5 Del. Ch. 77 | New York Court of Chancery | 1875
The title of the statute 13 Eliz. chap. 5, is “ An Acte agaynst Fraudulent Deedes, Gyftes, Alienations,” etc. The preamble and § 1 of the Act are as follows::
“ For the avoyding and abolysshing of faigned covenous- and fraudulent FeofEmentes Gyftes Grauntes Alienations-Conveyaunces Bondes Suites Judgementes and Executions,, oswell of Landes and Tenementes as of Goodes and Catals, more commonly used and practysed in these dayes, then hatheben scene or hard of heretofore; Wch FeofEmentes Gyftes-Grauntes Alienations Conveyaunces Bondes Suites Judgementes and Executions have ben and are devysed and contryved of Malyce Fraude Covyne Collusion or Guyle, toThend Purpose and Intent to delaye hynder or defraudeCreditors and others of theyr juste and lawfull Actions Suites
The opinion of judges is uniform that this statute cannot receive too liberal a construction, or be too much extended in suppression of fraud. In Twyne’s Case it was resolved that, “ because fraud and deceit abound in these days more than in former times, all statutes made against fraud should be liberally and beneficially expounded to suppress fraud.” This statute, it is believed, has been universally adopted in this country,— it certainly 'has been in this State; and I feel no disposition, from a consideration of a more favorable aspect of
This statute makes void against creditors all manner of alienation of property, and also all bonds, suits, judgments, and executions, as well of lands and tenements as of goods and chattels had or made, or at any time thereafter to be had or made, to or for the intent or purpose to delay, hinder, or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, etc. Its purposes and objects are as extensive as the Roman Civil Law, which declared “ that all acts of whatever nature done by debtors to defraud their creditors should be revoked.” Domat, Civ. L. bk. 2, tit. 1, § 1, ¶ 1.
If the bond executed by Jones to Edmund L. F. Hard-castle, trastee of Araminta Jones, was, in the language of the statute, devised of malice, fraud, covin, collusion, or guile, to the end, purpose, and intent to delay, hinder, or defraud creditors and others (under which term “ others ” these complainants, although not creditors at the time, but subsequently becoming such, would be included) of their just and lawful actions or suits, where aetioljs,.or suits had been instituted, or of their debts, accounts, or damages, where actions or suits had not been instituted, whether such debts, accounts,. or damages existed at the time of executing the bond, or were contracted, made, or existed subsequently, and at a period so near to the time of the execution of the bond, under circumstances sufficient to convince a rational mind that the purpose and intent of executing the bond was to delay, hinder, and to defraud creditors and others of their just and lawful actions, suits, debts, accounts, and damages,— then the execution of the bond was fraudulent, and the bond is void against all such, and the judgment confessed thereon, and the execution
The execution of a bond, the consideration of which is voluntary, or rather where there is no consideration, or the •consideration for which is natural love and affection, if made by a person in insolvent circumstances, or so indebted at the time as to justify a reasonable belief, founded upon a consideration of his pecuniary condition or estate, that its execution was not bona fide, and to place the bona fides of the transaction beyond reasonable question, would be, as against creditors .at the time, fraudulent and void, and would, as against subsequent creditors, be void upon proof of the existence of a ■fraudulent intent in the execution of the bond; and such 'intent or purpose to defraud may be proved either directly •or positively, or by a just- inference drawn from the existence •of facts and circumstances justifying a reasonable belief that the purpose and intent for which the bond was made was to ■defraud, hinder, or delay subsequent creditors in general, or any one or more subsequent creditors in particular. Whether the bond executed by Jones in favor of Hardcastle, and the judgment confessed to him, and the execution thereon issued, were such as to bring them within the just application of this principle, is the subject of inquiry in this suit.
There is no proof in this cause that, at the time of the execution and delivery of the bond by Jones to Hardcastle, there were any existing debts against Jones.
The case does not require, therefore, that I should consider -the law as to the validity or invalidity, in respect to the rights ■of existing creditors, of the execution of a bond to a trustee, by a husband, in favor of his wife, where the bond is purely voluntary, or where its consideration is love and affection. The rule of law in reference to voluntary conveyances in respect to subsequent creditors is, in my opinion, correctly stated by Judge Story, and is this: “ That there is nothing
In the case under consideration Jones made no conveyance to his wife, and none to her trustee for her. He did not profess, in executing the bond, to be making a provision for her by way of settlement, actual or contemplated. He made-thereby no settlement of property upon her or for her benefit,, either immediately or prospectively. He executed the bond-, as the acknowledgment of indebtedness in the sum of $4,000.. If it cannot be supported against the complainants as an obligation of indebtedness, it cannot be so supported by -being-treated in the light of an intended settlement, nor can it be-supported as a voluntary obligation made in her favor by means of the intervention of a trustee. It is true, there is no-evidence that Jones was indebted to other persons at the time of the execution of the bond, but there is no proof that at that time he was possessed of property of any kind to the-value of $4,000. He was engaged in selling goods, wares, and merchandise in Dover, and had been so engaged á very short time previous thereto. Within three months after the date of the execution of the bond, he contracted the debt with the complainants, for which they subsequently recovered
Such conduct would instinctively be adjudged fraudulent by any right-thinking mind, and a court of equity would not aid, but judge it by its true character. While courts of equity will favor a reasonable provision for wife or children, they
In a note to 1 Bishop on the Law of Married Women, § 751, taken from Bell, it is said : “Ho doubt, if the settlor be not •indebted at the time of making the settlement further than most men must be, as already shown, and the settlement lias been made without a view to the contraction of debt, it will. be good against creditors in subsequently contracted debts, -even although the settlement be in favor of strangers; but if •the settlor, though not indebted at the time of making the
As illustrating the application of the statute of 13 Elizabeth to subsequent creditors, the case of Walker v. Burrows,. 1 Atk. 93, may be cited. It is there said by Lord Hardwicke that it is necessary on this statute to prove that, at the making-of the settlement, the person conveying was indebted at the time or immediately after the execution of the deed. He also-remarked: “ Upon this statute there is no other description of the intent of the conveyance in the enacting clause but by-reference only to the preamble, the intent before declared and expressed; so that, unless the conveyance in 1718 was made for that purpose, it will not be void. How, here is no-proof that the father was indebted at the time or soon after,, so as to collect from thence the intention to be fraudulent.” See also the case of Stileman v. Ashdown, 2 Atk. 480. In the case of Gardiner v. Shannon, 2 Sch. & Lef. 228, Lord Redesdale set aside a settlement as fraudulent against subse quent creditors, which had been made at a time when the settlor was not indebted more than £20, but when he was on the eve of entering into a partnership which soon after ended in a bankruptcy. His lordship remarks: “ This is a mere voluntary bond,—an act which the bankrupt was not under an obligation to do; and when a man does such an act, it must betaken to have been done in order to deprive his creditors of the remedy they would otherwise have against his effects.”
The rule deducible from all the cases, I think, is this: that where there is no actual fraud, or fraud in the intent in the origin of a voluntary conveyance, it is good against subsequent creditors; and that such actual fraud, or fraud in the intent, is an inference to be drawn from all the circumstances
The important and sole question, therefore, in this cause, is whether, at the time of the execution of the bond by Jones to Hardcastle, Jones was indebted either to his wife orto Hardoastle, as her trustee, or was legally or equitably bound to pay her or him, as her trustee, the sum of $4,000, —the consideration mentioned in the bond,—or so much thereof as will constitute a sufficient consideration for the same; and whether he, ;as her trustee, is therefore entitled to the proceeds of the sale •of Jones’s goods now in the hands of the sheriff and claimed by the complainants. The inquiry is an important one, not •entirely free, perhaps, from difficulty,— important not so much in respect to the amount of money involved in the suit, as to the questions, legal and equitable, which require examination and decision. This, I believe, in one of its aspects,— the last which I shall notice,—is a case of first impression in the tribunals of this State. It will therefore justify a cautious and careful examination of the authorities applicable to it.
The doctrine in respect to the relation of husband and wife •as debtor and creditor has been correctly stated by the Court -of Appeals of the State of Maryland. In the case of Edelen v. Edelen, 11 Md. 415, a widow sought to charge her deceased
In the case of Kuhn v. Stansfield, 28 Md. 210, it is stated that Mrs. Somerville and her husband, in August, 1863, acknowledged, in writing, that they had received from her father $800 as an advancement with a view to a portion or settlement of his daughter. In March, 1866, nearly three years afterwards, the husband, being largely indebted, executed a bill of sale of his property to his wife. A few days afterwards the plaintiffs sued out attachments against him as .an absconding debtor. The court says : “ It is conceded that .-a contract may be entered into by a husband for the transfer •of property to his wife for a bona fide consideration coming from her. It is equally well settled that the relation of debt- or and creditor may exist, growing out of the appropriation, by the husband, of the wife’s separate property; but if received and appropriated with her knowledge and acquiescence, this court has said in such cases there must be an agreement by the husband to repay the money so appropriated. That it (the $800) was received with the knowledge .and acquiescence of the wife admits of no doubt; and, as to the agreement to repay, both papers are entirely silent. It
In the case of Hill v. Hill, 38 Md. 183, it appears that-the real estate of a deceased husband had been sold under a decree for the payment of his debts. Among the claims filed was one by his widow, being an account charging for cash lent by her to her husband during coverture. The claim was disallowed by the orphans’ court, and upon appeal the court of appeals says: “¥e think the decision of the orphans’ court was correct, the evidence being, in our opinion, altogether insufficient to establish the claim. In order to establish the relation of debtor and creditor between a husband and wife, growing out of the use or appropriation, by the husband, of the wife's money, being her separate estate, where the receipt and appropriation are with her knowledge and acquiescence, there must be an agreement by the husband to-repay the money. In such case an assumpsit is not implied, but an express promise or agreement to repay the money must be shown.”
These cases are in accord with the uniform decisions on the same subject. The words “express promise or agreement” do not, however, mean a bargain in so many words, but the recognition of an understanding between parties. Cantine v. Phillips, 5 Harrington, 429.
I know of no case contravening the principle, long established, thus recognized by the highest court of the State of Maryland. It will be applicable to and must govern all similar cases.
It appears, by the evidence in this cause, that at the time Jones and wife executed the several notes to Todhunter and mortgaged her separate property for their payment, and also-at the time they sold the property to Colladay, they resided in the city of Baltimore, where the property was situate.
By article 45 of the Code of that State:
“ § 1. The property, real and personal, belonging to a
“ § 2. The property acquired or owned, according to the provisions of the preceding section, by a married woman, she shall hold for her separate use, with power of devising the same as fully as if she were a feme sole ; or she may convey the same by a joint deed with her husband, etc.
“ § 3. It shall not be necessary for a married woman to have a trustee to secure to her the sole and separate use of her property; but if she desires it she may make a trustee by deed, her husband joining in the deed, or she may apply to a court of equity and have a trustee appointed, in which appointment the uses and trust for which the trustee holds the property shall be declared.
“ § 4. A married woman, having no trustee, may, by her next friend, sue in a court of law or equity in all cases for the recovery or security or protection of her property as fully as if she were a feme sole.”
“ § 11. Any married woman may convey her real or personal property, if her husband joins in the conveyance, whether the conveyance be absolute or by way of mortgage,” etc.
The object of this article was not to remove the general disabilities of married women, but only those that relate to the holding, use, and conveyance of property in the mode prescribed by the Act. It confers no rights and removes no disabilities in reference to anything else. It gives her no right to contract in respect to anything else. Her disability to execute a promissory note or obligation for the payment of money, having no relation to the holding, use, or conveyance of the property mentioned in the Act, is not thereby removed.
The acts of Mrs. Jones while she resided with her husband in the State of Maryland, in respect to her property, so far as the statute law of Maryland exclusively applies to those
In the case of Diver v. Diver, 56 Pa. 106-109, Strong, J., says, in respect to the Married Women’s Act then existing in Pennsylvania: “ It is a remedial statute, and we construe it so as to suppress the mischief against which it was aimed, but not as altering the common law any further than is necessary to remove that mischief.” ,
Ohief Justice Thompson, of Pennsylvania, in speaking of the same Act, expresses, in my opinion, the correct view in respect to all similar Acts.' He says: “ That Act is an enabling and enlarging Act. It is of the very nature of such Acts that they are to be administered in the spirit of the rights enlarged by them. Such legislation implies an intention to reform or extend existing rights, and it cannot be that it is the duty of the courts to render them as unavailing as possible to the class intended to be benefited, by harsh and unpractical views and rules.” I would add to the words of Ohief Justice Thompson that it is the duty of the courts .to render them (these Acts) availing to the class intended to be benefited, by liberal and practical views and rules, in so far as such views and rules are consistent with the purposes and objects contemplated by their enactment. It is not necessary, for the purposes of this case, to consider what words are necessary to create a separate estate in a married woman. If, from an examination of the instrument by which the estate is created, the intention to give a sole or separate enjoyment to the wife is discoverable, that will be sufficient. That the house and premises in Baltimore, which Mrs. Jones and her husband mortgaged to Todhunter, were her separate estate, appears by an inspection of the deed for the same to
At common law a husband and his wife cannot contract with each other. Her disability in this respect results from the fact that she is supposed to be subject to his power. Being thus subject, she is considered as having no will of her own. She cannot make a valid contract with any other person. Should she attempt so to contract, that law would adjudge her act a nullity. ”
A different rule prevails in" equity. Here, for some pur
As before remarked, these are questions of first impression in this State. Text-writers upon this subject substantially agree in respect to it, although their language in some respects differs.
“ Where a wife’s estate is mortgaged for the benefit of her husband, she has, if she survives, a right, after all his debts are paid, to stand as a creditor against his assets, unless at the time of the mortgage a settlement is made upon her ; but evidence is admissible to show that the wife intended otherwise. The title of the wife to be exonerated is considered as precisely the same as that of the heir.” 1 Madd. 585.
It is stated in Clancy on Married Women,. 589, that “ where the transaction is a mortgage by husband and wife of her real estate, with a view to pay his debts or to promote his interest, she will be considered in equity as a creditor for the money, and as entitled to have his personal assets applied in discharge of the amount; the court looking on him as the debtor, and on her land only as an additional security.”
Macqueen, in his work on Husband and Wife, 181, 182, speaking of a widow’s right to be exonerated out of her husband’s assets, says: “ This equity is put upon the principle that she is considered, when mortgaging her property for her husband’s debt, to stand in the attitude of a surety; from whence it follows that she must be invested with the usual privileges of that character, the first of which is indemnity from the principal for whose benefit her security was interposed.” He also states that creditors have no preference over her in the administration of her husband’s assets.
In Eoper on Husband and Wife, vol. 1, 143, where this - subject is treated, it is said: “ Since the money was borrowed for the husband upon his wife’s estate, she will be considered in the nature of a surety, and entitled to have such estate exonerated out of his assets.”
Judge Story, upon this subject, says: “ If a wife should unite with her husband to pledge her estate, or otherwise to raise a sum of money out of it to pay his debts or to answer his necessities, whatever might be the mode adopted to carry that purpose into effect, the transaction would, in equity, be treated according to the true intent of the parties. She would be deemed a creditor or a surety for him (if so originally understood between them) for the sum so paid; and she would be entitled to reimbursement out of his estate, and to the like privileges as belong to other creditors.” 1 Story, Eq. § 1373.
Bishop, in his work on the Law of Married Women, vol. 1, § 604, says : “ In like manner husband and wife may mortgage her lands to secure a debt of her husband. As between the two she occupies the position of surety for him.”
These opinions of text-writers are fully, supported by adjudged cases on this subject. I shall not attempt to refer to all these cases, but only to so many of them as may be necessary to show the origin, expansion, and development of the doctrine upon this subject, with a view to the application of that doctrine to the present case. The case which I shall first notice, and the one most generally cited in succeeding cases on this subject, is that of Tate v. Austin, 1P. Wms. 264. The report of that case states that a husband, seised in right of his wife, borrowed £500 in order to supply his occasions, particularly to buy himself a commission in the army; and for the securing of this money he and his wife levied a fine
According to this view, in a case like that supposed by Lord Hardwicke, the wife, paying the debt of the husband, would be entitled to be subrogated to the rights of the mortgagee in the mortgage against her husband’s land, and to payment out of her husband’s land in preference to creditors in judgments suffered subsequently to the mortgage. I cannot therefore conceive it to be true that all other debts of the husband shall be preferred to hers, especially if that other remark of Lord Cowper be true, that “everything shall be taken favorably for the wife, who, for the supptying the husband’s occasions, has agreed to charge her land with a debt of his.” It is also said by Lord Hardwicke, in Robinson v. Gee, 1 Ves. Sr. 252: “ It is a common case for a wife to join in a mortgage of her inheritance for a debt of her husband; after the husband’s death she is entitled to have her real estate exonerated out of the personal and real assets of the husband, the court considering her estate only as a surety for his debt; and none of his creditors have a right to stand in place of the mortgagee, to-come round on the wife’s estate.” According to this opinion she has the rights of a specialty creditor, and therefore it cannot be true that “ all other debts of the husband shall be preferred to ” hei's. Lord Thurlow, in the case before cited from Atkyns, after stating that the title of the wife is precisely the same as that of an heir at law, assigns as a reason, “ because-in Tatev. Austin, 1 P. Wms. 264, and 2 Yern. 689, though not the question in the cause, and consequently not weighed upon argument, yet the court was very clear that the wife-cannot insist upon being paid in preference to onerous cred
If, then, according to these decisions, the wife in such a case be a creditor of her husband, how can it be said that all other debts of the husband shall be preferred to hers ? But this-remark of Lord Chancellor Cowper in Tate v. Austin, that all other debts of the husband shall be preferred to that of the wife, has not met the approval of the judicial mind in other-cases. Mr. Justice Helson,—then of the Court of Errors of the State of Hew York, and late of the Supreme Court of theHnited States,—in the case of Gahn v. Niemcewicz, 11 Wend. 312, says: “ The examination of the authorities have led me to concur with the court below on the point of suretyship, and I am unable to discover any satisfactory reason, upon principle, for distinguishing between the rights of the wife in this respect and those of any other person. ... It is her separate estate to all intents and purposes, beyond the reach of her husband, his creditors, or anyone claiming under him, as much so as if she was a stranger. If, then, she pledges this estate for the security of his debts, why should she not be viewed,fin respect to it, in the light of a surety, as much so as if she had pledged it for a stranger. It seems to me, to subject this property (which the law has thus distinctly sep
The principle that the wife, by joining with the husband in the mortgage of her separate estate for the payment of his debt, where the money raised upon the mortgage is appropriated for his benefit, thereby becomes- a surety, and that the relation of debtor and creditor is thereby established between them, is also supported by the cases of Lewis v. Nangle, 1 Amb. 150 ; Huntington v. Huntington, 2 Vern. 437; and Pocock v. Lee, Id. 604.
In the case of Aguilar v. Aguilar, 5 Madd. 414, it appears that the plaintiff, who was the wife of the defendant,
In the case of Gleaves v. Paine, 1 De Gr. J. & S. 87, decided in 1863, Lord Chancellor Westbury says: “ The estate of the wife being mortgaged in the manner I have described, for the debt of the husband, the wife unquestionably assumes, in the eye of a court of equity, the character of a surety for the husband. Properly speaking she is not a surety, but she is so called by way of analogy. She has a title to call upon the husband to exonerate her estate from the debt; but, the husband having become bankrupt, that •exoneration is nothing more than a right, after she has paid the debt, to go in as a creditor upon the husband’s estate in bankruptcy, and there, together with his other creditors, to receive such dividend as she may be able in respect of this debt which she has so paid.”
The American decisions upon this subject fully sustain the doctrine of the English cases.
■ In the case of Miner v. Graham, 24 Pa. 495, Lewis, Ch. J., says: “ It is true that where a wife joins with her husband in granting a mortgage upon her estate for the debt of her husband, she stands as a surety.”
In the case in 3 Paige, 614, before referred to, it was
Lewis, J., in the case of Sheidle v. Weishlee, 16 Pa. 137, decided that when a wife joined her husband in a mortgage to secure the debt of her husband, she became entitled to all the rights of a surety as against her husband; that she had a right to insist on the sale of his own house and lot, included in the same mortgage, to pay his own debt, before resorting to her property; and that in case she was compelled to pay the debt, or any part of it, she was entitled to subrogation pro tcmto, and had a right to enforce the mortgage against her husband’s house and lot.”
In the case of Fitch v. Cotheal, 2 Sandf. Ch. 29, it was decided by the assistant vice-chancellor of Hew York “that where a wife, seised of lands, joined her husband in executing three several mortgages to secure his bonds for money lent, the husband was the principal debtor, and that his wife’s lands stood in the relation of a surety for his debt.”
This case is very similar, in some of its facts, to the one under consideration. The vice-chancellor, in announcing his decision, remarks: “ This evidence leads me irresistibly to the conclusion that Webster’s (the husband’s) note was made for the purpose of raising money to procure these mortgages for his benefit; that they were transferred the better to sub-serve that purpose.”
My full concurrence in the views thus expressed by the vice-chancellor of Hew York has induced me to quote thus largely from his opinion.
We have seen that the receipt and appropriation, by a husband, of money constituting tlie separate estate of his wife, with her knowledge and acquiescence, does not establish the relation of debtor and creditor between them, and entitle the wife to compensation out of the husband’s assets, unless at the time of such receipt there was an understanding between them that he should repay the money so received and appropriated; and that, in the absence of such an understanding, the law presumes the money to be a gift by the wife to the husband.
When, however, a wife joins with her husband in mortgaging her separate estate for the payment of his debt, no presumption does or can arise from that fact that she at the time intends that, in case she is compelled to pay, or does pay, the amount of the mortgage out of her separate estate so mortgaged, she shall not be reimbursed by her husband. By becoming surety,'or pledging her separate estate for the payment of her husband’s debt, she gives him nothing. She only makes her separate estate subject to the payment of his debt in case he makes default in its payment. Presumption does-not fix her liability nor determine her rights. The relation
Upon a full consideration of the facts in this case, and the legal and equitable principles applicable to it, 1 am of opinion that the debt, for the payment of which the mortgage was executed by Jones and his wife of her separate estate, was his debt, and not hers; and that in executing the mortgage she only pledged her estate as a security for the payment of the debt, and that the relation which she thereby and therein assumed was in the nature of a surety', and not of a principal debtor, and that that relation conferred upon her all the rights and privileges of a surety; that when the amount due on the mortgage was paid out of the purchase money of the house and premises sold to Colladay, that payment created the relation of debtor and creditor between Mr. and Mrs. Jones, and that by reason thereof he became bound to pay to her the amount so paid upon the mortgage; that Jones, in receiving the balance of said purchase money on a check drawn in his favor for her, and indorsed by him .as her agent (there being no proof that he afterwards paid it to her), thereby became indebted to her in the amount so received; and that the bond executed by Jones to Hardcastle, her trustee, to secure the payment of the moneys so received by him, was not and is not fraudulent as against the complainants, but was executed for a consideration which in equity is sufficient and valid.
I therefore direct a decree to he drawn dissolving the in junction and dismissing the bill filed in this cause, with costs, upon the usual terms.