Freeman's Adm'r v. Butters

Keith, P., delivered the opinion of the court. Freeman’s adm’r filed his bill in the Circuit Court of Culpeper county, in which he shows that William Hurt died in 1851, leaving a will which was duly probated, by the second clause of which he gives and devises to his wife, Maria Louisa Hurt, the whole of his estate, real and personal, during her widowhood, “with full power and authority to dispose of the same by her last will and testament in any manner she may think proper.” He further shows that his intestate is the assignee of a bond executed by Maria L, Hurt for the sum of $1,000, bearing sis.per cent, interest. On the 4th of March, 1872, Mrs. Hurt, “in consideration of the high esteem she hath for the party of the second part, and in the further consideration of the sum of $10, conveyed to William H. Butters, of Chicago, 111., 75 acres of the tract oí land devised to her by the will of her deceased husband.” — 408 — On the 18th of November, 1876, she conveyed to William H. Butters, trustee, in consideration of certain advances of money from time to time made from the said Butters and Susan E., his wife, and for the further consideration of $1.00, another parcel of land containing 130 acres, to hold on the following uses and trust, that is to say, to allow “the said Maria L. Hurt to take and receive the rents of the land during her natural life, to be applied to her support and maintenance as may be necessary, the balance to be used as she may think best, and after her death to hold the said tract of land for the sole and separate use of Susan E. Butters, the wife of William H. Butters, trustee.” On the same day she conveyed to William H. Butters, trustee, for his wife, Susan E. Butters, and her heirs, another tract of land containing forty-three acres, the consideration being $1,000 in hand paid. On the 19th of February, 1878, she executed another deed in consideration of $5.00, by which she relinquished the interest in the rents and profits of the land reserved to herself in the deed of February 18, 1876, to William H. Butters, trustee for his wife; and on the 5th day of March, 1887, she executed a will which was duly probated in the County Court of Culpeper on March 19, 1888, by which she devises to Susan E. Butters, wife of William H. Butters, “the 142 acres of land conveyed to her by deed of bargain and sale.” By other clauses of the will she makes sundry other devises and bequests. The several deeds and the will referred to are exhibited with the bill. William H. and Susan E. Butters filed their answer and demurrer to this bill; and the guardian ad litem of the infant defendants also answered; and the cause coming on to be heard upon the demurrer and the answer of the guardian ad Utem, and upon the demurrer of William H. Butters, Susan E. Butters, Alice, Lucy B. and Horace Finks it was adjudged and ordered that the demurrer be sustained, and the bill of complaint be dismissed with costs. — 409 — At a subsequent day the plaintiffs were allowed to file a bill of review, and the court set aside the decree dismissing the bill, and permitted the plaintiffs to file an amended bill. The object of the amendment was to implead the administrator of Maria L. Hurt, deceased, and to aver that she died possessed of personal estate liable to the payment of her debts but inadequate thereto, and that therefore the lands devised by her under the power given by the will of William Hurt, deceased, upon her exercise of that power, in favor of volunteers, became subject to the payment of her debts. On the 9th of June, 1894, the cause was brought on again to be heard upon the papers formerly read, and the court, being of opinion that the real estate devised by the will of Maria L. Hurt to Susan E. Butters is not liable to the debts set up by the plaintiffs in the bill of complaint, ordered and decreed that the original and amended bill be dismissed as to Susan E. Butters and her children. It is obvious that the Circuit Court in the final decree adhered to the opinion which it had already expressed, and dismissed the bill upon the demurrer. But even if this be not so it does not affect the case. It must be controlled by the construction to be placed upon the will of William Hurt, which conferred the power, and the will of Mrs. Hurt, by which that power was executed, for the averments in the answers of the defendants, so far as they seek to show the payment of a valuable consideration by Butters and wife for the lands conveyed to them, set up affirmative matter of which there is no proof. The case, therefore, will be considered as upon a demurrer to the bill. The will of William Hurt gives to his widow the whole of his estate, real and personal, during her widowhood, with full power and authority to dispose of the same by her last will and testament in any manner she may think proper. This unlimited power of disposition by will thus conferred upon her, she executed in the prescribed mode in favor of — 410 — mere volunteers. It further appears that she died insolvent, and that, unless her creditors are permitted to subject the property so appointed by her in favor of a volunteer, her debts must go unsatisfied. In Dold's Trustee v. Geiger's Adm'r, 2 Gratt. at p. 102, Judge Stanard says: “A cardinal rule of legal ethics inculcates the duty of being just before being generous. Donations, voluntary transfers, assignments or surrenders of rights even in favor of wife or children, by a debtor, which might have been used to provide for his debts, have, under the influence of this pervading rule of English law, been made to yield to the paramount claims of creditors. Even where a debtor, having a general power to appoint property which he never owned, exercises that power in favor of volunteers, the property in the hands of such volunteers is burdened with the debts of the appointer, if it be necessary for the satisfaction of them. This application of this rule shows it to be so searching that it reaches property which, though not owned by the debtor, he might have made his, but has voluntarily, without valuable consideration, made the property of others.” This passage enunciates a principle which is well established in our equity jurisprudence. See Jeremy’s Eq., p. 376; Hauser v. King, 76 Va. at p. 738; Penn v. Guggenheimer, Id. 854; Holmes v. Coghill, 12 Vesey 214; Daubeny v. Cockburn, 1 Merevail 638; Harrington v. Hart, 1 Cox’s Ch. Cases 132. Upon this subject Chief Justice Gray, in Clapp v. Ingraham, 126 Mass. at p. 203, says that the soundness of the reasoning on which the doctrine rests has been impugned by Chief Justice Gibson, of Pennsylvania, and by Mr. Justice Story in his Commentaries, though it is stated by Judge Story and Chancellor. Kent as well settled law. but said he: “A doctrine so just and equitable in its operation, clearly established by the laws of England before our Revolution, and supported by such a weight of authority, cannot be set aside by a court of chancery because of doubts of the technical — 411 — soundness of the reasons on which it was originally established. ’ In Brandies v. Cochran, 112 U. S. at p. 352, Mr. Justice Matthews uses tb'e following language: “It is indeed a rule well established in England, and recognized in this country, that where a person has a general power of appointment, either by deed or by will, ana executes this power, the property appointed is deemed., in equity, part of his assets, and subject to the demands of his creditors, in preference to the claims of his voluntary appointees or legatees.” In 3 Williams on Executors (9th Eng. ed.), at p. 128, the lav upon this subject is stated as follows: ‘ Where a man has a general power of appointment over a fund, and he actually exercises his power, whether by deeri or will, the property appointed shall form part of his assets, so as to be subject to the demands of his creditors at his death, in preference to the claims of his legatees or appointees. But, in order to raise this equity, the power must be actually executed; for equity never aids the non-execution of a power. And although creditors in these cases prevail ever volunteers, yet if a party taking under voluntary appointment sell to a person bona fide, and for valuable consideration, such person, in analogy to the decisions on the statute of voluntary conveyances will be preferred to the creditors, as having a preferable equity to them.” In Leading Oases in Equity the principle under discussion is thus declared: ‘ ‘ Whether it be real or personal estate which has been appointed so as to become assets for payment of the appointer’s creditors, it will be only applicable in aid of the assets which are really his property. But if the appointee under a general power of appointment were to sell the property to a bona fide purchaser for valuable consideration, the purchaser, having a better equity, would be preferred to the creditors of the appointer, since they have no specific charge — 412 — upon the property.” Silk v. Prime, 2 White & Tudor’s Leading Cases in Eq., pt. 1, at p. 378. See also Johnson v. Cushing, 15 New Hampshire 298. The authorities cited are sufficient to show that there was error in dismissing the plaintiff’s bill. We have considered this case as though it had been heard upon a demurrer to the bill, and we repeat that if it be doubtful that it was so heard, those averments of the answer which, if established, might justify the decree appealed from are affirmative in their character, and are unsupported by proof. The decree must, therefore, be reversed, and the cause remanded to the Circuit Court to be there proceeded with in accordance with this opinion. Reversed.