McCartney v. Welch

E. Darwin Smith, J. The decision in the case of Wood-worth v. Siuce.t,(a) in principle decides,this case; This is an action in equity, and was tried as such at a special term, by the judge without a jury. The learned judge who tried the action found as matter of fact, that when the husband received from his wife’s father the conveyance of the land, the proceeds from the sale of which constituted the basis of the debt claimed by and allowed to the wife, it was expressly agreed between the said -Welch and his wife’s father, that he might sell such land and use the proceeds in his business, and that at some [275] future time he should pay or secure to his said wife, in her own right, the amount of such avails or proceeds ; that the said conveyance was made upon no other consideration whatever. And the learned judge also finds as matter of fact that the subsequent settlement between Welch and the brother of his wife, acting for her, of such claim was made and the promissory notes therefor given by said Welch for her benefit in good faith and for the bona fide purpose of securing to the said Catherine (the wife) the avails or proceeds of said land and timber, according to said verbal agreement with her father, and not for the purpose of defrauding any creditors. And the judge also finds that the assignment in the complaint mentioned, and the preferences therein given to the said debt of Mrs. Welch were in good faith and without any intent to hinder, delay or defraud the creditors of the said Welch. Upon these findings on the facts, I do not see why the conclusions of the learned judge that the defendants were entitled to judgment that the plaintiff’s complaint be dismissed, was not correct. Upon these facts as found by the judge it is clear that the father of Mrs. Welch intended to create a separate estate for his daughter and secure the same to her separate use. He allowed her husband to use such estate, upon his agreement in effect to treat her as his creditor therefor and to be a trustee of the same for her benefit. When Welch settled for the proceeds of her lands sold by him and gave the notes to her brother, therefor, it was precisely the same in legal effect, I think, as though she had received such separate estate at that time from her father, from whom under the acts of 1848-9 she might then receive a separate estate, The settlement between Welch and the brother of Mrs, Welch was made in 1860 when she could take a separate estate as a legal estate, under those acts. If the transaction were an honest one I do not see why the notes then given by Welch for the proceeds of the land and timber received by him from her father weye pot valid potes, and free fi'Qm the ela,ini of [276] his creditors. He could not at that time make a gift to her at the expense of his creditors; but if he did truly and honestly owe her for money or property received by him as a loan, as and from her separate estate, which had always been received, regarded, and held and recognized as such between them, equity would allow him to pay such debt. Courts of equity have always favored the wife. They have ever followed the civil law, and regarded husband and wife as separate persons, and allowed them to contract with each other as such, in many instances, as unmarried persons. There is no reason in principle, why a wife, if she has a separate property which she trusts to the management of her husband, or money which she loans him, shall not be placed upon the same footing as his other creditors. A man in failing circumstances is allowed to prefer one creditor to another, and if it is fairly and honestly done I can see no reason why a husband in failing circumstances may not prefer and pay his wife, as well as his indorsers, or any other confidential or other creditors. The only reason which can be assigned' to the contrary grows out of the temptation and strong inducements which may exist in such cases for the perpetration of frauds for the benefit of the debt- or’s family. This consideration, I think, makes it especially the duty of courts and juries to scrutinize very closely and carefully all transactions between husband and wife, to see that claims in favor of the wife are not trumped up on the eve of insolvency. The pre-existence of the claims or debts to the wife, at such times and under such circumstances, should be very clearly proved, and their honesty most fully established, before they should be allowed. B.ut if honest, the debt of the wife is none the less sacred because it is due from her husband; and I do not see why the courts should be assiduous to strip the wife of any little patrimony she may have received from her parents or others, because she trusted it to her husband, and relied upon his good faith to repay it to her; even in preference to any other creditor. If the transaction .be honest and bona fide, X know of no reason why a [277] woman should not he treated as fairly as any other creditor of an unfortunate liushand, in the courts of justice. The case of Eckles v. Babcock, (24 N. Y. Rep. 624,) in the principle decided, controls this case, and was quite like it in some of its facts. In that case Mr. and Mrs, Eckles were married in 1829, and she before that time had inherited property from, her father worth $2000, which was sold, and the proceeds received by her husband and invested by him in other lands,, in which it was agreed they should be joint owners, the title to which was taken in the name of the husband. In respect to this $2000 Judge Davies says : “ Although her husband had reduced to possession the $2000 received on the sale of the land inherited from her father, a court of equity would protect her rights therein, and make a just and proper settlement thereof on her.” I think that case must be considered as deciding that whenever a husband has received or borrowed the property of his wife, under circumstances -which in a court of equity would he regarded as creating a debt to her from him, and as entitling her to be considered and treated as his creditor therefor, he will be allowed to pay such debt from his property, in the same manner and upon the same principles upon which he would be allowed to pay any other debt to any other creditor; and a payment to her or a transfer of property to her, in consideration of such debt, will not be regarded as a gift or a voluntary conveyance of property, in fraud of his creditors. That case went up from this district, and I concurred in the decision here and dissented from the decision in the court of appeals, but it was not upon the principles of law asserted in the opinion in that court, upon the merits, that we differed from that court, but simply upon a rule of evidence. We held “that where it appeared in a suit by a creditor of the grantor or vendee of property, on the trial of the cause, that a person conveying property to his wife or other member of his family was considerably indebted at the time of such conveyance, and existing creditors were [278] unpaid, the burden of proof was cast upon his grantee, 01 person claiming under such title, to show the bona tides of the transaction.” The court of appeals held that there was in this case sufficient' evidence of the bona fides of the transaction. The policy of the law and the temper of the age, in civilized lands, is in favor of relaxing the former harsh and strict rules of law in respect to married women, and to allow them to take, receive, hold and transfer property like unmarried persons. The disability of coverture still disqualifies husband and wife, at law,, from taking title from or conveying the title to property, real or personal, to each other. But otherwise they are quite as distinct as if divorced^ and the wife may now sue and be sued separately from her husband, and take and sell and convey property as a single woman, and yet she is not particularly charged with the legal duty of . helping to support the family. This burden still pertains exclusively to the husband, though the wife can obviously have no use for property except for that purpose, and to provide against the contingencies, casualties and misfortunes of life. It seems to me, that while husband and wife are living together, the use and income of her separate property, which in fact goes into the support of the family, should be considered as given to the husband for, and devoted to that purpose, beyond recall. I should therefore have been much better satisfied with the settlement between the brother of Mrs. Welch and her husband if it had not included interest on the value or proceeds of her property, while it was used and employed by him in his business. If the principal had been secured to her it was all she ought, under the circumstances, to have required or received, and yet the wife, as the creditor of her husband, has the right to have her funds or property in his hands regarded as lent or invested upon interest, and if the transaction .is honest and bona fide, it can not, I think, be disallowed at law. The circuit judge has found that this settlement is honest and fair, and I do not see how we can reverse his279 decision upon the evidence, for error in fact. It follows that the judgment must he affirmed, with costs. • Johnson, J. concurred.