
    Reuben O. Smith, App’lt, v. Henry W. Perine et al., Resp’ts.
    
    
      (Court of Appeals,
    
    
      Filed June 3, 1890.)
    
    1. Assignment fob creditors—When not rendered void by previous MORTGAGE TO "WIFE OF ASSIGNOR.
    In April, 1883, Mrs. Ferine was the owner of paid-up life insurance policies upon her husband’s life, amounting to $16,600, which she loaned to him to be used as security for loans. He pledged them to Juilliard & Co. for loans to Ferine & Co., which firm made a general assignment in January, 1884, preferring Juilliard & Co. for about $11,000; Ferine & Co.’s assets being a Lout $40,000. But previous to the assignment Ferine gave a mortgage to his wife for $16,600, with an agreement on her part that when the real amount due her was paid the mortgage was to be satisfied. Eeld% that under the circumstances Ferine was under a moral obligation to protect his wife, and that the giving of the mortgage did not make the assignment void, as being made with the intent to hinder, delay and defraud creditors.
    3. Same. )
    Previous to 1873 William H. Ferine, an unmarried son of defendant, having accumulated property in business with his father, on his death bed requested his mother and father to divide his property between them, winch the latter promised to do, and did divide a part, but $7,000 was, by the mother’s consent, left in the business. Ecld, that this furnished a good and valid consideration for a mortgage given by the father to one McCullough for the benefit of Mrs. Ferine.
    3. Same—Provision as to deficiency in mortgages.
    It is proper for an insolvent debtor to insert a provision in the assignment for the purpose of guarding mortgagees against any loss from a deficiency arising upon the foreclosure of their mortgage.
    Appeal from a judgment of the supreme court, general term/ fifth department, affirming a judgment for defendant entered upon the decision of the Steuben special term.
    
      Wm. H. Henderson, for appl’t; George T. Spencer, for resp’ts.
    
      
       Affirming 17 N. Y. State Rep., 226.
    
   Ruger, Ch. J.

This action is brought for the purpose of vacating a general assignment made for the benefit of creditors, by the defendant, Ferine, to the defendant, Farkhurst, upon the ground that the same was made with the intent to hinder, delay and defraud creditors. No claim was made on the argument that the assignment was fraudulent by reason of any special provisions contained therein; but it was sought to derive a fraudulent intent in making it from certain transfers of property and mortgages, made by the assignor, to some of his creditors immediately preceding the execution of the assignment.

It was found by the trial court that each of the transfers and mortgages referred to were respectively made upon a valuable consideration and without intent to hinder, delay or defraud the creditors of the assignor. It was also found that the assignment was made in good faith and without intent to hinder, delay or defraud creditors.

Unless the correctness of these findings can be successfully impeached by the appellant, the judgment must necessarily be sustained, and he, therefore, claims that a legal presumption of an intent to defraud creditors arises out of some of the transactions surrounding the assignment, and, among others, that the giving by the assignor of a certain real estate mortgage to his wife, two days before the execution of the assignment, for $16,600, is evidence of .such intent. As bearing upon the question of such intent it may be premised that the mortgagee never asserted any claim under the mortgage and within two months after the assignment was made, and more than six months before any question was raised over its validity, the mortgagee voluntarily satisfied it of record, the obligation which it was given to secure having" been paid from other sources. Notwithstanding these facts the appellant still insists that it is conclusive evidence of a fraudulent intent in making the assignment. The facts out of which the mortgage grew are wholly undisputed and substantially as follows: In April, 1883, Mrs. Ferine was the owner of paid up life insurance policies of the value of $16,609. Her husband, being desirous of procuring these policies for the purpose of using them as security for ■contemplated loans to be made to him for use in his business, applied to her for them and she consented to loan them to him for that purpose. Ferine, after obtaining the policies, pledged them to Juilliard & Co., to secure loans made to Ferine & Co., a firm of which H W. Ferine was a member.

In January, 1884, Ferine & Co., becoming insolvent and unable to pay their debts in full, made a general assignment for the benefit of their creditors, preferring Juilliard & Co. The amount of that indebtedness was then about $11,000 and the debtors’ assets being about $40,000, the payment of the preferred debt might be considered comparatively safe. Before, however, executing his individual assignment Henry W. Ferine, not being satisfied of the sufficiency of such security and being desirous of fully securing his wife, executed and delivered to her a mortgage on his homestead property and other real estate for $16,600, acknowledging therein an indebtedness to her of that amount. It was never claimed by Henry W. Ferine, or his wife, that this mortgage stood as security for any other sum than the obligation of Henry W. Ferine to return or pay the value of the insurance policies hereinbefore described, and upon the delivery thereof to Mrs. Ferine she executed and delivered to him a defeasance in writing, providing that the mortgage should be cancelled and satisfied upon the payment of the actual indebtedness owing by H. W. Ferine to her, irrespective of the sum mentioned in the mortgage. It also appeared in evidence that immediately after the execution of the assignment the plaintiff was informed* of the actual nature of the mortgage and the obligation which it was given to secure. When this mortgage was given Henry W. Ferine was under a legal obligation to return the policies of insurance to his wife or pay her the value of them. Ferine had already transferred these policies and placed them beyond his reach and they were hable to be lawfully disposed of at any time by their pledgee and pass beyond the power of the owner to recover. Under these circumstances, Ferine, being about to dispose of all his property, was under a moral obligation to protect his wife. Nothing less than security to her for the full value of the policies would effect this object, and what he did was nothing more or less than to give her such security. He was under no legal or moral obligation to any one to require his wife to rely wholly upon the uncertain and doubtful security afforded by Ferine & Go’s, assignment, but could, if he thought best, so dispose of his property as to place her security beyond doubt, provided he took nothing more from his creditors than was necessary to secure his obligation to her. Whatever may have been the form which this transaction assumed, it could never have resulted in legal harm to the creditors except by subsequent fraudulent conduct upon the part, not only of the mortgagee- and mortgagor, but also of the assignee, and it cannot be presumed, in order to subvert this assignment, that such a fraud was contemplated. It is not claimed that any such conduct was attempted and it is found by the trial court that it was not intended by the parties to the transaction. We think this finding is supported by the evidence and is therefore conclusive upon this court as to the fact, of the intent.

It is also claimed that another mortgage given by Ferine on the same day to one McCullough, but practically for the benefit of Mrs. Ferine, was fraudulent, for the alleged reason that it was given for a fictitious debt. The circumstances out of which this liability arose were proved beyond controversy, and were as follows: Previous to 1873, William H. Ferine, an unmarried son of Henry W. Ferine and his wife, had been engaged in business with his father and had accumulated some property. In that year, being afflicted with a mortal illness, he summoned his father and mother to his death bed and announced to them that he was about to die and did not desire to make a will, but wished that-such property as he owned should be divided equally between his father and mother. His father, in the presence of the mother and son, promised that his wishes should be respected and fulfilled. After his death a portion of the property was actually divided between the father and mother; but the remainder, amounting to upwards of $7,000, was, with the consent of the mother, continued in the business conducted by the father, and he had the benefit thereof. One-half of this sum formed the con-; sideration of the mortgage in question. We think this furnished a good and valid consideration for the mortgage. The promise of Henry W. Ferine to his son and wife to pay to her the value of one-half the property left by the son in his possession constituted a legal obligation against him which could have been enforced by her in an action for that purpose. Lawrence v. Fox, 20 N. Y., 268; Williams v. Fitch, 18 id., 546. The voluntary preference of this sum by Henry W. Ferine for his wife’s benefit did not, of itself, constitute any evidence.

It is also objected that a mortgage on real estate given by Henry W. Ferine, on January 28, 1884, to Moses Davidson, William R. Sutton and Samuel Camochan, to secure to them $8,063.54, taken in connection with a provision in the assignment preferring the same individuals for such sum as he should be indebted to them, in the absence of any other proof of indebtedness but the mortgage debt, was evidence of a fraudulent intent on the part of the assignor, and it is claimed that the court below erred in not finding such intent. The fact that the assignor was in good faith indebted to the mortgagees for the sum in question is not disputed; but the claim seems to be that because he did not specify in the assignment that the indebtedness was also included in the mortgage, that in some way it furnished evidence of fraud which vitiates the assignment

It is unnecessary to dispute the claim of the appellant, for, conceding its correctness, it would furnish, at the best, but some evidence of fraud, which has been considered by the trial court and found by it against the plaintiff’s contention. It is quite probable that this claim was put in the assignment for the purpose of guarding the mortgagees against any loss from a deficiency arising upon the foreclosure of their mortgage, and it was, we think, entirely proper for the assignor to provide for such a liability. We can see no objection to the finding of the trial court as to the validity of this mortgage or the preference contained in the assignment. The preferees would take no benefit under the assignment without proving the existence of a debt in their favor against their assignor, and they, confessedly, had no other claim except that arising under the mortgage. If they received payment of the debt from the land, they could receive nothing under the assignment, and if they collected the debt from the assigned property, it would leave, subject to the provisions of the assignment, an equal amount in value of real estate to be used for the benefit of the other creditors under the assignment

There is no view of the transaction which furnishes any conclusive evidence of fraud on the part of the assignor.

We have carefully considered the remaining points presented by the brief of the appellant, but are of the opinion that there are no others which require special consideration. The questions raised in the case are solely those of fact, and have been conclusively disposed of by the adverse findings of the trial court.

In view of the conclusion reached it becomes unnecessary to consider the point made by the defendant, that the plaintiff is estopped from assailing the validity of the assignment by reason of his acquiescence in and acceptance of benefits thereunder The judgment should be affirmed, with costs.

All concur.  