Krueger v. MacDougald

Atkinson, J. (After stating the foregoing facts.) 1. The principle announced in the first headnote is so universally recognized that it is unnecessary either to cite authority for it or to state the reasons upon which the rule is based. 2. Relatively to the real estate involved in this suit the uncontradicted evidence, including the admissions of the defendant’s answer, shows that the money of the wife was used by the husband in making the initial payments upon the purchase-price; that the title was taken in the name of the husband, and the deeds conveying the same were placed on record in the year 1906 and continuously remained in his name, he paying the taxes thereon for a number of years and, so far as the record discloses, up to the date of the execution of the deed to his wife in' 1912. In the meantime the debts which are the foundation of the present suit were contracted by the husband. The property was jointly occupied continuously by the husband and wife as a home, and was so occupied at the time the suit was filed. There is no evidence that the wife at any time asserted or exercised any independent dominion over the property, not even, according to the record, having ever returned it for taxes in her own name or paid taxes thereon. Before the money was loaned by Mrs. Patillo an investigation was made for her to ascertain the condition of the title to this property, and it was found upon examination that the title was vested in the husband, Charles Krueger, and that the shares of stock stood in his name. When his indorsement was made upon the note to the Atlanta National Bank he was the president of the Krueger Manufacturing Company, with which company the bank had done business previously, and, upon the indorsement of Charles Krueger, — 434 — had extended 'a line of credit to the amount of two or three thousand dollars. The cashier of the bank testified that at the times loans were made and credit extended to Keaton-Krueger Company he understood that Krueger was the principal owner of the Krueger Manufacturing Company, that he had real estate at that time, and that that was the reason the bank was willing to take him as indorser. These loans to the Keaton-Krueger Company, indorsed by Krueger, were short-time loans, sixty and ninety days, which were renewed from time to time. The evidence is in conflict as to whether any direct representation was made by Krueger to the bank’s. ca'shier to’the effect that Krueger owned either the corporate stocks or the real estate; but at that time the title to both the land and the stocks'stood in his name. There is no intimation in the evidence that either the cashier or Mrs. Patillo had the slightest knowledge of any claim of Mrs. Krueger of an equity in the property; nor did this fact come to their knowledge until after the execution of the deed and the assignment in 1912. It was. insisted upon the part of Mrs. Krueger that while the legal title to the real estate was taken in the name of her husband, she had no knowledge of that fact, and therefore was entitled to assert her equity as against the creditors, notwithstanding the fact that the husband might have actually obtained a credit upon the strength of his apparent ownership; and this seems to be the controverted question around which they were chiefly at issue. Pretermitting the question as to whether the negligent omission of the wife to inform herself as to. the real state of the title would entitle her to assert her equity as against bona fide creditors, we think that from the statements of her answer it is clearly deducible that she knew that the title had been taken in her husband at the time the property was purchased. Her husband, according to her answer, had always transacted most of her business for her, doing so most of the time in his own name. From her answer we quote as follows: “The said Chas. Krueger (this defendant being without business knowledge) had always transacted most of her business for her, doing so most of the time in his own name.” This is an admission that according to the constant and prevailing method of transacting her business she knew that her husband was accustomed to transact 'it in his name. • She further admits in her answer as follows: “When this defendant purchased the McDonough Eoad property, about $1.800 was to be paid in cash, — 435 — a mortgage of $1000 assumed, and about $1200 to be spent on the house, which had to be practically rebuilt. In view of all these transactions that had to be made, and the amount of detail necessary to carry it out, the said Chas. Krueger took the title to the property in his own name without this defendant’s knowledge, because he always had looked after this defendant’s business, and desired to save this defendant from the trouble of managing this property, improving the same, and signing all the necessary papers.” It will be observed, according to the course of dealings between husband and wife, that the husband was accustomed with the wife’s knowledge to transact her business in his name. She gave no single instance, either in her answer or her-testimony, in which she had acted for herself in any transaction. There was considerable detail necessary to carry out the transaction, according to her statement of it. She knew that this had to be done. She knew that it was done. She knew that it was not done by herself. She knew that it must.be done by some person. She knew that that person must be her husband; for he alone had authority from her to represent her either in this or any other transaction, so far as the record discloses. Since he undertook to manage all these transactions and to execute the necessary papers without consulting her, the irresistible conclusion is that she must have known that the title was in her husband. Knowing this she permitted it to remain there from 1906 until 1912, without any question, thus enabling him to create debts upon the credit thus established for him by permitting him to claim as his own her property. It would be inequitable and unjust to permit her now to assert an equity in opposition to creditors claiming to be paid out' of the property left by her in her husband’s name. There is no intimation in this record that this wife was wanting in ordinary business sagacity. A Avoman of sound memory and discretion she was, as the record discloses, possibly under the influence of her husband, but certainly not without knowledge as to the true status of affairs. The statement in her answer to the effect that she had no knowledge that the legal title was in her husband, a mere general denial, is completely overborne by the facts as she states them; for the want of knowledge upon her part is utterly inconsistent with the existence of the facts alleged in her answer. The inference unfavorable to her must necessarily be drawn from the facts as stated. This view of the case is reinforced by the further statement of the defendant, — 436 — “that when she discovered that the law of Georgia was different from the law of Florida in this, that a husband can sell his property without his wife joining in the deed, that this defendant demanded that the said Chas. Krueger place the title in her name.” If she had no knowledge that the title was taken in the name of the husband in the first instance, why should her mere discovery that the law of Georgia was different from the law of Florida in the re'spect above indicated in any wise affect her action? If she thought the title was in her and believed it, knowing that her own money had paid for it, why should that circumstance call to her mind the necessity of a change in the title? Yet she says it was only upon the discovery of the difference between the law of Georgia and the law of Florida that she demanded that Chas. Krueger place the title in her name.- The clear inference from these statements is that she must have had knowledge that the title was in Chas. Krueger, and not in herself, prior to the time that she discovered the difference between the laws of Georgia and Florida. When we come to read the answer and analyze it, the conclusion is irresistible, notwithstanding her protestation in her answer to the contrary, that the defendant, with knowledge of the facts of which she was informed, would be charged as matter of law with knowledge that the title was in her husband. This being true, and the credits having been extended to the husband on the faith of his apparent ownership, the law raises against her an estoppel to assert her secret equity against these creditors. Gorman v. Wood, 68 Ga. 524; Brown v. West, 70 Ga. 201; Kennedy v. Lee, 72 Ga. 39; Robinson v. Stevens, 93 Ga. 535 (2), 538 (21 S. E. 96); Ford v. Blackshear Mfg. Co., 140 Ga. 670, 674 (79 S. E. 576), and cases cited. Counsel for the defendants have urged upon us the proposition that since these creditors had no liens either by judgment or by contract, the property could not be subjected. That might be a pertinent inquiry if this controversy were between secured and unsecured creditors, or if the issue were as to whether a particular lien had been imposed upon this property; but in so far as the doctrine of estoppel is concerned, it may be applied as against the enforcement of a debt whether it be secured of unsecured. The estoppel gives no lien and defeats no lien. It only interposes a barrier against the assertion of a claim by one person who has permitted another to expend money or to obtain — 437 — á credit upon a representation expressly or impliedly made, upon Which the creditor has in good faith acted to his prejudice. 3,4. The reasoning just above stated applies with equal cogency to the claim of both of the creditors represented by the trustee in bankruptcy. There is, however, another legal principle which is controlling, and which is equally applicable to both creditors, in so far as the same relates to the corporate stocks in question. It will be noted that in her answer Mrs. Krueger alleges that she borrowed $10,000 from her father, which she “loaned” to her husband with the understanding that he was to use it in bringing about a com-r position of a bankrupt estate in which he was interested, and turn over to her the property which he received. The money was so used by the husband, but instead of turning over the corporate stocks to her he kept them in his own name. Some years later, after the debts had been created against him, he conveyed to her the stocks im-question upon the theory that they belonged to her. Under the view we take of this ease there was never any trust in favor of the wife imposed upon these stocks. When she loaned the money to her husband the relation of debtor and creditor was established between them. His promise to turn the property over to her was a mere executory, agreement, a breach of which would give her a right of action; but it could no more give her an equitable interest in the res than could the breach of any other promise in respect to the sale of goods. When the husband transferred to the wife the corporate stocks they were of the value (according to the husband’s testimony as a witness for the wife) of $38,500. The debt due by the husband to the wife was $10,000. The transfer left him wholly insolvent. This being true according to the undisputed evidence, it requires no argument to show that the transfer was void as against the husband’s creditors, when attacked, as was done in. this case, upon the ground that it was. fraudulent within the meaning .of our statute which prohibits a debtor, insolvent at the time, from conveying or transferring his property with intent to delay and defraud his creditors. No.claim of good faith could give validity to the transaction. It would be legally impossible for the husband to pay or for the wife to receive in good faith three times the amount of her debt. Such a transaction the law denounces as fraudulent upon its face. The husband may prefer his wife, hut in doing so he must have due regard for the interests of other creditors. We have considered the cases cited — 438 — on the brief of the plaintiffs in error, commencing with Dodd v. Bond, 88 Ga. 355 (14 S. E. 581), and including Bell v. Stewart, 98 Ga. 669 (27 S. E. 153), and Ford v. Blackshear Manufacturing Co., supra, and are of the opinion that the principles in these eases announced do not require a different ruling in the present case. We therefore conclude that the trial judge committed no error in directing a verdict for the plaintiff. 5. None of the assignments of error show cause for reversal. Judgment affirmed. All the Justices concur.