Stauffer, Macready & Co. v. Morgan

The opinion of tlie Court was delivered by Fenner, J. Plaintiffs, creditors of tbe insolvent banking firm of M. Morgan’s Sons, of New York, whereof defendant was a member, sued tbe latter by attachment, under which two pieces of real estate standing in the name of Mrs. Penelope O. Morgan, wife of defendant, were seized. Mrs. P. O. Morgan intervened in the suit, claiming the property under seizure as her paraphernal property. Plaintiffs answered her intervention, averring that the property had been acquired during marriage under the regime of the community of acquests and gains, and formed part of the community and was liable for its debts. From a judgment in favor of the iutervenor maintaining her separate ownership of the property attached, this appeal is taken. [635] The plaintiffs’ case presents no feature of the revocatory action or the action en déclaration de simulation. It rests simply on the proposition that the property belongs to the community and is liable for its debts, hecause purchased during the marriage. Such is undoubtedly the presumption of the law, whether the purchase was made in the name of both or either of the spouses. But when, as in the instant case, the purchase is made in the name of the wife, she lias the faculty of rebutting this presumption by proof that she purchased the property, as her separate property, by the-investment of her paraphernal funds, which were administered by her separately and apart from her husband. As tersely stated by plaintiffs’ counsel, the crucial facts are: (1) paraphernality of the funds; (2) administration thereof by her separately and apart from the husband; (3) investment by her. Of these facts she carries the burden of proof. So far as one of the properties, known as the coal yard, is concerned, her proof is so conclusive that plaintiffs abandon the contest as to it. The other, designated as the Ocean Sa w-mill property, is alone left-in dispute. The evidence shows that on December 29, 1880, Henry It. Morgan, at that time a millionaire, being about to leave New York for New Orleans to marry the intervenor, drew a check on his firm of M. Morgan’s Sons, of which he gave notice to the firm, stating that it was intended as a present to the lady whom he was about to marry. On January 15, 1881, the day of t.lie wedding and before the ceremony, he presented and delivered this check to her. She endorsed the check and forwarded it by mail to the firm of Morgan's Sons, with request to honor the same and place the amount at her individual credit. The firm took up the check, opened an account on their books in the name of Mrs. Morgan and passed the amount to her credit. On the 25th of April, 1881, defendant made another present to his wife of $15,000, which was placed by the firm, under his orders, to the same account. The evidence is positive and undisputed that in the conduct of this account the firm dealt with Mrs. Morgan precisely as with any other depositor, allowed her interest on her balances, and honored her checks,. which she drew at will in her own name without any authorization of' her husband, and that he never, in any manner, controlled or interfered with it. ' In June, 1881, defendant, being in New Orleans, was informed of an636 opening for an investment in this Ocean Saw-mill property, and concluded to make it. He authorized Mr. Jno. C. Morris, president of the Canal Bank, to accept the sale and draw on him for the price. But, .after reaching New York and seeing his wife, it was determined that she should purchase the property and pay for it as an investment of her separate funds. Accordingly, Mr. Morris was instructed to take the title in the name of Mrs. Morgan, arid this was done and he accepted it as her agent. He drew on Mr. Morgan for the price, and when the -draft reached New York, Mrs. Morgan wrote across the face of it: “ M. Morgan’s Sons will please pay this draft, and charge to my account. ^Signed) P. O. Morgan.” The payment was made accordingly and charged to her account, which then liad at its credit the amount of $35,597.62. The property yielded no revenues, and Mr. Bradish Johnson, who' was a co-owner, attended to the paying of taxes and expenses on it,. and she repaid him the amount of her share by checks on her own account. On these facts, the plaintiff's contend : 1st. That the funds from which the payment was made, to wit: the amount at her credit with M. Morgan’s Sons, were not paraphernal funds, because there was no valid and complete donation thereof by •the defendant to Iris wife, because the manual delivery of a check of the donor to the donee is not a completed donation but a mere power of attorney to collect the check, revocable at any time before actual collection or by the death of the donor, and that the donation did not become effective until the check had been actually collected and the proceeds reduced to possession by the donee. G-ranting the' correctness of the proposition of law, wo are satisfied. that the presentation of the check to the firm on which it was drawn and the placing of the proceeds, under her instructions, to her credit, was an effective collection of the check and a reduction of the proceeds to her possession. Counsel for plaintiffs admit that if the check had been drawn on any • third person, or on a firm of which defendant was not a member, the presentation of it and passing of the proceeds to credit as instructed would have been a delivery to the donee. But he contends that the credit on the books of M. Morgan’s Sons did not divest the possession of defendant, which continued, as a partner, jointly and severally with the other partners, and, therefore, did not constitute delivery. This is to ignore the elementary principle that a partnership.is, in contemplation of law, a legal entity,’separate and distinct from the in dividual [637] members; and that, partnership possession, custody and obligation are different from those of an individual member. The distinction sought to be drawn by plaintiffs’ counsel has no foundation in law and as little in reason. 2d. Tt is claimed that, for the same reason, the funds remaining in possession of a firm, of which the husband was a member, could not have been under the wife’s administration, separate and apart from him. This position is equally unsound with the former one, and only-serves to expose more forcibly the unreasonableness of the contention. Certainly, a wife who has paraphernal monies in her possession is not bound to carry them in her pocket. She may deposit them with any banker, and, if there is a bank or banking firm with which her husband is connected, that should be a reason for preferring such one to' another. Her funds, at her credit with such bank or bankers, remain as much under her control and administration as elsewhere. Her husband, though a member of the firm, would have no power or authority to destroy the right of his wife to control the funds, or the duty of the firm to respect her orders. 3d. Plaintiffs claim that the investment in this property was not made by the wife, but by the husband. It is true, no doubt, that the original design was that the husband should purchase. Rut it is perfectly clear that, before the consummation of the transaction, with the joint consent of both husband and wife, this design was changed into an actual and bona, -fide purchase by the wife, for her separate account, and with her paraphernal funds. There is nothing in the slightest degree suspicious about this transaction ; • no suggestion of, nor motive for, any fraud, simulation or concealment. The husband was a very rich man, entirely free from financial embarrassment. Circumstances which, in a different case, might furnish ground for suspicion, have here no significance whatever. On the face of the transaction and under the uncontradicted evidence, the purchase was made in the name of the wife, under her authority; the price was actually paid by her with her paraphernal funds, and the property has, ever since, been regarded and treated as her own. We think she has fully discharged the burden of proof resting on her and has successfully rebutted the presumption of law that this property purchased during the marriage was community property. Judgment affirmed.