On certified appeal from the Appellate Division of the Superior Court.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Heher, J.
[19 NJ Page 285] The action is in ejectment by the children and heirs at law of Minnie Yeiser, who in life, late in 1945, not long after her husband, Benjamin Yeiser, divorced her, entered into illicit cohabitation with the defendant Rogers which continued until her death on October 22, 1951. She died intestate, seized of a dwelling house in Englewood, New Jersey, No. 405 Grand Avenue, where she and Rogers had cohabited. The title to the property was conveyed to her alone on July 31, 1950 under a contract of purchase she made on the prior June 13, for the consideration price of $15,000, of which $8,000 was paid in cash supplied by Rogers and the balance was satisfied by her assumption of a subsisting mortgage on the lands of $7,000 plus.
Rogers counterclaimed alleging that Minnie "purchased" the property to his "use, ownership and enjoyment" and seeking the declaration of a resulting trust for his benefit.
Rogers was a professional gambler, the "banker" in the pursuit of a "numbers game"; and some time prior to the purchase of the property the Federal Government had attached his automobile and bank account, presumably to enforce a claim for taxes allegedly in default. He had on an earlier occasion entered into a trust agreement with his sister and a niece. The motive for concealing his asserted ownership of the property is not hard to divine; his business was unlawful, a continuing defiance of the law, and he lived in fear and apprehension, not only of criminal prosecution, but of the seizure of his assets to satisfy claims for taxes on his ill-gotten income. We are convinced that this was the fact.
Rogers and Minnie had lived an unconventional life together in New York before moving to New Jersey, to satisfy their longing for a suburban residence; and, as found by the Appellate Division of the Superior Court, 32 N.J. Super. 581 (1954), the "enjoyment of the use of the property perpetuated the enjoyment of their informal and illicit affinity."
The equitable cause of action was given precedence; and the county judge found that title to the property was placed in Minnie so that Rogers' "creditors could not attack it," and there was, "at least in the mind of Rogers, an intention some day to have the title vested in him or a corporation" to be formed for the purpose, and he entered judgment declaring a resulting trust and directing a conveyance to defendant.
Accepting the finding that defendant caused the conveyance to be made to Minnie so "that creditors could not attack it," the Appellate Division, applying the clean-hands doctrine, reversed the judgment and remanded the cause for trial of the law action. Semenowich v. Melnyk, 93 N.J. Eq. 615 (E. & A. 1922), was invoked for the principle that the "rights of frauddoers are not looked at in the light of the wrong they accomplish but of the wrong they plan." And
adherence was given to the "principle that in all species of resulting trust, intention is the superior element of consideration," citing Gordon v. Griffith, 113 N.J. Eq. 554 (Ch. 1933). Judge Jayne found that the county judge "justifiably determined the facts," but "erred in his consequent decision."
The case is here by this court's certification at the instance of the defendant.
The argument, in sum, is that there is no evidence that Rogers "had any creditors, present or anticipated," and no evidence that he "owed the United States any money or obligation, present or anticipated," and no evidence that "one of the instigating motives for establishing the alleged trust was to evade payment of federal income tax," as charged by plaintiffs. We think otherwise.
It is not requisite, to bar relief, that present creditors be in contemplation. Under R.S. 25:2-3, rendering void a conveyance "with intent to hinder, delay or defraud creditors and others of their lawful actions, debts, damages or demands," a subsequent creditor can impeach a voluntary conveyance by showing fraud in fact -- i.e. "an actual fraudulent intent to defraud some creditor." Washington National Bank v. Beatty, 77 N.J. Eq. 252 (E. & A. 1910). See also Claflin v. Mess, 30 N.J. Eq. 211 (Ch. 1878); Haston v. Castner, 31 N.J. Eq. 697 (E. & A. 1879); Hagerman v. Buchanan, 45 N.J. Eq. 292 (E. & A. 1889); Zinn v. Brinkerhoff, 48 N.J. Eq. 513 (Ch. 1891); Kinsey v. Feller, 64 N.J. Eq. 367 (E. & A. 1901); Eastern Sash & Door Co. v. Meister, 99 N.J. Eq. 819 (Ch. 1926). And by the Uniform Law, R.S. 25:2-13, every "conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, ...