
    Rousseau v. Bleau et al.
    
    
      (Supreme Court, General Term, Third Department.
    
    May 21, 1891.)
    1. Fraudulent Conveyance—Action to Set Aside—Evidence.
    In an action by an administrator to set aside a conveyance by his intestate as in fraud of the creditors of intestate (Laws N. Y. 1858, c. 314,) the grantee offered in evidence certain notes of the grantor to the grantee, which were excluded on the ground that it nowhere appeared that they constituted any part of the consideration of the deed, were nowhere referred to or shown to have been considered as such, were still in the possession of the grantee uncanceled, and were in no way connected with the consideration expressed in the deed. Held, that the notes were properly excluded.
    ■a. Same—Action by Administrator—Declaration or Deceased Grantor.
    Where an administrator seeks to set aside a conveyance of his intestate as fraudulent with respect to the creditors of the estate, (Laws N. "S'. 1858, c. 314,) the declarations of the grantor, made at the time of the execution of the deed, tending to show a valuable consideration therefor, are not admissible to support the deed; such declarations being in his own interest, and hostile to those of the administrator, who occupies the position of a trustee for creditors of the estate.
    3. Witness—Attorney and Client—Privileged Communications.
    M.. an attorney at law, was employed to draft a deed, which he did, and, on being questioned thereafter in respect to its provisions, refused to disclose the same, upon the ground that it would be improper and unprofessional. After the deed was executed, he subscribed it as an attesting witness. Held, in an action to set aside the deed as fraudulent, that the relation of attorney and client existed between M. and the grantor, and that he was incompetent to testify as to her declarations made when the deed was executed, and that the disability was not removed by his subsequent attestation of the deed as subscribing witness.
    Learned, P. J., dissenting.
    Appeal from circuit court, Rensselaer county.
    Action by John Rousseau, administrator of Mary Rousseau, deceased, against Jennie Bleau and others. The plaintiff, as administrator, recognizes the validity of certain claims made against the estate of his intestate, alleges tlie inadequacy of personal assets to pay the same, and that, unless the real estate conveyed by tlie deceased in her life-time can be readied, the estate is insolvent; and charges in his complaint the fraudulent transfer of the real estate by his intestate, and asks, in his own behalf, as administrator, and of the creditors of the estate, that the conveyance be declared fraudulent and void as to him as such administrator, and the creditors whom he as such administrator claims to represent; and that such conveyance or transfer be set aside, and said real estate may be sold by the order of this court, or by proceedings in surrogate’s court, and the proceedings applied, in due course of administration, to the payment of the debts of the deceased. The defendant Jennie Bleau, the grantee under sueli conveyance, by her answer denies the allegations of the fraud, alleges the validity of her deed, and denies the validity of some of the claims allowed by the administrator, as valid debts against the estate of the intestate. The actiqn was tried at the Rensselaer circuit, and, no issue having been settled in tlie.ease, the trial judge propounded certain questions of fact to the jury, which they answered by their special verdict. Upon the evidence given, the jury, among other things, found some of tlie claims against the estate valid, and that the deed of conveyance of the land in question was substantially without consideration; that it was substantially intended as a gift to the defendant Jennie Bleau. The learned trial judge adopted the findings of the jury, and, in addition thereto, found that the personal estate of the deceased was, at the time of her death, insufficient to pay her debts, and that the deed was executed by Mary Rousseau, with intent to defraud her creditors out of claims then existing and thereafter to be incurred, and, as conclusion of law, found that the deed was fraudulent, null and void, as against the creditors of the estate of Mary Rousseau, and that the property therein described .belonged to her estate, and is applicable to the payment of her debts, and directed judgment setting aside the deed, and canceling the record thereof, and directing the sale of tlie real estate, and the application of so much of the proceeds thereof as were necessary to pay the claims established against the estate of the deceased. Judgment was entered on this decision, and the defendant Jennie Bleau appeals to this court.
    Argued before Learned, P. J., and Landon and Mayham, JJ.
    
      Myers & Norton, (John T. Norton, of counsel,) for appellant. H. D. Bailey, for respondent.
   Mayham, J.

The evidence offered by the plaintiff in this case is snbstantially like that on a former trial, upon which this court held, in setting aside a nonsuit and ordering a new trial, “that the evidence was sufficient to put the defendant upon'her defense.” 8 N. Y. Supp. 823. That decision establishes the right of the plaintiff to recover in this"form of action, and relieves this court from the consideration of that question at this time, and makes it. only necessary to inquire whether the defendant by her proof established a valid defense, and also whether the trial court erred in his rulings upon the questions raised by the defendant on the trial. The defense of the defendant, upon the merits of this controversy, rests solely upon the question whether or not she held, the premises in dispute under a valid conveyance, as against the plaintiff, as administrator of the estate of Mary Rousseau, and in that character representing the creditors of the estate of said deceased. We think the evidence fully justifies the finding and conclusion of the jury and learned court that the personal estate of the deceased was at the time of her death insufficient to pay her debts, and that recourse could therefore properly be had by her administrator to any real estate, or any interest in the same, belonging to the deceased, which might be available to a creditor for the collection of a debt against her. If, therefore, the deed to the defendant was a voluntary conveyance without consideration, it was void as against the creditors of the grantee; or, if made with intent to hinder, delay, or defraud the creditors of the grantor, it was in like manner void. But it is insisted on the part of the defendant that it was given upon a sufficient consideration of a preexisting indebtedness from the grantor, to the grantee, and that indebtedness is sought to be established by proof that the grantee-held the notes of the grantor, and also other claims against the grantor, which, together with the incumbrance upon the real estate, subject to which it was conveyed, constituted a full and adequate consideration for the deed. The difficulty with that contention is that the notes were excluded by the trial judge as incompetent evidence. The ground for the exclusion does not fully appear, but we think they were properly excluded, as it nowhere appears that they constituted any part of the consideration of the deed, and are nowhere referred to or shown to have been considered as such, and as it now appears that they are still in the possession of the grantee, and have not been canceled or surrendered to the maker, and they are in no way connected with the consideration expressed in the deed.

It is also urged by the learned counsel for the appellant that there was error committed on the trial in excluding testimony by Myers, thedraughtsmad of the deed, offered by the defendant as to what occurred between him ann the grantor at the time of the execution of the deed and its deposit with him. It appeared at the commencement of his examination as a witness that he was an attorney. We think, under the circumstances, his testimony, as to the personal communication between him and the deceased, who at that time sustained at least the implied relation of client and attorney, was properly excluded; and it appears from the evidence of the witness himself that he so regarded it, for, on being interrogated by Elizabeth Rousseau, who claims some interest in the property before the death of Mary, he refused to communicate any information to her as to Mary’s disposition of the property, and put his refusal upon the ground that “it would be improper and unprofessional for me to disclose any business given in my charge. ” But it is insisted by the appellant that, as the witness subscribed the deed as a witness, and took the acknowledgment of the same, the grantor thereby waived her privilege, and that the disability was thereby removed, and cites, in support of that contention, In re McCarthy, 8 N. Y. Supp. 578, and several other cases. In the case above cited the attorney was the subscribing witness to a will, which, being an attorney, he had drawn for the testator, and the court, in substance, holds that, by making the attorney one of the subscribing witnesses, she had waived the privilege, and made him a competent witness to-testify to what occurred at the time of its execution. The other cases cited upon this point by the learned counsel for appellants are of a similar character, or where fraud is charged in the execution of the papers. But we think those cases clearly distinguishable from the one at bar. In the case of a witness to a will the testator is presumed to know that, by having the attorney subscribe the will as a witness, he necessarily becomes a witness on its presentation for proof, and that the will cannot be admitted to probate, and become operative, without the testimony of the witness as to the transactions and communications between the testator and witness at the time of its execution; whereas, in the case of a deed, the official certificate or acknowledgment proves it without production or examination of the subscribing witness, and on its acknowledgment the necessity for the production of the subscribing witness ceases, and the presumption of the necessity for the examination of the witness no longer exists, and no waiver of the privilege can therefore be presumed. In the case of Rosenburg v. Rosenburg, 40 Hun, 91, the communication to the attorney was in the presence of both parties, and therefore was not privileged. Nor do we see how the declarations of the grantor to Dr. Prefontain, after she signed the deed, are competent in behalf of the grantor, when her title is attacked by the creditors, or the administrator representing the creditors, of the grantor. Such statements were not a part of the res gestee. The law seems well settled that, when an executor or administrator claims a right or interest solely by virtue of his character as such, evidence of the declarations and admissions, made by the deceased and his wife in his life-time, is competent against the representative. Abbott, Tiv Ev. 59, and cases there cited. Can this rule be extended to a case where the administrator, solely as trustee of the creditors of the estate of the deceased, seeks to disaffirm the act of the intestate, on the ground of the fraudulent alienation of property by the intestate in his life-time for the purpose of defrauding her creditors? If that be so, then the declarations of a party to a fraud could be resorted to, not only to uphold the fraudulent transaction, but would estop the administrator from disaffirming the fraudulent acts of the intestate. The theory upon which the declarations of the deceased have been received against the administrator is that there is a privity of estate between the deceased and his administrator or personal representative, and that the interest of the. deceased while living, and the recipients of the estate after his death, are in harmony with the interest of the personal representative or administrator of the estate. But by chapter 314 of the Laws of 1858 the administrator was authorized, on behalf of the creditors of the estate, to disaffirm the act of the intestate, and, as the representative of the creditors of an insolvent estate, to seek to recover property which the intestate bad transferred in fraud of their rights. By the act above referred to, the relation of the administrator to the deceased seems to have been changed, and he becomes the trustee for the creditors, and, in that position, may disaffirm and commence and prosecute proceedings to set aside a transfer made by the intestate. He is thus placed in hostility to the acts of the intestate, and to the fraudulent grantee. The estate which he seeks to reach for the creditors of the estate he seeks in hostility to the acts of the deceased grantor, and also in hostility to-the interest of the intestate’s grantee, whose acts and interests are in harmony with each other; and in hostility to the interest of the creditors, and of the trustees, seeking to set aside the transfer as fraudulent. In Harvey v. McDonnell, 113 N. Y. 530, 21 N. E. Rep. 695, the -court says: “They [the administrators] stand as trustees of creditors, (Laws 1858, c. 314, § 1.) and for their benefit may disaffirm and treat as void any transfer or agreement made in fraud of the right of creditors interested in any property or right belonging to the estate they represent.” Under such circumstances, we do not see upon what principle the declaration of the person whose conveyance is. sought to be set aside as fraudulent can be received in evidence to support •such conveyance. The plaintiff stands in the place of the creditor, who might have maintained this action, and it could not be maintained, nor would it be contended, that, if the action had been prosecuted by the creditors instead of the administrator, this evidence would have been proper. The evidence was therefore properly excluded.

Excluding the evidence of the draughtsman and that of Dr. Prefontain as to the declarations of the deceased, we find no proof of consideration in,this •case sufficient to uphold the validity of this .deed, as against the claims of creditors established in this action. But we think that there is another and serious objection in this case, as to the validity of. this deed, as against the •creditors of this grantor. It is conceded that the deed was never delivered to :the grantee by the grantor, and that the grantee had no knowledge of its existence until after the death of the grantor. It is true that a deed may be delivered as an escrow to a third person, to be delivered by him to the grantee •on the happening of some future event. But in this ease there was no actual ■delivery by the grantor to the grantee named in it, nor is there any evidence that the grantor ever gave any direction as to the time of its delivery, or that it should be ever delivered. Delivery in some form was absolutely essential to its validity. Stilwell v. Hubbard, 20 Wend. 44. “Delivery includes surrender and acceptance, and both are necessary to its completion. This must ■be the result of a contract,—the meeting of two minds, the accord of two wills. The grantor must be willing and agree to deliver, and the grantee must be willing and consent to receive, and this accord of wills must be evidenced in some way to show the unequivocal intention of both parties that the instruraént shall take effect according to its purport and tenor.” Best v. Brown, 25 Hun, 224; Fisher v. Hall, 41 N. Y. 416. But, if we assume in this case ■that this delivery of the deed by the grantor to the draughtsman Myer was valid as an escrow to be delivered to the grantee on the death of the grantor, •it would not in that event be operative until delivery, (Hinman v. Booth, 21 Wend. 267;) and, not being upon a valuable consideration, would be subject ;to the debts of the deceased existing at the time of her death; so that, in either ■event, the deed would, as to the creditors of the grantor, be inoperative and void. We have carefully examined all the exceptions taken by the learned ■counsel for the appellant, many of which have not been discussed here, but we find no error in the rulings of the learned trial judge for which this .judgment should be reversed. Judgment affirmed, with costs.

Landon, J.,- concurs.

Learned, P. J.,

(dissenting.) The judgment in this action sets aside the ■deed from the deceased to defendant, and declares the property to belong to :the estate of deceased. It appoints a receiver, with power to sell the property, and pay the debts of the deceased, directing him, first, to pay the dam•ages of Elizabeth Rousseau; then to pay to plaintiff the amount of any other debts of deceased. I had occasion to suggest in a former case the inconsistency of permitting an administrator to bring an aiction to set aside a deed of land, and remarked that chapter 314, Laws of 1858, speaks of “estate or .property held by or of right belonging to such trustee or estate;” and that the property of the deceased does not belong to the executor or administrator. But there are expressions in some eases indicating that the executor or administrator may bring the action to set aside a deed of real estate of the deceased alleged to be fraudulent. I cannot think, however, that in such an action the court has the right to change the whole system of enforcing debts ■of deceased persons against their real estate. The statute (Code, § 2749) has provided a settled course to be pursued when real estate is to be made liable •to debts of a deceased person. If this deed is fraudulent as to creditors, then I think the creditors must seek their remedy under the sections above cited: of the Code. I do not think there is any right to give preference to one creditor over another. Nor do I think there should be a receiver appointed. Furthermore, if the deed was never delivered so that it never took effect, then it, is void, not only as to creditors, but as to the heirs of the deceased; and there is no ground for returning any of the avails to the grantee, as the deceased provides. These difficulties would not arise if the decree merely set aside the-deed, and left the creditors to enforce their rights in the mode provided by-statute.  