Keller v. Washington
| Decision Date | 25 March 1919 |
| Docket Number | 3509. |
| Citation | 98 S.E. 880,83 W.Va. 659 |
| Parties | KELLER v. WASHINGTON ET AL. |
| Court | West Virginia Supreme Court |
Syllabus by the Court.
Delivery by a wife of her money or other 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.
In order to create the relation of debtor and creditor, or cestui que trust and trustee, between husband and wife, as to such transaction, to the prejudice of his creditors, the proof must be ample, clear, and satisfactory; and where the facts and circumstances tend to establish an intention on her part to give him her property without limitation or restraint, the mere parol testimony of both to show a private understanding between them of a different character, or that they regarded the transaction as a loan or trust, ordinarily will not suffice, as against creditors of an insolvent husband, to rebut the presumption of a gift.
But where there is other evidence sufficient of itself to show and corroborative of the statements of the wife coupled with the admissions of the husband tending to show, an intention to create a trust to invest for her benefit the property intrusted to him, and there is no conduct inconsistent with such an intention, and no circumstance warranting the suspicion that, in acknowledging the obligation to repay his wife, the husband was trying to favor or prefer her to the prejudice of his other creditors, the presumption of a gift is deemed to be rebutted.
Where a person, not acting merely as agent, has or accepts possession and control of money or other personal property, not to deal with it as his own, but to hold and apply it for certain specific purposes, or for the benefit of certain specified persons, a valid and enforceable trust is created.
An express trust springs from the agreement of the parties; a constructive or resulting trust from the construction of equity, in order to satisfy the demands of justice.
The statute of limitations never applies to express trusts until and from the time the trustee repudiates the trust by unequivocal words or acts, and such repudiation is brought to the notice of the beneficiary in such a manner as to require him promptly to assert his rights.
Though there may be instances in which laches will run against express trusts, courts of equity apply the rule in such cases less readily than in cases of constructive or resulting trusts, and rarely ever do so unless the lapse of time is of such duration, and the circumstances of such character, as to indicate clearly a relinquishment or abandonment thereof, or unless a situation has arisen in the nature of an estoppel which will make it clearly inequitable and unjust to enforce it.
When a wife places her personal property in the hands of her husband in trust to invest for her, and he later becomes insolvent she may, upon declining to assert any possible lien rights she may have to the detriment of other creditors, present her claim as a general creditor, and is entitled to participate proportionately with other general creditors in the distribution of any fund derived from the sale of the insolvent's real or personal property, after all specific and general liens chargeable thereto are satisfied.
When the husband in such a case, years after he received his wife's money or property, acknowledges by written statement the validity of her claim against him, but seeks to defer payment or restitution until all his other debts are satisfied, her acceptance of such statement, when not based upon a valuable consideration, generally does not operate as a waiver of her right to participate with general creditors of the common debtor.
No agreement to waive an existing legal right is valid unless it rests upon a consideration deemed legally sufficient.
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.
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, he 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 which 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 does 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. 226, 40 S.E. 341, 88 Am. St. Rep. 859; Horner v. Huffman, 52 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...
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