Opinion
March 12, 1920.
Edward A. Kenney [ Charles E. Casey with him on the brief], for the appellant.
Ralph G. Barclay [ Robert Stewart and Robert M. Johnston with him on the brief], for the respondents.
Present — RICH, PUTNAM, BLACKMAR, KELLY and JAYCOX, JJ.
Although the appellant did not file a formal exception to the nonsuit (Code Civ. Proc. § 994) this was not jurisdictional, but simply a matter of procedure ( People v. Journal Co., 213 N.Y. 1), so that this court can permit an exception to be filed. Therefore, we treat the appeal on the merits. The determination of the burden of proof must be decisive.
Could the trustee prevail here merely on producing these conveyances, apparently not founded on a valuable consideration? The Real Property Law, section 265, declares: "A conveyance or charge shall not be adjudged fraudulent as against creditors, purchasers or incumbrancers, solely on the ground that it was not founded on a valuable consideration." To raise any presumption of fraud there must be existing creditors at the time of the conveyance. ( Kerker v. Levy, 206 N.Y. 109.)
A trustee in bankruptcy, suing as such, cannot prevail in such a suit merely because a solvent person made voluntary conveyances, when the nearest approach to a creditor is the showing that a plaintiff had begun, or was about to bring, an action of tort. ( Beers v. Hanlin, 99 Fed. Rep. 695.) This is the only circumstance relied on here, namely, that an action for negligence had been begun about two months before the first of these conveyances, and over two years before this adjudication in bankruptcy. (See Smith v. Reid, 134 N.Y. 568.)
There is a different rule in actions of contract, since such a plaintiff may be a "creditor," under the bankruptcy statute. ( Matter of Berkeley, 203 Fed. Rep. 7, 10; 30 U.S. Stat. at Large, 544, chap. 541, as amd.) As there was no proof of insolvency, and no evidence to support any inference of fraud towards any existing creditor, the court rightly dismissed the complaint.
Hence the judgment should be affirmed, with costs.
Judgment unanimously affirmed, with costs.