« ForrigeFortsett »
chandise shipped as mentioned in the preceding sections of the chapter), and every such factor or agent not having the documentary evidence of title, who shall be entrusted with the possession of any merchandise, for the purpose of sale, or as security for any advances to be made or obtained thereon, shall be deemd to be the true owner thereof, so far as to give validity to any contract made by such agent with any other person for the sale or disposition of the whole or any part of such merchandise for any money advanced, or negotiable instrument, or other obligation in writing given by such other person upon the faith thereof."
It is insisted by the appellant that the evidence in this case brings it within the protection of sec. 3, chap. 91, L. 1863, above quoted, and consequently the instructions given by the circuit judge were erroneous. We do not think so. It will be seen by an examination of the provisions of the acts above cited, that a factor or other person holding a negotiable warehouse receipt by transfer, either with or without endorsement, shall be deemed and taken to be the owner of the goods, etc., therein specified, so far as to give validity to any pledge, lien or transfer made or created by such person or persons," and that a factor or other agent who is entrusted with the possession of any merchandise for the purpose of sale or as security for any advances to be made or obtained thereon, "shall be deemed the true owner thereof, so far as to give validity to any contract made by such agent with any other person, for the sale or disposition of the whole or any part of such merchandise for any money, advanced or negotiable instrument or other obligation in writing given by such other person upon the faith thereof.”
The two sections are materially different. Under the first, any pledge, lien or transfer made by the ho der of the receipt is made valid, whereas under the second the contract of the agent is made valid so far only as to protect the person dealing with such agent for any money advanced or negotiable instrument, or other obligation in writing given by such other person."
The case of Price v. Wisconsin Marine Fire Ins. Co., cited above, was a case arising under sec. 6, chap. 340, as amended by sec. 1, chap. 73, L. 1863, and was the case of a pledge for money advanced, and was protected even under the provisions of sec. 3, chap. 90, L. 1863. The case at bar must come within the provisions of sec. 3, chap. 91, L. 1863, to be protected at all.
The provisions of sec. 3, chap. 91, L. 1863, are in derogation of the common law, and when construed as applicable to a person who deals with a person knowing him to be an agent for another, has always been construed, to say the least, not literally in favor of such person. It appears to us that under any fair construction of this section, a person who barters with an agent is not protected thereby.
He can not be said to have advanced money upon the faith of the property received. The particular words used in the statutes exclude the idea that a barter with the agent can be protected.
It would seem that the legislature did not intend
to protect a man dealing with an agent to sell, who deals with him in a way which he is presumed to know is in violation of his contract with his principal.
The evidence in the case simply shows that Lyman was he agent of the plaintiffs to sell machines. No evidence was given to show the powers of the agent, other than this general statement of his agency. It was not shown, or attempted to be shown, that the agent had power to barter away the machines, or that he had in fact been accustomed to barter the machines either with or without the knowledge or assent of his principals, and no evidence was given to show that the agent had any lien on this or any other machines in his possession, either for commissions or money advanced thereon. The case as presented was simply either a pledge by the agent to secure a debt of his own, or it was a conditional sale, or exchange and part payment made in goods sold to the agent, the payment for such goods to be secured by pledge of the machine in case the defendant was not satisfied with it. As the proof shows, he was not satisfied with the machine, refused to pay for the same and notified the agent to take it away. He held the same at the time of the commencement of this action, as a pledge for the goods sold to the agent. This he clearly had no right to do. The instructions given by the circuit judge were not, therefore, erroneous.
We do not think there was any error committed by the court with respect to the verdict. It is true the record shows that the judge, after the delivery of the verdict, said to the jurors they were discharged, but immediately thereafter, before they had left their seats or communicated with any one, the judge called their attention to the imperfections in the verdict, and having put the same in the form which the jurors affirmed they intended it to be, it was signed by the foreman, and as so amended declared by the jury to be their verdict. The judges of the circuit courts are frequently called upon to perform a work of this kind. Jurors unacquainted with the forms of law very often deliver very informal verdicts, and where their intentions are clearly indicated by such informal verdict, it becomes the duty of the court to put it in proper form, before it is entered as the verdict of the jury. It is in furtherance of justice that the judge should do so. When it is clear that the verdict as finally put in form by the court, is the one intended by the informal one delivered by the jury at first, no injustice is done to the parties if, after the same is so put in formal shape, the jury without further consultation and without again retiring to consult, assent to the entry thereof.
The judgment of the circuit court is affirmed.
AN English judge has recently pronounced a sentence that seems somewhat strained. A boy of eighteen was charged with administering oxalic acid to his wife with the intention of poisoning her. The prisoner's wife detected it before she had taken enough to do her any harm, and deosive evidence was adduced as to the probable effect of the poison draught had the woman swallowed the whole of it. The wife in court stated that she had forgiven her husband, and begged that his punishment might not be excessive. The response of Justice Hawkins to that appeal was a sentence of penal servitude for life.
CONVEYANCES BY HUSBAND TO WIFE WITH POWER OF REVOCATION-BANKRUPTCY-WHAT POWERS DO NOT PASS TO ASSIGNEE.
JONES, Assignee, v. CLIFTON.
United States Circuit Court, District of Kentucky, July, 1878.
Before Hon. BLAND BALLARD, District Judge.
1, SETTLEMENT BY HUSBAND ON WIFE - POWER TO REVOKE.-A husband being at the time free from debt, and without the contemplation of bankruptcy, conveyed certain lands to his wife to her separate use free from his control. The deeds reserved to the husband a power of revocation in whole or in part, and a power of appointment to any uses or persons as he might designate either by deed or will. Three years later he became bankrupt. Held, that the settlement would be upheld as against the assignee in bankruptcy.
2, THE OMISSION, IN A VOLUNTARY SETTLEMENT, to insert a power of revocation, will subject the settlement to suspicion in a court of equity.
3. WHEN A SETTLEMENT IS MADE BY A HUSBAND free from debt-when it is induced by no fraudulent motive-when it makes no more than a reasonable provision for the wife-when it conveys any benefit on her, a court of equity will uphold it. Though the grant may not contain every provision which a chancellor would direct to be inserted in a settlement ordered by himself, though it contains reservations tending to impair the full benefit of the provision made for the wife, yet if the grant confer any substantial benefit on the woman, so long as she is in the actual enjoyment of that benefit, a court of equity will protect her.
4. POWERS WHICH DO NOT PASS TO ASSIGNEE UNDER BANKRUPT ACT.-Powers of revocation and appointment to be exercised by the bankrupt do not pass to the assignee, under § § 5044 and 5046 of the bankrupt act. The "power" which is enumerated and does pass, is only the power to sell, manage, dispose of, sue for and recover, or defend the property and rights which do pass.
B. H. Bristow and Jas. A. Beattie, for plaintiff; Bijur & Davie, for defendants.
On the 3d of October, 1872, the defendant, Chas. H. Clifton, being then free from debt, and with a fortune probably exceeding two hundred and fifty thousand dollars, conveyed to his wife, without the intervention of a trustee, a small parcel of land, worth about seven hundred dollars, and assigned to her five policies of insurance on his life, each for ten thousand dollars, but at the time not worth more in the aggregate than twelve thousand dollars. On the 1st of April, 1873, being still free from debt, and with his fortune very little diminished, he made another conveyance to his wife, also without the intervention of a trustee, of two parcels of land, one situated in the city of Louisville and the other in the county of Jefferson. The first parcel was, at the time of this conveyance, and still is, incumbered by mortgage to probably its full value. The other parcel was the homestead of the ancestors of the grantor, and was esti
mated to be worth eighteen thousand dollars. On this parcel he afterwards erected a dwelling-house which cost eight thousand five hundred dollars.
By both deeds, and substantially in the same terms, the property was conveyed "to the said Nannie to hold to her and her heirs forever as her own separate estate, free from the control, use, and benefit of her husband." By both deeds, and substantially in the same terms, power and authority were conferred on the grantee to appoint the parcels of land and each or all of them, or part or parts of each, as often as she might choose to exercise the same to such uses as she might designate by joint deed with her husband, or by a writing in the form of and to take effect as a devise under the statute of wills of Kentucky, and by both deeds, in substantially the same terms, the grantor expressly reserved to himself power to revoke the grants in whole or in part, and to appoint to any such uses or persons as he might designate either by deed or last will. In default of appointment, or to the extent that the grantor might fail to appoint, each of said parcels of land was to remain to the grantee and her heirs forever as her separate estate, with the powers conferred upon her as above stated.
On the 4th of December, 1875, Clifton filed his voluntary petition in bankruptcy, and was adjudged bankrupt thereon, and the complainant, Stephen E. Jones, was appointed his assignee. In October, 1876, the assignee brought this suit in equity, in which he seeks to have both of the above-mentioned deeds declared void, and thus the clouds removed from his alleged title to the parcels of land and policies of insurance mentioned therein.
The bill proceeds on three grounds, all more or less connected, but still so distinct as to require a separate statement: First-That the making of the two instruments was a contrivance and scheme on the part of Chas. H. Clifton to cheat, hinder and defraud his future creditors. Second-That the conveyances having been made by the husband to the wife, without the intervention of a trustee, are, because of this, and because of the reservations contained therein, especially the absolute power of revocation, void, and so passed no title or interest to the nominal grantee. Third-That by operation of the bankruptcy act the property described in the instruments, or, at least, the powers of revocation therein reserved, passed to the complainant as assignee in bankruptcy. I shall examine each of these grounds separately.
The complainant has offered no testimony whatever of the alleged fraudulent intent. He does not even allege that the grantor at the time the conveyances were executed owed anything. The uncontroverted proof is that he was then free from debt; that he was not then engaged in trade; that he did not contemplate engaging in trade or contracting debts; that he was an indiscreet young man, who, though possessed of a large fortune, might squander the whole in reckless gaming and dissipation; that the settlements were made at the suggestion of his more prudent wife, and did not embrace more than one sixth of his estate.
That Clifton might, under these circumstances, by proper conveyances, have settled on his wife this amount of property, free from all claims proceeding from his future creditors, or from his assignee in bankruptcy, is indisputable. The authorities everywhere sustain such settlements. Sexton v. Wheaton, 8 Wheat. 229; Hinds v. Longworth, 11 Wheat. 211; Haskell v. Bakewell, 10 B. Mon. 206; Lloyd v. Fulton, 91 U. S. 485; Smith v. Vodges, 92 U. S. 183. Authorities to the same point might be multiplied indefinitely.
The learned counsel of complainant themselves do not dispute that such settlements are generally unimpeachable. Their contention is that the settlements in controversy here were not made by proper conveyances; that the conveyances being made by the husband to the wife without the intervention of a trustee are void in law, and that by reason of the powers of revocation reserved they are void both in law and in equity.
It thus appears that the complainant does not now ask relief on the ground of the distinct fraud alleged. If he attaches any importance to the allegation of fraud contained in his bill, it is only because he considers that a deed made by a husband to his wife, containing a reservation of an absolute power to revoke it, is per se fraudulent. Thus considered, the complainant's first ground becomes blended with the second, and one and the same with it. I proceed, therefore, to consider the second ground.
Under the common law system the husoand and wife are, for most purposes, regarded as one person. As a result of this legal unity, their contracts with each other, whether executory or executed, in parol or under seal, are void. This doctrine, it must be confessed, has little foundation in reason. It is wholly unknown in that enlightened system of jurisprudence which, coming down to us from the ancient civilizations, now prevails on the continent of Europe, and it has only a faint recognition in the system of equity jurisprudence which in England and in this country, has grown up by the side of the common law. In equity the husband and wife are for many purposes treated as two persons. Whilst at law all the personal property of the wife becomes on marriage the property of the husband, and the entire management and profits of her real estate pass to him, in equity she may not only own and manage her real and personal estate, but she may dispose of it free from the control of her husband. True, it was at one time doubted whether any interest in either real or personal property could be settled to the exclusive use of a married woman, without the intervention of trustees; but for more than a century and a quarter it has been established in courts of equity that the intervention of trustees is not indispensable, "and that wherever * prop
erty * * is settled upon a married woman, either before or after marriage, for her separate and exclusive use, without the intervention of trustees, the intention of the parties shall be effectuated in equity, and the wife's interest protected against the marital rights of her husband, and of
his crediters also." 2 Story's Equity Jurisprudence, sec. 1380.
Nor is it at all material whether the settlement is made by a stranger or by the husband himself. In either case the trust will attach upon him, and will be enforced in equity. It is now universally held that a settlement made by a husband on his wife by direct conveyance to her, will be enforced in the same manner and under the same circumstances that it will be when made by a stranger, or when made to a trustee for her exclusive use. Shepard v. Shepard, 7 Johns. Chy. 56; Jones v. Obenchain, 10 Gratt. 259; Sims v. Rickets, 35 Ind. 192; Thompson v. Mills, 39 Ind. 532; Putnam v. Bicknell, 18 Wis. 335; Burdens v. Ausperse, 14 Mich. 91; Barron v. Barron, 24 Vt. 398; Marraman v. Marraman, 4 Met. (Ky.) 84; Wallingsford v. Allen, 10 Pet. 594.
All voluntary conveyances, whether made wholly without consideration or upon the meritorious consideration of love and affection, are scrutinized and regarded with some suspicion in courts of equity, when they are sought to be impeached by creditors. But I have been referred to no case, and I have found none which hints that a reasonable settlement made by a husband, free from debt, on his wife by direct conveyance to her, is any more impeachable than when it is made through the intervention of trustees. Settlements made in either mode, when uncontaminated by actual fraud, are unimpeachable by subsequent creditors. It may be admitted that a power of revocation, inserted in an assignment made by a debtor for the benefit of his creditors, would render such assignment constructively fraudulent, and therefore void. Riggs v. Murray, 2 Johns. Chy. 576; s. c. 15 Johns. 571; Tarback v. Marbery, 2 Ver. 570. But such power of revocation has never been held to affect a family settlement. On the contrary, in the above case of Riggs v. Murray, Chancellor Kent expressly declares that family settlements may often require such powers of revocation to meet the ever-varying interests of family connections." Moreover, it is the well-settled practice in England to insert such powers in such settlements, unless, indeed, the sole object of the settlement is to guard against the extravagance and imprudence of the settler. Indeed, ever since Lord Hardwicke's time, the failure of the conveyancer to insert a power of revocation in a deed of family settlement has been regarded as a strong badge of fraud. Hugenin v. Basely, 14 Vesey, 273.
In some of the later cases such settlements have been annulled at the suit of the settler, apparently on the sole ground that they did not contain a power of revocation.
In Coutts v. Acworth, L. R. 8 Eq. 558, it was held that "the party taking a benefit under a voluntary settlement containing no power
of revocation, has thrown upon him the burden of proving that there was a distinct intention on the part of the donor to make the gift irrevocable." In Wallaston v. Tribe, L. R. 9 Eq. 44, the same rule is recognized and enforced. In Everett v. Everett, L. R. 10 Eq. 405, the Chancellor, in annulling a deed of settlement made by a young
woman soon after she arrived at age, chiefly on the ground that it contained no power of revocation, says, in substance: "The sole object of the settlement being to protect the settler and her children, if she married, had I been called on for advice, I should have said: · Have proper trustees, give her a voice in the selection of new trustees, and give her a power of revocation with the consent of the trustees.'"
In Phillips v. Mullings, L. R. 7 Ch. App. 244, the court of appeal recognizes the same general rule, but in that case refused to annul the settlement, though it contained no power of revocation, on the distinct ground that the settlement was made by a young man of improvident habits to guard against his own folly, and "the deed was explained to him and the particular clauses brought to his notice." "Those who induce," said the Lord Chancellor, "a young man of this description to execute such a deed, are bound to show that the deed is in all respects proper, or, if the deed contains anything out of the way, that he understood and approved it.
It is not necessary to show that the usual clauses inserted by conveyancers were explained, but any unusual clauses must be shown to have been brought to his notice, explained and understood." In Hall v. Hail, L. R. 14 Eq. 365, the vice chancellor regarded the rule as so firmly settled that he felt impelled to annul a settlement twenty years after its execution, simply because it did not contain a power of revocation. The same rule has been recognized and adopted in the United States. Russell's Appeal, 75 Penn. St. 269; Garnsey v. Mundy, 24 N. J. Eq. 243. Some chancellor has intimated that a voluntary settlement partakes very much of the nature of a last will, and that it should be scarcely less revocable.
I feel much difficulty in yielding assent to the extreme doctrine announced in some of these cases, and I am glad to observe that it is somewhat modified and limited by the late case of Hall v. Hall, decided by the court of appeal in chancery in 1873-L. K., 8 Chy. Ap. 430. I quite agree with what Sir W. M. James, L. J., says in this case: The law of this land permits any one to dispose of his property gratuitously if he pleases, subject only to the special provision as to subsequent purchasers and as to creditors. The law of this land permits any one to select his own attorney to advise him, and it seems very difficult to understand how this court could acquire jurisdiction to prescribe any rule that a voluntary conveyance, executed by a person of sound mind, free from any fraud or undue influence of any kind, and with sufficient knowledge of its purport and effect, should be void, because the attorney of his own selection did not advise him to insert a power of revocation, or did not take his express direction as to the insertion or omission of such power." The true rule is that laid down by Lord Justice Turner, in Toker v. Toker (3 D. J. and S. 487, 491), that the absence of a power of revocation is a circumstance to be taken into account, and is of more or less weight according to the circumstances of each case.
In the case now before me I think it could not be seriously contended that, had powers of revocation been omitted from the conveyances made by Clifton, this fact would have been entitled to much, if any, consideration, in a suit brought by him to annul the settlements. To such a suit the chancellor might have said, as Chancellor Hatherly did in Phillips v. Mullens: "You were an exceedingly indiscreet and improvident young man. You made the settlements to guard against your own folly and extravagance, Of what advantage would it have been to place the money in this way, out of your control, and then give you power to destroy the limitations whenever you pleased."
But, whatever may be the true doctrine, all of the foregoing cases, and many more that might be cited, certainly do establish that it is ordinarily proper to insert a power of revocation in a voluntary settlement; nay, more, that the omission of such a power will subject the settlement to more or less suspicion. Certainly the practice in England for centuries has been to insert such a power in family settlements.
A practice which is thus approved by time, and which has received the sanction and enconium of courts of equity in both England and America, can not be regarded as vicious or immoral. Should I hold that these settlements of Clifton are fraudulent and void as to his subsequent creditors simply because they contain powers of revocation, I should overturn an ancient practice and a long course of decisions; nay, I should hold that courts of equity have themselves advised frauds to be committed.
The fact that Clifton inserted powers of revocation in his settlements, so far from proving that he contemplated defrauding his future creditors, tends to show the contrary. Should he simply revoke the settlements, then, of course the property conveyed would revert to him, and be liable at law for all his debts. And should he exercise the power of appointment for even the benefit of a stranger, then, according to an unbroken current of authority, the whole estate appointed would be liable in equity to his debts. Thompson v. Towne, 2 Vern. 319; In re Davie's Trusts, L. R. 13 Eq. 163; Willians v. Lomas, 16 Beavan, 1; Petre v. Petre, 14 Beav. 197. If, then, he had meditated a fraud he would have omitted the power altogether. He would have relied altogether on the affection and beneficence of his wife to provide for him. To contend that he intended to defraud his creditors, and at the same time to exercise the power of revocation arbitrarily, is to maintain a contradiction, since, as we have seen, the exercise of the power would, ipso facto, render the property liable in equity for his debts, unless, indeed, we can assume that he was gifted with a foresight which none of the facts warrant. A man, it is true, might make a voluntary settlement on his wife, and, contemplating that he might be adjudged a bankrupt in the future and be discharged from his debts, reserve a power of revocation for the very purpose of reinvesting himself in such. contingency with the property, relying upon holding it free from debts contracted be
fore bankruptcy. It is by no means certain that such a reliance would be safe. It is by no means certain that such a device would not be pronounced a fraud on the bankruptcy act. But assuming that it would not be fraudulent, there is nothing in the present case to suggest that the grantor had any such forethought or was actuated by any such motive. At the time of the settlements he was not only free from debt, but possessed of a large estate. He was not engaged in trade, and all the testimony shows that nothing was farther from his contemplation than bankruptcy. That he did in fact become bankrupt in the short space of two years is partly explained by the large shrinkage in the value of real property, and the decrease in its rents, but it is best accounted for by his frank confession that he has squandered much in reckless dissipation and gaming.
I do not mean to intimate that Clifton, having regard to the motive and circumstances which prompted these settlements, should not have reserved a power of revocation. Had he known his own habits as well as his acquaintances knew them, and had his motive been solely to guard against his follies, it would have been more consistent with that motive to deprive himself of all dominion over the estate settled. But he could not know himself as others knew him, and he doubtless had implicit faith that, even should misfortune overtake him, his affection for his wife would be a sufficient guaranty that he could not be persuaded to strip her of his bounty.
The settlements being of his own pure bounty, he might well wish to reserve to himself power to modify the limitations of them according to the future necessities and exigencies of his family. Then, too, the grantor has given reasonable explanation of the particular reservations contained in these deeds. He says that, at the time they were made, he contemplated removing to California, and that his object in reserving the powers of revocation was that he might change the investments from Kentucky to California. He did not expect to exercise the powers for his own benefit; he did not know that he could do so. He only contemplated settlements in California to the same uses declared in the original conveyances.
This suggestion derives additional force from the uncertainty in which the law of Kentucky stood at the time the conveyances were made in respect to the power of a married woman over her separate estate.
The Revised Statutes adopted in 1852 had, in effect, destroyed separate estates. They had, in effect, provided that where real or personal property should be conveyed or devised to the separate use of a married woman she should not alienate the same by joining her husband in an ordinary conveyance or in the exercise of a power, except when the estate was a gift, and then it might be conveyed by the consent of the donor, or his personal representative.
This provision was so anomalous that it gave much perplexity to the legal profession and produced much litigation. It was frequently amended, but, even down to the date of the settlements in
question, its precise meaning and operation were not determined. So uncertain was its construction that timid lawyers might have been found who would not have advised the acceptance of a conveyance from husband and wife, of an estate conveyed by the husband to the separate use of the wife. At any rate, Clifton might well have thought it best to guard against the uncertainty by reserving to himself a power which would avoid all difficulty.
Every grantor in England has, by virtue of the second section of the statute of 27 Elizabeth, the substantial right to revoke and annul his voluntary conveyance, since such conveyance is declared by said statute to be fraudulent as to subsequent purchasers for value, with or without notice. Dolphin v. Aylward, L. R. 4 Eng. and Irish Appeals, 486; Roberts on Conveyances, 39, 40 and 41. A grantor may, therefore, revoke or annul his voluntary conveyance at any time by conveying the property included in such conveyance to a purchaser for value. But the statute is limited in its remedial operation to purchasers, and, consequently, such settlements can not be defeated by subsequent creditors. Dolphin v. Aylward; supra. So, also, the fifth section of the same statute, which makes all conveyances containing powers of revocation fraudulent and void as to subsequent purchasers, does not extend to creditors. Voluntary settlements, whether they do or do not contain powers of revocation, can not be assailed by creditors unless they are fraudulent. They are revocable by the grantor either by virtue of the express power reserved or by virtue of a subsequent conveyance for value, but it has never been held that they are on this account fraudulent as to creditors.
But, say complainant's counsel, Mrs. Clifton's title is but the "ghost of a title;" that the legal title is or was in her husband, who reserved to himself absolute power to revoke or to appoint to new uses, and that, therefore, it is not such a title as a court of equity will uphold.
I know it is sometimes said that a court of equity will not enforce every deed made by a husband to his wife. Bishop on the Law of Married Women, section 717. The cases usually cited to support this view are Beard v. Beard, 3 Atk. 71; Moyse v. Gyles, 2 Vern. 385; Stoit v. Ayloff, 1 Ch. Rep. 33. Of all these cases it may be said that they were decided at a time when the rights of married women were not so fully acknowledged or so zealously protected by courts of equity as they are at the present day. It is also to be observed that in the first case the gift was so extravagant as to excite just suspicion of fraud and undue influence. In the second the court refused to aid the defective grant on the ground that it was without consideration. In the third the contract was executory. None of these cases would at all impeach a grant containing no more than a tair provision for the wife, and if they would, they are opposed to the cases heretofore cited in this opinion, to the well-settled doctrine of the Supreme Court of the United States, and to the whole current of later authority.
When the settlement is made, by a husband free