First National Bank v. Bartlett

Maxwell, Ch. J. In August, 1866, Wallace R. Bartlett came to Omaha, bringing with him about $1,000 in money. In the latter part of that year his wife came, bringing with her about $5,000 of her own money. This money was delivered to the husband under an agreement that he was to invest it in real estate for her benefit until such time as they could determine on a suitable location for a home. In 1869, Bartlett, in connection with seven others, purchased forty acres of land adjoining the city of Omaha, for the sum of $16,000, the deed being made to Bartlett, who conveyed to each of his co-purchasers the portion of the tract to which he was entitled. This tract of land was laid off into an addition to the city of Omaha, known as Bartlett’s addition, and lots 3 and 14, costing $2,000, were selected as a site for the family residence, the legal title at that time being in Bartlett. Of the purchase money one thousand dollars was [326] derived from the sale of real estate held by the wife in her own name, and the second thousand appears to have been derived from the sale of property purchased with the wife’s money, but the title to which had been taken in the name of the husband. In May, 1874, Bartlett made a quit-claim deed for the property in question directly to his wife, but the deed was not recorded until February, 1875. About the time of the execution of the deed in question, Bartlett commenced the erection of a residence on one of the lots in question, costing with the improvements about $8,000. In August of that year, he, with his family, moved into the house, although it was not fully completed until the next spring. At the February term, 1876, of the district court of Douglas county, the plaintiff recovered a judgment against Bartlett, Watson B. Smith, and Joel T. Griffin for the sum of $2,326, with interest at twelve per cent per annum, and $81.25 attorneys’ fees. An execution having been returned unsatisfied, the plaintiff instituted proceedings by a creditor’s bill against Bartlett and wife, alleging that the funds expended in the erection of the house were the funds of Bartlett, and that Sarah F. Bartlett, his wife, had no interest therein whatever. And that “ during the period of expenditure the said Wallace R. Bartlett was insolvent and unable to pay his debts as they matured; and he so expended the said sum upon the said property, the title whereof was in his said wife, for the purpose of placing it beyond the reach of his creditors, etc.,” and praying for a sale of the premises, etc. The defendants answered the petition of the plaintiff, alleging that the original indebtedness upon which the judgment was recovered was incurred on the tenth day of June, 1874, Bartlett being merely surety on the note; that the note was renewed a number of times, the last renewal being the fifteenth day of March, 1875. The [327] answer also alleges that the money expended in purchasing the lots in question belonged to Sarah E. Bartlett, and that lots 3'and 4 in block 251, in the city of Omaha, which had been occupied as a home for the family for a time, were sold in the spring of 1874 for the sum of $3,160, and the proceeds applied in improvements upon the lots in question, “ together with other moneys belonging to the defendant, Sarah E. Bartlett.” On the trial of the cause in the court below, a decree was rendered in favor of Mrs. Bartlett for the sum of $7,000, and declaring the same a lien upon the premises, subject to a prior mortgage, and subjecting the remainder of the property to the payment of plaintiff’s judgment. The plaintiff appeals to this court. Where it is clearly shown that a husband has his wife’s money, holding it in trust for her, and the proof is clear that it is a bona fide transaction, she may become his creditor. Monteith v. Bax, 4 Neb., 176. Ault0man v. Obermeyer, 6 Id., 260. And a wife may appoint her husband her agent to manage her separate property, and will be bound by his acts when within the scope of his authority. McMurtry v. Brown, 6 Neb., 377. In the case at bar, the money was placed in the' husband’s hands by the wife for the express purpose of investing it in real estate for her, until such time as a suitable location for a home could be selected. This contract, when the funds were her separate property, in equity she had a right to make, even before the passage of the act of 1871 in relation to the rights of married women, notwithstanding the rule of the common law that her personal estate, when reduced to possession by the husband, becomes his personal property, because it is a rule of equity that if a husband, after marriage, contract with his wife that she shall separately possess and enjoy her separate estate, the contract will be upheld in equity. Story’s Equity Juris., sec. [328] 1372, and cases cited. This is not a case where the wife loaned money belonging to her separate estate to her husband upon his promising to repay it, but where she constitutes her husband her agent to invest the money until such time as a suitable location for ahorne could be found. Were these investments productive of profit — if so, to what an amount? We are not informed. The proof shows that the property purchased from Redick, which, with the building, cost $4,000, was sold several months afterwards for the same, thereby realizing no profit whatever. Also that the property purchased from McCracken for $4,500, was afterwards sold at a considerable loss. Under these circumstances, in the absence of testimony showing the purchases and sales, it will not be presumed that the investments were productive of profit. It is true Bartlett in his testimony swears that $7,000 of his wife’s money was put into the house,' but fails satisfactorily to explain from what sources the money was derived, while it is apparent from his testimony that her funds were mingled with his, and no separate account kept of matters pertaining to her separate estate, Bartlett’s testimony upon that point being: “I retained her funds and kept them invested in a line of succession until we concluded to invest in a homestead, and kept them as distinct as I could in the way I was doing business.” Erom other portions of his testimony it is apparent that no distinct account was kept. The burden of proof is on these defendants to show the amount of profits received from these investments. And mere allegations as to profits cannot be received where better evidence is at hand, namely the transactions upon which profits are claimed to have been made. Transactions between husband and wife in relation to the transfer of property from him to her, by reason [329] of which, creditors are prevented from collecting their just dues, will be scrutinized very closely, and it must be clearly established that such transactions were made in good faith. Aultman v. Obermeyer, 6 Neb., 264. The reason is, that there is such a. community of interest between husband and wife, that such transfers are often resorted to for the purpose of withdrawing the debtor’s property from the reach of his creditors and preserving it for his own use. Therefore, in a contest between the wife and the • creditors of her husband, there is a presumption against her which she must overcome by affirmative proof. Seitz v. Mitchell, 4 Otto, 583. The insolvency of Bartlett appears to have been caused by misfortune rather than by his own fault. But his property, even if it had been given to his wife during this period, would be liable for his debts. The decree of the court below will therefore be modified so as to give Sarah E. Bartlett a lien on the house and lots in question for the sum of $5,300, in place of $7,000, and in all other respects the decree of the court below is affirmed. Judgment accordingly.