McCrory v. Foster

Weight, C. J. Tbe above statement contains all facts — 275 — necessary -or material, in order to understand tbe principal ;points decided. Other and minor questions have been raised, however; and those we will first settle. It is first claimed by appellant’s counsel, that as this suit is brought to subject this land to the payment of the debts of the decedent, and there appearing to be sufficient property •aside from it, the bill is unnecessary, and for that reason should be dismissed. We think that the record does not sustain this position. It appears that the debts amount to ■ some $1,100, after making deduction for certain claims due the estate, and after the sale and disposition of all property, except two parcels of real estate, other than this lanch One parcel, known as the “church property,” was .appraised at $500. The bill alleges that it was offered for sale, and not sold for want of bidders, and. that said property is not available for the payment of debts. This is not denied by the •answer. The other property is alleged to be worth $600, ■and this is not denied, nor controverted by any proof So that, without adjudicating any legal question that might be involved, if the facts were -otherwise, we dispose of this point, by saying that the record does show a necessity for subjecting this land -to the payment of debts, if it can be .legally or •equitably done. Respondent also claims as an offset against any money which may be found in her hands, as executrix, the sum of $230 — being the value, as she alleges,-of the sheep and their fleeces, and provisions for family, for three months, which were not set oflj and furnished her as the widow of the decedent, under the law of 1813. Whether she could adjudicate this claim in this manner, or must present such claim in the proper county court, is a question that we need not heré determine. This is a claim that she sets up as new matter, and not in any manner responsive to the bill. Its correctness is denied in the replication. She introduces no proof on the subject. It was her duty to have ■done so; after having failed, it was correctly disallowed. The respondent claims that this claim required no proof, but proved itself.- We think otherwise, and -that there was no — 276 — more reason, for allowing this demand, without proof, than there would be to allow any other. And especially so, as it was the duty of the executors under the law, to omit such items in their inventory of the property, and not to administer on them as assets; and we cannot presume that they violated their duty. It is again claimed, that certain testimony was improperly admitted on the hearing. As we shall determine the case, however, without reference to such testimony, giving it no weight, it is unnecessary to examine this question; Without discussing further, then, these and, perhaps, other minor questions that arise, we come at once to those of more importance, and which relate to the substantial rights of the parties. If the money which was paid by Mrs. Snyder for the redemption of this land, belonged to her husband’s estate, then she must be declared a trustee; for being executrix at the time, the purchase will be considered as made for the use of said estate. It is against conscience, as' well as the good faith that policy and necessity require in such relations, that the trustee shall have, either gain, profit, benefit, or advantage, by the use of the trust fund. If any profit or advantage does accrue, it shall go to the benefit of the cestui que use; and property acquired by such use of the trust fund, when claimed by the party beneficially interested, will be declared by the chancellor to be held in trust. In Philips et al. v. Crammond et al., 2 Wash. C. C. 441, it is held, that if a receiver, executor, factor, or trustee, lay out the money which he holds in his fiduciary character, in the purchase of real property, and take the conveyance to himself, he who is entitled to the money, may follow the same, and consider the purchases made for his use, and the purchaser as his trustee. See also Provost v. Gratz, 1 Pet. C. C. 864. A trustee cannot purchase, or acquire by exchange, the trust property. Wormly v. Wormly, 8 Wheat. 421. . No act of the trustee shall prejudice, as between them, the cestui que trust. Van Horn v. Fonda, 5 Johns. Ch. 838; 1 Johns. Ch. 510, 535, and 629. If a trustee purchase land with the trust — 277 — fund, taking tbe conveyance in bis own name, in equity, tbe land is beld as a resulting trust for tbe person beneficially interested. Piatt v. Oliver, Williams et al., 2 McLean, 313, and authorities there cited. Tbe rule is, that acts done by tbe trustee, are presumed to be, not for tbe benefit of tbe trustee, but for that of \h.Q cestui que trust. 4 Kent, § 61. Where such-trust fund has been converted into another species of property, and its identity can be traced, it will be beld in its new form, liable to tbe rights of tbe cestui que trust; and these general doctrines are not limited to trustees, but extend to all other persons in a fiduciary relation to tbe party, whatever that relation may be. See case in 2 McLean above' cited; Everton v. Tappan, 5 Johns. Ch. 497; Hart v. Ten Eyck, 2 Ib. 62, 104, 441; 2 Story’s Eq. 503 and 506; Brown v. Lynch, 1 Paige, 147; Fellows v. Fellows, 4 Cowen, 682. Was tbe money used, then, a trust fund, or means which belonged to tbe respondent in her individual right ? Tbe determination of this question, depends, upon tbe further one, whether tbe same bad ever been so far reduced to tbe possession of, and become subject to tbe control of, her deceased husband, as to prevent her, as against bis creditors and representatives, from asserting her. original right thereto? And here, adopting tbe language of Paukbe, C. J., in Angel v. McLellan, 16 Mass. 31, we must say, in advance, that tbe circumstances of tbe respondent’s claim to this money, are so favorable in an equitable point of view, and tbe claim is based upon a ground so rigid, that if regret was to be indulged in tbe performance of duty, we should feel no small portion of it, in deciding this point in tbe case. We have examined for some correct principles and authorities, upon which tbe respondent’s claim to this money might be sustained; but are led to tbe conclusion, from tbe facts contained in tbe record, that she did not bold tbe money in her own right, but that it- was legally tbe money of her deceased bus-band’s estate, and as such, as executrix, she must be beld responsible for its use; and under tbe well settled and salutary rules above adverted to, tbe land redeemed, being clearly identified, must be declared beld for tbe use -of tbe cestui — 278 — que trust. The land'sold in Obio was hers, as one of the-heirs of ber deceased father. After coverture, the father died, and the land was sold. The money used in redeeming-the quarter section in controversy, was the last payment due on the land, so inherited, and which she and her-husband had’ sold". The notes and mortgage were made payable to the husband, and were left by him, or her, or both of them,, with his brother. Whether the sale took place before or after- Snyder and his wife removed to Iowa, is not shown; but it is shown that the installments due before the death of Snyder, were paid to and received by him. All parties' concede that it was her land, that was sold; and in conversation with regard to the- money paid, and to be paid therefor, it was spoken of as hers, and Snyder himself so1 spoke of it. As a correct man, and a considerate and kind husband, it is but natural that he should thus speak of it. He, in the same spirit, was doubtless entirely willing that-she should do as- she pleased with regard to it. But these' matters; while commendable enough on his part, and well-enough when viewed without reference to legal rights, cannot change such rights, especially where nothing was done-by the wife to re-invest herself of the means so belonging to-the husband, by virtue of the marital relation, and his legal-rights resulting therefrom. Where gifts, transfers, or transactions of any kind, with regard to the wife’s property, take place between husband and wife, policy would seem to dictate, that a trustee should be appointed by them, to protect and guard the rights and interests of the wife,, who being, for most purposes, under the legal control of the husband, needs not unfrequently a-protector, to properly guard and secure her separate estate. Where no such trustee is appointed, however, we know of no rule that will hold such transactions void, or even voidable, in the absence of fraud and unfair dealing. It is true, courts of equity will guard, with jealous care, the rights of the wife in such cases. The husband will be held to the strictest fairness and integrity, and the wife will not be deprived of her property, by any gift or transfer procured by — 279 — sucb fraud., circumvention, or undue and improper influence. We see none sucb in tbis case. On tbe contrary, tbe whole testimony, tends to sbow, not only tbat sbe freely and voluntarily submitted to tbis sale of ber estate, but failed years afterwards to accept ber husband’s offer, in tbe presence of ber own brothers, tbat sbe might buy tbe land they once owned, on the very mortgage debt which was made payable to him. To bold tbat there was sucb fraud and improper influence as should set aside tbis gift, and defeat tbe husband’s legal rights, would be doing very great violence to all tbis testimony, and tbe doubtless deserved confidence which sbe placed in tbe integrity and honesty of her husband. As sustaining tbe views above suggested, as to tbe rights and powers of tbe wife over ber separate property, and tbe presumptions arising as to sucb gifts in courts of equity, see Bradish v. Giles, 3 Johns. Ch. 523; Methodist Episcopal Church v. Jacques and others, 3 Ib. 77; Story’s Eq. Juris. 1395; Demarest and wife v. Wynkoop, 3 Johns. Ch. 129. Tbe husband, by tbe marriage, at common law, became entitled absolutely to tbe goods and personal chattels of which tbe wife was actually or legally possessed at tbe time, in ber own right; and also of sucb as came to ber during ber marriage. As to ber cboses in action, however, be was not so entitled absolutely, until they were reduced into possession, and tbat during ber life. Story’s Eq. Jur., § 1402 ; Reeve’s Dom. Rel. 1; Clancy’s Rights of Mar. Women, 109. Where reduced to possession, however, as they then cease to be.cboses in action, and become cboses in possession, ber right by survivorship will be barred. See Clancy’s Rights Married Wo. Ill; and authorities cited. It can make no difference, whether tbe notes in Ohio were given for real or personal estate. Her right thereto by survivorship must be barred, if there was a reduction of tbe same to bis possession. If tbe possession of bis brother, was for him as bis agent or attorney, then it was tbe possession of tbe husband, and must bar the right of tbe wife. Clancy’s Mar. Wo. 112 and 3 & 4; Schuyler v. Hoyle, 5 Johns. Ch. 196, — 280 — The case of Dixon, admr. v. Dixon and others, 18 Ohio, 113, was a bill filed to determine the rights of the surviving husband to certain choses in action, belonging to the wife. One note in controversy, taken in the husband’s name, was given by one M. R. for the dower of the wife in the estate of a former husband. It is there held, that such choses in action of the wife, may be reduced to possession by the husband, by substituting other securities, taken in his own name, and that “ notes taken by the husband in his own name, for lands of the wife, sold during coverture, will of course belong to him.” So in the case of Ramsdale v. Craighill and others, 9 Ohio, 199, it is held, that if husband and wife unite in selling her realty, and receive the money, it is his; and if invested in real estate, and the title taken to himself, the estate is. his. In Talbott, admr. v. Dennis, and others, 1 Carter, 471, it is held, that notes given to the husband, for the purchase money of the land of the wife, and secured by mortgage to him, became the property of the husband, and when he dies, they pass to his administrator, though it was the intention of the wife, that the proceeds of the land should be appropriated in a certain way, for the benefit of herself and children. See, also, upon this subject, 2 Kent, 136; Pierce v. Thompson, 17 Pick. 391; Fourth Ecclesiastical Society in Middletown v. Mather, 15 Conn. 587; In re Gray’s Estate, 1 Barr. 327; 7 Watts & Serg. 238. It is claimed, however, by counsel for respondent, that the money due on the last payment on the Ohio land, never having been paid to the decedent, or his administrator, the wife having reduced it to her possession, and this suit being brought for the purpose of having the husband’s rights to that fund settled, it is proper that the wife’s equity, or right to a portion of that fund, should also be considered and determined. We do not think, however, that this is such a case as comes within the rule laid down in the argument and authorities cited. Here the husband’s right to this property — the note, mortgage, and money arising therefrom- — -was perfect and absolute. No suit was necessary on Ms part, or that of his administrator, to make more perfect — 281 — sucb right. Having, as we have shown, reduced it to his possession, and this being the just and legal exercise of his marital rights, he became the absolute owner, and had the right to dispose of it at pleasure. In such case, the rule is, that courts of equity will not interfere to restrain or limit it. Where, however, the husband, or his representative, seeks by action to reduce to possession such choses in action, equity will, in a proper case, give to the wife, on application, a provision out of such portion so sought to be reduced to possession, by such suit. In the one case, his right to the property is absolute, and needs no aid from the chancellor to enforce it; and equity, no more than law, can deprive him of it, in the absence of fraud, or evil practice, in obtaining it. In the other case, he seeks to enforce a right which, until consummated by legal possession, may be said to be but an equitable right; and as he seeks equity, by asking the enforcing of this right, he will be required to do equity. We think this distinction, briefly stated, is well sustained by the books. See Story’s Eq. Jur. 1403; Clancy’s Mar. Worn. 441; Howard v. Moffatt, 2 Johns. Ch. 205. Of. the money received by the wife, a portion was paid to redeem this land, and the balance retained, which she was ordered to pay by the decree. The ruling above, will render any reference to that part of the decree unnecessary. If the money invested in the land was held by the wife, in her capacity as executrix, and not in her own right, so was the remaining portion of the same fund received by her. We, therefore, conclude that there is no sufficient ground for disturbing the decree below, and it will, therefore, be affirmed.