Subd. 1. Essential Elements of Fraudulent Conveyances. (Fiero, Spec. Act., 3rd Ed., pp. 887-888.) In the absence of statutory restrictions an insolvent debtor has the right to sell and transfer the whole or any portion of his property to one or more of his creditors in payment of or to secure his debts, when that is his honest purpose, although the effect of the sale or transfer is to place his property beyond the reach of his other creditors and render their debts uncollectible. Lehrenkrauss v. Bonnell (1910), 199 N. Y. 240. Subd. 2. Voluntary Conveyances. (Fiero, Spec. Act., 3rd Ed., pp. 888-890.) A voluntary conveyance by one indebted at the time is presumptively fraudulent as against existing creditors. Kerker v. Levy (1912), 206 N. Y. 109; Bushby v. Berkeley (1914), 85 Misc. 178, 148 N. Y. Supp. 121. Subd. 4. Consideration as Affecting Legality of Transfer. (Fiero, Spec. Act., 3rd Ed., pp. 892-896.) A person may transfer lands without consideration providing he retains enough property to satisfy his creditors, and, until the evidence shows the contrary, the grantee is not bound to prove a consideration for the grant. Durland v. Crawford (1916), 172 App. Div. 283, 158 N. Y. Supp. 692. Mere inadequacy of price is not sufficient to predicate fraud. Bank of South Dayton v. Kellogg (1916), 161 N. Y. Supp. 542. Subd. 5. Fraudulent Intent and Knowledge. (Fiero, Spec. Act., 3rd Ed., pp. 896-916.) A voluntary transfer without consideration by one indebted is a fact from which an intent to defraud creditors may be inferred. Hickok v. Cowperthwait (1909), 134 App. Div. 617, 119 N. Y. Supp. 390. (Fiero, Spec. Act., 3rd Ed., pp. 925-937.) Where a judgment has been assigned, it is not necessary for the assignee, in a judgment creditor's action, to allege a transfer of the general cause of action set forth in the complaint. It is not sufficient to authorize suit in equity to allege fraudulent intent on the part of a judgment debtor in making a conveyance, if it appears from other allegations of the complaint that such intent has not been consummated by acts which prevent the enforcement by ordinary remedies. Holland v. Grote (1908), 193 N. Y. 262, modfg., 125 App. Div. 413, 109 N. Y. Supp. 787. An allegation that the debtor possessed no property except the equitable assets sought to be reached in the action is not sufficient. to show that the legal remedy has been exhausted. The statute (2 R. S. 173, § 38; Code Civ. Pro. § 1871) providing for a creditor's action to discover any property or chose in action belonging to the debtor does not make insolvency the basis of the action. Trotter v. Lisman (1910), 199 N. Y. 497. An allegation that, by the acts of the defendants, "it became impossible for the creditors of the railway company to enforce at law the collection of their claim and debts" is not a sufficient ground for the assumption of jurisdiction by a court of equity, for such allegation is not one of fact, but is the statement of the pleader's conclusion. Trotter v. Lisman (1910), 199 N. Y. 497. The complaint in a judgment creditor's action to set aside fraudulent conveyances which merely alleges that judgment against the defendant was recovered in a Municipal Court and was docketed in the office of the county clerk, is insufficient if it fail to allege facts showing that the Municipal Court had jurisdiction to render the judgment. The defect aforesaid is not cured by an allegation that the judgment was docketed in the county clerk's office and that supplementary proceedings were duly instituted thereon wherein the plaintiff was appointed receiver. Such complaint is also fatally defective where it merely alleges that the execution, returned unsatisfied, was issued to the sheriff of a certain county where the judgment debtor then had and still has a place for the regular transaction of business in person, for while such execution is a sufficient basis for supplementary proceedings, yet in a judgment creditor's action, regulated by section 1872 of the Code of Civil Procedure, the plaintiff must show either that the execution was issued to the sheriff of the county where the debtor resided if a resident of the State, or to the sheriff of the county where he had an office for the regular transaction of business in person if a non-resident. Pendleton v. Friedman (1909), 135 App. Div. 420, 119 N. Y. Supp. 994. Where the complaint in a judgment creditor's action to set aside a conveyance does not in words allege that the plaintiff has no adequate remedy at law but does allege and the proof shows that an exeuction against the property of the judgment debtor had been returned wholly unsatisfied it brings the case within section 1871 of the Code and plaintiff is entitled to maintain the action. Shenk v. Oliva (1916), 94 Misc. 702, 158 N. Y. Supp. 437. Subd. 2. Answer and Defense. (Fiero, Spec. Act., 3rd Ed., pp. 938-939.) A judgment creditor, in an action to set aside a fraudulent conveyance, alleged that execution was returned unsatisfied at a given date, which was a short time before the action was commenced. Defendant answered that the cause of action alleged in the complaint did not accrue within ten years before the commencement of the action. Plaintiff demurred to the defense. Held, while plaintiff was compelled to allege issue and return of execution unsatisfied, and his cause of action did not accrue until such return, that time and place were not part of the cause of action, and hence defendant was not bound by his plea of the statute, to the statement of plaintiff as to date of such issue and return, but might show that the cause of action accrued at some other date, and that it was barred; hence the defense was not demurrable. Holland v. Grote (1908), 193 N. Y. 262, modfg., 125 App. Div. 413, 109 N. Y. Supp. 787. ARTICLE V. MATTERS OF PRACTICE. (Fiero, Spec. Act., 3rd Ed., pp. 939-945.) The County Court has not jurisdiction, even by consent of the parties, of an action to set aside certain transfers of real estate alleged to have been made in fraud of creditors, where the plaintiff asks for the appointment of a receiver and for an accounting of moneys and the judgment sought will not affect all of the defendants in the same way. Ertrachter v. Locust Building Co. (1918), 102 Misc. 368, 169 N. Y. Supp. 879. ARTICLE VI. EVIDENCE. (Fiero, Spec. Act., 3rd Ed., pp. 945-951.) While fraud must be proved and is never presumed, it may be shown by circumstantial evidence. Hickok v. Cowperthwait (1909), 134 App. Div. 617, 119 N. Y. Supp. 390. In a judgment creditor's action to set aside a conveyance alleged to have been fraudulent it was error for the court to exclude evidence offered by the plaintiff to show that after the conveyance the defendants gave two chattel mortgages to other parties on the property conveyed. This because proof of contemporaneous conveyances, no matter to whom made, is always relevant to an issue of fraudulent conveyance. Evidence of the circumstances under which conveyances are made and the consideration paid therefor, is also relevant on the issue of fraudulent intent. Wittemann Brothers v. Forman Bottling Co. (1917), 178 App. Div. 674, 165 N. Y. Supp. 811. ARTICLE VIII. JUDGMENT, ITS FORM AND EFFECT. (Fiero, Spec. Act., 3rd Ed., pp. 955-975.) The Code of Civil Procedure (§ 1879) does not prohibit the maintenance of a creditor's action to reach a vested remainder in a fund held in trust, to receive the income and apply it to the use of a person other than the judgment debtor. Bergmann v. Lord (1909), 194 N. Y. 70. A judgment debtor's life insurance policy which provides that he may change the beneficiary at any time, is his personal property, and may be reached in a judgment creditor's action. Cavagnaro v. Thompson (1912), 78 Misc. 687, 138 N. Y. Supp. 819. As to accrued earnings for services rendered by a husband within 60 days, the statutory exemption cannot be asserted against the wife in an action to secure payment of alimony, since she is one of the persons for whose benefit the exemption is made. Valentine v. Williams, Inc. (1916), 159 N. Y. Supp. 815. Where a son's interest was limited to such amounts as the executors in the exercise of their judgment should see fit to apply to his support, and the balance remained a part of the trust estate to which the children were entitled, the court had no power to direct the application of any part thereof to the son's debts. Myers v. Russell (1908), 60 Misc. 617, 112 N. Y. Supp. 520. Where a will creates a trust in personal property during the life of testator's wife, and directs the trustees upon the wife's death to divide the property equally and pay it to his son and daughter if they are then living, there is a gift to the son of a contingent future interest, which is "property" within the meaning of section 1871 of the Code of Civil Procedure, and may be reached by a judgment creditor of the son through a suit in equity. National Park Bank of New York v. Billings (1911), 144 App. Div. 536, 129 N. Y. Supp. 846, affd., 203 N. Y. 556. JUDGMENT, ACTION UPON. See MISCELLANEOUS ACTIONS AND RIGHTS OF ACTION. JUDICIAL SALES. See REAL PROPERTY, PROVISIONS RELATING TO. LIENS ON CHATTELS, FORECLOSURE OF. LOST NEGOTIABLE PAPER, ACTION ON. See MISCELLANEOUS ACTIONS AND RIGHTS OF ACTION. |