
    Joseph M. Wright, Plaintiff, v. Arthur B. Clark et al., Defendants.
    (Supreme Court,
    Westchester Special Term for Trials, July, 1913.)
    Fraudulent conveyance — conveyance of certain real estate to corporation controlled by husband of grantor — action to set aside conveyance for fraud — lunatics.
    Trusts—i wills — substituted "trustee — liability of surety company on bond of trustee — actions.
    Where a wife, through the fraud of her husband and without valuable or lawful consideration, conveys certain real estate to turn corporations which he controlled and of which he was president, and the husband knew that at the time and for many years his wife had been of unsound mind, the grantees are chargeable both with notice of the fraud and of the grantor’s mental condition.
    
      Where on the trial of an action by the sole heir at law of the grantor to set aside the conveyance for fraud there is no evidence of the due execution of a paper purporting to be the last will and testament of said grantor and which was a part of the husband’s scheme to get absolute control of her property, the presumption is that she died intestate.
    Where the wife created a trust irrevocable except by her last will and testament, by the terms of which her heirs at law upon the execution of the trust deed took a vested remainder in the principal of the trust fund which was liable to he wholly divested either by their prior decease or the grantor’s last will, and her husband having- had himself made a substituted trustee received the principal of the trust fund and converted the same to his own usé, the surety company on his bond was liable therefor to plaintiff as remainderman.
    That the wife was insane when she created the trust was no defense to the trustee and his surety for misappropriation of the fund, and the liability of the surety may be established in an action to recover the amount without an accounting as a condition precedent.
    Action to recover real property alleged to have been fraudulently obtained by defendant Clark.
    Ernest P. Hoes, for plaintiff.
    Edward Weiss, for defendant Clark.
    Edward M. Grout and Paul Grout, for People’s Surety Company of New York.
   Tompkins, J.

This action is brought by the plaintiff, who is the sole heir at law of Elizabeth V. A. Wright, deceased, to recover real property, • which he alleges was fraudulently obtained from said Elizabeth Y. A. Wright, by the defendant Arthur B. Clark, and subsequently conveyed by said Clark to the Arthur B. Clark Company, a corporation organized by said Clark for the purpose of holding and developing said property for his own benefit, and to recover a trust fund of $8,000, which was held by the said Arthur B. Clark, as substituted trustee, under a trust deed made by the said Elizabeth Y. A. Wright, by which she conveyed an undivided one-half interest in certain real property in New York city to one Robert W. Bell, Jr., in trust to receive the rents and profits of said undivided one-half part, and to apply the same to the use of one Eva Yrederberg Wright, during her lifetime, and, upon her death, to convey the said undivided one-half part to such person or persons as the said Elizabeth Y. A. Wright might appoint to receive the same, in her last will and testament, or, if there should be no will, to her heirs at law.

The deed gave the trustee power to sell, and authorized him to invest the proceeds, ‘ ‘ provided that on any sale thereof, the proceeds of such sale shall stand in place of said undivided one-half part, and be subject to the same trusts and powers and ultimate disposition thereof.”

In 1907, this property was sold by the trustee. A part of the proceeds thereof consisted of a mortgage for $16,000 which was made to R. Walter Bell, as substituted trustee as to an undivided one-half, and to Robert W. Bell, Jr., as trustee as to the other undivided one-half. Robert W. Bell, Jr., continued to act as trustee under the deed by the said Elizabeth Y. A. Wright until his death in 1908, and thereafter, in a proceeding in the Supreme Court, the defendant Arthur B. Clark: was made substituted trustee,. and qualified by giving a bond with the defendant. People’s Surety Company of New York, as surety. The mortgage was paid on January 8, 1909, and the defendant Arthur B. Clark, as such substituted trustee, received one-half of the proceeds, to wit, $8,000, and in this action the plaintiff seeks to recover that amount from the defendant Clark, and his surety, the defendant People’s Surety Company of New York, claiming that the said Elizabeth Y. A. Wrig’ht died without leaving a valid testamentary disposition of her estate, and that the said Arthur B. Clark converted the said $8,000 to his own use.

First, with reference to the real estate. Elizabeth Y. A. Wright was forty-five years of age at the time of her death, December 8, 1911. She had not been married until she married the defendant Arthur B. Clark, in August, 1906. She first met Clark in October, 1907, in a New York city restaurant. She, at that time, lived at Mt. Kisco, in Westchester county, where she had lived practically all of her life until 1903, when she went to Cuba, and remained until 1907. She had always been more or less peculiar and eccentric, and at times had hallucinations and delusions that indicated mental unsoundness, which increased as she grew older, and culminated in her death, by hanging by her own hand, in an insane asylum in the state of New Jersey; where sometime before she had been placed by her husband, the defendant Arthur B. Clark.

For years she pretended to believe in fortune telling and always carried cards with her for the purpose of telling her own fortune. When she met the defendant Clark, in 1907, he- was running a clairvoyant office in New York city, under the name of Professor Charles F. Dale, and extensively advertised himself in New Y-ork daily papers as the World’s Renowned Clairvoyant, Psychic and Palmist, announcing that he possessed “ wondrous powers of guidance,” and “ personal magnetism, and the power of psychic force,” able to 11 remove all evil influences, and possessed of extraordinary clairvoyant powers, combined with the superior knowledge of occult forces, enabling him to read human life with accuracy from infancy to old age. His powers are wonderfully indisputable, his advice reliable, his information clear, the only clairvoyant in the world who will give you a written guarantee; who will teach you to fascinate any one you desire, how to make your enemies your friends, how to cause a speedy marriage with the one of your choice. ’ ’ In other advertisements, he characterized himself as the world’s greatest clairvoyant, Professor Charles P. Dale.” He especially emphasized the value of his advice and services in matters of love and marriage, and stated that he had been a professional clairvoyant for sixteen years; although as a witness in this action he testified that he was only in the business for one year, and confessed that he had possessed none of the powers advertised.

The influence that this man exerted over Miss Wright by reason of his alleged occult powers, both before and after her marriage to him, is quite apparent from statements that she made to two disinterested witnesses, to the effect that the stars and other celestial signs pointed Clark out to her as her future husband, at which time she seemed to be in a state of extreme ecstasy. Two months before her marriage, she executed and delivered to the defendant Clark a deed of parcels one and two, which, it is claimed by him, was made in contemplation of their marriage, and as a wedding gift or settlement. It was drawn by the defendant’s lawyer, and recorded four days before their marriage, and, in order to divest his wifé of any dower interest, he organized the Arthur B. Clark Company, and in July, before his marriage, had the premises conveyed to said company. Besides getting title to all of her real estate, he got about $3,500 in cash from her, previous to their marriage, and in May, 1909, he received about $4,000 from the plaintiff, who was the administrator of Thomas B. Wright, the father of Mrs. Clark, and in January, 1909, he received the trust fund of $8,000: already referred to, which he pretends his wife thereupon voluntarily gave him, without any suggestion on his part. In all, the defendant admits that between the time he met Miss Wright, and the early part of 1909, he received in cash, about' the sum of $16,000 of her moneys, besides the deed for the real estate. He thereafter mortgaged the real estate for $6,500', and personally received the proceeds thereof.

. Clark lived with his wife for a few months only, after their marriage, and then, after getting practically all she had, abandoned her, and thereafter and down to his wife’s death in 1911 lived a large part of the time with another woman as his mistress. After abandonment, she complained bitterly of her husband’s treatment of her, and brought an action in equity to recover the real estate and the Us pendens then filed has ever since prevented him from disposing of the same for his own benefit. While that action was pending, and when it was about to be brought to trial, the defendant Clark, with the assistance of his mistress, the woman with whom he was living in Hew York city, got control of Mrs. Clark, and stealthily removed her from a hospital, where she had been placed by her friends, and thereafter unduly influenced her to discontinue the action she had brought to recover her property. Her conduct at this- time, and the paper she signed, and the letter she wrote, taken in connection with the letters she had previously written, complaining of her-husband’s treatment, and of his conduct in stripping her of Jie-r property, are all indicative of mental unsoundness.

Thereafter her friends and former attorney, who had all through acted honorably, and for her best interests, instituted a proceeding to have her declared an incompetent person, and for the appointment of a committee of her person and property. This proceeding Mrs. Clark, ostensibly, under the influence and tutelage of her husband and Ms mistress, defended, and many hearings were had, which Mrs. Clark attended, accompanied by her husband and his mistress. (It appeared by the defendant’s testimony that, during a part of this period, he and his wife and mistress were occupying the same apartment, the wife occupying a room by herself, and the defendant and his mistress occupying another.)

These proceedings finally ended in a finding by a jury, on May 26,1911, that Mrs. Clark was insane, and unable to manage her affairs, and thereupon Arthur I. Strang, Esq., was appointed her committee. He qualified, but owing to subsequent proceedings to vacate the finding of the jury, and for a rehearing, he never had possession of any of her property, or commenced any proceeding to recover it.

In August, 1911, the defendant Clark sent Ms wife, in charge of Ms mistress, to a sanatorium for nervous and insane persons, at Plainfield, N. J., and there she remained until she committed suicide on December 8, 1911.

The story of the life of this unfortunate woman, from the time she met the defendant Clark until her tragic death, is pathetic indeed. She was robbed of her property, abandoned, cruelly neglected, and brutally treated, from about three months after her marriage until the date of her death. Her money and property were her only attractions, and, as soon as the defendant succeeded in getting all she had, Ms abuse and neglect began, and continued until the time drew near for the trial of her suit .against him to recover her real estate, and then he cunningly devised a way of getting her away from her faithful attorney, and devoted and loyal relatives and friends, and thereafter she was completely under his domination and that of his mistress, and kept under their control, practically a prisoner away from her true friends, and the few relatives she had, until her death.

The proof shows that, from the defendant’s introduction to the woman in 1907, he schemed to obtain her property and money, and, without much apparent effort, succeeded; The conveyance of the real estate was fraudulently obtained, and the moneys that he got from the fiancee and wife were obtained by means of deceit and duplicity; she by reason of her weak mental condition was an easy victim of this scheming and unscrupulous man. I am satisfied from the evidence that, at the time of her marriage and down to the date of her death, she was of unsound mind, and incapable of entering into a marriage contract, and unable, in law, to dispose of her property, or to make-a valid testamentary disposition thereof; and that the real estate in question was obtained from her by the defendant Clark by means of fraud, and deceit, and without valuable or lawful consideration; and that the deeds of June 15, 1906, and May 19, 1910, should be set aside. The defendants Newcastle Stone Company, and the Arthur B. Clark Company, must be regarded as having had notice of the fraud, and of Mrs. Clark’s mental condition. Both companies were organized by Clark, and he was president of each, and in control of them.

The paper purporting to be the last will and testament of Mrs. Clark, dated October 2, 1906, was a part of the defendant Clark’s corrupt scheme to get absolute control of his wife’s property. There is no evidence of its due, execution. The subscribing witnesses were not examined as witnesses on this trial, and th'e law does not presume that it was duly executed. A person is presumed to have died intestate until the contrary is proven. Mitchell v. Thorne, 134 N. Y. 541.

The mental incapacity of Mrs. Clark at the time of the execution of the alleged will of September 8, 1910, was clearly shown upon this trial by the proof of her general condition, as well as by the testimony of the subscribing witnesses to that paper.

As to the trust fund. Clark had himself made substituted trustee, and gave a bond, executed by the ■People’s Surety Company of New York, as surety. He received $8,000 as such substituted trustee, the income of which belonged to his wife during her lifetime, and upon her death, without leaving a will, to her heirs at law. Inasmuch as she left no valid will, the plaintiff is entitled to the fund as her heir at law, with interest thereon from the date of her death, December 8, 1911. That Clark received the money, and converted it to his own use, is not disputed, but the claim is made on behalf of the defendant Clark, and the Surety Company, that the trust was one which Mrs. Clark was at liberty to terminate at any time, and that it was in fact terminated by her in January, 1909, when it is claimed she was paid the full amount of the principal of the trust fund, and executed a general release; but the trouble with this claim is that, as a matter of fact, the money was not paid to her, but was received by Clark within a few days after he qualified as substituted trustee, and retained and used by bim for his own purposes; while the alleged release was obtained from her by the same dishonest means used by him in getting her other property and for the same fraudulent purposes. It was by means of undue influence and Mrs. Clark’s impaired mental condition that Clark had himself appointed substituted trustee, and he thereupon as soon as possible converted the entire fund to his own use. His claim that he paid the money over to her was shown by his own examination at the trial to have been untrue. He simply exhibited to her a check according to his .own testimony, and it was never in her hand, and never deposited to her credit. He put it in his own bank account, and used it for his own purposes, and fraudulently got her to sign the alleged release.

If the surety company is not liable under such circumstances, there is nothing to be gained’by requiring a trustee to give a bond. It is doubtful, even if there had been no fraud in connection with the release, and the money had actually been given to Clark, whether it would be a defense in this action. The original trust deed put the legal title in Bell the trustee. The remainder, after the trust for Mrs. Wright’s life, was in such persons as might be her heirs- at law, upon her death, and each such person who would be one of her heirs at law, in case of her death, at any particular time, had then a vested remainder in the principal of the trust, which was liable to be wholly divested by his death before her death, or to be partially divested by an increase in the number of heirs at law, and the fact that the trust was created by Mrs. Wright herself does not seem to change the rule or make the interests of the remaindermen less absolute. Real Prop. Law, % 54, 100; Moore v. Littel, 41 N. Y. 66; Genet v. Hunt, 113 id. 158.

The trust then was absolute and irrevocable, except by a valid last will and testament. Hamlin v. Hamlin, 192 N. Y. 164; Culross v. Gibbons, 130 id. 447; Real Prop. Law, § 57.

The claim is made on the part of the surety company that the trust was void because Mrs. Clark was insane at the time she made the deed in 190'5. This, I think, is untenable. The most that can be said, assuming that she was insane at that time, is that the trust deed would have been voidable at her own option, had she recovered her sanity; but surely the trustee cannot urge that fact in defense of his own misconduct in appropriating the entire trust fund to his own use; nor can his surety for that reason escape liability on its bond; and I think its liability may be established by a judgment in this action, without an accounting, as a condition precedent, and without an order granting leave to bring this action. Dunn v. American Surety Co., 43 App. Div. 91; Grivin v. Hickman, 21 Hun, 316; Long v. Long, 142 N. Y. 545; Russell H. & I. Manufacturing Co. v. Utica Drop Forge & T. Co., 195 id 54; Satterlee v. Kobbe, 173 id 97.

The plaintiff is entitled to judgment annulling the marriage, setting aside the deeds and wills, and against the trust company for the amount converted by the trustee, with costs.

Judgment for plaintiff.  