Adoue v. Spencer

• Decision Date: 03 April 1901
• Citation: 62 N.J.E. 782,49 A. 10
• Court: New Jersey Supreme Court
• Parties: ADOUE et al. v. SPENCER.

49 A. 10

62 N.J.E. 782

ADOUE et al.

v. SPENCER.

Court of Errors and Appeals of New Jersey.

April 3, 1901.

(Syllabus by the Court.)

Appeal from court of chancery.

Suit by Bertrand Adoue and another against Mary H. Spencer. Decree for complainants (46 Atl. 543), and defendant appeals. Reversed.

Frank Bergen and Wm. T. Austin, for appellant.

Sherrerd Depue and John Neethe, for appellees.

FORT, J. This was a creditors* bill to set aside a conveyance made by John C. S. Spencer to his wife, passing the title through one Coote. The deed conveyed a one-half interest in property in the city of Elizabeth, in this state. At the time of the conveyance Spencer and his wife were domiciled at Galveston, Tex. The deeds were both dated September 6, 1896, and the one from Spencer to Coote was acknowledged September 30, 1896, and the one from Coote to Mrs. Spencer January 30, 1897. Both deeds were recorded on February 1, 1897. Mr. Spencer died in Texas in June, 1897. Letters of administration were taken out there, but his estate was admittedly insolvent at his death. On September 6, 1898, the orphans' court of Union county, in this state, after notice and hearing, granted letters of administration on his estate to Edward Nugent. The complainants in this case presented to the New Jersey administrator a duly-verified claim against the estate of said John C. S. Spencer, which, after notice to the counsel of Mrs. Spencer, the widow, and the Texas administrator, and no objection being interposed on her behalf, the same was allowed by the administrator. The claim was upon a note of Ladd & Co. of $12,000, with a collateral note of John C. S. Spencer, given therewith. As to the legality of this claim and its rightful allowance we agree with the conclusions reached by the learned vice chancellor. We also agree with him in his finding that under the law of this state a creditor whose claim has been allowed by an administrator is in a position to maintain a creditors' bill to set aside a conveyance of land by the intestate which it is alleged was conveyed to defraud creditors. The case cited by the vice chancellor was determined in this court, and settles the law upon that subject in this state. Hasten v. Castner, 31 N. J. Eq. 697. The consideration stated in the conveyance from Spencer and wife to Coote and Coote and wife to Mary H. Spencer was one dollar. The learned vice chancellor throughout his opinion seems to have treated these conveyances as deeds, while upon any theory that would allow Mrs. Spencer to sustain the conveyance to her her deed must be treated as a mortgage. It surely, upon the most favorable view to be taken of the transaction in her behalf, was only security for an alleged indebtedness due from her husband to her arising out of moneys of hers which he had appropriated to his own use, or which she had advanced him either with or without an express promise to repay, as her evidence and the facts disclosed establish. On this state of facts, even if the transaction were not fraudulent, the creditors would be entitled to an equity in this property beyond the amount that was justly due to Mrs. Spencer from her husband for money she had advanced, and for expenses for betterments and taxes which she may have paid, less rents received since the conveyance to her. That conveyances to secure debts are mortgages is undoubted. Judge v. Reese, 24 N. J. Eq. 387; Melick v. Creamer, 25 N. J. Eq. 429; Cake v. Shull, 45 N. J. Eq. 208, 16 Atl. 434; Winters v. Earl, 52 N. J. Eq. 52, 588, 28 Atl. 15.

The decree in this case is that there is due to the complainants from the estate of John C. S. Spencer, deceased, the sum of $13,268.60, which is decreed to be a lien upon the lands in the complainants' bill mentioned, and the deeds in question (above recited) are set aside, annulled, and made void as against the said debt of the said complainants, and the defendant is to pay costs. The one-half interest in the property in question is admittedly of less value than the amount decreed complainants, and therefore the defendant, Mrs. Spencer (the appellant here), takes nothing by the conveyance of her husband to her. That this decree must be reversed and modified to the extent of the taxes or assessments, or both, paid upon the property by Mrs. Spencer, together with the cost of the betterments placed thereon in excess of rents received, if any, we are all agreed. The case shows that on August 10, 1897, Mrs. Spencer paid for taxes and assessments then upon the property $917.02. This was paid within two months after her husband's death, and within about six months after the conveyance made to her was recorded. The amount of these taxes and assessments was admitted to have been paid by Mrs. Spencer, as appears in the record, and a statement of them was marked "D 1," in evidence by consent. I also think this decree should be reversed for another reason, namely, that there may be an ascertainment, either by the vice chancellor or by a reference to a master, of the amount of any money or other personal property, or its proceeds other than income thereon, which came to Mrs. Spencer by gift, devise, or descent, and which was received by her husband, either from her or from some other person for her account, and which was taken and used by him. To the extent that he received such funds, I think he could, and, indeed, in law and morals should, secure her as he did by the conveyance of September 6, 1896. Whatever that amount may be should also be decreed to be a prior lien to that of the complainants. I agree with the learned vice chancellor that the burden is on Mrs. Spencer to establish the consideration for the conveyance to her, and that it is only good as a security to her for the amount which she can establish was received by her husband from her, or others for her, from the principal of her separate estate, and which had come to her by gift, devise, or descent, as aforesaid; but I do not agree with him in his opinion where he seems to indicate, if not directly hold, that the burden is on Mrs. Spencer to also show that the funds which thus came to her husband's hands were not given to him by her, but were a loan, for which he had agreed to repay or secure her. My reasons for this last position are twofold: First, that by the terms of the married woman's act of the state of Texas, when a husband takes the principal of property which comes to his wife by gift, devise, or descent, he takes it charged with a trust to administer it for the wife, and that to establish the taking in any other manner and a nonliability to account therefor to her, he, or those claiming against her, must show an express agreement by her to that effect; and, second, that the principal of the separate property of a married woman coming into the hands of her husband from her, or others acting for her, after the passage of a married woman's act, where its terms are as broad as the Texas act or our own, is to be treated as if she were a feme sole at the time of its delivery to him, and the law will not presume that such money thus taken by the husband from her, with or without her consent, was a gift to him, and the burden is upon him to establish that it was a gift, and is governed by the same legal rules of liability as if received from a stranger. The Texas statute applicable to this case is as follows:

"Art. 2967. All property, both real and personal, of the husband, owned or claimed by him before marriage, that acquired afterward, by gift, devise or descent, as also the increase of all lands thus acquired, shall be his separate property. All property, both real and personal, of the wife, owned or claimed by her before marriage, and that acquired afterward, by gift, devise or descent, as also the increase of all lands thus acquired, shall be the separate property of the wife, but during the marriage the husband shall have the sole management of all such property.

"Art. 2968. All property acquired by either husband or wife during the marriage, except that which is acquired by gift, devise or descent, shall be deemed the common property of husband and wife, and during the coverture may be disposed of by the husband only."

This is a very comprehensive statute, and the last clause in article 2967, "but during the marriage the husband shall have the sole management of all such property," is particularly forceful upon the question here at issue. The statute expressly says all the property belonging to the wife before marriage, and that acquired after "by gift, devise, or descent," shall be her separate property; and the statute, by giving the husband during marriage the right to the sole management thereof, impresses upon all such property a trust to manage it for the wife, and the imposition of the duty to manage excludes a presumption of title passing, or the property vesting in the husband or merging in his estate. When he takes property under that statute, he takes it to manage, not as his own. By the statute the wife's consent is immaterial. She cannot prevent his taking it if she were to so desire, and when he thus takes he takes just the rights the statute gives, and no more. At his death his executors must account for his stewardship. If he has lost or misappropriated any of the property so taken, he may secure the wife therefor out of any funds or property he may possess. Nor does article 2968, as to the common property of the husband and wife, above quoted, change the effect of article 2967, because property coming to the wife during marriage by "gift, devise, or descent" is expressly excepted out of the common property. The conferring by statute or by private contract upon another of the "sole management of all such property" could by no known method of construction, as it seems to me, be converted into a right to divert to one's own use. The statute fixes the husband's obligation to account for all funds which came to his hands to manage as a sacred...