Keller v. Wash.

• Citation: 98 S.E. 880
• Decision Date: 25 March 1919
• Docket Number: (No. 3509.)
• Court: Supreme Court of West Virginia
• Parties: KELLER . v. WASHINGTON et al.

98 S.E. 880

KELLER .

v.WASHINGTON et al.

(No. 3509.)

Supreme Court of Appeals of West Virginia.

March 25, 1919.

(Syllabus by the Court.)

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Constructive Trust; Express Trust; Resulting Trust.)

Williams, J., dissenting.

Appeal from Circuit Court, Hampshire County.

Suit by Louise E. Keller against R. M. Washington, Mary Cavitt Washington, his wife, and others. From a decree overruling her exceptions to the report of the commissioner appointed to ascertain for court's information the realty of R. M. Washington, the liens against his estate, and the priorities thereof, and confirming the report, Mary Cavitt Washington appeals. Reversed and remanded, with directions.

G. K. Kump, of Romney, and Walter C. Capper, of Cumberland, Md., for appellant. J. S. Zimmerman, of Romney, for appellees.

LYNCH, J. The appellant, Mary Cavitt Washington, acquired through the estate of her deceased father, Josephus Cavitt, valuable real and personal property owned by him in the state of Texas. The land devised or allotted to her she caused to be sold at the instance of her husband, R. M. Washington, to whom she was married in 1886. The proceeds of the sale she likewise at his instance delivered to him, together with all or most of the personal property derived from her father's estate; and such of it as was not converted into money when so received he sold or assigned, and apparently devoted the proceeds to his individual personal use. In this manner her patrimony came into his possession or under his control at various times after the marriage, though the dates of the receipt of all of it are not disclosed. She did not demand any notes or memoranda evidencing the receipt thereof or the purpose of its delivery to him, or if she did make such demand, he did not comply therewith until February 28, 1914, when, by way of recognition of an indebtedness to her for the various sums, aggregating $35,770.81, be executed a paper filed in the record to which we shall have occasion to refer at a later stage of this review.

The decree from winch she has appealed overruled her exceptions to the report of the commissioner to whom the cause was referred to ascertain for the information of the court the real estate of R. M. Washington, and the liens chargeable against his estate, and the priorities thereof, and confirmed the report. The report and decree denied the right claimed by her to participate in the distribution of the proceeds of the sale of the lands and personal property of her husband, who, it seems, is hopelessly insolvent. His investments, though large and valuable, are grossly inadequate to meet his liabilities.

The refusal of such right is sought to be sustained by appellees, who are common and lien creditors of the insolvent, upon the grounds: (1) That the delivery of the money or property to the husband did not create the relation of debtor and creditor, but presumably was a gift to him by her; (2) that, if it was a debt, it is barred by the statute of limitations, or, if not by the statute, by her laches. She seeks to reverse the decree, and supplant it by another allowing the claim, on the ground that the money was delivered and received in trust for investment for her at interest, pursuant to an oral agreement entered into between them on the several dates of the delivery. She docs not, however, attempt to trace it to any specific property in which it was invested by him, or ask to have it declared to be a lien or charge against any particular part of her husband's lands or personal property, but she does ask to be permitted to join ratably with other creditors of her husband in the distribution of the surplus proceeds remaining after the payment, in whole or in part, of the specific liens on certain parcels of his real estate, not as a trust fund in his hands, but by way of enrichment of his estate to that extent, and merely as a debt entitled to such participation notwithstanding its character as a trust fund. In other words, as she cannot point out with certainty any property, real or personal, not subject to liens created by him with her consent evidenced by her joining with him in creating them, if such there be, she expresses a willingness to accept a share of such surplus ratably with other creditors of her husband.

Delivery by a wife of her money or property to her husband, who uses it in his business without an agreement, oral or written, entered into by them at the time, binding him to account therefor to her, gives rise to the presumption of an intention on her part to bestow it upon him as a gift, and, in order to create the relation between them of debtor and creditor as to such a transaction to the prejudice of his creditors, the proof must be ample, clear and satisfactory. Bank v. Atkinson, 32 W. Va. 203, 9 S. E. 175; Zinn v. Law, 32 W. Va. 447, 9 S. E. 871; Bennett v. Bennett, 37 W. Va. 396, 16 S. E. 638, 38 Am. St. Rep. 47; Crumrine v. Crumrine, 50 W. Va. 228, 40 S. E. 341, 88 Am. St. Rep. 859; Horner v. Huffman, 02 W. Va. 40, 43 S. E. 132; Morris v. Westerman, 79 W. Va. 502, 508, 92 S. E. 567. Likewise where the facts and circumstances tend to establish an intention on her part to give him her property without limitation or restraint, with the right to appropriate it to any purpose he may desire without regard to any obligation to restore the possession or account therefor to her, and he uses and deals with it as if he were the real and sole owner, the mere parol testimony of both to show a private understanding between them of a different character, or that they considered the transaction as a loan or trust, ordinarily will not suffice, as against creditors of an insolvent husband, to rebut the presumption that a gift was intended. Zinn v. Law, supra; Horner v. Huffman, supra; Cheuvront v. Horner, 62 W. Va. 476; Morris v. Westerman, supra.

The basis for the presumption of a gift as between husband and wife, and the difficulty of overcoming it by proof when the rights of creditors are involved are well stated in Morris v. Westerman, supra, 79 W. Va. page 508, 92 S. E. 570:

"If she had had the property in her possession or the title in her name and within her control, and delivered or conveyed it to him, or permitted him to take possession of it, without any understanding or agreement for return thereof, there would have been a presumption of a gift. * * * But if, under such circumstances, he had contemporaneously given her his note or other obligation, * * * or even verbally promised to pay or return it, no such presumption would have arisen. The transaction would have created the relation of debtor and creditor. In most instances, however, if not all of them, the verbal agreement is rejected for want of sufficient proof or inconsistency with conduct."

Here there is neither such inconsistency of conduct nor want of sufficient proof to rebut the presumption of gift. True there was no written agreement to invest for the wife's benefit; no notes or other documentary evidence of the real character of the transaction given. All the negotiations were oral. The money or property passed directly to Mrs. Washington or to her husband through the hands of her brother, J. B. Cavitt, who acted on behalf of his and Mrs. Washington's mother, the executrix of their father's estate, and as such agent he made all the settlements with the heirs of their father and distributees of the estate, as he also did subsequently with respect to their mother's estate. Mrs. Washington's share of the property inherited from both sources he paid to her personally, or to her husband at her direction, but not without protest in her behalf, manifested by correspondence conducted by him with her and her husband regarding the application of the money, the result of which was as he says that "finally he [the husband] stated to me that he had all of Mrs. Washington's money invested for her In such a way that she would get it back with good earnings." He also says:

"From many statements made to me by R. M. Washington at the times he received these different sums of money and on many other occasions he induced me to believe that he was getting all this money from my sister to be invested for her, and that he was in duty and honor bound to handle it for her in such a way that it would make her good interest."

The reasonable deduction from this testimony given by a witness having peculiar knowledge of these frequent transactions, and being an active agent participating in them during a period of several years, is that he meant what his language clearly imports, namely, that R. M. Washington received the property upon the agreement to reinvest it for his wife, and not that she had loaned it to him. It is not susceptible of any other reasonable interpretation. The trend of what the witness says, the force of the language he uses, and the implications embodied in it, warrant but one conclusion when finally construed as a whole. So that without accrediting any probative force or value to the oral testimony of Mrs. Washington relative to the purpose for which she delivered the money or its equivalent to her husband, or his recognition in the paper signed by him of the liability and amount thereof, there remains in the record enough to permit us to discern the true character of the negotiations between them in respect to her property. The only effect of the combined testimony is to render more obvious that which is sufficiently apparent for the purpose of reaching a just conclusion as to the merits of her claim.

Certainly in view of the separation before, and the apparent hostility existing between, them at the time the paper was executed, and in view of the harsh terms of the paper itself, we perceive no circumstance to excite or warrant the suspicion that, in acknowledging the obligation to repay his wife. Washington was trying to favor or prefer her to the prejudice of his other...