
    First National Bank of Sing Sing, App’lt, v. Schuyler Hamilton, Jr., et al., Resp’ts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 16, 1894-)
    
    Fraudulent conveyances—Pre-existing debt.
    A conveyance by an insolvent husband to his wife, in satisfaction of an existing debt, will not be set aside as in fraud of his creditors, unless there is proof of a fraudulent intent on her part.
    Appeal from a judgment dismissing the complaint.
    The following is the opinion of Hamilton Odell, Esq., referee:
    On February 11, 1889, the defendant Schuyler Hamilton, Jr., conveyed to Ms wife, the defendant Gertrude Y. 0. Hamilton, the several pieces of real estate in the city of New York which are described in the complaint. ■ He was, at the time, heavily indebted to the plaintiff. In September, 1890, the 'plaintiff recovered judgment against him for $63,799.17, a portion of the said indebtedness, which it has been unable to collect It is charged in the complaint that at the date of said conveyance the said Schuyler Hamilton, Jr., was insolvent, and that the conveyance was made without consideration, or for an inadequate consideration, and for the purpose of hindering, delaying, and defrauding the grantor’s creditors, and the relief demanded is that it be declared to b@ faudulent and be set aside aS to the plaintiff, and that the said real estate be subjected to the lien of the plaintiff’s judgment. The material facts in the case are not disputed. In June, 1885, the defendant Schuyler conveyed to the defendant Gertrude, in consideration of “love and affection,” an undivided one-fourth interest in the Prescott House, on Broadway. No reasonable ground exists for challenging the validity of that conveyance. Mr. Hamilton’s solvency at that time is not questioned, and the fact appears that he had other property far exceeding in value the sum of his existing liabilities. It is plain from the proofs that he was not then anticipating the business misfortunes that subsequently came upon him, and that the gift of the Prescott House property to Mrs. Hamilton was not made with any dishonest purpose or intent. Such a settlement upon a wife the law approves, and will protect. Carr v. Breese, 81 N. Y. 584; Payne v. Freer, 20 St. Rep. 605; 4 N. Y. Supp. 644. In January, 1886, this property was mortgaged by Mrs. Hamilton for the sum of $30,000, all of which was loaned by her to her husband, who joined with her in executing the bond and mortgage. In December, 1888, the property was sold by her for the sum of $67,500, Mr. Hamilton receiving the entire proceeds, he at the same time agreeing, in consideration thereof, to convey to her other real estate of equal value. The conveyance which is assailed in this action was made by him in fulfillment of that agreement. The lots conveyed were subject to various ™ mortgage liens, and it is admitted that $67,500 was the fair value of Mr. Hamilton’s equity therein at the time of the conveyance. The said mortgage for $30,000 was paid by Mr. Hamilton out of the proceeds of said sale. It is claimed by the plaintiff that Hamilton was insolvent when the conveyance of February 11, 1889, was made. The claim, in my opinion, is well founded. This, however, is unimportant unless the conveyance was made either without adequate consideration or with fraudulent intent; and, if the consideration was adequate, a fraudulent intent on Hamilton’s part will not invalidate the deed unless Mrs. Hamilton had knowledge of it, or herself actqd with like intent. The statute expressly declares that its provisions-“shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor.” 2 Rev. St. p. 137, § 5. The law is stated as follows by Judge Earl in Starin v. Kelly, 88 N. Y. 421: “Under the statute, a-creditor assailing a transfer of property as fraudulent may succeed by simply showing a fraudulent intent on the part of the vendor, or such intent on the part of the vendee. If;' however, the vendee shows that he paid a valuable consideration for the property transferred to him, then proof of the fraudulent intent of the vendor alone is not sufficient. Then there must be proof, also, of a fraudulent intent on the part of the vendee, or that he had notice of the vendor’s fraudulent intent.” Here, it seems to me, is the fatal weakness of the-plaintiff’s case. There was valuable and ample consideration for the deed in question, and there is no proof to support a finding of fraudulent intent on the párt of either of the defendants. The learned counsel of the plaintiff strenuously insists that undisputed facts in the case require an inference of such an intent as against the defendant Schuyler Hamilton. It appears that in 1878, and also in 1884, he made gifts to his wife of other real estate situated in Croton, Westchester county, and in Newport, R. I.; that he afterwards expended thereon large sums of his own money; and that he so expended a considerable portion of the proceeds of the mortgage and sale of Mrs. Hamilton’s interest in the Prescott House, loaned to him by her as above stated. The argument is that for years Hamilton was systematically and deliberately divesting himself of his property, and bestowing it upon his wife, for the purpose of placing it beyond the claims of creditors, and that the gift of the quarter interest in the Prescott House, and the conveyance of the premises described in the complaint, were in execution of that fraudulent scheme. The contention, in iny judgment, is without foundation. The only question involved in this action is the validity of the said conveyance of February 11, 1889, and the facts above alluded to are material only as they bear upon the sufficiency of the consideration for that conveyance. There is nothing to show that there was any understanding between the defendants that any of the money realized from the Prescott House property, either by mortgage or sale, should be applied to the benefit of Mrs. Hamilton, or expended upon other property owned by her, or that any of it was so applied or expended with her knowledge or at her request. Her testimony is that Mr. Hamilton desired the money to assist him in his business, and that she loaned it to him for that one purpose. She was not bound to know the uses to which he put it. It may be that the plaintiff can successfully follow some of the said moneys into other property belonging to Mrs. Hamilton upon which it was expended by him; but it is clear to me that such voluntary expenditure by him, without prearrangement and without knowledge on her part, cannot in any manner affect the transaction which the plaintiff now attacks as fraudulent, and does not tend to prove a want of consideration for the conveyance of the lots in question. The defendants are entitled to judgment dismissing the complaint.
    
      Samuel Watson, for app’lt; Henry L. Sprague, for resp’ts.
   Per Curiam.

Judgment affirmed on opinion of referee, with •costs.  