Etheredge v. Cochran

• Decision Date: 27 February 1929
• Docket Number: 456.
• Citation: 146 S.E. 711,196 N.C. 681
• Parties: ETHEREDGE v. COCHRAN et al.
• Court: North Carolina Supreme Court

146 S.E. 711

196 N.C. 681

ETHEREDGE v. COCHRAN et al.

No. 456.

Supreme Court of North Carolina

February 27, 1929

Appeal from Superior Court, Mecklenburg County; John H. Harwood Special Judge.

Action by Katherine H. Etheredge against Claude A. Cochran and James P. Harris, administrators of the estate of C. Lane Etheredge deceased. Judgment for plaintiff, and defendants appeal. No error.

C. Lane Etheredge was the sole owner and proprietor of an unincorporated business which he conducted in the city of Charlotte under the name of the Etheredge Motor Sales Company. W. V. Hartman of Pittsburg, Pa., the plaintiff's father, gave her the sum of $45,000 in the three checks as follows: (1) A check for $10,000 dated May 12, 1922; (2) a check for $15,000 dated March 4, 1924, drawn by the Mellon National Bank of Pittsburg on the National Bank of Commerce of New York, payable to the order of the plaintiff; (3) a cheek for $20,000 dated February 11, 1924, drawn by the Mellon National Bank of Pittsburg on the Bank of America payable to the order of the plaintiff. All these checks were indorsed in due form by the plaintiff. C. Lane Etheredge died on July 2, 1926, and on July 7, 1926, the defendants qualified as administrators of his estate.

The plaintiff brought suit to recover of the defendants the sum of $45,000, the aggregate amount of the checks, alleging, in substance, that the intestate had received and had never accounted to the plaintiff for any part of this amount. The defendants answered, admitting that their intestate had received of the plaintiff $10,000 on May 12, 1922, $20,000 on February 14, 1924, and $15,000 on March 7, 1924, and that no part of either sum was thereafter received by the plaintiff from the intestate or from the defendants. The defendants' motion for nonsuit was overruled, and they excepted. Thereupon they tendered instructions to the effect that, if a wife, having money in her possession which belongs to her, by her voluntary act transfers it to her husband, the law presumes the transfer to be a gift, in the absence of evidence tending to show a loan, and that the burden of proving that the transaction was a loan was upon the plaintiff. These prayers were refused and the trial judge instructed the jury that, if a wife, having funds in her possession, transfers the same to her husband there is a presumption, nothing else appearing, that the transaction is a loan and that the husband will undertake to repay it, and further, that it is incumbent upon the husband who asserts it to show that the transfer is a gift.

It was admitted that the claim for $10,000 is barred, and the jury returned a verdict for the plaintiff in the sum of $35,000. Judgment for plaintiff. Exception and appeal by defendants.

F. A. McCleneghan and Taliaferro & Clarkson, all of Charlotte, for appellants.

Whitlock, Dockery & Shaw, of Charlotte, for appellee.

ADAMS J.

It is admitted that the plaintiff was the owner of the checks, that she duly indorsed them, that her husband collected them, and that the plaintiff has never been repaid. The question is whether the transfer of the wife's money to her husband raised the presumption of a loan or the presumption of a gift.

On this question judicial opinion is not unanimous, but the weight of authority and, we think, the better reasoning, uphold the doctrine that, where the separate property of the wife comes into the hands of her husband, either from her directly or from another duly authorized to act for her, there is no presumption that the transfer is a gift. The doctrine is clearly stated in Stickney v. Stickney, 131 U.S. 227, 239, 9 S.Ct. 677, 680, 33 L.Ed. 136, 143: "Whenever a husband acquires possession of the separate property of his wife, whether with or without her consent, he must be deemed to hold it in trust for her benefit, in the absence of any direct evidence that she intended to make a gift of it to him." When, as with us, the property of a married woman is her sole and separate estate and is free from liability for the debts or obligations of her husband, the presumption is that it continues hers. Grabill v. Moyer, 45 Pa. 533. In Bergey's Appeal, 60 Pa. 408, 100 Am. Dec. 578, it was shown that the husband and wife were together when the wife was paid a sum of money out of her father's and her mother's estates; that the husband picked up the money, counted it, and did not put it down again, but invested it in a farm. In reference to the question whether the transaction was a gift to the husband, the court said: "Not a word was spoken by the wife when her husband took up the money to count it, and put it in his pocket. Nor do we ever hear of a word thereafter to the effect that the wife had made a gift of it. No inference of a gift from the transaction as detailed could, we think, arise. She was not bound to attempt a rescue of it from him, or proclaim that it was not a gift. She might rest on the idea that his receipt, in her presence, was with the intent to take care of it for her."

These two cases are cited with approval in Stickney v. Stickney supra; and in Parrett v. Palmer, 8 Ind. App. 356, 35 N.E. 713, 52 Am. St. Rep. 479, a similar conclusion is based upon additional citations: "We have here a case where the wife's money passes directly and voluntarily from her hands to that of her husband, with no finding as to whether a gift was intended, or whether he received the money simply as an agent or trustee for her. Under such circumstances, what is the presumption of the law? It has long been conceded to be the law that a woman could bestow her separate property upon her husband by way of gift, unless prevented by some special limitation of her powers over it, but courts of equity view such transactions with care and caution, and in dread of undue influence. Story's Equity Jurisprudence, § 1395. 'There is no doubt that courts should narrowly scrutinize cases of alleged gifts from the wife to the husband.' Hardy v. Van Harlingen, 7 Ohio St. 208. 'As regards the corpus of the separate estate, no presumption arises in favor of a husband who has received it. He is prima facie a trustee for his wife, and a gift from her to him will not be inferred without clear evidence.' 2 Lewin on Trusts, 778. 'A simple payment by the wife to the husband of the...