Randel v. Dyett , 45 N.Y. Sup. Ct. 347 ( 1885 )

Barnard, P. J.:

There is no doubt but that a right of action exists somewhere to remedy the admitted wrong by the defendants Dyett and Norton to the estate of Jonah B. Randall. All cases agree that if a vendee takes a title to the goods of a deceased person from his executor or administrator, he takes a good title unless there be fraud or covin.

In this case Dyett and Norton took an assignment of the assets of tbe deceased from his administrator, to be used as a mortgage on stock purchases for the individual benefit of the administrator. The purchaser of the stocks lost, as is usual, tbe property of the estate, and the broker claimed to keep the assigned property. They cannot defend their title against the estate, having taken the property with full knowledge that it was the property of the deceased Jonah JB. Randall. So far the case needs no authority and requires no discussion. The person, however, who represents the estate will no.t defend it. He will not bring an action to set aside the transfer made by himself under these circumstances.

To meet this state of facts it is an acknowledged principle in our law that when a person whose duty it is to act refuses, a party injured by the refusal may act in behalf of the injured estate. Thus a stockholder may sue in behalf of a corporation when the receiver refuses. A guardian may be sued to set aside a transfer made by him in connection with the fraudulent purchase by an interested party. (Field v. Schieffelin, 7 Johns. Ch., 150.)

So in Colt v. Lasnier (9 Cowen, 320), it is held that persons beneficially interested may sue without being substituted to the position of a representative of the estate and simply by reason of their interest in the fund. Again, the same principle is reasserted in Sacia v. Berthoud (17 Barb., 15), where a transfer by an insolvent executor was set aside at the instance of those who were beneficially interested and who were injured by the transfer. The action did not depend on the insolvency of the executor but on the illegal transfer.

In Bate v. Graham (11 N. Y., 237), the Qourt of Appeals held that a creditor of a deceased person could maintain a bill to set aside a fraudulent transfer made by the deceased, in his lifetime.

The claim that the action cannot be maintained under all these authorities except by a creditor or legatee, is not a well drawn conclusion from the cases. The action depends upon the injury to the beneficial interest and upon the refusal of those legally charged ^with the defense of the fund to do so. It may be that a-creditor or legatee who would be paid out of other assets should not bring his action.

An heir-at-law is surely injured by a fraudulent transfer. It should not be permitted that a fraudulent vendee could escape the action of an heir unless he proved that the fund was sufficient to pay all debts, legacies and expenses. The heir has the right to have his father’s property applied as directed by statute.

The judgment should be affirmed, with costs.

Dykman, J., concurred; Pratt, J., not sitting.

Judgment affirmed, with costs.