
    Kain v. Larkin et al.
    
    
      (Supreme Court, General Term, Third Department.
    
    November 22, 1892.)
    Fraudulent Conveyances—Action to Set Aside—Complaint—Insolvency.
    A complaint, under 2 Rev. St.- p. 137, § 1, declaring that every conveyance made with intent to hinder, delay, or defraud creditors shall be void “as against a person so hindered, delayed, or defrauded, ” must allege, not only the intent, but actual fraud, hindrance, or delay, as that such convey anee had left the debtor insolvent and without other property to pay debts.
    
      Appeal from circuit court, Ulster county.
    Action by Margaret Kain, administratrix of David Kain, deceased, against Patrick Larkin and Maria B. Larkin, to set aside a deed. From a judgment dismissing the complaint, and denying motion for a new trial, plaintiff appeals. Affirmed.
    For former reports, see 131 N. Y. 300, 30 N. E. Bep. 105, reversing 17 N. Y. Supp. 223.
    Argued before Mayham, P. J., and Putnam and Herrick, JJ.
    
      C. R. Adams, for appellant. F. L. & F. A. Westbrook, (F. A. Westbrook, of counsel,) for respondent.
   Putnam, J.

The court of appeals has determined in this case, (131 N Y. 300, 30 N. E. Rep. 105.) that to establish her cause of action on the trial plaintiff must not only show want of consideration for the transfers of real and personal property assailed in the complaint, but that such transfers left the judgment debtor insolvent and without ample property to pay his existing debts and liabilities, and that the fact that an execution was returned unsatisfied 18 months after the conveyances in question does not show that at the time thereof the debtor did not have property enough to pay his debts. The plaintiff insists that under a complaint alleging that the transfers in question were made without consideration, and with intent to hinder, delay, and defraud creditors, she could properly show the facts which the appellate court has held necessary to establish her cause of action on the trial; that the allegation that the conveyances in question were made with a fraudulent intent must be deemed to impliedly allege all that is necessary to show such intent, viz., that the grantor did not retain sufficient other property to pay his debts; that it was only necessary in the complaint to allege the ultimate fact which constitutes the cause of action, — that is, the fraudulent intent; that, the action being statutory, it is sufficient to allege the cause of action in the words of the act. The trial judge, however, held that it was necessary to allege in the complaint what the court of appeals has determined must be established on the trial,—that the transfers in question left the defendant without other property. I agree with the position of the appellant, that in an action given by a statute it is ordinarily sufficient in the complaint in alleging the cause of action, to follow the words of the act. Railway Co. v. Robinson, 133 N. Y. 242, 30 N. E. Rep. 1008. But I think the plaintiff, in his pleading, fails to follow the words of the act. The statute provides “that every conveyance * * * made with intent to hinder, delay, or defraud creditors, * * * as against a person so hindered, delayed, or defrauded,,shall be void.” 2 Rev. St. p. 137, § 1. It will be seen that a conveyance made with a fraudulent intent is only void as against one hindered, delayed, or defrauded; in other words, against one damaged. In the opinion delivered in the court of appeals when this case was before it (page 307, 131 N. Y., and page 106, 30 N. E. Rep.) this language was used: “If the grantor remains solvent after the conveyance, and has sufficient property left to satisfy all his just debts, then the conveyance, whatever his intention was, cannot be a fraud upon his existing creditors.” In other words, there may be a fraudulent intent in making a conveyance not fraudulent as to creditors, because the debtor retains sufficient property to pay his debts. In the same opinion the court further says, (Id.:) “The person assailing the deed assumes the burden of showing that it was executed in bad faith, and that it left the debtor insolvent and without ample property to pay his existing debts ánd liabilities. ” This means he must show both facts, —the bad faith, the fraudulent intent,—and also that the transfer assailed left the debtor insolvent.

It will thus be seen by the language of the statute and by the extracts quoted from the opinion delivered by the court of appeals that the cause of action in such a case is not only the fraudulent intent, but also the injury, the damage, the hindering and defrauding, resulting from such fraudulent intent. It follows, I think, that the plaintiff, in stating her cause of action, should not only have alleged the making of the transfers in question without consideration and with intent to hinder, delay, and defraud his creditors, but should also have alleged that she was hindered and defrauded 'for the reason that such transfers left the debtor insolvent and without sufficient property to pay his debts in full. The statute says a transfer made with a fraudulent intent shall be void as against one defrauded. Therefore there must be an unlawful intent and fraud in fact, on account of which plaintiff has been defrauded. This fraud in fact it was necessary for plaintiff to allege in order to properly state her cause of action given by the" statute. As stated in Rice v. Perry, 61 Me. 150: “A fraudulent purpose is an important element in the case, but it is not the only one. There must be superadded to it, in addition to the sale, actual fraud, hindrance, or delay, resulting therefrom to the creditors. The sale will be upheld unless the fraudulent purpose is actually accomplished. Thus if, notwithstanding the s.ale, W. and C. retained and held * * * other personal property sufficient to pay the debt, * * * the sale would not be void, whatever might have been the secret purposes of the parties to it. The reason for considering the sale void in this class of cases is that creditors are damaged thereby; and when the reason is wanting the rule itself becomes inapplicable.” To the same effect see Sell v. Bailey, 119 Ind. 51, 21 N. E. Rep. 338.

The court of appeals, when this case was before it, did not pass directly on the question of the sufficiency of the complaint. But there is language in the opinion delivered by that court indicating an opinion that the complaint should have contained an allegation showing that the transfers assailed by the plaintiff in this action left the defendant without other property, and insolvent. Thus Judge Earl says: “There was no allegation in the complaint that the money deposited in the savings bank and the real estate conveyed by the judgment debtor to his daughter constituted substantially all the property he had, or that be was insolvent at the time of the conveyances, or that he was thereby rendered insolvent. And there was no allegation in the complaint that he owed any debts except the liability which he incurred by killing the plaintiff’s intestate.” Also: “Our opinion, therefore, is that upon the allegations in the complaint, and the proofs upon the trial, and the finding of the trial judge, the plaintiff could not successfully assail this deed.” These quotations indicate that, in the view of the learned judge who delivered the opinion of the court of appeals, an allegation in the complaint that the transfers assailed by the plaintiff as made with fraudulent intent left the debtor without other property and owing other debts was necessary, or at least would have been proper. Such an allegation could hardly have been properly inserted in the complaint unless necessarily stated as part of the cause of action. In the opinion by Judge Earl the case of Sherman v. Hogland, 54 Ind. 579, is quoted from, cited, and approved. In that case, which was, like this, a creditor’s bill, the court held: “After a very careful consideration of the whole subject we have come to the conclusion that, both on principle and on authority, it is necessary to charge in the complaint and prove on the trial that at the time the conveyance complained of was made the debtor did not have left enough of other property subject to execution to pay all his debts.” Page 584. It will thus be seen that in the case of Sherman v. Hogland, supra, the very question involved in this case was passed upon. On the whole, I think the trial court reached the correct conclusion, and that the judgment should be affirmed, with costs.

Herrick, J„ concurs. Mayham, P. J., not acting.  