Monroe v. May, Weil & Co.

[472] The opinion of the court was delivered by Brewer, J.: May, Weil & Co., judgment creditors of A, Q,. Monroe, brought their action to subject to their judgment-two pieces of real estate in the city of Atchison, standing in the name of Mrs. H. A. Monroe the wife of the judgment-debtor. As to one piece, the district court found that it was the homestead of the Monroes, and therefore exempt. The other it found was subject to the lien of such judgment, and ordered it sold in satisfaction thereof. This portion of the findings and decree tiñe plaintiffs in error seek by this proceeding to reverse. 1. Loans by a wife to her husband. 2. Repayment; rights of creditors. The case was tried 'by the court without a jury, and the facts specially found. The testimony was not preserved in the record, so that the only question before us, is, whether the facts found support the conclusions of law and the judgment. The material facts arc these: Mrs. Monroe had at her marriage a small sum of money, and during the year 1870 earned a little larger sum by teaching and writing. These two sums bj^ our laws were her absolute property, and not liable for her husband’s indebtedness: Ch. 62, ' || 1, 4, Gen. Stat., 562. She could loan them to any one, not excepting her husband, and thereby create a valid indebtedness to herself personally. She did loan them to her husband upon an agreement that they should be repaid to her at some time in the future. As against the bonafides’ of this transaction, and the validity of this indebtedness, there is nothing in the findings to raise a suspicion. True, there was no time fixed for the repayment; but a loan on call, or for an indefinite time, is no curiosity in business transactions between strangers.- The amount earned by teaching and writing in 1870, as found by the court, was “about $570,” Whence the uncertainty, as to the exact sum, arose, we can only conjecture. Wo are not at liberty to conjecture bad faith. It might spring from a doubt in the mind of the court as to its recollection of the testimony. It might result from a difference between the witnesses in some small item, or from [473] an over-cautious method of statement, by one or other of the parties. It might very naturally arise from the mutual confidence and trust of husband and wife. Neither doubting the' ■other, and never contemplating a controversy with strangers, it would not be strange if both were unable to name the ■exact cent. But whatever may have been the cause of this indefiniteness, one thing is of old settled law—wrong-doing, bad faith, are matters of proof, not presumption. A bona fide indebtedness of about $910, from husband to wife, then, existed, as found by the court. The payment of this indebtedness would be no fraud upon creditors, create no trust in their favor. In December 1870 this sum, or nearly this sum, was paid to Mrs. Monroe in this way, the payment being made upon the suggestion of Mr. Monroe, and by agreement between them. She negotiated with a Mr. Wagcnhols a trade for a lot at the price of $850. “Two or three days thereafter she sent her husband as her agent to Mr. Wagenhols with directions to look at the property, and, if it answered Mr. Wagenhols’ ■description, to pay Mr. W. $850, and receive the deed for her.” He went as directed, found the property as represented, paid the money, and took the deed in her name. This by their agreement was a repayment of the money borrowed. Who could be wronged by it ? The right of a •debtor to pay one creditor, in full, before paying another anything, is absolute, and unquestioned. It is no wrong to the latter. Mrs. Monroe was, so far as this transaction is concerned, her husband’s creditor, would have shared with other creditors in a distribution by an assignee of her husband’s property, and could rightfully receive payment in Trill before .any others received a cent. It may be said such rule as this opens the door to fraud; that a husband may borrow money from his Avife, go into business, receiA^e credit on the strength of his apparent property, Iía-c cxtraAragantly for years, and the moment any pressure comes, pay his Avife in full and let the other creditors Avho have trusted him go Avithout anything. In this AA'ay a man may 1íatc on his creditors’ [474] property. The same, thing might happen if a man disposed to fraud was doing business on capital borrowed of anybody else. Whether further legislation be needed in such cases, is-not for ns to say. Whether the secresy of such-loan might not sometimes invalidate it, is a question to be decided when fairly presented. It is enough, in this case, to decide, that the repayment, in good faith, of a loan from his wife, does-not defraud the other creditors of the Imsband, or create a. trust in their favor. 3. Homestead; its im íoi.ibii The questions thus far discussed are in this case hampered with others which we must now consider. In September 1869, Mr.-Monroe purchased a farm for $3,700, took a deed in his own name, and occupied it as a homestead. This was before he had borrowed from his wife any but $340 at the time of their marriage. In November 1870, he sold and conveyed this farm, receiving in exchange a house and lot in Atchison, and $1,600 in notes secured by mortgage. Possession by agreement was to be exchanged on the 1st of March following. It vras so exchanged, and thereafter this city property wTas occupied and claimed by the Monroes, as their homestead. The deed for the house and lot was made to Mrs. Monroe. This was-, done by direction of Mr. Monroe, “and without any agreement or understanding between.the parties that such conveyance was in satisfaction of the claim for the money loaned her husband.” One of the notes taken in payment of the farm was used in the purchase of the lot from Mr. Wagen-hols. The conclusion to which the court belowr came, was, that the house and lot received in exchange for the farm were exempt as a homestead, but that placing the title to this-homestead in the name of Mrs. Monroe was in equity a payment of the indebtedness to her, (the consideration expressed in the deed for this property being $3,000,) so that thesubsequent deed of the Wagenhols lot was in effect only a voluntary conveyance of the husband’s property, which could be set aside, and the property reached by creditors. That the homestead exemption covered the Rose house and [475] lot, seems to us clear. True, there was a period of time between the execution of the conveyance, and the taking of possession. But the transaction, as it appears to us, was no-more than the exchange of homesteads. Mr. Monroe traded his homestead in the country for one of less value in the city. When he gave possession of the one, he took possession of the other. There was no intermediate homestead. Now, ail legislation must be construed with reference to settled usages, necessary facts. No man will enter premises until he has some right to enter. The right is determined before the entry is made. Occupation of a homestead succeeds, in point of time, its. purchase. This is true,-except in a few instances, as, where one buys a house he has theretofore occupied as tenant. To give a fair and reasonable interpretation of the homestead law, this fact must be recognized. The purpose of that law was to secure to each family its homestead. We may not' defeat this beneficent purpose by strict, technical, arbitrary constructions. As we said in the case of. Edwards v. Fry, (ante, 417, 425,) “A purchase of a homestead with a view to occupancy, followed by occupancy within a reasonable time, may secure ab initio, a homestead inviolability.” A man may sell his homestead, and give good title, no matter how many judgments may be standing against him. Morris v. Ward, 5 Kas., 247. The proceeds of that sale he may reinvest in a homestead, and though he do not actually occupy until after he has completed his purchase, and secured his title, still, if he purchase it for a homestead, and' enter into occupation within a reasonable time thereafter, no-lien of existing judgments will attach. We need not however pursue this branch of the case any further, for the plaintiffs in error make no complaint of it; and though defendants in error took exceptions, and have discussed the question in their brief, the case is not so before us as that we could give them any affirmative relief. We have said thus much, and indicated our views on the question, to save further litigation on the part of defendants in error. [476] 4. Title to homestead [475] We come now to the remaining question involved. • Was476 the act of Mr. Monroe, in placing the title to the homestead in his wife, a payment of his indebtedness to her? After a careful consideration of the question, we are constrained to answer it in the negative. A debt cannot be paid with anything but money, except by the consent of the creditor. No amount in value of property will cancel a debt, unless the creditor choose to accept it. He who loans money has a right to insist that money be returned. That is the only legal tender. And though Mr. Monroe intended the homestead as payment, it needed Mrs. Monroe’s consent before it became payment. But the findings show that 'neither party intended or considered it payment. They intended and made payment in another way. Nor is there anything in the transaction of which creditors can complain, or upon which the)- can base any equity. It was a matter of entire indifference to them whether the homestead was in the husband’s or wife’s name. In either case it was exempt from their claims. If placing the title in the wife’s name had, removed so much property from the roach of their claims, it might give them some pretense for insisting that no more property should be thus removed. But where the homestead is alike exempt -whether in the husband’s or wife’s name, we fail to sec why placing it in the Avife’s name gwes the creditors a right to call that a gift which the parties made a payment. It is of equal logic with that AAhich 'Avould hold that placing a homestead in a wife’s name Avas a conveyance to defraud creditors. The homestead is something toward which the eye of the creditor need never be turned. It is an ■element which may never enter into his calculations in his efforts to collect his debt. He may as well ignore that, as he .does now- (except in cases of fraud) the body of the debtor. Entertaining these A-iews, it seems to us the judgment in the ■district court should lia\-e been entered on the findings for the defendants, the plaintiffs in error here. The case will therefore be remanded to that court, Avith instructions to set aside the judgment heretofore entered, and to render judgments for the defendants in that court, for the costs of suit. All the Justices concurring.