On appeal from the Superior Court, Chancery Division.
For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Wachenfeld, J.
This appeal was originally to the Appellate Division of the Superior Court from a summary judgment in favor of the respondent entered by the Chancery Division. As in several other instances, we certified the appeal here on our own motion to enable the Appellate Division to dispose of all matters on its calendar that were ready for argument before the summer recess.
Plaintiff-respondent brought suit to set aside as fraudulent a conveyance of real property by the appellants Battifarano to the appellants DeMea. In the summer of 1947, respondent, a practicing physician in Union City, loaned money at various times to the Battifaranos at interest rates ranging from ten
per cent. upward and received in return checks made out to "Cash" for the amount of the loan and interest and signed by Mrs. Battifarano. Default occurred and the respondent started suit against the Battifaranos on four of the checks in the Hudson County Court of Common Pleas on August 13, 1948. The Battifaranos were served on August 16th and although they retained counsel, neither an answer nor an affidavit of merits was filed. On September 9th a default judgment in favor of the respondent was entered in the sum of $2,548.74 and $56.35 costs.
Six days prior to the entry of the judgment, on September 3, 1948, the Battifaranos conveyed certain real property, their residence in North Bergen, to appellants George and Lena DeMea for a stated consideration of $1.
On September 14, 1948, five days after entry of the default judgment, Schwartz filed the present bill alleging the facts set forth above and that he was unable to find any other property of the Battifaranos out of which to satisfy his judgment, and asking that the conveyance be set aside as fraudulent. To this bill the Battifaranos filed a separate answer and counterclaim and the DeMeas filed a separate answer. On motion of the plaintiff-respondent, the Battifaranos' answer and counterclaim was stricken on January 21, 1949, with leave to file an amended answer.
The four appellants filed a joint amended answer and counterclaim on January 31, 1949, wherein they set forth five separate defenses: (1) the loans were made by the respondent knowingly to aid and facilitate the gambling enterprise, bookmaking, carried on by Nicholas Battifarano; (2) the loans were made at usurious rates of interest; (3) the default judgment was based on loans made at usurious rates of interest and made with knowledge that the proceeds were to be used to facilitate the operation of a gambling enterprise; (4) the conveyance of real estate was made in full satisfaction of a debt due and owing from Nicholas Battifarano to George DeMea; (5) the respondent had not levied execution on the default judgment and so exhausted his legal remedies. The counterclaim demanded that a judgment of restraint be issued
against the respondent "preventing him from all further actions at law upon the said judgment, and costs."
Respondent moved to strike the amended answer and counterclaim and for summary judgment on the following grounds: the first, second and third defenses were false in fact, insufficient in law, res judicata and a collateral attack on the judgment of the Court of Common Pleas; the fourth defense was false in fact and insufficient in law; the fifth defense was insufficient in law and immaterial; the counterclaim failed to state a claim on which relief could be granted, was false in fact and insufficient and was res judicata by reason of the judgment previously entered in the Court of Common Pleas.
Supporting this motion, respondent filed an affidavit denying knowledge of Battifarano's gambling activities or of the use to which the money was put until after all the loans had been made, but admitting usurious interest rates and asserting that Battifarano informed him that he, Battifarano, was in debt to the extent of about $30,000, was being pressed by creditors, and would put his house "beyond * * * reach" if the respondent tried to get it. ...