L. M. Wiley & Co. v. Gray

Smith, C. J., delivered the opinion of the court. This suit was brought in the Vice-Chancery Court at Macon, to set aside a conveyance, for fraud, and to subject the property to the satisfaction of a judgment at law, recovered by the complainants against the defendant Gray. The bill charged that the defendant Gray, in the year 1850, was indebted to the complainants in a large sum of money, for which they brought suit, and recovered judgment on the 13th of October, 1852, for $1149 60, upon which execution issued, and was returned nulla bona ; that said defendant was utterly insolvent, and that nothing could be made out of him. That defendant was the owner of certain slaves, and while so indebted, on the 10th of March, 1851, that lie conveyed the said slaves to one Turner, in trust for defendant’s wife, Mrs. Virginia Gray. That the slaves conveyed in trust to Turner were delivered into his possession, and [514] that the conveyance purported to be in payment for, or in lieu of, property, which was the separate estate of Mrs. Gray, and which the defendant had appropriated to his own use. That the property conveyed in trust, greatly exceeded in value the amount of the debt alleged to be due by Gray to his wife. And further, that the conveyance of the said slaves was fraudulent and void as to the complainants, who, when it was made, were bona fide creditors of the grantor. The answer admits that the defendant, Gray, was indebted to complainants when the trust deed was executed, and the recovery of the judgment as alleged in the bill. It denies, expressly, that Gray was insolvent when the conveyance was made. It admits the execution of the trust deed at the time alleged, but denies that it was voluntary, or intended to hinder, delay, or defeat the claims of creditors. It avers that said conveyance was made for a full and valuable consideration, which is truly stated in the deed; that Gray was justly indebted to his vdfe for the joroeeeds of the sale of two negroes, and for other money which belonged to her in her separate right, which he had received and applied to his own use; that the conveyance to the trustee was made in consideration, and intended as an indemnity or repayment of the amount which Gray was thus indebted to Mrs. Gray; and that the property conveyed and settled to her use, did not exceed in value the amount of the said debt. No evidence was offered by the complainants; of consequence, no proof was adduced in support of the allegation in the bill, that Gray was insolvent when the settlement was made. The evidence for the defendants, showed that Mrs. Gray was possessed of separate property, consisting of securities for money and two slaves; that the money was collected by Gray, that the slaves were sold by Gray, and the purchase-money was received by him, and that the whole amount of the money, thus received by him, was about equal to the value of the property settled upon Mrs. Gray. A decree was rendered, sustaining the validity of the settlement, and the bill was dismissed; hence this writ of error is prosecuted. The capacity of a husband and wife after marriage, to contract, [515] for a bona fide and valuable consideration, for a transfer of property from the husband to a trustee for the benefit of the wife, or to her directly, is not now a subject open for discussion. In transactions of this character, the person claiming under the conveyance stands in the attitude of a purchaser. For that reason, post-nuptial settlements, not founded upon a valuable consideration, or which are made for fraudulent purposes, are void as to third parties. And for the same reason it is held, and the doctrine is well settled, that such settlements, when made bona fide and upon a valuable and adequate consideration, are good against creditors and purchasers. 25 Law Lib. 81; Atherly on Marr. Set. 156, 162, and cases referred to. As it is not material to the validity of a post-nuptial settlement upon a wife, that the husband should not be indebted at the time when he made the settlement, the true point of inquiry here, and it is the question presented by the first exception taken to the decree, is, whether the conveyance was made upon a valuable and fair consideration, so as to repel the presumption of fraud. Atherly Marr. Sett. 155, 161. It is the settled doctrine in England and this country, that the devotion of her own property, by a wife, to the use of her husband, or the making a charge upon it for his benefit, will support a settlement by the husband in favor of his wife. Lady Arundel v. Phipps, 10 Vesey, 130; Chapman v. Emory, 1 Cowp. 280; Atherly on Marr. Sett. 163 (25 Law Lib. 85); Taylor v. Heriot, 4 Desaus. 227; 1 Johns. Chan. Rep. 261; Bullard v. Briggs, 7 Pick. 538. But here it is insisted that the settlement was not based upon a consideration arising from previous advances made by Mrs. Gray, or from a devotion of her separate property to the use of her husband ; that the money was appropriated, and the slaves sold, without her consent; that her title to the latter has in nowise been affected by such sale; and that she has now the unquestioned right to sue for and recover them from the purchasers. Having made no advance to her husband, nor released any right to her property for his benefit, it is contended that she is not to be regarded as a bona fide purchaser for a valuable consideration; and hence, that the settlement is fraudulent and void as to existing creditors. These positions are more plausible than sound. There was no trustee appointed to take charge of the property of Mrs. Gray. [516] Gray, therefore, in virtue of his marital relation, was entitled to the possession of it, and, in reference thereto, he occupied the character of a trustee, and as such was responsible to Mrs. Gray. And if, as insisted by counsel, her funds and her slaves, without her assent, were appropriated to his own use by Gray, there can be no doubt that, upon application to a court of equity, he would have been compelled to make ample indemnity, by a settlement out of his own property. It is a general principle, that whatever a man may be compelled by law to do, he may do without the intervention of the court; and his act will be legal and valid. If, therefore, the settlement actually made, was reasonable and just, and such as a court of equity, in view of all the circumstances, would have ordered, it will certainly not be avoided upon the ground that it was voluntary and fraudulent as to existing creditors. Further, it was not material, whether Mrs. Gray’s funds and property were appropriated by Gray, with or without her consent. As in either event, she was, in an equitable point of view, a creditor of Gray, to the amount of the value of the property, which he had converted to his own use. Upon the ground taken by counsel, that her title to the slaves had not been divested, it is therefore, clear, that she had, at her election, the right to proceed against Gray, or to recover the slaves by suit against his vendee. But as she could not have relief against Gray, and at the same time recover 'the slaves, it seems clear that, by accepting the settlement and claiming under it, she .was estopped from setting up any claim or title to them. Her acceptance of the settlement, was in effect, a release of her title ? Which, according to all the authorities, was a consideration of value, sufficient to sustain a settlement of this character. What has been above said, renders it unnecessary to examine the question, raised by the second and only remaining exception to the decree. For if, where a husband has applied the funds, and converted the property of his wife to his own use, without her consent, the debt or obligation thereby incurred, is a valuable consideration for a post-nuptial settlement; it is manifest, that the principle contended for by counsel, does not apply to the facts of this case. It is clear that it can only apply to cases, in which voluntary advances have been made by the wife to the - husband, or where there was a [517] devotion of her property to his use, or the making a charge upon it for his benefit. In such eases it has been held, but the rule is not uniform, that it must appear either that there was an agreement between the husband and wife, at the time the advances were made, to secure her by settlement, and such an agreement as it would be obligatory upon him to perform; or that the parting with her own property, or incumbering it for her husband’s benefit, was intended to serve as a consideration for a settlement, to be afterwards made by him; and that the deed of settlement when executed had reference thereto; otherwise the conveyance would be considered as merely voluntary, and consequently invalid as to existing creditors. But here the settlement rests for its validity, upon the equitable right of the wife to be indemnified or repaid by the husband, out of his own property; and his consequent obligation to secure her by a settlement of property to her use, equal in value to the money and slaves, which he had applied and converted to his own use. The allegation in the bill that, when the settlement was made, Gray was totally insolvent, was expressly denied ; and no evidence was offered to sustain the bill in this respect. The fact admitted in the answer, that Gray was then -indebted to the appellants, is not of itself sufficient ground for questioning the honafides of the settlement, which as we have seen was made upon a valuable consideration. The property conveyed in settlement was about equal in value to the debt, which was due from Gray to his wife. Upon the whole, we think the decree of the vice-chancellor ought to stand; and, therefore, order it to be affirmed.