The opinion of the court was delivered by: BYERS
This is an action in equity by the trustee in bankruptcy of the defendant Elizabeth Bunge, to set aside a conveyance of real estate made by her to the corporate defendant Baxter Arms Corporation on November 2, 1933, on the ground that the same was made without consideration and with intent to hinder, delay and defraud her creditors, and caused her to become insolvent.
The other individual defendants are the mother and brother of Elizabeth Bunge, who are joined because they are officers and directors with her in the said corporation, and are sought to be enjoined as such from disposing of the said property.
The evidence having been taken and considered, following are the
1. The property described in paragraph 13 of the complaint was taken by Elizabeth Bunge in her own name in September of 1930.
2. In so acquiring title, the plaintiff paid the cash consideration over and above a first mortgage from funds, securities and properties of her father and mother entrusted successively by them to her for safe keeping and investment for the benefit of her mother and her said brother who was an infant of the age of fifteen in 1922 when her father and mother determined that the father's property should be so administered. Her father died on October 4, 1923.
3. The said funds and securities, so received by Elizabeth Bunge, were not described in any written document, but were held and administered by her in a voluntary fiduciary capacity, and in the belief that she was legally and morally required to abide by her parents' wishes.
4. Elizabeth Bunge, without financial consideration to herself, conveyed the said property by deed to the corporate defendant on November 2, 1933. Since that date she has not received any part of the rents thereof.
5. The mother and said brother of Elizabeth Bunge are the only stockholders in the corporate defendant except for a qualifying share or two which were issued in her name.
6. In 1927 Elizabeth Bunge invested her own one-third share of the cash and securities so received by her from her father, namely, $5,000.00, in stock of the corporation holding title to the property occupied by the Elmhurst National Bank.
7. Thereafter she was induced to believe that she was required to exchange that stock for 62 1/2 shares of stock in the bank itself.
8. During the bank holidays commencing March 4, 1933, the said Elmhurst National Bank was closed.
9. On February 21, 1934, one Thomas F. Hanley was appointed receiver of said bank by the Comptroller of the Currency of the United States of America.
10. The testimony in this case does not purport to establish the date of actual insolvency of the said bank.
11. On June 7, 1934, the said Comptroller duly made an assessment upon the said Elizabeth Bunge, as a stockholder in said bank, of $25.00 per share for each share of said stock owned by her, which assessment she failed to pay.
12. Action was duly brought by the said receiver in this court against the said Elizabeth Bunge to recover the amount of said assessment, less her savings deposit in the bank (of which the receiver availed himself), on February 26, 1936.
13. The said receiver duly recovered judgment against the said Elizabeth Bunge by default in the sum of $1,672.78, on March 31, 1936.
14. On April 27, 1936, the said Elizabeth Bunge filed her voluntary petition in bankruptcy in this court, describing her occupation as that of a counter clerk employed in a pharmacy in New York City, and listing in her schedules the said claim of the said receiver as her only indebtedness, and asserting therein that she was possessed of no property.
15. The bankruptcy proceeding was thereafter duly conducted before the designated referee, and an order was filed by him, dated July 23, 1936, closing the case, following the first meeting of creditors, at which no assets were disclosed and no trustee was appointed.
16. The report of the first meeting of creditors, made by the said referee and filed in this court, discloses that on May 14, 1936, the only debt proved against the bankrupt was that of said Thomas F. Hanley as receiver of the Elmhurst National Bank of New York, in the said sum of $1,672.78, being the amount of the said judgment so recovered by him.
17. On July 10, 1936, the said Elizabeth Bunge duly obtained her discharge as a bankrupt from the said indebtedness to the said receiver.
18. On April 8, 1938, one Sadie Zenn is deemed, for the purposes of this litigation only, to have purchased the said judgment in fovor of the said receiver.
19. The said Sadie Zenn is the motherin-law of the plaintiff Morton Frederick, and is an elderly woman whose physical condition was said to be such that she could not appear in court at the trial of this cause.
20. By order dated June 3, 1938, the said bankruptcy proceedings were reopened in response to the petition of the said Sadie Zenn, which asserted that a transfer of the real estate referred to in Finding 4 hereof was fraudulent and that the petitioner desired it to be set aside, whereby the appointment of a trustee and the reopening of the estate in bankruptcy would be rendered necessary.
21. Thereafter a meeting of creditors was called by the said referee, and the plaintiff appeared at the said meeting, as attorney in fact for said Sadie Zenn, the only alleged creditor, and caused himself to be chosen trustee, and thereafter qualified by filing a bond in the sum of $200.00 which was duly approved June 22, 1938.
22. By order dated June 30, 1938, the said trustee procured the appointment of his attorney of record in this cause, to prosecute an action to set aside the transfer of the real estate referred to in Finding 1 hereof.
23. The plaintiff conducted sundry examinations of witnesses before the referee in bankruptcy during the months of July, August and September, 1938, as the result of which he was apprised of the facts and circumstances hereinbefore found concerning the source of the money and securities which enabled the defendant Elizabeth Bunge to purchase the real estate in question for the benefit of ...