Pugh v. Lingafelter, 181 F. 24

181 F. 24 | 6th Cir. | 1910

WARRINGTON, Circuit Judge.

The question presented in this proceeding is whether a wife’s release of dower, contained in a mortgage executed by her husband and her for his benefit and upon his property, can be enforced by the mortgagee after the husband has been adjudicated a bankrupt and the mortgage has been adjudged to be null and void as constituting a preference under the bankruptcy act.

The referee in bankruptcy held that the receiver of the mortgagee could recover the estimated value of the contingent right of dower and made an order accordingly. Upon a petition for review the District Court reversed this order. Upon a petition to revise in matter of law and reverse the order of the District Court, the case is pending here.

On May 11, 1903, Eingafelter, the bankrupt, executed and dfelivered a mortgage on his property in which his wife released dower to the Homestead Building & Savings Company of Newark, Ohio, to secure the payment of $50,000. A deed of trust conveying less property than that covered by the mortgage had been executed by Lingafelter alone and delivered to the Homestead Company prior to the giving of the mortgage. Lingafelter was secretary and manager of the Homestead Company, and the object of the mortgage, as well as that of the deed of trust, was to indemnify the company against shortages with which the secretary and manager was charged. The mortgage was not recorded until May 11, 1904, one year after its execution, and it is claimed that the reason for this delay was forbearance to expose the mortgagor, also to avoid financial trouble in the affairs of the Homestead Company itself and likewise of the Newark Savings Bank Company of which Lingafelter was cashier.

On September 6, 1904, within four months after the mortgage was placed of record, an involuntary suit in bankruptcy wds commenced against Lingafelter, and on March 25, 1905, he was- adjudged a bankrupt. The business of the Homestead Company was placed in the hands of a receiver, who presented for allowance proofs of a secured claim against the bankrupt’s estate. The referee found the amount due to the receiver to be $81,843.65 growing out of shortages in the assets of the company, and caused an issue to be made up between the receiver and the trustee on the question of whether this sum should be allowed as a secured claim. Mrs. Lingafelter was not a party to the proceeding involving this issue. The referee found that the mortgage (as well as the deed of trust) was a “preference within the bankruptcy act, and as such is null and void and of no effect,” and there- ' upon declared it to be “null and void” and ordered that it be “set aside as against creditors” of the bankrupt’s estate; and at the same time ordered the trustee to sell the real estate "free and clear of * * * the dower interest” of Mrs. Lingafelter, but reserved the question of who was entitled to the “dower interest” for future decision. This order of the referee was affirmed by the District Court, and no proceeding to review that order was ever taken.

Mrs. Lingafelter filed an answer in the proceeding to sell, stating that she had “never assigned, transferred, or sold her dower interest in the property” except by the mortgage in question; that under the bankruptcy act the mortgage was “invalid as a preference" to the Homestead Company and of “no avail” to the company or to the general creditors for any purpose. The prayer was that in the sale of the property her dower rights be protected, and that “the said property may be ordered sold subject to her said dower rights, or that the value of her said dower rights in said real property be ascertained and ordered paid to her in money by the trustee herein or ordered invested for her use and benefit.” The trustee sold the real estate free of dower, and the court determined the value of her dower right to be $849.21, and this sum is held by the trustee.

The single issue is whether this money shall be paid to Mrs. Lingafelter or to the receiver of the Homestead Company. It is insisted on behalf of the receiver that as between the Lingafelters and the Homestead! Company the mortgage is valid, and that the wife can claim no-part of the proceeds of sale until the mortgage is paid. The theory is that the mortgage was no more than a voidable preference,- and that this was simply a name unless avoided at the instance of creditors.

This seems to us to overlook the necessary effect of the order vacating the husband’s conveyance, upon his wife’s release of dower. The transaction concerned the husband’s debt, and, as regards the-present question, his property alone. The Homestead Company demanded the mortgage, and Lingafelter and his wife yielded to the-demand. The object manifestly was to apply the whole property free of dower, exclusively to the payment of the debt due to the company. The very contention that the mortgage is still valid as between theLingafelters and the company impliedly concedes that the purpose of the mortgage could not have been accomplished except by the joint, action of the husband and wife. Plainly the husband could have-conveyed his estate in the land through his own separate act taken-independently of any act of his wife; but it is not claimed that the wife-could have acted in a corresponding manner with respect to her right of dower.

In the order of affirmance of the District Court adjudging the mortgage to be null and void and setting it aside as against creditors, it was also adjudged that the proceeds of the “property mentioned in-said mortgage be distributed by the trustee equally between the general creditors of said bankrupt.” - Thus, whatever estate of the husband may be said to have passed to the mortgagee, it was as effectually diverted from the original object of the mortgage as if the instrument had never been executed at all. The result of the conten- » tion of learned counsel therefore comes to be that recovery can be-maintained on the hypothesis that the wife’s right of dower belongs to-a stranger to the estate of her husband. We think the principle underlying the release of dower is so far ignored in this contention that it: will not be amiss to notice and keep in mind some of the Ohio decisions bearing upon the subject.

In Douglass v. McCoy, 5 Ohio, 523, 527, the plaintiff, who was in. possession of land purchased by him at judicial sale, had filed a bill to quiet title against claims set up by defendants. The judgment under which the sale had been made antedated a certain deed that the-judgment debtor and his wife had executed conveying the land to ■another. It was in substance urged against plaintiff that, since the-dower interest had not been acquired at the judicial sale, the grantee in the deed could set it up as a bar to the plaintiff’s suit. Judge Dane, speaking for the court, said:

“Although the deed from Findlay and wife to McOoy extinguished the-right of dower in the land conveyed, it was not intended to pass, nor did it .pass, the right of dower as a separate substantive estate, if no lands were-conveyed by the deed, for the law will not permit the alienation of such possible contingent interests. 4 Kent’s Com. 254; [Stinson v. Sumner], 9 Mass. 143 [6 Am. Dec. 49], Neither can it be aliened before assignment, sons to enable the grantee to maintain a suit in her own name, for it lies in action only. [Jackson ex dem. Clowes v. Vanderheyden] 17 Johns. [N. Y.] 167 [8 Am. Dec. 378].”

In Miller’s Adm’r v. Woodman, 14 Ohio, 518, 521, in speaking of a dower interest vested in a widow, Hitchcock, J., said:

“It is not in the power of the widow to transfer any interest in it, until it has been actually assigned. When the dower is assigned, when it is aparted and set off to her by metes and bounds, then she may sell and convey, not before. The right, the chose in action, if I may so speak, is not assignable. It may be relinquished to him who has the next estate of inheritance in the land out of which it is to he carved, but cannot be transferred to a third person.”

In Weaver v. Gregg, 6 Ohio St. 547, 551, 67 Am. Dec. 355, where a question arose touching the right of dower under certain statutory proceedings in partition, Brinkerhoff, J., said of the wife’s right of dower in her husband’s undivided interest in the land:

“She has a contingent possibility of interest in it, which may be released, but no property, no actual interest in it which is the subject of grant or assignment. Miller’s Adm’r v. Woodman, 14 Ohio, 518.”

In McArthur v. Franklin, 15 Ohio St. 485, 509, White, J., had occasion to say:

“Although the right of a wife to dower is contingent upon her surviving her husband, nevertheless it is a right or interest in the land, created by the law for her benefit and vested in her. * * * It is true she cannot assign it to a stranger.”

In 2 Scribner on Dower (2d Ed.) p. 307, par. 40, it is said:

“It is well settled that it is no defense to an action for dower that the widow has released her dower to a stranger.”

See, also, Rice on Modern Law of Real Property, p. 147; 1 Washburn on Real Property (6th Ed.) §§ 423, 483.

While it is held in Mandel v. McClave, 46 Ohio St. 407, 22 N. E. 290, 5 L. R. A. 519, 15 Am. St. Rep. 627, that a contingent right of dower is property and of ascertainable value according to mortality tables, etc., it is nowhere held in Ohio that it is susceptible of grant or assignment.

The logic, however, of the argument made on behalf of the Homestead Company is that a wife’s right of dower may be withheld from her under conditions in which it could not have been acquired. The endeavor to work out this result is of a twofold character. One claim is that while the inchoate right of dower cannot be assigned it may be released; but to insist that the release is operative after the husband’s conveyance is annulled is in effect to give to the release -the attributes of an assignment. The other claim is sought to be maintained upon the familiar distinction between voidable and void instruments, but we think it comes to the same end concerning the release. For the idea is that, since the mortgage was merely voidable, the release of dower was good when made and remained so in spite of the annihilation of the mortgage so far at least as it affected the estate of the husband.

One vice, if there be any in such claims, is that they ignore the necessity of continuously sustaining the release of dower, as well as of acquiring it, as part of the estate and as an incident of a conveyance of the husband. The estate and conveyance of the husband are the essential foundation of the release, no matter how the latter is effected. It is therefore most difficult after annulment of the husband’s conveyance actually happens to perceive anything, and nothing is stated, upon which the release can any longer rest or operate. The last suggestion is that it is sustainable by estoppel; but, as said by Mr. Rice when speaking of a release of an inchoate right of dower (175) :

“Such a release can be availed of only by one who claims under the very title created by the conveyance with which the release is joined.”

And Scribner observes:

“Her renunciation of dower is to attend the conveyance of her husband; to endure while that endures and no longer.” 2 Scribner on Dower (2d Ed.) p. 313, par. 49.

Illustration of the need of continuing the primary support of the release of dower may be found in Black v. Kuhlman, 30 Ohio St. 196, relied on by the Homestead Company. There the validity of the third mortgage in which alone the wife had joined was not questioned. Hence the only thing to prevent the third mortgagee from recovering more than the value of the dower interest was simply the circumstance that the property did not sell for enough to pay the claims of the first and second mortgagees and also the claim of the third mortgagee. Another illustration may be seen in the language of Earl, J., in Elmendorf v. Lockwood, 57 N. Y. 322, 325:

“But In all cases, when the wife unites with her husband in a conveyance, properly executed by her, which is effectual and operative against her husband, and which is not superseded or set aside as against him or his grantee, her right of dower is forever barred, and extinguished, for all purposes and as to all persons.”

The difficulty confronting the Homestead Company is inherent in the subject-matter. When the mortgage was vacated and set aside, the title of the trustee under section 70a (4) of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 565 [U. S. Comp. St. 1901, p. 3451]) and his right to administer the property of the husband for the equal benefit of all the creditors became absolute. The release being thus completely severed from the only support it ever had, it ought to follow that the right of dower attached again to the wife; and that too without regard to the cause of annulment of the husband’s conveyance.

It is, however, insisted that decisions relating to instruments which are by statute denounced as void and not merely as voidable are not pertinent to the solution of the present question. The objection is that they proceed upon the theory only that the instruments were void ab initio. But we think the better considered decisions are also, if not chiefly grounded upon the principle before discussed, that a wife’s release of dower can survive only so long as it attends the estate and conveyance of her husband; or, stated in another way, that, when the principal estate falls, the incident must fall with it.

Ridgway v. Masting, 23 Ohio St. 294, 13 Am. Rep. 251, we think may fairly be said to have recognized this principle; for, while the person there resisting the dower claim was the one at whose instance the deed containing the release of dower was set aside, yet the release was not allowed to operate after the deed was avoided and the husband’s estate declared to belong to a stranger to the deed. In that case Mrs. Masting sought dower in lands which her husband had in his lifetime agreed to sell to Mrs. Ridgway and of which he had given her possession. Afterward, Masting and wife mortgaged the land to one Carpenter, and subsequently joined in a deed to the wife of Carpenter conveying the premises absolutely. In an action brought by Mrs. Ridgway against the husband, Masting, and Carpenter and his wife, but to which the wife of Masting was not a party, the mortgage and deed were declared fraudulent and void and were set aside as against Mrs. Ridgway. It is stated in the syllabus:

“A release of dower by a married woman, who joins her husband for that purpose in a deed to defraud purchasers, is binding only as against the releasee and his privies; and where such fraudulent conveyance is set aside at the suit of the party Injured, and a transfer of the premises, as against her husband, is decreed to the plaintiff, the wife, in the event of her surviving the husband, is entitled to dower as against such owner.”

In the excellent work of Scribner before cited, the learned author said:

“A wife who joins with her husband in a conveyance of his lands is not a party thereto except for the purpose of relinquishing her dower. She is not to be regarded as alienating a real subsisting estate, but as releasing a future contingent right. Her renunciation of dower is to attend the conveyance of her husband; to endure while that endures, and no longer. Hence, if the conveyance of the husband be inoperative, or if it be set aside, or avoided, the right of dower remains unimpaired.

“It is upon this principle that dower is restored where a conveyance in which the wife has joined is set aside as fraudulent as to the creditors of the husband.” 2 Scribner on Bower, p. 313, par. 49.

See, also, opinion of Maxwell, J., in Dubois v. Ebersole (Common Pleas, Ham. Co., O.) 20 W. L. B. 401. In Bohannon v. Combs, 97 Mo. 446, 448, 11 S. W. 232, 10 Am. St. Rep. 328, Sherwood, J., cited quite a number of decisions, which we refer to but do not set out, and from them he deduced this rule;

“Although there are authorities to the contrary, the better opinion is that when a conveyance of the husband in which the wife joins is set aside as being fraudulent as to creditors, this will result in reviving the wife’s right of dower, for that, the deed of the husband being void, there is no estate left in the grantee upon which the relinquishment of dower can operate; hence, the wife is restored to her former rights.”

After allusion to the overthrowal of the deed as fraudulent, the learned judge continued (page 449, 97 Mo., page 232, 11 S. W. [10 Am. St. Rep. 328]):

“ * * * The grant of the inchoate right of dower fell with it, as it was not the alienation of an estate, but the mere incident of the principal thing, the conveyance of the fee by the husband, and of course perished with its principal, because there was no estate left to support it, and because there was no one in whom the bare relinquishment of dower could vest. Moore v. Harris, 91 Mo. 616 [4 S. W. 439].”

That decision was approved in Wells v. Estes, 154 Mo. 291, 297, 55 S. W. 255. In Elmendorf v. Lockwood, supra, it is said (page 325, 57 N. Y.):

“Hence, when the deed of the husband is for any reason void, or is set aside or superseded, so as to become inoperative, the wife’s dower, although she joins in the conveyance, is not barred.”

In Frederick v. Emig, 186 Ill. 319, 322, 57 N. E. 883, 884, 78 Am. St. Rep. 283, it was decided in respect of a release of dower, where the deed in the execution of which the wife had joined her husband was set aside:

“She was a party to the deed only for the purpose of releasing her dower, and her right to dower could not he separated from the principal estate, so that, \when the deed became inoperative as against creditors to convey the estate of her husband, it became inoperative to release or bar her right to dower. As against creditors, the deed conveyed no estate of the husband, and in such a case a deed is not allowed to operate to release or bar the dower, but the wife may assert it after the death of the husband. Blain v. Harrison, 11 Ill. 384; Summers v. Babb, 13 Ill. 483; Stowe v. Steele, 114 Ill. 382 [2 N. E. 169].”

See, also, 1 Rice on Modern Law of Real Property, pp. 174-5; 1 Washburn on Real Prop. (6th Ed.) p. 214, § 426; Matthews v. Thompson, 186 Mass. 14, 19, 20, 71 N. E. 93, 66 L. R. A. 421, 104 Am. St. Rep. 550; Munger v. Perkins, 62 Wis. 499, 22 N. W. 511; Lockett, Adm’r, v. James, Adm’r, 8 Bush (Ky.) 28, 30; Sanford v. Ellithorp, 95 N. Y. 48, 51; Cox v. Wilder, 2 Dill. 45, 48, Fed. Cas. No. 3,308; Kennedy v. First Nat. Bk. of Tuscaloosa, 107 Ala. 170, 188, 191, 18 South. 396, 36 L. R. A. 308.

The claim that Mrs. Ringafelter received a consideration for her release of dower is not tenable. The only consideration suggested is alleged forbearance in recording and so publishing the mortgage. Conceding for the purpose of the question that this might be a sufficient consideration, still it does not appear that Mrs. Ringafelter made any request for or received any promise of any such forbearance, or that she had anything to do with the custody or control of the mortgage. Nor are we impressed with the claim that the Homestead Company’s rights were enhanced by the fact that Mrs. Ringafelter in her answer in the proceeding of the trustee to sell the bankrupt’s property, consented that the property might be sold free of dower. She expressly claimed her right to dower or its equivalent in money. All the objections that have been pointed out against releasing dower to a stranger in title to the property of the husband, apply to this claim.

We are therefore constrained to hold that the order of the District Court, from which no proceeding to review was ever instituted, vacating and setting aside the mortgage as null and void and directing the mortgaged property of Ringafelter, the husband, to be distributed equally among his creditors, operated to restore to his wife her right of dower in the property, regardless either of the claim urged under the bankruptcy act concerning voidable preferences (Act July 1, 1898, c. 541, § 60b, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445], as amended by Act Fed. 5, 1903, c. 487, § 13, 32 Stat. 800 [U. S. Comp. St. Supp. 1909, p. 1314]), or that might have arisen under any statute of Ohio (particularly sections 6343 and 6344; Loudenback v. Foster, 39 Ohio St. 203, 206; Robertson v. Desmond & Ryan, 62 Ohio St. 487, 497, 57 N. E. 235) relating to mortgages which may be declared void as to creditors (see, also, paragraph “e,” § 67, Bankr. Act, 30 Stat. 564, and amendment, 32 Stat. 800); and that she has in no wise waived or lost that right.

The action of the court below must be affirméd, with costs.