Witsell v. Charleston

The opinion of the Court was delivered by Willard, A. J. The plaintiff charges that the defendants have illegally transferred city stock, standing in the name of a trustee, to a stranger. It appeared by the endorsement on the stock at the time the transfer was made that the party who authorized the transfer held the stock subject to a trust in favor of the plaintiff. Under our decision in Magwood vs. South Carolina Railroad, the city corporation could not legally make such a transfer unless the trustee possessed authority to cause such transfer to be made. The question whether the trustee possessed such authority depends, in the first instance, upon the power of the plaintiff, as a married woman, to authorize the sale of property placed in the hands of a trustee for her use and enjoyment, and for its protection against liabilities for her own debts and those of her husband; and if it be found that the plaintiff possessed such authority, whether she exercised it. It was contended that C. E. Miller, by whose direction, endorsed on the stock, the transfer was made, appeared by the endorsements on the stock itself not to have the authority of a trustee as it regards the stock. It will not be necessary to examine this objection, for, as will appear hereafter, the determination of that question, one way or the other, cannot affect the final results of. the ease. The plaintiff had no authority to give validity to the transfer, unless derived from the Constitution, (Article XIV, Section 8,) or the Act “ to carry into effect the provisions of the Constitution in relation to the rights of married women,” passed January 27, 1870, (14 Stat., 325.) — 98 — It is contended that the plaintiff authorized her husband, as her agent, to pledge the stock in question to enable him to carry on his business of planting. It was not, therefore, the case of an investment of trust funds by a trustee consented to by a married woman, the cestui que trust, as in Frazier vs. Center, (1 McC. Ch., 270,) nor was it the case of a trustee incurring obligations for the benefit of the trust estate, as in Carter-vs. Eveleigh, (4 DeS. Eq., 19.) On the contrary, it is simply the question of the power of a married woman to charge her separate estate for the benefit of her husband — in the present case, to enable him to borrow money to carry on his business. Independent of the effect of the Constitution enlarging the powers of married women, and the Act of the Legislature intended to carry these constitutional powers into effect, she possessed no such authority as was decided by this Court in Dunn vs. Dunn, (1 S. C., 350.) The Section of the Constitution in question is as follows: “The real and personal property of a woman held at the time of marriage, or that which she may thereafter acquire, either by gift, grant, inheritance, devise, or otherwise, shall not be subject to levy and sale for her husband’s debts, but shall be held as her separate property, and may be bequeathed, devised or alienated by her the same as if she were unmarried: Provided, That no gift or grant from her husband shall be detrimental to the just claims of his creditors.” — Constitution, Art. XIV, § 8. The first question that arises is, whether equitable interests in lands are embraced by the terms of this Section. The object of the Section is threefold: First, to convert the property of a wife, acquired before or during marriage, into a legal separate estate; second, to prevent its subjection to the payment of her husband’s debts; and, third, to confer upon the married woman the same power of disposition or alienation, as to such separate estate, as that enjoyed by a femme sole. The subject matter upon which this characteristic is impressed is described as “ real and personal property.” Are the terms “ real and personal ” used to exclude from the category certain classes of property, or kinds of possession and ownership, ordinarily embraced under the description “property,” where no qualifying terms are employed to narrow their force; or, on the other hand, are these terms employed for the purpose of giving to the idea of property, as thus used, its most comprehensive significance? If theo latter is the correct interpretation, which we think it is, then — 99 — choses in action and equitable estates and demands are included under the words “ real and personal property.” The latter mode of employing these terms is usual, indeed it is the natural sense of the terms, to be understood when nothing exists to point an intent to use them in an exclusive, rather than an inclusive, sense. This view will be strengthened when we come to look at the object of this Section, but first we must notice an argument urged as affording ground for limiting the sense of these terms. It is contended that the words “real and personal property of a woman” are qualified and restricted by what immediately follows, viz., “held at the time of her marriage, or that which she may thereafter acquire.” It is contended that “ held ” is used to qualify the general expression “real and personal property.” For the purpose of enforcing this view, the word “ held ” is interpreted in a technical sense. It is said that a cestui que trust does not hold the lands out of which such equitable interest arises, but that they are held by the trustee. “ Held,” in the connection in which it is used, does not imply limitation, but is used to give the largest effect to the terms “real and personal property” in their application to property of a married woman. Is the word “ held,” standing by itself, to be taken in a technical sense ? If so, what is the effect of such reading ? Asa technical term, “held” embraces two ideas — that of actual possession of some subject of dominion or property, and that of being invested with legal title or right to hold or claim such possession. We speak of lands being held in fee, or for a term of years, or by adverse possession, meaning that possession is had of these lands under claims to such possession of the nature described by these terms. So we speak of a legal title being held in respect of lands, that expression not necessarily implying the actual possession of the lands to which such title relates. This term is constantly applied to cases of possession had of anything that is the subject of property. It does not follow, then, merely from the fact that “ held ” is taken in a technical sense, that it limits the expression “ real and personal property,” for if everything capable of being possessed may be “ held,” then the use of that word does not lead to the exclusion of choses in action and equitable interests and estates from that category. — 100 — But the argument goes further and contends that in its application to a trust estate the term “ held ” is to be used in a particular technical sense. We speak of trust estates as held by one and enjoyed by another. That to which we refer as held in this case is the title with or without actual possession. This limited sense of the word “held” depends entirely on the context in that mode of using it, and not upon its own inherent force of expression ; change the context and this qualified meaning of the term disappears. It does no violence to technical propriety to say of lands in the hands of a trustee that a beneficial interest in such lands is “ held.” It is clear that unless the words “ real and personal property ” are read as precisely equivalent to “ the title to real and personal property,” there is no ground whatever to apply the argument in question to the case in hand. On the contrary, the Section affords a definition of “ held ” by supplying its equivalent, as to which there can be no doubt. It says “ held at the time of her marriage, or which she may thereafter acquire.” The subjects of holding and those of acquisition are intended to be the same. The object of the particular clause is to put property acquired before marriage on the same footing with that acquired afterwards. “ Held ” is used as equivalent to acquired, and that word cannot be limited in the way contended for. It is clear both in the language and intent of this clause that there was no design to use the word “held” in any sense limiting the generality of the expression “real and personal property,” but that, assuming that the general purpose of the Section requires that these terms shall be read as embracing equitable estates, the word “ held ” is in entire consistence with that reading. It remains, then, to gather up the general intent from all parts of the Section taken together. Its object was to enlarge what was theretofore known as the wife’s separate estate, so as to embrace all acquisitions, past or future, of such a nature that, if she were a femme sole, they would vest in her as property, and to enlarge her powers over such property to the same extent as if she was a femme sole, and at the same time to shield that separate estate from liability to the husband’s debts against her will. The same reason that would exclude equitable estates from this statute would also exclude choses in action and demands of an equitable nature. This would limit the faculty thus conferred without any good reason. The decisions of the Courts of this State, — 101 — followed by us in Dunn vs. Dunn, did not rest on the judgment of the Courts that the ends of justice were best subserved by depriving a married woman of all control over her separate estate, except where authority for that purpose was conferred by the instrument creating that separate estate, but upon the fact that the state of the common law prevented equity from enlarging her powers over her separate estate. It was felt that full justice was not attained under that view, and that there was an anomaly in the deprivation of the power to do right, unaccompanied by deprivation of the power to do wrong. Elsewhere the Courts of equity had found means to escape in a greater or less degree from the dilemma, and put an interpretation upon the powers of married women over their separate estates, that found an exception in the common law rule of incapacity, but in this State the Judges left the rule of the common law in full force until it should be changed by legislative authority. Now that the Constitution has reversed the rule of the common law, and. substituted general competence for the former rule of incompetence, as it regards the holding and acquisition of a separate estate, it is not for the Courts, on nice readings of its text, to restore a state of things from which the Courts of equity have long striven to be released. If equitable estates are excluded because not “ real and personal property,” in an exclusive sense of those terms, then, as has been said, ehoses in action and demands that can only be enforced by means of suits in equity are equally excluded; for the expressions real and personal property are more often used as denoting something distinguishable from ehoses in action than for distinguishing equitable estates from legal estates. It certainly cannot have been intended that rights of this nature should be excluded from the benefits conferred by the Constitution. When future acquisitions are carefully protected, it certainly could not have been intended to neglect rights of action and demands which might be the means of such future acquisition of tangible property. We have been referred to cases decided in the Courts of other States on statutes similar in their general intention to our own* some regarded as favoring the view that has been expressed and others as opposing it. When the construction of our own Constitution is free from doubt, little aid can be obtained from the decisions in the Courts of other States. Doubtful expressions, however, — 102 — should receive, to aid their solution, all the light that can be thrown upon them from judicial minds, contemplating them from the different standpoints afforded by the different statutes and circumstances relating to the same subject in other States and countries. In the present ease the meaning of our Constitution is free from doubt) and it demands interpretation at our hands according to the expressed intent of the people of the State who framed it as our organic law. It will not be necessary to look into the Act passed under the Constitution in detail. It could not narrow the sense of the Constitution, and, as we have seen, it is not necessary to look elsewhere for an enlargement of its provisions in order to admit the present case to its advantages. The next question is, whether the provisions of the Constitution apply to the powers of a married woman over a separate estate consisting of a beneficial interest under a trust of personal property, where such trust was in existence at the time the Constitution went into effect. At the adoption of the Constitution the legal title to the stock in question was in ■ Jane Neyle in trust for the plaintiff, Mrs. Witsell. Jane Neyle died in 1869, and no trustee has been appointed to succeed her in the trust, unless it was competent for the administrator of the trustee to appoint such a successor. The objection urged to allowing the Constitution to become operative as to conferring enlarged powers on the cestui que trust is, in effect, that it tends to change the nature of the trusts on which the property was held. Is this the fact? The trust in question arose under the following words of the will of the plaintiff’s testator: “And the said sum of nine thousand dollars to be invested for the sole, separate and exclusive use, benefit and behoof of the said Mary Susan Neyle, and not to be in any manner liable for her debts, or for the debts and contracts of any husband she may marry hereafter.” It is noticeable that this devise did not, in terms, designate a trustee, nor create a trust, but its intention must be assumed to be the creation of a trust in futuro. The only respect in which the trusts thus contemplated are limited, is by the direction that the beneficial enjoyment shall be in M. S. Neyle, now Mrs. Witsell, the plaintiff, .and that such estate shall not be liable for the debts either of the plaintiff or of any husband she might marry. — 103 — Had the will imposed certain definite characteristics in the trust, conformable to the then existing laws, and after the purpose of the will had become executed by the creation of the contemplated trust the Constitution had been changed so as to tend to effect a change in the trust in these respects, an interesting question might have been presented affecting the construction and possibly the efficacy of the law in such respect. The will, however, does not bear such a construction. The only expressed objects of the trust, assumed to have been intended, affect the rights of creditors of the plaintiff and her husband. The powers of the cestui que trust over her beneficial interest are not limited or even named. There is no ground from which to raise an implied intent that the plaintiff should have no power of alienating her beneficial interest. It may be said that the testator would naturally deem it equally important to prevent the plaintiff from voluntarily parting with the bequest to creditors, as to prevent them from seizing it against her will. Where there is a question of effectuating a general intent in order to prevent a failure of the testator’s bounty by reason of some defective expression of his particular intent, a large liberty may be enjoyed in referring the ultimate motive that influenced the testator ; but where the end of the inquiry is to withdraw the subject of bequest from the operation of a general statute, especially an enabling statute, such liberty of implications is not admissible. In the latter ease the inferences must be limited to that which appears to have formed a part of the testator’s mind and purpose. In the present case the will affords no evidence that the question of the alienation by the legatee was before the mind of the testator. The state of the law was such as to render it unnecessary that an^ attention should be paid to limiting her powers as a married woman over her beneficial interest. He must be regarded as intending that her powers should be such as the law permitted, not necessarily such as the then existing law permitted, for he is presumed to have known that the law was susceptible of change. If he acted from the opinion that the law was unlikely to be changed, that was equivalent to leaving the matter to be regulated altogether by the law. The provisions as to protecting the bequests from creditors cannot be construed as intending more than a direction to put the instru — 104 — ment in the form of an ordinary trust for the benefit of a married woman. The declared object is the ordinary object of such trusts. We must conclude that the trust in question is without defined limitation as it regards the powers of the cestui que trust over her beneficial interest, and that it is subject to the general rules affecting trusts of that nature. Whatever view may be taken of the question whether one holding a beneficial interest as cestui que trust, under the terms of a will or deed creating a trust, can directly destroy or impair such trust, it appears clear that, in certain cases, the trust may be indirectly destroyed through the power of alienation conferred upon a cestui que trust who is sui juris. Such a case exists when the whole beneficial interest in the trust estate is in such cestui que trust, without remainder or condition capable of defeating such beneficial interest, and when the whole object of the trust is to secure in such cestui que trust an enjoyment of a certain character. In the case just stated, if the cestui que trust be sui juris, the beneficial interest may be alienated, and no provision of the will or deed intended to prevent such alienation can destroy such power of alienation. If, then, the whole object of the trust was to secure in such particular cestui que trust a certain enjoyment of such beneficial interest, then the alienation of the interest of such cestui que trust, contrary to the intention of the trust, necessarily defeats the trust, because it defeats the whole object that the trust had in view. Nix vs. Bradley, (6 Rich. Eq., 43,) fully sustains the proposition just advanced. Although the alienation in that case only defeated the trust as it regarded a portion of the trust property, leaving it still in operation as to the portion in respect of which there was no exercise of the power of alienation, still power to defeat in part implies power to defeat wholly, for a rule that would protect the whole trust fund against destruction would protect each part with equal efficiency. The case just cited was fully considered and amply supported by authority. The language of that case is that the power may be exercised by a femme sole who is sui juris, but there is no force limiting it to one who is a femme sole. At that time the question could not arise in the case of a married woman, for she could have no authority to affect the trust or her beneficial interest under it, except that derived from the instrument creating it. Now that a married woman is in terms invested with — 105 — the powers of a femme sole as to her separate property, she is brought within the terms of the decision in Nix vs. Bradley, as well as within the principles upon which that ease was decided. It must be concluded that at the time when the stock in suit was pledged, and when it was sold by the pledgee and transferred to a third person, the plaintiff was competent to authorize such transfer, it appearing that she held the whole beneficial interest without remainder or condition that could defeat it. Such being the case, her consent to the pledge of the stock would in equity be equivalent to her formal transfer of it. Did she consent to the pledge of the stock ? The Referee found that the stock was so pledged, with the knowledge and consent of the plaintiff, Mrs. Witsell, but that such authority and consent went only to the extent of authorizing the pledgee to hold the stock as security for advances made. We find no ground for disturbing this finding of the Referee. The sale of the pledgee was not warranted by the terms of the contract upon which it was pledged. The advances made were not equal to what was agreed to be made; an amount of stock was disposed of greatly in excess of what was requisite to cover the amounts advanced, and the sale was prematurely made. Had the stock been regularly transferred by proper endorsements showing a complete title to the pledgee, a purchaser for value and without notice could have obtained good legal title, and without being chargeable with any equities existing between the plaintiff and the pledgee. But the endorsements showed that the legal title to the stock was subject to a trust, and such notice affected the purchaser. The acts of the city confirming this defective title of the purchaser by cancelling the stock or evidence of indebtedness belonging to the plaintiff, in part at least, and issuing new evidence of indebtedness to the purchaser, caused damage to the plaintiff, for which she is entitled to recover, as the defendant had notice by the endorsement of the trust. The plaintiff was, therefore, entitled to recover the value of the stock thus transferred by the city, less the amount due for principal and interest to Haselh It would seem that the judgment of the Circuit Court allowed to the plaintiff the value of the stock sold without deduction. This was erroneous. To the extent of the amount due to Hasell for advances, the plaintiff had by her consent parted with all interest, and that amount cannot enter as an element into the damages she sustained by the improper transfer of the stock. — 106 — The propositions advanced in the third exception by the city need not be particularly considered. The stock contained, in its endorsement, notice of the trust, and, being so charged, they can only discharge themselves by proof of actual authority or consent-on the part of the plaintiff, and the proof in this respect falls short of giving them full protection. The judgment must be set aside and the cause remanded for a judgment in conformity with the foregoing. Moses, C. J., and Wright, A. J., concurred.