Chaney v. Gauld Co.

SULLIVAN, C. J. This action was brought to perpetually restrain the sheriff of Canyon county from selling at sheriff’s sale the north one-half of, the southwest quarter of the northwest quarter of sec. 26, tp. 9 north of range 5, West Boise Meridian, Canyon county, to satisfy a judgment against her husband. Upon a trial of the case the court made its finding of facts, conclusions of law and entered judgment in favor of the plaintiff, perpetually restraining the defendant, as sheriff, from selling said land. The appeal is from the judgment. The main contention is that the evidence is insufficient to support the findings and judgment. It is contended by appellant that the conveyance of said land by the husband, Edward Allen Chaney, to his wife, — 80 — Edna A. Chaney, the plaintiff, made and executed the day after the suit was brought against her husband by his creditors, was made to hinder, delay and defraud the creditors and that undér the facts of the case the plaintiff is estopped to claim and assert title to said land against the appellant creditor. It appears from the evidence that the husband of the plaintiff was engaged in the plumbing business at Payette, Idaho, and kept a store there where he had bath-tubs and other plumbing supplies of various kinds for sale. He had purchased plumbing supplies from the defendant company and became indebted to it in the sum of about $1,200 and was unable or refused to pay for the same, and a suit was brought against him by the appellant corporation and judgment obtained for about $1,100. When said action was commenced an attachment was issued and levied upon the land involved in this suit, and after judgment was obtained the sheriff was proceeding to sell the same to satisfy the judgment when this action was brought by the wife of said judgment debtor to restrain the sale of said land, on the ground that said land was her separate property, she having made the first payment of $2,000 therefor with money borrowed from her father. The record shows that the deed to said land was taken in the name of her husband, but was not recorded, but kept in his possession until the day after the suit was brought against him by the defendant company to recover from Mm the amount due it for plumbing supplies sold and delivered to-.him, when he conveyed the land to her. The plaintiff testified on the trial of the instant case that it was her intention to have the title to said land conveyed to herself, but that the person who drew the deed inserted therein the name of her husband; that some days after such conveyance was received she examined the deed and found that the land was conveyed to her husband, and thereupon she had a conversation with her husband in regard to the matter, and she testified as follows: “I asked Mr. Chaney to just hold it in trust and at any time that I should demand it, to81 turn it over to me and have this deed placed in the feminine, E. A. Chaney.....Noticing the error, I asked him to hold it in trust for me to be turned over to me at any time I should wish it.” It appears that Mrs. Chaney’s initials are the same as her husband’s and when she found that it was made out, as she testified, “in the masculine,” she wanted it changed to the “feminine.” She further testified: “The day I demanded the deed to be put in my name was the day he told me he was sued. I demanded my rights to be protected then; I knew absolutely nothing of the difficulties until that day.” She testified that she borrowed the $2,000 of her father which she paid on the land in question, and also borrowed another $1,000 of him which she loaned to her husband. The evidence shows that her father sent her the money in two drafts, one for $2,000 and one for $1,000; that she deposited them in a bank at Payette and the money was checked out from there. It was objected on the trial that plaintiff’s oral testimony in regard to this money was not the best evidence; that she ought to have produced the letters from her father, the checks or drafts and the boobs of the bank as the best evidence. Counsel’s contention in this respect is no doubt correct. In transactions of this kind between the husband and wife, where the wife is attempting to protect property which she claims as her separate property from the debts of her husband, which has been standing in his name, the evidence ought to be clear and convincing, and the best evidence that can be produced ought to be presented on the trial. It is stated in 17 Cyc. 465, that “All evidence that shows upon its face that better remains behind is secondary.”' (Putnam v. Goodall, 31 N. H. 419. See Mendenhall v. Elwert, 36 Or. 375, 52 Pac. 22, 59 Pac. 805, and cases there cited.) As against a pre-existing creditor, a wife who takes a conveyance from her husband must show adequate consideration by clearer and fuller proof than is required in transactions between strangers. (20 Cyc. 604.) If it were made to appear that the drafts and bank-books could not be produced or had been destroyed, then and only thén should the court — 82 — have admitted secondary evidence of the financial transaction claimed to have taken place between the plaintiff and her father. However, we do not rest the decision on this point. As above stated, the husband had a plumbing business where he was buying from wholesalers and selling plumbing goods. The agent of R. G. Dun & Co. procured a statement from the said husband, which was signed by him, in regard to his financial condition, and furnished an abstract of such statement to the defendant company, and it appears from the evidence that the credit was extended to the husband on the strength of said financial statement. In other words, the statement furnished to Dun & Co. was used as a basis for credit. The agent who procured said statement from Chaney testified: “When I called upon Mr. Chaney I informed him I was representing R. G. Dun & Co. and would like to have a statement of his assets and liabilities for the use of my company. In reply to my questions relative to his assets and liabilities he said in substance that he had stock on hand, $500; accounts receivable, $600; cash on hand and in bank, $900; fixtures, machinery and tools, $100; 20 acres of fruit land .2 miles northeast of Payette, $8,000; that he was owing on the land $3,000, and for merchandise not due $500. He further claimed to have fire insurance of $500 and that he was paying a monthly rental of $20. ’ ’ The evidence also shows that the defendant company was a subscriber to R. G. Dun & Co., and that in the matter of extending credit to Chaney it was governed by said financial statement made by Chaney. Now, if we concede (which we do not) that the evidence was sufficient in this case to warrant the trial court in holding that said land was the separate property of Mrs. Chaney, the next question presented is whether she is estopped to claim and assert title to said land as against the claim of the appellant. It is a well-established principle that where the true owner of property, for however short a time, allows another to appear as the owner or having full control of, or disposition — 83 — over, the property, and innocent third parties are thus led into dealing with the apparent owner, they will be protected, and such rights do not depend upon the actual title or right or authority of the party with whom they have directly dealt, but are derived from the conduct of the real owner which precludes him from disputing against them the existence of the title or right or power which he caused or allowed to appear to be vested in the party using such property to obtain credit. (See Bigelow on Estoppel, 6th ed., 607.) In the case of McNeil v. Tenth National Bank, 46 N. Y. 325, 7 Am. Rep. 341, the court said: “Their rights in such cases do not depend upon the actual title or authority of the party with whom they deal directly, but are derived from the act of the real owner, which precludes him from disputing, as against them, the existence of the title or power which, through negligence or mistaken confidence, he caused or allowed to appear to be vested in the party making the conveyance.” As bearing on this subject, see First National Bank v. Kissare, 22 Okl. 545, 132 Am. St. 644, 98 Pac. 433; 7 Modern American Law, p. 488. The record shows that Chaney and his wife never lived on the fruit ranch, hence the question of the alienation of property on which the husband and wife lived does not arise in this case. It is clear from the evidence that Chaney would not have obtained the credit from the defendant company had he not represented that he was the owner of said land. To be sure, the deed conveying it to him was not placed on record but was in his possession, and had Dun’s agent examined the records of Canyon county to ascertain whether Chaney was the owner of said land and found this deed not on record and had advised Chaney of that fact, he no doubt would have produced the deed then in his possession and exhibited it to the agent. The plaintiff, through negligence or carelessness, allowed the legal title of this land to remain in the name of her hus — 84 — band, which enabled him to procure credit because of his apparent ownership thereof, and the law is well settled that where one of two innocent parties must suffer through the fraud.of the third person, the loss should fall upon the one who, by his own act, created the circumstances, which permitted the fraud to be perpetrated. From all of the evidence in this case and the rules of law applicable thereto, we are satisfied that it would be a fraud upon the defendant corporation to permit Mrs. Chaney to assert title to said land, and that under the law she is estopped from so doing. However, if we concede that the plaintiff is not estopped from asserting title to said land by reason of the facts above stated, there is another reason why she cannot recover in this case. It is conceded she borrowed the money to make the first payment on this land from her father, and, as we understand the record, she executed a mortgage on the land to secure the payment of said money. It was borrowed money and she or someone else must repay it. It has been held by this court that, as a rule, property purchased with money borrowed by either spouse during the existence of the community is community property. (Northwestern & Pacific Hypotheek Bank v. Rauch, 7 Ida. 152, 61 Pac. 516.) Had the husband borrowed this money to make the first payment on said land, the land would become community property and the wife occupies no better position than the husband in that regard. Under the provisions of see. 2676, Rev. Codes, all property of the wife owned by her before marriage and that acquired afterward by gift, bequest or descent, or that which she shall acquire with the proceeds of her separate property, shall remain her sole and separate property. Sec. 2680, Rev. Codes, provides that all other property acquired after marriage by either husband or wife, including the rents and profits of the separate property of the husband and wife, is community property, unless by the instrument by which any such property is acquired by the wife it is provided that the rents and profits thereof be applied to her sole and separate use. — 85 — In Humbird Lumber Co. v. Doran, 24 Ida. 507, 135 Pac. 66, this court held that all property acquired by either spouse during coverture is presumed to be community property, and the burden of proof rests upon the party who asserts that it is separate property to show such fact by a preponderance of the evidence. The plaintiff has failed to show in this case by any evidence whatever that said real estate is her separate property, but, on the contrary, has shown that it was not her separate property, since she borrowed the money with which to make the first payment and did not pay for it with money belonging to her that she had acquired under the provisions of sec. 2676, Rev. Codes. Since the community was liable for the money borrowed to make said first payment and also for the payment of the balance due on the land, said land was community property and subject to the payment of the judgment of the defendant. The judgment is therefore reversed and the cause remanded for further proceedings in accordance with the views expressed in this opinion. Costs awarded to appellants. Budge, J., concurs.