Butler v. Merchants' Insurance

COLLIER, C. J. The third section of the bankrupt act of 1841, enacts “ That all the property and rights of property, of every name and nature, whether real, personal or mixed; of every bankrupt, except as is hereinafter provided, who shall by a decree of the proper court be deelared to be a bankrupt within this act, shall by mere operation of law, ipso facto, from the time of such decree, be deemed to be divested out of such bankrupt, without any other act, assignment, or other conveyance whatsoever; and the same shall be vested by force of the same decree, in such assignee as from time to time shall be appointed by the proper Court for this purpose,” &c. “ And the assignee so appointed, shall be vested with all the rights, titles, powers and authority to sell manage and dispose of the same, and to sue for and defend the same, subject to the orders and direction of such court, as fully to all intents and purposes as if the same were vested in, or might be exercised by such bankrupt before or at the time of his bankruptcy declared as aforesaid; and all suits at law or in equity then pending, in which such bankrupt is a party, may be prosecuted or defended by such assignee to their final conclusion, in the same way and with the same effect as they might have been by such bankrupt,” &c. There is a proviso, which excepts from the provisions of this section, household and kitchen furniture, &c. not exceeding in value, in any case, the sum of three hundred dollars ; also the wearing apparel of the bankrupt, &c. The terms of this enactment are exceedingly comprehensive, and operate not alone upon the property of the bankrupt, of which he is in possession, but upon actions pending, and mere rights of action; so that it is important to inquire, whether the husband at the time of the application tobe discharged as a bankrupt, had any right growing out of the cause of action stated in the declaration. Marriage, it is said, operates as an absolute gift to the husband [151] of all the personal chattels of the wife which were in her possession at the time of the marriage. Choses in action are mere rights, arising from contracts expressed or implied, which must be asserted at law for the purpose of being reduced into possession, as money due on simple contract or by specialty, damages for the breach of promises expressed or implied, &c. When such rights of action belong to a woman at the time of her marriage, they become vested in her husband and he acquires a qualified property in them ; that is he may reduce them into possession during his wife’s life-time, and then they become his property absolutely ; but if he die without having reduced them into possession, they become his wife’s by survivorship, and if she die in the life-time of the husband, he shall have them only as her administrator. [Clancy on H. and Wife, 2-4; 2 Kent’s Com. Lecture 28, on H. and Wife; Legg vs. Legg, 8 Mass. Rep. 99-101; Howes v. Bigelow, 13 Id. 384; Stanwoood v. Stanwood, 17 Mass. Rep. 57.] The right of the husband to the wife’s choses in action, is recognized by law as something valuable, and may be disposed of by him, so as to cut off her right of survivorship, though they be not reduced into possession. Thus it may be barred by a settlement, either before or after marriage; by a release of the demand ; by an award of payment to the husband; by a judgment and execution at the suit of husband and wife ; by husband’s assignment for valuable consideration, &c. [Clancy on H. and Wife, 110-136.] It is a rule of the English Common Law, that a married woman cannot possess personal property, and that every thing of this nature to which she is entitled at the time of her marriage, and which accrues in her right during its continuance, is vested solely in her hnsband ; they are but one person, and all the rights and duties which are her’s at the period of the marriage, become his during its continuance. Hence, it is said that a man cannot by any conveyance at the common law, limit an estate to his wife, and if a joint estate be conveyed to husband and wife, and a third person, the husband and wife would take a moiety. The unity of their persons, disables her to possess personal property, and the husband being the head of the wife, all that she hath belongs to him. [Clancy on H, and Wife, 1,2; 2 Steph.Com. 296; 2 Kent’s Com. 136.] [152] These are the rights and disabilities of the wife, at law, so far as it is necessary now to consider them. But the husband may grant to, or contract with a third person, as trustee fo.i the wife ; and if he conveys land to a third person, to her use, that will be an effectual conveyance under the statute of uses. [2 Steph.Com. 297.] If the husband makes a gift to his wife to her separate use, equity will regard him as a trustee ; and if a conveyance be thus made by a third person without the interposition of a trustee, the husband will be considered such. [2 Kent’s Com. 136; Clancy on H. and Wife, 256-261.] The release (as it is called) to Mrs. Butler by her husband, is not the mere abandonment or discharge of a right of action; whatever the terms employed may be. If operative at all, it must be as a conveyance among other things of the husband’s interest in, or right to the choscs in action of the wife, which have not been realized by him. Releases, it is said, frequently operate as conveyances. [2 Bouvier’s Die. tit. Release.] Assuming such to be the character of the writing under which the title of the wife is attempted to be sustained, and the conclusion necessarily follows, that it is inoperative at law for all purposes. The effect of a conveyance (we have seen) from the husband directly to the wife, is not to invest the latter with any rights which a court of law will recognize; but as it respects that forum, the thing granted remains in the same predicament in which it was before the deed was executed. If the husband convey directly to the wife, property of which he is in possession, if the conveyance could operate to invest the wife with the legal title, as her head, and in virtue of the unity of their persons, her title would immediately vest in him : and a conveyance by the husband to the wife of his interest in her choses in action, would be alike inoperative, to take from him the right to sue for or assign them. A Court of Equity, in such case, is alone competent to give effect to such deeds, if they can be upheld. [2 Brock. Rep. 285; 3 Paige’s R. 440; 4 id. 64; 10 Pet. Rep. 594.] This brings us to the conclusion, that the wife, in the present case, can claim nothing from the release; and ourinquiriesmight now close, but we will add a few words upon the effect of the husband’s bankruptcy. It is said to be now settled, that neither the assignment produced by the bankruptcy, or the insolvency of the husband, will defeat the wife’s title by survivorship to her [153] choses in action. [Clancy on H. and Wife, 124.] Owen, in his Treatise onBankr. 118-122, says, that property, which the husband is entitled to in right of his wife, either upon or after his marriage, passes to the assignee, subject to the equity of the wife, and if the same be in the hands of trustees, or executors, or in other words not reduced into the husband’s possession at the time of the issuing of the decree, the wife may claim her equity for a settlement; and if the assignee, in such case, file a bill in equity to recover the wife’s property, equity will not interfere to relieve him, except upon the terms of making a suitable settlement upon the wife and children. But if the assignee can recover without the intervention of a Court of Equity, it is said by the same author, that he will not be bound to make a settlement on the wife. Whether, if the deed in question, before the husband applied for the benefit of the bankrupt law, a Court of Equity would not give to the wife the entire benefit of it, is an enquiry aside from the present case. The view we have taken, is conclusive of the cause as presented by the record; the consequence is, that the judgment of the Circuit Court must be affirmed.