Latimer v. Glenn

JUDGE WILLIAMS

delivered the opinion op the codrt:

R. J. Latimer and his wife, Madeline, were married in the year 1833 or 1834. She had a landed and personal estate by devise from her father of about seven thousand dollars.

The real estate was sold from 1847 to 1849, she joining her husband in the deeds, amounting to about four thousand seven hundred dollars.

The husband had some estate of his own, and was merchandising, from the year 1835 to 1846, in Burlington, and had then in the firm between four and five thousand dollars.

After withdrawing from this firm, he commenced a wholesale dry goods business in Cincinnati, in partnership with Jenkins, and continued therein some three or four years. This firm also seems to have done a prosperous business. It began about January, 1846.

After living at Cincinnati some time, his wife’s health seems to have become delicate, and he then purchased a farm and residence near Carrollton, Kentucky, and spent some five or six thousand dollars improving it.

About the year 1850 he took an interest in a wholesale hardware establishment in Cincinnati. He still continued to reside near Carrollton, however, for several years. He then exchanged his farm near Carrollton for real estate in Indiana.

In 1854-5 he purchased a tract of about one hundred and ten acres near Burlington, Kentucky, for about four thousand four hundred and eight dollars and fifty-six cents, upon which he erected a comfortable mansion, costing some eight thousand dollars. The hardware firm to which he belonged failed in 1861, and creditors attached his Indiana lands in April, 1862.

May 10, 1862, he sold to Cravens and .Utz Indiana lands amounting to some three thousand one hundred and fifty dollars, and on 13th to Stephens and Early, amounting to some three thousand one hundred dollars, and June 11 to Harper, amounting to three thousand two hundred and forty dollars — in all nine thousand four hundred and ninety dollars.

June 9, 1862, he conveyed to his son, C. L. Latimer, in trust for the use of his wife, Madeline, the home place near Burlington, reciting that the consideration was the seven thousand dollars received from her father’s estate, which he had promised to invest for her. He was then in the last stage of consumption, of which he died July 22, 1862, greatly insolvent.

At the time of making this deed to the use of - his wife, he executed a mortgage on his household furniture and all his personal estate to Corbin, reciting a consideration of two thousand dollars that day loaned to him, to be repaid in two years. He also owed a considerable individual debt to his neighbors and acquaintances.

Several of these appellees, as his creditors, filed their petition in his lifetime to attack said conveyances as fraudulent, made for the benefit of his wife and the mortgage to Corbin.

Several of them did not file their petitions until after his death, and some not until six months had expired from the qualification of his administrator, said C. L. Latimer.

There was no recital in the deeds from Latimer and wife of her real estate to the several purchasers that the proceeds were to be hers, or invested for her use, or any equivalent expression; as to this these are wholly silent. Mrs. Madeline Latimer answered, denying any fraud or knowledge that her husband was insolvent at the time of the execution of her deed; but insists that it was made to carry out a long standing promise of her husband to invest the proceeds of her estate, devised by her father for her use and benefit; that the farm near Burlington had been bought at her instance, and was of her selection, because situated among her relatives and the associates of her youth; and her husband then promised to have it conveyed to her, which she thought was done until after she signed the two deeds, dated May 10, 1862; that finding it was not so done, she refused to sign the other deeds to the Indiana lands until her husband promised, if she would do so, he would secure to her, by a proper conveyance, the home place. She then signed the other deeds. That by the laws of Indiana she was entitled to one third of the lands in fee simple, and that she never would have signed the first deed had she not believed the home place had already been secured to her. She also signed deeds to his other Kentucky real estate, which seemed, however, not to have been very valuable.

The evidence strongly tends to prove that her husband recognized his indebtedness to her for the property derived from her father’s estate, with a promise to invest it for her from the reception of it. until the purchase of the Burlington property; after which she ceased to claim and he ceased to acknowledge an indebtedness, but constantly and persistently recognized the place as hers; and in his most prosperous days, when he and his friends regarded him as wealthy, he consulted friends as to how much interest he should pay his wife on her money which he had been using.

When he exchanged the Carrollton farm for the Indiana lands, he' offered to have the lands conveyed to her in discharge of this indebtedness, but which she refused to take, insisting that he should purchase for her a home near Burlington, which he soon after did, stating, at the time of the purchase, to his vendor, he was purchasing for his wife.

Whilst the Burlington property was being improved she remonstrated against so much outlay, saying it would be better for her to have some of her money to loan out and have an income, than-to have it all in a fine house; but the husband would say it was hers, and to make her a comfortable home, and she should not object to its im-1 provement.

She signed the deeds to convfey his real estate for the payment of his debts without remonstrance and cheerfully, until she discovered that the home place had been conveyed to her husband in such manner as not to secure it to herself. She .then refused to sign any more until she had an assurance that the home place should be secured to her. Her husband was then in the last stage of consumption, which must certainly soon terminate his existence. She knew he was in laboring circumstances, as he was then selling his real estate to pay his debts.

Under such circumstances she would hardly have parted with her fee simple interest in the Indiana, and her dower interest in the Kentucky lands, had she not believed that the home place had been secured to her. She refused to join in the deeds subsequent to her knowledge that it had not been, until she had an assurance that it should be.

The chancellor set aside the conveyances to her use, also the mortgage to Corbin, as fraudulent, and ordered a sale for the benefit of these appellees, from which she alone appeals.

Judge Story, in his 2d volume Equity Jurisprudence, section 1372, page 736, lays it down, that though by the principles of the common law contracts made between husband and wife after marriage are a mere nullity — for there is deemed to be a positive incapacity in each to contract with the other — yet, although courts of equity follow the law, they will, under ■ peculiar circumstances, give full effect and validity to post-nuptial contracts; as if a wife, having a separate estate, should, bona fide, enter into a contract with her husband to make him a certain allowance out of the income of such separate estate for a ■reasonable consideration, the contract, although void at law, would be held obligatory and enforced in equity. So, if the husband and wife, for a bona fide and valuable consideration, should agree that he should purchase land and build a house thereon for her, and she should pay him therefor out of the proceeds of her own real estate, if he should perform the contract on his side, she should be compelled to perform it on her side.

And in section 1373 he says it is upon similar grounds that a wife may become the creditor of her husband by acts and contracts during marriage, and her rights as such will be enforced against him and his representatives; as if a wife should unite with her husband to pledge her estate or otherwise to raise a sum of money out of it to pay his debts, or to answer his necessities, whatever might be the mode adopted to carry that purpose into effect, the transaction would, in equity, be treated according to the true intent of the parties. She would be deemed a creditor or a security for him, if so originally understood between them, for the sum so paid; and she would be entitled to reimbursement out of his estate, and to the like privileges as belong to other creditors.

Again, at section 1377a, he says: If a husband should voluntarily enter into a contract to make a settlement, or should actually make a settlement upon his wúfe and children in consideration of personal property coming by distribution or bequest to her from her relatives, to no greater extent than what a court of equity would, upon a suitable application, direct him to make, this will be held valid upon him and his representatives^ and equally so against his creditors.

Mr. Clancy, in his work on Husband and Wife (chap. 12, p. 590), says :

“Where the transaction is a mortgage by husband and wife of her real estate', with a view to pay his debts or to promote ■his interest, she will be considered in equity as a creditor for the money, and as entitled to have his personal assets applied in discharge, of the amount — the court looking upon him as the debtor, and on her lands as only an additional security. So, where the wife advances or charges her separate estate for her husband’s use, intending it as a loan and not as a gift, she will be considered as the creditor, and will be supplied with all the means of enforcing the demand against her husband’s estate which the creditor possessed. Such is the doctrine, which seems to be without exception or qualification.”

The great question is to determine whether the wife intended to make a gift to her husband, or whether she meant to make him her debtor. And where the wife joins the husband in a conveyance of her real estate in this State, and thereby converts it into personalty, which the law gives to him, equity will presume it to be a gift, unless this presumption is repelled by the evidence. But when, as in this case, the husband, for a number of years, acknowledges his indebtedness, and promises to pay interest, and these made through a period of prosperity and when he was amply able to perform, we cannot doubt but that the presumption of a gift is rebutted, and the wife’s claim as creditor fully established.

The purchase of the home place for his wife, his ceasing afterwards to acknowledge his indebtedness to her, and her ceasing to assert any claim on him, and her claim of the property as hers, purchased and improved with her means, and believing, as she did, that the title was so fixed as to secure the property to her, although in reality the husband had taken the title to himself, raises a resulting trust to her, not prohibited by section 20, chapter 80, 2 Stanton’s Revised Statutes, 230, but comes within the savings of section 22. This conveyance to the use of the wife, therefore, was only the voluntary discharge by the husband of an obligation which the chancellor would have compelled on the proper application of the wife.

Neither was this a mere voluntary conveyance by the husband to the wife, but one founded on a valuable consideration. Nor was it a conveyance in contemplation of insolvency to prefer one creditor to another, but was a conveyance in the execution of a previous purchase and sale, and to carry out a previously undertaken trust.

Mrs. Latimer’s equity is, as elevated and pure and sacred as that of any creditor of her husband; her conduct is free from any fraud or overreaching, or concealment of any 'character; nor does it manifest any desire to screen the property of a failing husband from the just demands of his creditors, but only an honest effort to secure that which she regarded as her own, and which had been frequently accorded to her in the most prosperous days of her husband, and for which she had paid an ample pecuniary consideration. She having the legal title, with an equity untainted with illegality or fraud, cannot be disturbed.

The plaintiffs’ petitions, so far as they sought to set aside her conveyance, or to bring it within the operation of the statute of 1856, should have been dismissed absolutely ; and, on the return of the cause, the court will do so, and order a restitution of whatever she may have paid on her purchase of the property under the decretal sale.

Wherefore, the judgment is reversed, with directions for further proceedings in accordance herewith.