as fraudulent give the administrators any title thereto which they would not have had if the deeds had never existed? It seems inconsistent [86] to say that a trustee may disaffirm acts which, when disaffirmed, give him no more property or rights than he had before. It was, however, held in Barton v. Sosner, 24 Hun, 467, that an administrator might bring an action to set aside a fraudulent conveyance of land. It may be said that Liehtenberg v. Herdtf elder, ut supra, decides that, even if a judgment had been recovered, the action could not be maintained. What was said as to action by administrators was not necessary to the decision. It is not strictly necessary for Us here to consider how relief is to be obtained in regard to land fraudulently transferred by the deceased; but we may remark that the statute makes such transfer void, (2 Rev. St. 137, § 1;) that a creditor recovering a judgment during the life of the debtor may under execution sell the land just as if no transfer had been made, and may then test the question of fraud by ejectment; or he may, after obtaining a lien,, bring an action to set aside the fraudulent conveyance. If the conveyance made with fraudulent intent is void, then it would seem that, at least as to creditors, the land, at the death of the debtor, must be treated as going to his heir or legatee; and that the creditor treating the conveyance as void as to him, must reach the land as he would any other land which had belonged to-the deceased at his death. Section 274, et seq, or section 1843, et seq. Sec- ■ tian 2762 in the former proceeding seems to provide opportunity for a litigation with the fraudulent grantee over the alleged fraud, prior to any sale. In. the other proceeding a lis pendens can be filed, (section 1853,) which probably would be a sufficient ground for an action against the fraudulent grantee,, should the creditor prefer not to wait till he acquires a title under the sale by virtue of his judgment. But this is a matter we do not decide. Judgment, affirmed, with costs. Ingalls, J., concurs.