App. Div.]

FIRST DEPARTMENT, MARCH TERM, 1899.

ants and be used up, either in the purchase by the plaintiff of carriages or repairs thereof. The balance of what money? Clearly of the $1,100, less the sum so actually paid in cash. There could be no balance of the whole without payment of the part, otherwise we would make a balance out of nothing save an unfulfilled obligation to pay on account. The intention here is quite plain as evidenced both by the letter and the spirit of the instrument. The defendants were to pay $1,100 for the three vehicles, but they were permitted to pay it in a particular way. Thus, if they sold the phaton and then paid $550 upon account of the $1,100, they could pay the balance of $550 in the manner indicated, So if they sold the brougham and then paid $550, they could pay the balance of $600 in like manner. But surely if they sold either of these vehicles and did not then pay the agreed sum, they were not still to have the privilege of paying the balance in the specified manner. Upon the defendants' construction their privilege would continue notwithstanding the total breach of the agreement to pay upon a resale. They need not thereupon pay $1, and the plaintiff's only remedy would be to sue for the $550 (or the $500 as the case might be) and to get the rest of the $1,100 in carriages or repairs. This is a preposterous view of the agreement. The balance of the $1,100 was only to remain with the defendants in case, upon a resale, they actually paid in cash" at once" the agreed sum. Failing to do that, the privilege as to the residue ceased and the contract took its natural course. We think, therefore, that upon the defendants' failure here to pay "at once $550 cash" upon the sale by them of the phaton the entire sum of $1,100 became due and payable. The direction was, therefore, right and the exceptions should be overruled and judgment ordered in the plaintiff's favor for $697.77, with interest from the date of the trial, and costs.

RUMSEY, O'BRIEN and INGRAHAM, JJ., concurred; VAN BRUNT, P. J., dissented.

Exceptions overruled and judgment ordered in plaintiff's favor for $697.77, with interest from the date of the trial, and costs.

APP. DIV.-VOL. XXXVIII.

34

FIRST DEPARTMENT, MARCH TERM, 1899.

[Vol. 38.

JOSEPH WEISER, Appellant, v. PHILIP KLING and WILLIAM H. WRIGHT, Respondents, Impleaded with REBECCA WEISEL and Others.

Fraudulent conveyance - the grantee estopped to enforce against the premises a mortgage paid by him, which he seeks to re-establish as a lien on the land.

A person who, in consideration of payments made by him upon a mortgage upon certain premises, received from the mortgagor a conveyance thereof, and subsequently paid the mortgage and satisfied the same of record, was thereafter sued by a creditor of the mortgagor, and the conveyance to him was adjudged to have been made with intent to hinder, delay and defraud the creditors of the mortgagor. After the rendition of judgment in such action, the grantee brought an action against the mortgagee alleging that he was entitled to be subrogated to the latter's place as to all payments made on the mortgage, and asking that the satisfaction piece of the mortgage be vacated, and that he be declared to be the assignee of the mortgage, in which action he recovered a judgment to that effect.

Held, that he was barred by the recovery of the judgment in the creditor's action from enforcing the mortgage against the premises adjudged therein to have been conveyed to him in fraud of the creditors of the mortgagor;

That, when he received the conveyance from the mortgagor, he ceased to have any claim against her, as her indebtedness constituted the consideration for the conveyance;

That he was not entitled, as against her creditor, to have the mortgage declared to be an existing security and a charge upon the land for the payment of the debt, as the right to such relief depended entirely upon a previous determination that the conveyance in which he participated was fraudulent, and a court of equity would not aid him in escaping from a situation in which his dishonest act had placed him.

APPEAL by the plaintiff, Joseph Weiser, from a judgment of the Supreme Court in favor of the defendants, Philip Kling and William H. Wright, entered in the office of the clerk of the county of New York on the 22d day of June, 1898, upon the decision of the court rendered after a trial at the New York Special Term.

Sol. M. Stroock, for the appellant.

Abram Kling, for the respondents. RUMSEY, J.:

The facts appearing in this case are somewhat complicated, and for a correct understanding of the case it is necessary that they should be carefully recited.

App. Div.]

FIRST DEPARTMENT, MARCH TERM, 1899.

On the 5th of April, 1892, one Rebecca Weisel, with others, delivered to one Friend, a bond and mortgage to secure the payment of $5,500, of which $1,000 was to have been paid on the 1st day of December, 1892, and a like sum on the same day in each year up to and including 1895, and the remaining $1,500 on the 1st of December, 1896, with interest annually. On the 5th of October, 1895, Mrs. Weisel conveyed the mortgaged premises to the plaintiff in this action. By the deed it was stated that the premises were subject to two mortgages, one of $18,000, and one of $2,500, to which latter amount the Friend mortgage had been then reduced. At the time of this conveyance Mrs. Weisel was indebted to the defendant Wright in a considerable amount of money, for which he recovered a judgment against her on the 12th of March, 1896. This judgment was duly docketed in New York county and execution was issued upon it, which was returned unsatisfied, and Wright began a judgment creditor's action against Weiser (this plaintiff) and Mrs. Weisel, in which he recovered a judgment that the conveyance from her to Weiser was made by the said defendants and each of them, with intent to hinder, delay and defraud the creditors of Mrs. Weisel. The judgment directed that the premises should be conveyed to a receiver by the defendants in that action, and should be disposed of by him and the proceeds applied as more particularly stated in the judgment. Whether this direction of the judgment was fully carried out or not does not appear. It does appear, however, that the receiver sold the premises at auction and conveyed them to the defendant Kling. When sold, they were subject to a mortgage of $18,000. Weiser was in possession of the premises from the date of his deed in October, 1885, until they were sold by the receiver. While he was in possession, he paid, as he says, to Friend, what was due upon his mortgage, and procured a satisfaction piece thereof, which was executed on the 1st of December, 1896, the last of the payments having been made upon it on that day. After he had been dispossessed from the premises in pursuance of the receiver's deed, he brought an action against Friend, alleging that, for certain reasons stated in his complaint, he was entitled to be subrogated in Friend's place as to all the payments made on the $5,500 mortgage, and asking that the satisfaction piece of that mortgage be vacated, and that he be

FIRST DEPARTMENT, MARCH TERM, 1899.

[Vol. 38.

declared to be the assignee of the mortgage. No other person than Friend was made defendant in that action. Friend, having no interest in the matter, made no substantial defense, and Weiser procured the judgment which he asked for.

Of that judgment it may be said that, as neither Wright nor Kling were parties to it, it is evidence in this action of nothing but its own rendition, and it is only material as tending to show that by some means Weiser has the title to the mortgage and that it is not satisfied. It neither establishes, as against the defendants in this action, that Weiser paid any money upon that mortgage, nor that he paid the money in good faith, nor that the mortgage was not properly reduced to $2,500 when Weiser took his conveyance, nor that the money paid upon the mortgage before that time was actually advanced by him to Mrs. Weisel. For any other purpose than showing that the mortgage is not in fact extinguished it is of no importance whatever.

After this judgment against Friend had been entered, Weiser brought this action against Wright and Kling to foreclose the Friend mortgage, claiming that there was due upon it all the money which had been paid since it was made. The defendants Kling and Wright answered, disputing the right to foreclose the mortgage, and setting up the judgment in the creditor's suit as a reason why the plaintiff should be defeated in this action. The learned justice at the Special Term dismissed the complaint, and from the judgment entered upon his decision this appeal is taken.

In the judgment creditor's action, Wright, one of the defendants here, was the plaintiff; Weiser was one of the defendants, and Mrs. Weisel was another. That judgment, therefore, is evidence in this action between the parties as to everything which was decided in it, or whatever fact lay at the basis of the decision and was necessary to be established in order to warrant the decision therein made. (House v. Lockwood, 137 N. Y. 259, 268.) Wright alleged in that case that the conveyance by Mrs. Weisel to Weiser was made with intent to hinder, delay and defraud her creditors, and especially himself. Weiser in his answer denied the fraud, and set up that he was a purchaser for a valuable consideration. To enable Wright to recover in that action it was not sufficient that he should prove simply that the conveyance was not founded upon a valuable considera

App. Div.]

FIRST DEPARTMENT, MARCH TERM, 1899.

tion (2 R. S. [9th ed.] 1888, § 4), but, if it was voluntary, he was bound to prove in addition that as matter of fact it was fraudulent and made with fraudulent intent. If, however, it was made to appear that the purchase was for a valuable consideration, then it was necessary for him to prove, not only that the grantor, Mrs. Weisel, made the conveyance with intent to hinder, delay and defraud her creditors, but that Weisel had previous notice of the fraudulent intent of his grantor. (2 R. S. [9th ed.] 1888, § 5.) Unless this fact appeared, it would not have been competent for the court to render a judgment that the conveyance was fraudulent. Therefore, the judgment necessarily is a determination that the grantor made it with a fraudulent intent and that the grantee had notice of that intent; in other words, that the grantee participated in the fraud.

Weiser claims, as the ground for his subrogation to the rights of Friend in this mortgage, that he paid every dollar of the money which was paid upon it, both before the conveyance was made and afterwards. In his bill of particulars he states that he had paid before the 15th of August, 1895, on account of the principal of this mortgage, $3,700, and on account of interest, $675. He alleges in his answer to the creditor's bill that he was a purchaser of the premises for a valuable consideration. He testifies in this case that he received that conveyance of the 5th of October, 1895, for the money which he had let Mrs. Weisel have to pay upon this mortgage. He had previously testified to that fact in supplementary proceedings, and he repeats his testimony in this action. There was no dispute in regard to that matter in this case, and the justice who decided the case finds as a fact that the consideration for the conveyance of the 5th of October, 1895, was the money paid by Weiser before that time to Friend, the mortgagee, for the benefit of Rebecca Weisel. The judgment in the creditor's action determines nothing contrary to that finding, but it does adjudge in terms that Weiser was a party to the intent to hinder, delay and defraud the creditors of Mrs. Weisel. It must be taken then as a fact conclusively proved in this action that Weiser, the plaintiff here, was a party to the fraud of which Mrs. Weisel was guilty in conveying the premises to him, and that the consideration for the conveyance was the money which Weiser had advanced upon this mortgage for her benefit.