Driggs & Co.'s Bank v. Norwood

• Decision Date: 10 December 1887
• Citation: 6 S.W. 323,50 Ark. 42
• Parties: DRIGGS & CO.'S BANK v. NORWOOD
• Court: Arkansas Supreme Court

6 S.W. 323

50 Ark. 42

DRIGGS & CO.'S BANK v. NORWOOD

Supreme Court of Arkansas

December 10, 1887

APPEAL from Nevada Circuit Court in Chancery, S. A. BYRNE, Judge.

Decree reversed and cause remanded.

Atkinson & Tompkins, for appellants.

1. The money of the wife not having been scheduled, or entrusted to the husband as agent, or kept separate, became the husband's. Const. 1868, art. 12, sec. 6; 30 Ark. 79; Ib 124. By permitting the husband to use and control her property, as his own, and obtain credit on the faith of it the wife lost her right as against her husband's creditors. 2 Perry Trusts, sec. 678; Schoulder on Dom. Rel sec. 119 (3d Ed.).

2. The husband being involved at the time the lot was deeded to the wife, the conveyance was fraudulent as to his creditors both prior and subsequent. 38 Ark. 419. The fact that the deed was conveyed to the wife directly does not aid him; it is the same as if made to him and by him conveyed to her. 33 Ark 762.

Montgomery & Hamby, for appellees.

1. To entitle appellants to relief they must show an unsatisfied judgment upon a debt created prior to the conveyance, the issuance of execution and inability to find property out of which to make the debt. 31 Ark. 546.

2. The case in 30 Ark. 79, was decided before the passage of the Act Dec. 15, 1875, which provides that a married woman shall not be prejudiced by her failure to schedule, and the fact that she permits her husband to control and manage her property, is not of itself sufficient evidence of relinquishment of her title, but he is presumed to be acting as her agent. Mansf. Dig., secs. 4634-6. See also Rudd v. Peters, 41 Ark. 177; 42 Ark. 62; 22 Id. 429; Stewart Husb. and Wife, sec. 88; 33 Mo. 156.

OPINION

SMITH, J.

The bill alleged that the plaintiffs, Driggs & Co., had recovered judgment against Norwood, as a member of the firm of Nelson & Co., for more than $ 1,200 and had taken out execution thereon, which was returned unsatisfied; that Norwood had bought a lot in the town of Prescott, and for the purpose of cheating and hindering his creditors, had caused the deed to be made to his wife. The prayer was for the subjection of the property to the satisfaction of the plaintiffs' debt.

The defendants filed a joint answer, in which they denied any fraud in the transaction, and averred that the lot was purchased and paid for with the wife's own money. The bill was dismissed at the hearing.

The testimony developed these facts: Norwood was a country physician with a limited practice and utterly without means, until, in the year 1869, he married a widow, who had an interest in her deceased husband's estate. From this source he received fifteen hundred dollars. He invested eight hundred dollars in a farm, taking the title in his own name, and lent such part of the remainder, as was not consumed in the support of the family, upon interest. He seems to have enjoyed a reasonable share of prosperity, cultivating his farm and practising his profession, until the year 1882, when he removed to Prescott, the county seat of his county. He was then the owner of another small farm, in addition to the one previously mentioned, was free from debt, and had one thousand dollars or more due to him in notes and accounts. He was regarded by his neighbors as a man in easy circumstances. About this time he was induced to sign a bond of $ 5,000; and the condition of the bond not having been performed, he and two others of the sureties made their joint note for $ 1,600 in adjustment of their liability. This note had not been paid down to the taking of the proofs in this cause and an action was pending in the courts upon it. In the course of the complications growing out of this bond, and as soon as it was ascertained that the sureties were in for a loss, Norwood made a suspicious transfer of the smaller of his two farms and of his book accounts to a friend in Prescott. In the fall of 1882 he also sold the other farm, and about the first of October in that year was admitted as a partner in the mercantile firm of Nelson & Co.

On November 18th, 1882, he became surety on the bond of the postmaster at Prescott, and made oath that he was worth one thousand dollars over and above all debts, liabilities and exemptions. On November 21, 1882, occurred the transaction, which is the subject of this controversy, viz: the purchase of the town lot for three hundred and sixty dollars and the conveyance of it to his wife. A few days afterwards--not later than the first of December following--Norwood's firm failed in business, or was closed out by creditors. The plaintiffs recovered their judgment on September 4, 1884. It does not appear from the record when their debt was created. It is probable that it was before the date of the conveyance, which is attacked herein as fraudulent; since, as we have seen, the firm of Nelson & Co. failed very shortly afterwards. The plaintiffs were bankers at Prescott, and it would be strange if the firm of Nelson & Co. could have obtained so large a credit on the verge of insolvency or after insolvency. Still on this point of the exact date of the accrual of the debt, there is neither allegation, nor proof, and the plaintiffs must accordingly be treated as subsequent creditors.

The money which Norwood collected for his wife was rightfully hers and could have been secured to her use by an investment in real estate in her own name, or by an investment in personal property, a schedule of which was recorded in the county of her residence; or, possibly, if it was desirable to keep it in money or choses in action, by holding it separately from that of her husband. It was her separate property so long as she chose to preserve its distinctive character, and did not entrust its management or control to him otherwise than as an agent. Beeman v. Cowser, 22 Ark. 429; Constitution of 1868, art. XII, sec. 6; Humphries v. Harrison, 30 Ark. 79; Hydrick v. Burke, 30 Ark. 124.

There is nothing to show that Norwood, in the investments he made, acted as his wife's agent. On the contrary he purchased lands for his own benefit and dealt with her money as his own for a period of more than ten years, and obtained credit on the faith of its being his own. Mrs. Norwood is not shown to have objected to such use and her assent must be presumed. It is now too late to assert her claim to the money or its proceeds against her husband's creditors. 2 Perry on Trusts, sec. 678; Schouler Domestic Relations, 3d Ed., sec. 119; Humes v. Scruggs, 94 U.S. 22, 24 L.Ed. 51.

If the plaintiffs' debt was in existence, when the transfer was made, there could not be any doubt of their right to impeach it. For every voluntary alienation of his property by an embarrassed debtor is presumptively fraudulent against existing creditors. Indebtedness raises a presumption of fraud, which becomes conclusive up-on insolvency. But as to subsequent creditors, a voluntary conveyance by a person in debt is not per se fraudulent. To make it so, proof of actual or intentional fraud is required. Sexton v Wheaton, 21 U.S. 229, 8 Wheat. 229, 5 L.Ed. 603; S. C. 1 Am. Lead. Cas. 17 and notes; Hinde's Lessee v. Longworth, 24 U.S. 199, ...