In re Teter
| Decision Date | 02 November 1909 |
| Citation | 173 F. 798 |
| Parties | In re TETER. |
| Court | U.S. Court of Appeals — Fourth Circuit |
William T. George, for trustee.
Harry H. Byrer, for creditors.
Samuel V. Woods, for claimant.
J Blackburn Ware, for bankrupt.
Mary Sophia Teter, wife of the bankrupt, has filed herein her petition, in which she alleges that she was a daughter of Braxton B. Durrett, a man of large estate, and was married to Teter March 5, 1874; that his father, Jesse Teter, on February 3, 1880, executed to him a deed for two tracts of 167 and 20 acres of land, for a stated consideration of $1,000, of which $250 is recited to have been paid, and the residue, $750, was payable in three installments, of $250 each, for which notes were given and a vendor's lien retained upon the land-- a life estate in favor of Elizabeth Teter, wife of said Jesse Teter, the grantor, being also reserved in the 167-acre tract, the said Elizabeth Teter being still alive and holding such estate, and Jesse Teter the grantor, being now dead. It is then charged that Jesse Teter by this deed in fact advanced to his son, the bankrupt $2,000, the land being in fact valued at $3,000, and that such advancement was made with the express understanding that, when the deed was delivered, petitioner, Mary Sophia Teter, wife of the bankrupt, should pay, out of advancements made to her from her father's estate, and not received from the estate of her husband, the $1,000 provided on the face of the deed to be paid for the land; that she did furnish, and, through her husband, paid to Jesse Teter, the $1,000 out of her separate estate, and the notes for the deferred payments, as also the deed for the land, was delivered to her, with the distinct understanding that she was to have conveyed to her the land in value to the extent of such payment, or that a vendor's lien was to be retained upon the land to secure its repayment to her; that said notes and deed have always since remained in her possession, the deed unrecorded, no part of the money having been repaid her; and she charges that such money, so paid by her, constitutes an equitable lien and charge upon the lands superior to all others, except as to the life estate in the 167-acre tract in favor of Elizabeth Teter. It is then charged that her husband, the bankrupt, was entirely free from debt until 1892, when he became surety upon a bond of Williamson, sheriff, upon which bond the state recovered a judgment, instituted a general creditors' bill against Williamson and his sureties, in which an order of reference was made, and a release of liability on the part of the bankrupt was secured, but, before such release was obtained her petition in said cause was filed, setting forth her rights, as here urged, and in support of which the depositions of Jesse Teter, Minnie M. Teter, Worth Teter Floyd Teter, and herself were taken; that the depositions of Jesse Teter, Minnie M. Teter, and Worth Teter, now all dead, have been lost from the files of said cause, and cannot be found, but she files verified copies of her petition, and the depositions of herself and Floyd Teter, so filed in the said cause of the state, the prosecution of which, it is alleged, has been abandoned. The prayer of the petition is that she be declared a creditor of the bankrupt to the extent of the $1,000 so paid by her into the land, and that this sum, with its accrued interest, be given priority of payment out of the proceeds of sale of the lands. This petition, filed before the referee on May 16, 1909, has been contested by the trustee, who has filed before the referee his exceptions and objections thereto, as also by the creditors. Depositions of petitioner, Floyd Teter, O. G. P. Durrett, and Thomas B. Teter, the bankrupt, have been taken, and the referee has determined to uphold her claim, and give it, to the extent of the $1,000 and its interest, priority of payment out of the proceeds of the sale of the 167 and 20 acre tracts, subject to the life estate of Elizabeth Teter in the 167-acre tract. At the instance of the trustee and unsecured creditors, this decision of the referee is brought here for review.
DAYTON, District Judge (after stating the facts as above).
The agreement charged to have been made at the time the two tracts of land were conveyed by his father to the bankrupt was that the petitioner should pay the $1,000 and have conveyed to her the land in value to the extent of such payment, or that a vendor's lien was to be retained upon the land to secure her the repayment of her money. Neither of these things has ever been done, and, after the lapse of 29 years, the question arises whether the pleading and evidence justifies equity and good conscience to do either for the relief of petitioner, against the creditors. The decision of the referee is in effect to charge this $1,000, with its accumulated interest, in the nature of a purchase-money lien, upon the land, as having priority over all other debts except the life estate of Elizabeth Teter. This practically means that the wife of the bankrupt shall absorb the whole value of the lands, and the creditors shall take nothing.
It seems to me this is clearly untenable. Taking the most favorable view possible of this ruling, and quoting the testimony alone of Mrs. Teter, it seems clear that the deed was made direct to her husband by his father; that the lands were worth at the time $3,000; that she took no written evidence of the agreement; that she did not pay the $1,000, or any part of it, to the grantor, Jesse Teter, but 'furnished' it to her husband, partly in money and partly in stock, apparently, which he sold, who paid it to his father, who surrendered the notes to her husband as paid, and he in turn delivered them over to her, with the deed. She says the deed was delivered to her, and has been in her possession since about six months after its date, and the notes were delivered to her by her husband as of the times when he discharged them. They were not assigned to her, and her sole claim to enforce an equitable lien against the land in her favor, independent of oral agreement with her husband, rests upon her possession of the title deed and these notes. I can find no authority warranting me to hold the possession of this deed and of these notes, under these circumstances, as constituting an equitable assignment to her by Jesse Teter of the existing vendor's lien in his favor.
A vendor is not ordinarily compelled to receive payment for and assign to a third person such a lien. Jesse Teter, the father-in-law, might have been entirely willing to have done so; and it is incomprehensible why he did not do so, if at the time it was contemplated to secure this petitioner this money by and through his existing vendor's lien. Therefore, independent of all questions of trust relations, the whole matter resolves itself into this: Mrs. Teter loaned her husband this money, for which she took from him no note or evidence of debt of any kind. With this money he paid off and discharged the vendor's lien to his father. The only way Mrs. Teter sought to secure herself for the money so loaned her husband was, six months after its execution, to take possession of the deed and these notes, as her husband paid and delivered them to her. They were living together, and her possession was in fact his. A line of decisions in this state has fully established the principles that where a wife delivers money or property of her own to her husband, which he uses in his business, the presumption is that such delivery was intended as a gift, and when the facts and circumstances tend to show that a gift was intended, and that the husband used and dealt with the property as his own, the mere parol testimony of the husband and wife of a private understanding between themselves that the transaction should be considered or was intended as a loan to the husband by the wife, and not a gift, will not, as against the creditors of an insolvent husband, rebut the presumption of a gift. Zinn v. Law, 32 W.Va. 447, 9 S.E. 871; Maxwell v. Hanshaw, 24 W.Va. 405; McGinnis v. Curry, 13 W.Va. 29; Bank v. Atkinson, 32 W.Va. 203, 9 S.E. 175. And in this last case it is held that the fact that the wife's claim for money of hers received by her husband from the sale of her lands was barred by limitation tends strongly to repel her claim as against her husband's creditors.
This money of Mrs. Teter was received by her husband, it may be assumed, at various times between February 3, 1880, the date of the deed, and September 1, 1885, when the last note was payable. The evidence does not clearly establish the amount in a sum exceeding $811.50, unless we assume she increased the sums received by her from her father and aunt by investment and loans at interest, which are not shown by the evidence. The first effort attempted to secure repayment of this money was not made until after her husband had become Williamson's surety on his sheriff's supplemental bond, and judgment for $10,000 had been rendered in favor of and a chancery suit had been instituted for its enforcement by, the state. Then she filed her petition in this chancery suit, asserting her claim as a debt due her, based upon the same facts set forth here. The exact date of the filing of this answer is not shown; but it was not filed before 1895, because the suit was not instituted until that year, and it is probable it was not filed until the following year, 1896, when her depositions were taken in support of it. Thus for 10 years, at least, she allowed this money to remain in her husband's hands, with no written evidence of it having been loaned to him, with him in full possession of the land, with no assignment from her father-in-law of the notes, which she says her money paid, although such...
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