Hicks v. . Skinner

EodMAN, J. The fund in controversy represents by agreement of the parties, a certain lot in Ealeigh and certain furniture. The plaintiff claims title by purchase at a sale under execution at the instance of one Holleman, who recovered *540 judgment against Thomas E. Skinner at March Term, 1867, of Wake Superior Court. The sale was on 30th March, 1868. The plaintiff is also a judgment creditor of Thomas E. Skinner and. of Charles W. Skinner. This is the plaintiff’s title, and it is clear, that if the property was legally in Thomas E. Skinner, as plaintiff contends it was, his title is good, unless it is defeated by some equity which the law will uphold against him. It must be borne in mind that he is a purchaser at execution sale, and that such a purchaser does not occupy in this State, the same ground that a purchaser of the legal title for value, and without notice, does. Such a purchaser gets a title unaffected by any contrary equity; but a purchaser under execution, buys subject to all equities against the defendant, whether he knows of them or not. If therefore there had been no conveyance to Womble, and the legal title bad been in Thomas E. Skinner at the time of the plaintiff’s purchase, he would have bought just as he did, subject to all equities against Thomas E. Skinner. Freeman v. Hill, 1 D. & B. Eq., 389; Polk v. Gallant, 2 D. & B. Eq. 395, Vannoy v. Martin, 6 Ire. Eq., 169; Johnson v. Lea, Bus. Eq., 43. Of course this does not mean literally all equities which would be good against the defendant in the execution. It must be limited to equities ionafide created by him, and not fraudulent either in fact or by construction of law, as to his creditors. Davidson v. Cowan, 1 Dev. Eq., 470. The defendant, Mrs. Anne E. Skinner, contends that she had an equitable claim to the property, which was.valid against her husband, Thomas E. Skinner, which was tona fide, and not fraudulent as to his creditors; and which was consequently valid against them, and will be upheld against the title of the plaintiff. This equity she bases upon the facts found by the referee; and in order to pass on it, it will be necessary to review the material facts which he finds. The lot was conveyed to Thomas E, Skinner in September, *541 1859, by deed from A. M. Lewis and others. The consideration recited is $6,000. We will not stop here now to consider with whose money this consideration was paid, or any consequences which may flow from its payment by one person or another. On 30th October, 1865, Thomas E. Skinner conveyed the lot and certain furniture then in the dwelling on it, to Jordan Womble in trust for the separate use of the said Anne, his wife. At that time Thomas E. Skinner was insolvent, and the plaintiff contends that this deed was fraudulent and void as to his creditors, as being either without consideration, or upon a false and fraudulent consideration. Without going at present, into a farther statement of the facts on which Mrs. Skinner grounds her equity, we stop here to examine this deed to Womble, and ascertain its exact weight and bearing in this controversy. The deed (which is made an exhibit) recites, in substance, that “ Whereas, when Thomas E. Skinner contracted to buy the lot, and to build thereon, it was agreed between him and his wife, that she should furnish the funds to pay for the same out of her separate estate, secured by a marriage settlement dated 8th May, 1854, and that the lot should be secured to her separate use, which was never done, but the deed was by over sight made to him. And whereas, the furniture was purchased with her money, and as her sole property. And whereas, his father, Charles W. Skinner, had assigned to Womble, as trustee for the said wife, certain notes made by him (Thomas E. Skinner) as principal,- and by Charles W. Skinner, jr., as his surety of large amount, and certain other notes to which Charles W. Skinner, jr., was principal, and Thomas E. Skinner, surety, and the said wife had agreed to surrender said bonds to said Thomas E. Skinner, and to release him from the same. Therefore, he (Thomas E. Skinner) conveys to Womble the said lot and furnitnre, in trust for the sole and separate use of his said wife Anne, &c. The plaintiff contends that so much of the consideration *542 recited as consists of the surrender of the notes of Thomas E. Skinner is fraudulent and part of the conspiracy between the parties to defraud the creditors of Charles W. Skinner. It is clear and is conceded that the assignment of the notes of Thomas E. Skinner to Womble by Charles W. Skinner, who was insolvent at tne time, was voluntary, and was therefore fraudulent and void as to his creditors. Neither Womble or Mrs. Skinner owned or could lawfully release or surrender the notes. The surrender which was actually made was void, and the parties to the notes, (notwithstanding they have probably been destroyed,) are still liable to the personal representative of Charles W. Skinner for the benefit of his creditors. To that extent the consideration for the deed failed. Rut the agreement to surrender the notes was not a fraud upon any party to the deed nor upon the creditors of Thomas E. Skinner, which character alone the plaintiff claims in this action. It is clearly distinct and separate from the other consideration recited, viz: the equity of Mrs. Skinner, and did not necessarily infest and vitiate the whole deed. It neither supported or impaired the deed. If Mrs. Skinner had an equity by virtue of which a Court would have enforced the execution of a settlement of the property to her separate use, she did not lose that equity, because in the deed by which her husband undertook to do what a Court of equity would have compelled him to do, he recited a false consideration in addition to the true one. With that recital she had nothing to do. If, on the contrary, Mrs. Skinner had no equity for a settlement which a Court would have enforced, then it is admitted that the deed to Womble was voluntary, and therefore fraudulent and void as to the creditors of her husband. It is thus seen that the deed to Womble may be put out of the way as not affecting the real merits of the controversy. The main question is, did Mrs. Skinner have an equity to have this property settled on her % That question we proceed to consider. The material facts Concerning it are fully reported by the referee, whose report *543 we take occasion to say is creditable to his ability and industry. In brief they are these : On 8th of May, 1854, Thomas E. Skinner being about to marry Anne S. Ludlow, then a resident of New York, the two entered into a written contract, by which (in substance and as accurately as there is any occasion here to state it.) ho agreed that her property should continue hers, notwithstanding the mari’iage, and that she should have power to control and dispose thereof as if she were a feme sole. The property consisted exclusively of bonds and mortgages, which were in the possession of her guardian, who was her father and resided in New York. The marriage took place in New York on the day of the execution of the contract. The contract was duly recorded there. It gave to the wife substantially or precisely the rights in and over her property which she would have had by the laws of New York if no express contract had been made. It was never registered in North Carolina, but contained no provision unlawful in that State, or contrary to its policy. The domicil of origin of Thomas E. Skinner was North Carolina, and that domicil remained unchanged at the marriage. There is no evidence that the parties contemplated or contracted in reference to any particular domicil or place of resi-denceafter marriage. The husband had just become a licensed ministsr, and was probably open to any acceptable call from any quarter. He and his wife did in fact go to Petersburg and remained there for a year before coming to North Carolina. It must be held, however, that upon the marriage, the domicil of the wife by construction of law, became that of the husband, viz : North Carolina. Smith v. Morehead, 6 Jones Eq., 360; Story Confl. of Laws, sec. 195; Ford v. Ford, 14 Mart. La. R. 574. In 1855 the husband and wife took up their residence in Ealeigh, North Carolina. In 1856 she executed to him a power of attorney to collect all debts due to her, and under this he did receive at various times up to 4th December, 1860 *544 sums amounting in all to $45,469.62. The first time the husband received any of the wife’s money was on 8th May, 1857. We pause here again in the statement of the facts, for the purpose of determining'what was the effect of the ante nuptial contract of May, 1854, upon the property of the intended wife. It is admitted that it was valid in New York to all intents and purposes. By force of it, as well as of the general law of that State, the estate of the wife in her choses in action remained just what it was before her marriage. The husband was not even a trustee for his wife. He acquired no estate legal or equitable. He was not authorized to receive payment of her choses in action except by her consent, and as her agent. It is also admitted that it was binding on the parties everywhere. Story Confl. Laws, sec. 184, 1, sec. 241. Trimbey v. Vignier, 1 Bing., N. C. Rep., 151. It must also be admitted, and we suppose it to be, that but for the act of 1785, (Rev. Stat., chap. 87, sec. 29,) the contract in question would have had the same force and effect in North Carolina, after the removal of the parties and of the property here, which it had in New York. We conceive that it must also be admitted that if the wife had personally, or by any agent, brought her money to this State, and purchased land with it, taking a deed to her separate use, such deed would have been valid. The learned counsel for the plaintiff contends however: 1. That the matrimonial domicil of Thomas E. Skinner and of his wife was North Carolina. 2. That the ante-nuptial contractas presumed to have been made in reference to the laws of this State, and to have been intended to be, and was governed by the laws of this State in reference to its construction, and also as to the formalities of its proof and registration ; and 3. That as it was not registered in North Carolina, by the act of 1785, it was void as to the creditors of Thomas E. Skinner, and that the property of the wife was brought into this State and put (it must be with or without her consent) in a *545 tangible shape so as to be susceptible of levy under execution, it became liable to such levy for the debts of her husband. ¥e have already said that upon the marriage the domicile of the husband became by construction of law, that of the wife. The rule of law is, that the construction of a contract is in general to be governed by the law of the place where it is made. Story Confl. Laws, s. 278 and 278, a. But if it appears clearly to have been intended to be performed elsewhere, then the construction is to be governed by the law of the place where it is intended to be performed. Le Beton v. Miles & Paige 261; Le Beton v. Nourchet, 3 Marl. La., 60. But this means nothing more than that where it can be gathered from the terms of the contract, or from the circumstances attending it, that the parties intending it to be governed by the law of some certain place other than that of its making, the law of such place as to its construction, becomes a part of the contract as if it had been inserted in it..- It is only a question of intent,, and not one of positive law. I am not aware of any case that holds that where the domicile of the husband becomes merely by construction of law that-of the wife, and there is no other evidence that the law of his domicile was looked to'as the place where the contract was to. be performed, such domicile governs the construction of the.contract. The question however here is not one of construction, but of registration ; and not-only am I not aware of any authority that the law of the constructive matrimonial domicile governs-in that respect, but I think there is some authority, and conclusive reason, to the contrary, and that as to such matters, the lex loci contractus geverns. Story Confl. Laws, s. 242; (1) 242 a. Trimbey v. Vignier, 1 Bing. N. C., 151; Waunder v. Waunder, 9 Bligh. R. III; Story Confl. Laws, s. 276, 276a; 372, 372a. In s. 282, Story says: In general it may be said that if,no place of performance is stated, or the contract may indifferently,* *546 be performed any where, it ought to be referred to the lex loci contractus. Don v. Lipman, 5 Clarke & Fin. R. 1. In Wilder, succession of 22 La., An. 219, the husband was domiciled in Louisiana and the wife in Mississippi where the marriage took place. Immediately after the marriage they removed to Louisiana, and resided there until the husband’s death. The Court say that the form of the contract was to be governed by the lex loci actus, but its effect by that of Louisiana. In Wharton, Confl. Laws, s. 419, it is said “ Where by local legislation certain forms are necessary to the validity of certain' contracts (2, 9, registry, enrollment, acknowledgement before a magistrate or notary,) there the place where those forms are complied with, is to be regarded as the place of contract.” He cites Lavigny VIII., 371. In sect. 429 he says, where there are several possible local laws, that is to be applied which is most favorable to the contract. In sec. 676 he says, that all modern jurists concur, that it is sufficient if a contract be au.thenticated according to the law of the place where it is made. In the United States Bank v. Lee, 13 Peters, the Supreme Court of the United States expresses the opinion that a statute ■of Maryland similar in its supposed effect to ours of 1785, was ,-not intended to operate on contracts made out of the State. See also Adams v. Hayes, 2 Ire., 361. Now as to the reason of the proposition. Where there is a ,place clearly fixed by the contract in which it is to be performed, .it may. not be unreasonable to suppose that the parties intended to authenticate it according to the law of that place, and ,if they have omitted to do so, it may be because they have abandoned the contract. But where no such place is fixed in any way, and the contract is one which by its nature*must be performed wherever the parties may at- any time be, no such .presumption of intent can be made. To hold that the law of ,the constructive domicile after marriage governs the authenti-ication and.publication of an ante nuptial contract, as by registration, would ¡in .most cases be a fraud upon the wife. She is *547 presumed to know the. law of the State of her domicile at the time she contracts, but she cannot be presumed to know the law of another State, because it is the domicile of her intended husband. The marriage may not take place for months after the execution of the contract, and in the meanwhile the actual ■domicil of the husband may change without her consent, or even knowledge, and she eannot be justly be held to contract with an intent to subject the contract to the law of a place which she may not know. We conclude that the contract did not require registration in North Carolina, to make it valid here, but was governed in that respect by the law of New York where the domicile of the wife was when it was made. This point being established, it is an adjudged question, that the removal of the property by the parties to North Carolina in 1855, did not invalidate the wife’s right. The question was decided in United States Bank v. Lee. 13 Peters 107. In 1809 Richard Bland Lee and his wife Elizabeth resided in Virginia. He was then largely indebted to Judge Washington, and he and she joined in a deed whereby she relinquished her right of dower in certain lands belonging to him, and also conveyed lands belonging to her to trustees to secure that debt, which was afterwards paid by a sale of her land. In consideration of her execution of that deed, the husband conveyed to trustees certain slaves for her separate use, and this deed was duly recorded in Virginia.In 1814 Lee and his wife removed to the District of Columbia, taking with them the slaves, which remained in his apparent possession|with the acquiescence of his wife, and he obtained credit upon their supposed ownership, Some of them he sold to supply the wants of his family, with her like silent acquiescence. In 1817 he borrowed $6,000 from the U. S. Bank, and gave a deed in trust on the slaves to secure it. He died insolvent in 1827, and in 1834, the Bank filed a bill against Mrs. Lee and her trustees to compel a surrender and sale of the slaves to pay the debt to it. It was contended, *548 that although the deed of 1809 was valid in Virginia, yet when-the parties removed with the property to the District of Columbia, the property became liable to the creditors of the husband in the District, because of a law of Maryland in force in the city of Washington-,) where the jjarties and the slaves-lived,) which declared that no goods,. &rc., whereof the vendor1 shall remain in possession shall pass, or any property therein be transferred to a purchaser, &c.,. unless the sale be by writing proved and recorded in the county where the seller resides-within twenty days ofter the making thereof. (Act of Maryland 1729, chap. 8, sec. 5.) CatbON, J., delivering the opinion of the Court, says “ The> statute has no reference to a case where the title has been vested by the laws of another State, but operates only on sales," mortgages and gifts made in Maryland. The writing is to be recorded in the same county where the seller shall reside when it is executed. The seller, R. B. Lee, residing in Virginia, it was impossible for Mrs. Lee to comply with this act. That the Virginia deed secured to Mrs. Lee the same rights here that it did in Virginia we apprehend to be, to some extent, an adjudged question.” He then cites Smith v. Burch, 3 Har. & Johns. (Md.), and Crenshaw v. Anthony, Martin & Yer. (Ten.) 110. The plaintiff’s bill was dismissed. In DeLane v. Moore, 14 Howard S. C. 253, decided in 1852., tbe facts in substance were, that Mrs. DeLane, a widow residing in South Carolina, in contemplation of marriage with John Yancey, entered into án ante-nuptial contract, whereby certain slaves were agreed to he settled to her separate use. There was no conveyance to a trustee. The marriage took place and the deed, or a copy of it, was recorded in South Carolina, but not, it seems, in exact compliance with the laws of that State. Afterwards the parties removed to Alabama, where after the death of the wife the husband sold the slaves-to one Dover, The hill was brought by the representative of the wife against the administrator of Dover to recover the *549 ■slaves. The Court (by Daniel, J.,) say: “ It has been made ■a ground of defence in the answers in the Court below, and it ■has also been insisted on in the argument here, that admitting the ante-nuptial contract to have been recorded in the State of South Carolina, and in consequence thereof to have been so ■operative as to affect with notice creditors and purchasers within that State, yet that upon the removal of the parties carrying with them the property into another State or jurisdiction, the influence of the contract for .the protection of the property would be wholly destroyed and the subject attempted to be secured would be open to claims by creditors or purchasers subsequently coming into' existence. The position here advanced is not now assumed for the first time in argument in this Court. It has upon a former occasion been pressed upon its attention and has been looked into with care, and unless it be the intention of the Court to retrace the course heretofore adopted, this may now be, as it formerly was called, an adjudged question.’55 He then eites with approval the case -of U. S. Bank v. Lee. In Adams v. Hayes, 2 Ired. 361, it is admitted that a parol gift of slaves made in South, Carolina, good at common law which prevails in that State as to such gift, would be -good after the property is brought here, notwithstanding our law requiring such gifts to be in writing and registered, and it does not seem to have been thought that it would make any difference whether at the time of the gift the property was intended to be brought here or not. In our opinion it is not a matter of any importance whether the contract was technically executed or executory, so far as it concerns the question now before us. In equity, what is .agreed to be done is considered asdone, whenever such aeonciusion is necessary to support .the rights of the parties under it. No doubt nice distinctions may be drawn between those cases and the present, but none we think that are essential. The principle at the bottom of them all is, that by the contract Abe property remained in or passed to the wife in the State where it was made;; that it -was her property, .and her estate *550 did not change its character on being carried with the parties into another State, although by the laws of the latter State, registration is required of such instruments executed there or taking efteet upon property situated there. There remains the enquiry which is mainly one of fact, did Thomas E. Skinner receive the money of his wife and bring it into this State as her agent, upon an agreement to invest it in her name, and did he purchase and improve the lot in question with it, and in violation of his agreement, take the title to himself? There can be no question that the husband received a very large sum as the agent of his wife, and the referee finds that he received it upon an understanding that he would return it or invest it in her name, and especially that he would invest a part of it in buying and improving the lot in question. The whole lot was conveyed by Cook to Lewis, Williams,. Jones and Thomas E. Skinner on 1st April, 1856. The part of it now in question was conveyed to Thomas E. Skinner by his co-tenants on 17th September, 1859. The referee finds that it does not appear by whom the consideration of the deed of 1856 was paid, but tha't it was not paid with the money of Mrs. Skinner. This is immaterial. He also finds that it does not appear by whose means the consideration of $6,000 recited in the deed of 1859 was paid. The deed to Womble recites that the consideration of the deed of 1859 was paid by Thomas E. Skinner from his wife’s, estate. This recital would support an equity in his wife against him, to have the title conveyed to or for her but is admittedly no evidence against his creditors. • We think, however, that although the referee does not directly find this fact, he does find other facts from- which this must necessarily be inferred. A principal who undertakes to follow his money into property, into which it has been fraudulently converted by bis agent, is not required to show tliat the identical bills of exchange on bank notes which he gave to the agent with directions to pay for certain property were paid for that property. If this were- *551 so, tbe agent need only convert the bills of exchange into bank notes, or the bank notes into others, in order to make his fraud successful. Fraud cannot so easily evade pursuit. The principal need only show that he gave money to the agent upon a promise to invest it in the purchase of certain property, and that the agent did afterwards purchase that property and take the property to himself. Upon this- proof there is a clear equity to follow the property and have it conveyed as it ought to have been. That is just the case here. The referee finds that between -and-the husband received large sums as agent of the wife; that he agreed to invest a part of that money in this lot in her name ; that in 1859 he did purchase the lot, and at first directed Mr. Lewis to make the deed to his wife, as the payment was to be from her means; that he afterwards told Lewis to draw the deed to him, as it would injure his credit if made to his wife; and that it was accordingly so drawn. Can a Court of equity doubt, upon these facts, that the land was paid for with the principal’s money ? If it will refuse to allow a principal to follow his money under these circumstances, upon what proof can he do so ? "W e think that we are bound to draw the conclusion from these facts, and without reference to the recital in the deed from the husband to Womble that in contemplation of law, Mrs. Skinner’s money went to pay for the lot. The referee directly finds that her money, to the sum exceed;] ing $10,000, paid for the buildings, &c. If it were not clear that Mrs. Skinner’s money paid for the lot, as well as for the buildings and furniture, there might be a question of the apportionment of the fund. But in the view we take of the case, no such question arises. On these facts, the equity of Mrs. Skinner against her husband and his creditors is indisputable. It rests on a valuable consideration, is bona fide, and there is nothing in the circumstances attending it, to make it fraudulent as to.her husband’s creditors.. • *552 As to any conclusions of fraud to be drawn from her silent acquiesence in the dealings of her husband so far as they were known to her; as for example, his sale of a part of the lot to Dr. Johnson ; that is disposed of by the observations of CateoN, J., in the U. S. Bank v. Lee, p. 119. The learned Judge says in substance : “If a party having title to property stands by, and sees another deal with it as his own, and does not make his title known under circumstances which require him to do so, that is a fraud which estops him from setting up his title afterwards. How far that principle would apply to a wife standing by, and seeing her husband deal with her property, the Court does not decide. But Mrs. Lee was only passive and silent, although she may have known that Lee was obtaining credit on the strength of her property. A Court of Chancery will not hold her responsible because of her silence.” In the present ease it does not appear when Mrs. Skinner first knew that her husband had taken a deed for the lot in his own name. We are of opinion that the plaintiff purchased subject to the equity of Mrs. Skinner, and that her equity is paramount to the claim of the creditors of her husband. Pee Cubiam. A decree may be drawn in conformity with this opinion.