Frost v. Steele

• Decision Date: 02 April 1891
• Citation: 48 N.W. 413,46 Minn. 1
• Parties: FROST v STEELE.
• Court: Minnesota Supreme Court

46 Minn. 1

48 N.W. 413

FROSTvSTEELE.

Supreme Court of Minnesota.

April 2, 1891.

(Syllabus by the Court.)

1. A finding that land purchased and conveyed to the wife of an insolvent debtor was paid for by her with her own money, held justified by the evidence.

2. A creditor who would avail himself of the benefit of section 8, c. 43, Gen. St. 1878, (making conveyances to another person, when the consideration is paid for by the debtor, presumptively fraudulent, and resulting in a trust in favor of creditors,) has the burden of showing the fact that the consideration was paid by the debtor.

3. A recognition and payment in good faith by an insolvent husband to his wife of an actual indebtedness, with compound interest according to their agreement, as to which a right of recovery would have been barred by the statute of limitations, is not a fraud upon his creditors; nor is an agreement by the husband to pay to the wife rent for premises occupied by them, but purchased with her money, necessarily fraudulent.

4. The statute above cited is not applicable to the case of a debtor expending his means in permanent improvements on the land of another, (his wife.) Nor is this a fraud upon creditors if such expenditures are made in good faith, in repayment of an existing indebtedness to the owner of the estate thus improved.

Appeal from district court, Hennepin county; HOOKER, Judge.

Fred W. Reed, for appellant.

Haynes & Chase, for respondent.

DICKINSON, J.

The defendant has been a married woman since 1861. The plaintiff is a judgment creditor of her husband, J. A. Steele, the judgment having been recovered in 1884, for a debt which had existed for more than 15 years prior to that time. In 1887 a lot of land in the city of Minneapolis was purchased and conveyed to the defendant, on which a dwelling-house was subsequently erected, and the place has, since some time after the commencement of this action, been occupied by the defendant and her husband as their homestead. The plaintiff, alleging that the consideration for the purchase of this property was paid by the defendant's husband, and that the conveyance was made to the defendant for the purpose of defrauding the creditors of her husband, invokes the application of section 8, c. 43, Gen. St. 1878, and prosecutes this action to have a trust declared and enforced in his favor, as respects such land, for the purpose of satisfying his judgment. The court found, among other things, that the land in question was bought and paid for by the defendant with her own money; that the money used in the construction of the dwelling-house thereon was in part furnished by the defendant, and in part by her husband, from his earnings in the practice of his profession as a physician; that there was no intent to defraud the creditors of the husband, but that the design and purpose of both was to secure a house and lot as a homestead. In reviewing the finding that the land was paid for by the defendant with her own money, we are led to consider briefly the source from which, according to the evidence, she procured the money. It appears that prior to and after the defendant's marriage she loaned money to her husband to the amount of over $800. About the year 1874 the defendant's husband purchased for her in the state of Illinois, where they then lived, a lot of land, and erected a house thereon for a home. The title was taken in the name of the defendant, with the view, as the evidence goes to show, of extinguishing,by this means, the debt of the husband to her. Without dwelling upon the particulars of this transaction, which creditors do not appear to have questioned while she held the property, we will only say that we consider that the case justifies the conclusion that this became her property in good faith. The fact that her husband contributed somewhat to the construction of the house (beyond what he was owing to her) by procuring some of his debtors, whose debts were uncollectible, to work on the house, is not inconsistent with an honest purpose, nor necessarily prejudicial to the husband's creditors. About nine years prior to the purchase of the property now in question the home in Illinois was sold for $2,500, that being some $1,100 in excess of what it had cost, and the defendant, with her husband, removed to this state. The money...