Blake v. Meadows

• Decision Date: 23 December 1909
• Citation: 123 S.W. 868,225 Mo. 1
• Parties: DANIEL F. BLAKE, Trustee in Bankruptcy of Estate of THOMAS J. MEADOWS, Doing Business as MEADOWS & CO., v. SUSIE L. MEADOWS, Appellant
• Court: Missouri Supreme Court

123 S.W. 868

225 Mo. 1

DANIEL F. BLAKE, Trustee in Bankruptcy of Estate of THOMAS J. MEADOWS, Doing Business as MEADOWS & CO., v. SUSIE L. MEADOWS, Appellant

Supreme Court of Missouri, First Division

December 23, 1909

Appeal from Clay Circuit Court. -- Hon. J. W. Alexander, Judge.

Reversed and remanded (with directions).

F. P Divelbiss and Wash Adams for appellant.

(1) When Thomas J. Meadows used the money of defendant, his wife which had come to her by inheritance from her father and was her separate property, in the purchase of the farm in controversy, a trust thereby resulted in her favor and the land in equity belonged to her. The land was paid for by her checks only. If her mother had any interest it passed to defendant in December, 1900, when her mother died. Broughton v. Brand, 94 Mo. 169; Seay v Hesse, 123 Mo. 450; Hoffman v. Hoffman, 126 Mo. 486; Jones v. Elkins, 143 Mo. 651; Stickney v. Stickney, 131 U.S. 237. (2) The land being in equity her property, the conveyance made by Thomas J. Meadows to defendant was not a fraud upon his creditors, but was a valid and lawful conveyance. Deberry v. Wheeler, 128 Mo. 85; Marsten v. Dresen, 85 Wis. 530; Seay v. Hesse, 123 Mo. 450; Payne v. Twyman, 68 Mo. 339; Clowser v. Noland, 133 Mo. 221; Metsker v. Bonebrake, 108 U.S. 66; Bennet v. Straight, 63 Iowa 620; Garner v. Bank, 151 U.S. 420; Hanselt v. Harrison, 105 U.S. 401. (3) The statutory separate estate of a wife cannot be taken by any process of law for the debts of her husband. R. S. 1899, sec. 6869. (4) "The trustee in bankruptcy takes just such title as the bankrupt had, and no better or greater title, and subject to estoppel and all liens or equities to which the title was subject in the hands of the bankrupt." Bush v. Export Storage Co., 136 F. 920; Hood v. Blair, 91 N.W. 705; Duplan Silk Co. v. Spencer, 115 F. 690; Loveland on Law & Proc. in Bankruptcy (2 Ed.), sec. 173; Stewart v. Platt, 101 U.S. 731; Cook v. Tullis, 85 U.S. (18 Wall.) 332; Dudley v. Easton, 104 U.S. 99; 5 Cyc., 341; In re Standard Laundry Co., 116 F. 478; Brandies v. Cochrane, 112 U.S. 344; Nichols v. Eaton, 91 U.S. 716; In re Mullin, 101 F. 413; In re Hanna, 105 F. 587. (5) "The title which passes to the trustee is limited to such property as might have been recovered by creditors in whose right the trustee takes under the laws of the State, and as may be recovered by him under sec. 70e of the Bankrupt Act." A right resulting by estoppel in favor of a particular creditor does not pass to the trustee in bankruptcy. "Fraud, actual or constructive, is a necessary element to give the trustee in bankruptcy a right of action." Bush v. Export Storage Co., 136 F. 920. (6) "A married woman cannot lose her land, separate or not separate estate, by estoppel in pais without actual fraud, if even by it." Waldren v. Harvey, 54 W.Va. 609; Brant v. Coal & Iron Co., 93 U.S. 327; Baker v. McInturff, 49 Mo.App. 509; Hyde v. Powell, 47 Mich. 156. (7) There was no purpose on the part of defendant to give her husband fictitious credit. The land was in his name four years before he went into business. He was not in business while Mrs. Cummings lived. She died in 1900. Mere passive conduct or silence will not estop a married woman. Ingalls v. Ferguson, 138 Mo. 358; Dull v. Merrill, 69 Mich. 49; Marstin v. Dresen, 85 Wis. 530; Bank v. Lee, 13 Pet. 107; Brant v. Coal & Iron Co., supra; Burke v. Adams, 80 Mo. 514; Garner v. Findlay, 110 F. 123; McClain v. Abshire, 72 Mo.App. 390; Matador L. & C. Co. v. Cooper, 87 S.W. 235. (8) Defendant testified she had no knowledge that her husband was doing business on credit. He informed her his business was in good condition, and she let him have money to increase his stock, and put into his business; under such circumstances there is no estoppel. DeBerry v. Wheeler, 128 Mo. 85; Scrutchfield v. Sauter, 119 Mo. 615; Alkire Grocer Co. v. Ballenger, 137 Mo. 369; McClain v. Abshire, 72 Mo.App. 390; Hudson v. Wright, 204 Mo. 412. (9) The alleged declaration of Thomas J. Meadows to J. T. Hurt, that the land was his, was not admissible and should not be considered by this court in deciding this case. Maffi v. Stephens, 93 S.W. 158. (10) The commercial reports of R. G. Dun & Co. and Bradstreet were not admissible and should not be considered in this case. Maffi v. Stephens, supra. (11) Those creditors of Meadows & Co. who testified they relied on the commercial reports cannot rightly invoke the doctrine of estoppel, because these reports instead of being fit for reliance, threw doubt upon the fact itself by saying "He is credited with owning" and "He is said to own." None of these creditors examined the records or knew or relied thereon. The reports show Thomas J. Meadows declined to make any statement. Estoppel must be certain to every intent. Mills v. Groves, 36 Ill. 456; Brant v. Coal & Iron Co., 93 U.S. 327; Standard Mfg. Co. v. Errott, 135 F. 750. (12) The bank and Roney knew all the facts concerning the purchase of the land with the wife's separate means, and cannot for that reason invoke estoppel. Hequenbourg v. Edwards, 155 Mo. 523. The knowledge of Hurt was the knowledge of the bank. Rhinehart v. Bank, 89 Mo.App. 511; Lindsay v. Brooks, 82 Mo.App. 301. (13) The lower court erred in admitting the testimony of Henderson that Thomas J. Meadows told him "I own a good farm in Clay county," and that Hurt told him the same thing. These statements were not part of the res gestae and are not competent as against this defendant. The creditor should have searched the record; he had no right to rely on anything else. Maffi v. Stephens, 93 S.W. 158.

James M. Sandusky, Lavelock & Kirkpatrick and Karnes, New & Krauthoff for respondent.

(1) The authority relied on by the creditors of the husband in the court below, and which is controlling here, is, Singer Manufacturing Co. v. Stephens, 169 Mo. 1. An attentive reading of that case will show that it is on all-fours with the case at bar, with this exception: In the case of the Singer Manufacturing Co. v. Stephens, property belonging to a daughter was placed of record in the name of her father. In the case at bar, title was of record in the name of the husband, while the land was paid for with the money of the wife. As will be shown in a subsequent chapter of this brief a wife is now deemed feme sole, and is charged with the principles of estoppel precisely as if she were unmarried, so, accordingly, there is no essential difference between the case at bar and the case of Singer Manufacturing Co. v. Stephens, supra. And on the authority of that case, the right of the creditors to enforce as against the wife the payment of the debts which the husband incurred upon the faith of his apparent ownership of the land in question, is beyond controversy. 2 Pomeroy's Eq. Jur. (2 Ed.), sec. 805, p. 1115; 2 Beach on Mod. Eq. Jur., secs. 1096, 1103, pp. 1188, 1190; 2 Pomeroy's Eq. Jur. (2 Ed.), sec. 811, p. 1130; 2 Beach on Mod. Eq. Jur., sec. 1105, p. 1192; Rieschick v. Klingelhoefer, 91 Mo.App. 1; Riley v. Vaughn, 116 Mo. 169. Defendant is estopped from claiming the land in controversy against those who extended credit to her husband, believing he owned it. It was defendant's conduct that misled creditors to their prejudice and made it possible for her husband to obtain credit on his apparent ownership of the Clay county farm; she clothed him with authority to do just what he did, viz., obtain credit from those who dealt with him and relied on his ownership of this property, and believed him entitled to credit accordingly. It is not denied that defendant knew from April or May, 1898, to February, 1905, that the record title to this land stood in the name of T. J. Meadows, and if she did not disclose this fact to her mother in her lifetime, it suggests that she was satisfied with the title as it stood. Defendant was familiar with all the facts and understood the advantage to her husband, in a business way, of owning this farm or having the credit of owning it, and, whether he in fact owned the land, or was merely the ostensible owner, and obtained credit as if he were such owner with defendant's consent, can make very little difference in this case. It was her course of dealing, or method of permitting her husband to deal with the farm as he did, that gave him credit, and now she will be precluded from claiming the land against those whom her conduct misled to their prejudice. It is universally recognized that, if one of two innocent parties must suffer, the loss will fall on the one whose agency occasioned the loss; this is because the resulting wrong producing loss must be suffered by the one inducing it. This is the equitable principle upon which estoppel in pais proceeds; it is not a harsh rule of law; it only recognizes and enforces simple justice between man and man. Defendant's course of conduct embraced every element of estoppel in pais. 2 Pomeroy's Eq. Jur. (2 Ed.), sec. 804, p. 1115; 2 Beach on Mod. Eq. Jur. sec. 1103, p. 1188; 2 Pomeroy's Eq. Jur. (2 Ed.), sec. 811, p. 1130; 2 Beach on Mod. Eq. Jur., sec. 1096, p. 1182. Nor is it essential in this case that defendant should have actually known her husband was obtaining credit on his apparent ownership of the Clay county farm, or that she should have known creditors were actually relying on his apparent ownership of the land, provided her conduct justified such reliance, and it was in fact relied on. Singer Mfg. Co. v. Stephens, 169 Mo. 11; 2 Beach on Mod. Eq. Jur., sec. 1105, p. 1192. Persons extending credit to Thomas J. Meadows were entitled to rely upon his apparent ownership of the land as shown by the records. H. K. Porter Co. v. Boyd, 171 F. 312; Smith v. Willard, 174 Ill. 538; Rieschick v. Klingelhoefer, 91 Mo.App. 433; Kennedy v. Lee, 72 Ga. 41; Hirsch v....