Kenny v. Udall

5 Johns. Ch. 464 | New York Court of Chancery | 1821

The Chancellor.

The wife is here the plaintiff, and the bill is against her husband and the assignee of her husband, to set aside an assignment by him to the defendant Udall, of her interest in 8,000 dollars of the stock of the Bank of America. She was married at the age of sixteen, and is still an iniant. The assignment of her interest in that stock, was made by her husband and her, within a year after her marriage; and as far as the assignment was her act and deed, it was and is, of course, null and void, by reason of her infancy The case is to be considered precisely as if the husband had alone exe'cuted the assignment.

The circumstances attending the sale and assignment of this stock, by the husband to the defendant Udall, are of an aggravated nature, and denote an unfair and uncotisci entious advantage taken of the necessities of the husband. The defendant Udall admits, that he knew, at the time of the transaction with Kenny, of the existence of the deed of trust or settlement, and that he saw it. By that deed, Thomas Hewitt, the father of the plaintiff, makes a disposition of 310 shares which he owned in the Bank of America. He makes over those shares to the President, Directors and Company of the Bank, in trust, among other things, to pay to the plaintiff the dividends on 8,000 doliars of the stock, as the same should accrue, for her education, and to transfer to her the principal, at the age of Hveníy-one; and that if she should die before the age of twenty-one, without issue, the principal was to go to his son Thomas. The Bank refused to accept of the trust, and by an order of this Court of the 3d of July, 1815, the assistant register of this Court was appointed a trustee, to execute the ti ust raised by ihe deed of settlement. The defendant Udall admits, also, that he knew that the plaintiff was an infant. It is in proof that the husband was poor, and in embarrassed circumstances, when the sale of the stock took place, through the agency of one Ingraham, an intimate friend of the defendant Udall. It is admitted that Udall was acquainted with this pecuniary embarrassment of Kenny, when he entered into the negotiation for the purchase of the stock. It is also in proof, that Udall was informed by counsel, whom he consulted, that the plaintiff, being an infant, could not legally transfer her stock. Udall was to give nominally 5,000 dollars, for 8.000 dollars in the bank stock: and he says, in his answer, that he paid in cash to Ingraham, before the assignment, 1,300 dollars, and 1,500 dollars after the sale, and delivered to him United States síock, to the amount of 1,200 dollars, and a bond for 1,000 dollars* The plaintiff does not admit, that Udall ever paid to Ken-* ny, or to Ingraham, or. to his. agent, in the whole, above 2,900 dollars, or thereabouts, and that not above 150 dollars ever came to the use of the plaintiff; and there is no other proof of the payments alleged to have been made by the defendant Udall. The bond was for 1,000 dollars, payable in four years, without interest; and the defendant admits, that he took it up in the hands of Ingraham, and cancelled it, on paying 500 dollars. This last act marks the character of the whole transaction, and shows that the defendant made a most unconscientious speculation out of the distresses of the husband, or the fraud of his agent; and if the inquiry now was, as to the amount of these payments, I should think that the defendant U. ought to be put to the proof of his payments, as every person is obliged to do, when strong symptoms of fraud or imposition appear. (3 P. Wm. 288. 5 Vesey. 48, 49.) There is reason to believe the defendant retained the 980 dollars which were intended to be appropriated as a premium for insurance on (he plaintiff’s life, until t-renty-one, and that he meant to stand as his own insurer, after the application to the company for insurance had failed. It appears, that shortly after this speculation, and after the defendant Udall had got into the possession of the dividends of this bank stock, Kenny having found no relief from this dissipation of his wife’s property, was imprisoned for debt, and discharged under the insolvent act, and continues still embarrassed and infirm. The bill charges, that he was unable to procure the necessaries of life. Dealing in the manner which has been stated, with a necessitous person in distressed circumstances, and for the future and contingent interest of his infant wife, forms a very alarming case, and one that would seem to call fi r relief, (even if the assignment was otherwise ,valid,) to the extent of making the assignment stand as a. security only for the artiouht which the defendant TJ. should satisfactorily prove to have been actually paid.

The wife’s equitable right to her personal property, in the hands of trustees, cannot be disposed of by her husband* without making a suitable pro* vision for her support. The wife’s equity, as it is> called, attaches to her personal property whenever it is sub" ject to the jurisdiction of the Court, in whatever hands it may be, or in whatever manner it may have been transfer* red.

But independent of any undue advantage taken of the husband, the wife had an equitable interest in that fund, which could not be defeated by the act of the husband) and that interest she is entitled to assert, and to have protected against the claim of the assignee. The right of the plaintiffin this case, was an equitable right, known by the name of the wife’s equity, and the husband could not dispose of it, but upon the condition of its being subject to a suitable provision for her support.

The stock was trust property, under the control of the Court, and placed under the care of one of its officers. The legal title, at this time, is probably in the personal representatives of Heviitt, and there can be no doubt of the power and duty of the Court, notwithstanding the assignment by the husband to Udatt, to give full effect to the equitable title of the plaintiff. It is now understood to be settled, that the wife’s equity attaches upon her personal property,' when it is subject to the jurisdiction of the Court, and is the object of the suit, into whosoever hands it may have come, or in whatever manner it may have been transferred. The same rule applies, whether the application be by the husband, or his representatives or assignees, to obtain possession of the property, or whether it be by the wife or her trustee," or by any person partaking of that character, praying for a provision out of that property. It is equally binding, whether the assignment be by operation of law, or by the act of the party to general "assignees, or by particular transfer to an individual, and whether that particular transfer has been voluntary, or been made for a good and valuable consideraron.

In Gardiner v. Walker, (1 Str. 503.) the bill was filed by the executor of the testator, to stay the husband, who had instituted a suit in the Spiritual Court for his wife’s legacy. Lord Macclesfield said, it made no difference who was plaintiff in equity, and he directed, that the money should be disposed of for the benefit of the wife In tbe case eac parte Coysegume, (1 Atk. 192.) and in Elibank v. Montolieu, (5 Vesey, 73.) the wife, as in the present case, applied to the Court, and had her equity secured.

Ifhis equity of flie wife stands upon the peculiar practice of the Court, and not on any general reasoning.

Assuming that the defendant Udall was a bona fide purchaser of the wife’s personal estate, for a valuable consideration, or that the same had been fairly assigned to him by the husband, as security for a debt, or in payment of a debt, yet the wife’s equity would not be affi cted. This equity, as the Master of the Rolls said, in Murray v. Lord Ellibank, (13 Vesey, 6.) stands upon the peculiar doctrine of the Court, and we must ascertain the extent of the doctrine, not by general reasoning, but by the practice of the Court. The case of Jewson v. Moulson, (2 Atk. 417.) may be selected as the first direct authority in favour of the wife’s equity, as against a particular assignment by the husband of her equitable portion, for a valuable consideration. Vobe being indebted to the defendant Moulson, assigned over to him all the share which, in rip;ht of his wife, he was entitled to, in her father’s personal estate, '¡’he father had, by will, given the proceeds of his real estate to his executors, in tiust, after certain payments charged thereon, to be divided between his sons and his d." ughter. and if either died before' twenty-one, the share of such person was to go to the survivor. This daugh er was marro d to Vobe, and had no settlement, a>.d was an infant when the ■assignment was made to Moulson. The case is, therefore, very considerably analogous to the one now before me. There were two bills brought: one by the executois, to be discharged of the trust, upon paying and assigning over the wife’s share, and the other by the defendant ¡i. to be paid that share, under his assignment. Lord Hacdwirke held, that, there was an equity attached to ti e property itself, and that the assignee took it .subject to iha: equity, was an equity grounded upon natural justice, and prevailed equally against the husband' and his executors, and his general assignees, and his voluntary assignee. In all these cases, the equity was extremely clear, and the only instance where the party had got the better of that equity, was the case of a particular assignment of a specific article, for a valuable consideration- But in that case, he relied: upon the circumstances, that the wife, during all the transaction, was an infant, and a particular object of" the care of" the Court, a.id that it was an assignment at once of her-whole portion, and that the defendant M- was chargeable with notice of the wife’s equity, and that the husband wag. in debt before he married, and had1 married, the wife clandestinely;

It is remarkable, that in all’ these particulars, that case, and' the present one, correspond ; and Lord Haidwicke required a provision, to be made for the wife, out of the portion,, before the claim of the creditor could be admitted. The parties afterwards agreed to let the wife have half the portion, after, deducting the costs, and that the other half should go towards the debt The Chancellor- decreed, that the agreement should be performed, having previously declared, that he should not allow the creditor to. receive the-whole fortune of the wife,, without a provision for her.. After this case, it is not so easy, to understand, how Lord Thurlow should have been able to say, in Worrall v. Marlar, and Busknan v. Pell, (1 P. Wm. 459. note by Mr. Cox, and 1 Cox’s Cases, 153. S. C.) that “ he did not find it any where decided, that if the husband make an actual, assignment by contract, for a valuable consideration, the assignee should be bound to make any provision for the wife out of the property assigned.”

Again, in the case of the Earl of Salisbury v. Newton, (1 Eden, 370.) the wife was held to be entitled to a provision against the particular assignee, who was a creditor of the* • husband, for a valuable consideration, of the whole of _hecequitable interest. The Lord Keeper declared, that the assignment could not stand against the wife and her issue ; and he directed an inquiry as to a proper provision for herself and children, and that the overplus, if any, should go to the creditor.

This last case was in 1759, and seems also to have been overlooked by Lord Thurlow, for it appears to carry the wife’s equity to an extent, which he had not discovered.

The case of Like v. Beresford, (3 Vesey, 506.) put an end to all previous doubts on the subject. Lord Alvanhy directed the settlement of the property of a married woman, a. ward of the Court, and of all the dividends and interest accrued, in opposition to the assignment by the husband, for a valuable consideration. He observed, in the learned review which he gave of all the cases, that Lord Hardwicke gave a reason which was convincing, in favour of the wife against any assignee of the husband ; that a decision in favour of an assignee for a valuable consideration, would put an end to the equity of the wife. Lord Hardwicke and Lord Northinglon had given decided opinions, that an assignment, even for a valuable consideration, would not avail against the wife’s equity. The subject came before Lord A. again, in Macaulay v. Philips, (4 Vesey, 15.) and he said, he was,clearly of opinion, that the doubt respecting the assignment of the husband, for a valuable consideration, of the wife’s equitable interest, was not well founded, with the single exception, perhaps, of a trust for a term for years of land, and that the assignment for a valuable consideration would not bar the equity of the wife. .If the wife’s personal fortune be vested in trustees, or be in any way under the control of the Court, or placed within its reach, the Court will not suffer it to be removed, until an adequate provision be made for her.

Afterwards, in Wright v. Morley, (11 Vesey, 12.) Sir Wm Grant seemed to pause upon the doctrine so emphatically declared by Lord Alvanley, and deduced from the decisions of Lord Hardmcke and Lord Worthington. The husband had assigned, for a valuable consideration, only a part of his wife’s equitable interest. He had assigned 100Z. out of 26OZ. a year, of dividends of stock held in trust for her, and then had gone abroad and left her without any provision. Sir Wm. Grant seemed to think it worth his while to look into the authorities in reference to the question, whether there was any difference between an assignment for a valuable consideration, and by operation of law ; and he considered it to be a litigated point, whether the equity of the wife could be bound or affected by the husband’s assignment for a valuable consideration. But he admitted the assignment to stand, to the moderate extent of 10OZ. out of yearly dividends to 260?., and said, that he could not give her the whole of the dividends. It seemed, however, to be admitted, that the wife was entitled to her ordinary equity for a settlement.

I consider the wife’s equity, as against any assignment whatsoever and to whomsoever, to be now too well settled to be shaken. The only inquiry is, to what extent shall her equity be carried over her personal estate, not yet reduced to the husband’s possession. Lord Hardwicke intimated, in Jewson v. Moulson, that upon a bill by the wife, an injunction ought to be granted to stay execution, upon a judgment at law by the husband suing for his wife’s right, until a settlement was made upon her. Such an injunction was actually granted by the Court of Exchequer, in Winch v. Page, (Bunb. 86.) and by the Court of Chancery, in Meales v. Meales ; (5 Vesey, 517. note ;) and, upon general principles of justice, it would appear, that the Court of Chancery ought to restrain the husband from availing himT self of any means, either at law or in equity, to obtain possession of the wife’s personal fortune, unless he would make a competent provision for her. But we have no concern with that question in this case. The inquiry now is, how much of the wife’s estate shall be preserved from the husband’s assignment f

In Parker v. Dykes, (1 Eq. Cas. Abr. 54. pl. 6. Mich. 1798, at the Rolls,) the wife had a provision left her, by her father’s will, out of the proceeds of real estate directed to be sold, and the husband became a bankrupt, and died. His assignees brought their bill to have the land sold, and the surplus of the monies paid to them. The Court dismissed the bill, and as the wife was wholly unprovided for, suffered her to retain the entire of this legacy.

This was as against the general assignees of the- bank:rupl husband; and in Grey v. Kentish, (1 Atk. 280. 1 P. Wm. 459. note, S. C.) Lord Hardwicke followed that decision, in allowing to the wife the whole provision left her by her mother, in opposition to the claim of the assignees of the bankrupt husband. So, again, in ex parte Coys eg ame, (1 Atk. 192.) Lord Hardwicke gave to the wife the whole of an annuity of £ 40 a year, secured by bond, and belonging to her before marriage, as against the assignees of the bankrupt husband; and he held, that the creditors stand-in the place of the husband, and were not entitled to any more than he would have been. In Vandenanker v. Desborough, (2 Vern. 96.) as early as 1689, the wife was entitled to the interest of £ 800, invested in land, by the directions of the testator, for her benefit, and that of her children; and the Court held, that no part of that interest was liable to the creditors of the bankrupt husband, and the whole principal and interest was ordered to be settled according to the will. It is, also, to be here noticed, that in the case of the Earl of Salisbury v. Newton, already cited, Lord Worthington directed a proper provision for the wife, against the particular creditor and assignee of the husband, and that the overplus, if any, should go to the creditor. The case shows, that the extent of the provision depended upon the circumstances of the case, and might or might, not absorb the whole of the estate. It showed that there -was no precise rule, limiting the provision to a moiety, or two thirds, or to any sum or proportion less than the whole. So, also, in Like v. Beresford, (ubi supra,) Lord Mmri’ey observed, that the Court had a complete right, if they thought of it, under all the circumstances, - to give to the wife and children, any part, or the whole, of the fortune, to which the wife might be entitled.

The extent of the wife’s equity, whether it goes to a part only, or the whole, of hei personal property, depends on the circumstances of the: case.

Other cases have declared a different doctrine, and that the wife is not ent'tled to the whole of her property to her separate use. This was so said by the Master of the Rolls, in Burden v. Dean ; (2 Vesey, jun. 607.) and the same idea was thrown out in Wright v. Morley, in respect to a life interest of the wife, and that by the modern cases, the wife only took a portion of that provision, as against the assignees of the husband. In Beresford v. Hobson, (1 Madd. Ch. Rep. 362.) the Vice Chancellor reviewed the cases, and concluded, that where a legacy was left to the wife, posterior to the mortgage, and there was a settlement on her marriage, she was not emitted to the whole of the legacy, as against the assignees of her husband. He said, that in no case had the Court given the whole to the wife. The Court, in the exercise of its discretion, had never tied itself down to any precise rule, but it had never given the whole.

These observations of the Vice-Chancellor, must be taken under some qualification, arising out of that case, for several of the authorities winch have been already referred to, are in contradiction to them, if taken in their utmost latitude He refers, also, to the case of Lib v. BeresforA, as contaning an exception, and that where a ward of the Court had been run away with, the Court would not give the husband any parr of his wife’s fortune. “ It has a discretion in such cases, whether it will give the whole, or a part, to the wife.” And why not in every case, if the justice of it, and the condition of the wife, require it ? The Whole of this doctrine, as it was observed by Sir JVm. Grant, dependsupon the particular practice of the Court, and not on general reasoning; and I think I may venture to shy* that the practice of the Court has not been sufficiently fixed and uniform, to form a determinate rule, controling the- exercise of the discretion, of the Court in the particular case. The question, in every case, is, what is a suitable and adequate provision for the wife, under the circumstances ? The provision must have a reference to the whole of the wife’s fortune, and to what the husband had previously received.

If the husband lives with his wife, and maintains her, and has not misbehaved, he will be allowed to receive the interest or dividends on her property.

If the husband lives with his wife, and maintains her, and has not misbehaved himself, the course of the Court has been, to leave to him the receipt of the interest or dividends of her fortune, (Sleech v. Thovington, 2 Vesey, sen. 560. Bond v. Simmons, 3 Atk. 20.) In the present case, the husband has misbehaved himself, in the prodigal waste of his wife’s fortune, and suffering her to be left helpless and destitute, while still an infant. The interference and purchase by the defendant Udall, with knowledge of the trust and of the infancy of the wife, and of the necessities of the husband, and against the advice of counsel, and upon terms denoting oppression and undue advantage, does not deserve the least countenance or assistance. It is to be presumed, that the bank stock was the whole of the wife’s fortune; and the husband would, in an ordinary case, have been entitled to the dividends to maintain his wife, and they were accordingly directed to be paid to him, soon after his marriage. But he has grossly abused his marital right, by selling the whole contingent interest of the wife, in advance; and in justice to the wife, the authority to receive, the dividends by him, or by Udall, ought to be withdrawn.

It will be sufficient, in this case, to declare, that the assignment by Kenny to Udall was null and void, so far as respected the equity of the plaintiff, and that her equitable claim id*that property remains unimpaired, equally as if no such assignment had been made. I shall further declare, that the assignment was made, and was procured, in fraud of her rights, and that the orders of this Court directing the dividends to be first .paid to Kenny, and afterwards to TJdall, be rescindedand that Mr. Kip, the trustee, be directed to pay the dividends hereafter to arise, and to be received, to the solicitor for-the plaintiff, to the discharge of the plaintiff’s costs of this suit, and then to pay the dividends not so wanted, until the further order of this Court, to the plaintiff herself, or to her particular orders in Writing, to be given, from time to time, as each dividend becomes due. To what extent a provision ought to be made for her, may be determined upon the usual reference, when she arrives at the age of twenty-one, and she then may apply, upon the foot of this decree, for such provision. And it is hereby declared to be the duty of the President, Directors and Company of the Bank of America, not to permit any transfer of the shares appropriated in the deed of trust to the plaintiff, (being shares at par to the amount of 8,000 dollars,) without the order of this Court, and that the solicitor for the plaintiff give notice of this decree to the bank.

Decree accordingly»'