PITNEY, V. C.
Action by Fergus A. O'Connor against Isabella W. Williams and others. Heard on bill, answer, and proofs Decree ordered for complainant.
John Whitehead and Frederic M. Payne, for complainant.
Samuel W. Boardman, for defendants.
PITNEY, V. C. The complainant is an attaching creditor of the defendant Isabella W. Williams, and" the object of the bill is to set aside, as against the complainant and two or three other attaching creditors, first, a mortgage for $2,500, made by the defendant Williams to one Schretski in June, 1900; and, second, a conveyance made by the same defendant, September 7, 1900, subject to the mortgage, to the defendant Maria T. Gray, of certain real estate situate at St. Cloud, in Essex county. The equity of the bill, as set forth, is that the mortgage and conveyance were given without consideration for the purpose of defrauding the creditors of Mn. Williams. The proof at the hearing showed clearly that the whole amount of the mortgagehad, first and last, been advanced by the mortgagee to Mrs. Williams; and no further notice need be taken of that part of the bill. The real contest is over the conveyance to Miss Gray. The deed itself, dated and acknowledged on September 7, 1900, and recorded on September 19, 1900, expresses as the consideration the sum of "one thousand dollars, and other valuable considerations." The bill, in the charging part, alleges that no consideration whatever was paid for the conveyance, and that the same was made for the purpose of defrauding the creditors of the said Williams; and in the interrogating part uses this language: "That the defendants may in particular set forth and show whether there was any valuable consideration paid by the said Maria T. Gray for the said conveyance to her of said lands by the said Isabella W. Williams, and, if so, what the same was in particular, and when it was paid, and where, and who were present; and whether the whole consideration was not the said mortgage so given by said Isabella W. Williams to said William Schretski; and, if not, what other or further consideration." Miss Gray, in her answer to the charging part of the bill, states: "That the consideration mentioned in the deed, namely, one thousand dollars, was actually paid by this defendant to said Isabella W. Williams, and that there was other valuable consideration." And to the specific interrogatories above quoted she answers specifically as follows: "There was valuable consideration paid by this defendant for the conveyance to her by the said Isabella W. Williams for the lands described in the second division of said bill. Said consideration consisted of the cancellation of an indebtedness amounting to $1,500 for five years' unpaid rent on her house in Brooklyn at $300 net per year, and, in addition thereto, the actual payment to said Isabella W. Williams of about $1,000, paid as follows: From time to time, in cash or by check, as the unsuccessful boarding bouse business of said Isabella W. Williams required. The whole consideration was not the said mortgage given by said Isabella W. Williams to William Schretski." This response is quite lacking in the precision and detail required by the interrogatory.
At the hearing the following circumstances were developed: The real estate in question consists of a lot, with two dwellings upon it, worth between four and five thousand dollars. The complainant and other attaching creditors who united with him in prosecuting this suit became such, with a single exception, by doing work and labor and furnishing materials in the repair of those dwellings in the spring of 1900. They were disappointed in being paid, being put off from time to time by fair promises, and finally, in the fall of that year, attempted to enforce their claim by mechanic's lien proceedings, but were defeated by a technicality. Later on, in 1901, attachment proceedings were taken out from the circuit court of the county of Essex against the defendant Williams as an absent debtor. Two or three applying creditors came in, and afterwards this bill was filed. It was agreed that the proceedings should stand as if final judgment had been entered on the claims. The conveyance by Mrs. Williams to Miss Gray was made while the creditors were resting under fair promises of payment. Mrs. Williams, Miss Gray, and their confidential agent, a Mr. Ascherfeld, were sworn as witnesses for the defense in the order mentioned. Mrs. Williams, in answer to her own counsel, stated that the consideration of the deed was $600 and debts for borrowed money. Complainant's counsel then asked: "Q. Was there any other consideration? A. Valuable considerations." Directed by the court to state in detail the cash, or whatever it was, the answer was: "A debt. The debt was for rent." In support of this a written agreement was introduced, dated August 14, 1894, by which Mrs. Williams agreed to pay her sister for the rent of No. 330 Ninth street, Brooklyn, $50 per month,—$25 in cash and $25 in board and washing; and the effect of her testimony was that very little, if any, cash had been paid. No note or memorandum had ever been given for the rent alleged to be in arrear. In addition to that rent, Mrs. Williams swore that her sister had loaned her in September, 1898, the sum of $600, for which no note or memorandum was given, but that she herself immediately loaned the very money she had borrowed from her sister to Mr. Ascherfeld, the other witness, taking from him his promissory note on demand, which was produced. The witness Mrs. Williams also verified several small receipts given by her to Miss Gray for money advanced at several times, as follows: July 17, 1894, $57; July 16, 1895, $59; March 27, 1897, $5; April 21, 1897, $33.60; and August 26, 1897, $10.50,—in all, $165.10; and all except one express the purpose for which the money was borrowed. The fact that for these small advances of money Miss Gray was careful to take receipts from her sister, and that she took nothing to show for the $000 which she says she loaned to her in 1898, or for the arrears of rent alleged to be due, is quite significant. In addition to these, the evidence satisfies me that about $200 was advanced by Miss Gray to Mrs. Williams or her agent towards paying for the repairs put upon the dwellings in the spring and summer of 1900. At the start this witness' account of the $000 transaction in 1898 was as follows, namely, that it was an advance payment by Miss Gray to her on a verbal understanding already existing between them for the conveyance from her to Miss Gray of the premises in question. The defendants' contention as to "other consideration" was attempted to be supported by the production of a large number of receipted house bills for gas, fuel, grocers' and doctors' bills, rendaredto Mrs. Williams, and made out in her name, except the gas bills, which were made in the name of Miss Gray, as the owner of 330 Ninth street, Brooklyn. The evidence shows that Mrs. Williams kept a boarding house at that number, and that her sister and Mr. Ascherfeld boarded with her, and that the two sisters had lived together since about the year 1800 or 1891. The allegation was that many of these bills were paid by Miss Gray. No reliable proof was given that any particular one of the bills presented was paid by Miss Gray. The evidence of the two sisters was that many of them were paid by her, but none were specified. Upon several of the bills appeared memoranda that they were paid by Miss Gray, but they were all palpably made at a time subsequent to the date and payment of the bills. Most of the memoranda were in pencil, and were said to be made by a young woman, a relative of the parties, who was recently deceased. Those on the doctors' bills were in the handwriting of the doctor, but he was not produced. As before remarked, while Miss Gray seems to have been careful to take from her sister receipts for small sums of money advanced by her from time to time covering the very period of the alleged payment of these house bills, and also covering the period during which it is alleged the rent was accruing, no memorandum, as before remarked, is produced in support of any of those charges. The main reliance, at the inception of the production of the defendants' case, was upon the $600 alleged to have been loaned by Miss Gray to Mrs. Williams in 1898. and which was immediately loaned by Mrs. Williams to Mr. Ascherfeld. A promissory note for that amount, made by Ascherfeld to Mrs. Williams, was produced. The proof satisfies me that it was immediately delivered, though unindorsed, by Mrs. Williams to Miss Gray, and has been in her possession and control ever since, and she has held it as the real and only security for her money. Another circumstance bearing upon the question whether the loan was made by Miss Gray to her sister or to Ascherfeld is this: When the money was loaned to Mrs. Williams by Mr. Schretski upon the mortgage which was attacked, Mrs. Williams paid Ascherfeld out of it $350 for supervising the making of the repairs on the dwellings in question. Now, if she at that time had been the holder of his promissory note for $600, it seems somewhat improbable that she would have paid him in advance $350 for his services in that behalf. It is proper, however, to say that both Miss Gray and Mrs. Williams swear that Miss Gray was not aware of the purpose for which Mrs. Williams borrowed the money. This statement seems well-nigh incredible. The two sisters were living together on terms of the utmost intimacy. Miss Gray states herself to be a person of means,—a capitalist in a small way,—and that her sister was poor, trying to make a living by keeping a boarding house, and running constantly behind in that enterprise. As we have seen, she had been in the habit of taking receipts for all moneys, even small amounts, advanced to Mrs. Williams; and yet I am asked to believe that she loaned her $600—a comparatively large transaction—without taking anything in writing to show for it. The theory at first advanced by Mrs. Williams—that it was an advance payment oil account of a proposed conveyance of the St. Cloud property—was substantially abandoned by the defense in the further presentation of their case. Miss Gray did not testify to anything of the kind. I am therefore led to the conclusion that the actual truth is that the $000 was not loaned by Miss Gray to Mrs. Williams on her credit, but was handed to her to be by her loaned to Ascherfeld on Miss Gray's account. It is possible that the name of the borrower was not disclosed to Miss Gray at the time the money was handed over; but I am forced to the conclusion that it must have been handed to her with the understanding that she was to loan it to somebody for Miss Gray, and that the note of Ascherfeld was taken and handed over to Miss Gray, and has been in her control ever since. In this connection it is worth while to refer to the allegations of the bill and the answer thereto, above quoted. When called upon to state specifically and in detail the consideration of the conveyance, Miss Gray states it thus: "$1,500 for five years' unpaid rent on her house in Brooklyn, at $300 net per year;" and then the answer proceeds: "About $1,000 paid to Mrs. Williams as follows: Prom time to time, in cash or by check, as the unsuccessful boarding house business of said Isabella W. Williams required." Now, here we have no mention of the $600, nor is any detail of the payments given. The five receipts, amounting to $165.10, are not set forth as they might have been and should have been, nor is the loan of $200 in 1900, to pay for repairs, mentioned. These considerations lead me to entirely exclude the $000 loaned to Ascherfeld, and the other items for money advanced prior to 1900, except those for which receipts were given and produced.
Now with regard to the rent, I am unable to find that Miss Gray permitted her sister to become in arrears to her for rent for so long a time, and to such an extent. The absence of any actual account of what rents were paid, and the exact amount in arrear, is, in connection with the other circumstances, quite suspicious, to say the" least. All three of the witnesses—Mrs. Williams, Ascherfeld, and Miss Gray—swear that at the time the deed was given the consideration was figured up at $1,000, composed, first, of the $600 loaned in 1898, the $200 loaned in the spring of 1900, and the aggregate of the five small receipts above set forth. No account was taken by them in that connectionof the arrears of rent or moneys advanced to pay house bills, nor was any attempt made to ascertain the amount, if anything, due over and above the $600, $200, and the aggregate of the five receipts. At the time the complainant and the other persons in like situation did their work, the whole amounting to several hundred dollars, Mrs. Williams was the apparent owner of the property in question, subject to a mortgage of $1,800. They did their work and furnished their materials, thereby materially increasing the value of the property. While the work was in progress, the old mortgage was canceled, and a new mortgage taken for $2,500, upon $700 additional being advanced. The property is worth $4,000 or upwards. Mr. Ascherfeld, the agent of Mrs. Williams, made fair promises of payment, when suddenly Mrs. Williams conveys the premises to Miss Gray, her own sister. Miss Gray had notice that the repairs were being made. She denies it, but her denial is absolutely incredible. The sisters were on the most intimate terms, living together, and Miss Gray actually loaned and advanced to Mr. Ascherfeld for her sister $200 to go toward the repairs of these houses. Now, it is in the highest degree inequitable, from a general standpoint, for Miss Gray to take a conveyance of the property, including its increased vrlue, due to the labor and materials of the complainants herein, without satisfying their claims. I do not say that the equity which I speak of is one which can be enforced in a court of justice, unlesB it be true, as first suggested on the part of the defense when Mrs. Williams was first put on the stand, that there was an understanding all the while that the property belonged to Miss Gray, and that Mrs. Williams was holding it as her trustee. When that theory was advanced, I immediately suggested that, if Mrs. Williams was the trustee and agent of Miss Gray, a strong equity would arise in favor of the laborers and materialmen. But, as before observed, that position was abandoned, and the position that the conveyance was made for a valuable consideration, and of its date, was taken. Therefore, while there is a strong natural equity in favor of the labor and materialmen, it is not one that this court can enforce; and yet the circumstances are such as to induce the court to scan with great care the claim of a person who seeks to acquire the property, under such circumstances, by conveyance from the debtor and owner. I am satisfied that the whole scheme of the conveyance was devised by Ascherfeld, and am willing to acquit Miss Gray of any actual intention to defraud; but I feel constrained to place her in the position of a mere mortgagee, and to fix the amount secured thereby at the amount of the five receipts, $165.10, with interest, and the sum of $200 advanced to pay for repairs, with interest from July 1, 1900.
The complainants' lien will be declared to be subject to the amotmt due Sehretski on his mortgage as above and the amount due Miss Gray as above. Complainants may have, if they choose, an account of the rents and profits received by Miss Gray and the value of the occupation of the premises, if any, by her; and she will be credited, of course, with interest paid on the mortgage, and taxes and insurance. I will advise a decree accordingly.