Manning v. Carruthers

• Decision Date: 24 March 1896
• Citation: 34 A. 254,83 Md. 1
• Parties: MANNING v. CARRUTHERS et al.
• Court: Maryland Court of Appeals

34 A. 254

83 Md. 1

MANNING

v. CARRUTHERS et al.

Court of Appeals of Maryland.

March 24, 1896.

Appeal from circuit court of Baltimore city.

Suit by Cleveland P. Manning, trustee, against Emma W. Carruthers and her husband. There was a decree for defendants, and plaintiff appeals. Reversed.

Argued before McSHERRY, C. J., and BRISCOE, RUSSUM, FOWLER, ROBERTS, PAGE, and BOYD, JJ.

Chas. J. Bonaparte and P. M. Bennett, for appellant.

H. T. Tapman, for appellees.

FOWLER, J. The appellee Charles J. Carruthers was engaged in the plumbing business in the city of Baltimore. On the 11th of October, 1886, he was married to the appellee Emma W. Carruthers, and three years thereafter (being embarrassed, and having lost his capital, and being unable to pay his creditors) he transferred his business to his wife, and thereafter conducted it for her, as her manager and agent. From the time of the marriage until 1894, when the bill in this case was filed, the business was continued; the wife from time to time acquiring, not directly from her husband, but from third parties, a number of pieces of leasehold property, amounting in value to about $15,000. In the meantime there was no visible sign of any change in the management or ownership of the business having taken place, although the appellees claim that the wife became the owner of it in September, 1889. The husband continued, in most respects, to be the ostensible, as we believe he was the real, owner of the business which he pretended he was carrying on for his wife. His name, until shortly before these proceedings begun, appeared in the directory as the person who was the owner of and transacting the business, and the name of the wife never did so appear. He drew checks in his own name, and handled the money earned in the business as though it were his own. He never received any salary; his compensation being his board and clothes, and some "money to treat." This statement of facts alone is sufficient to arouse the suspicions of the most credulous, and we think there is ample proof to be found in the record before us to demonstrate that the alleged transfer of business, together with the various conveyances of property, constituted a scheme which was resorted to for the purpose of avoiding the payment of creditors, whether subsisting or not in the case of Diggs v. McCullough, 69 Md. 592, 16 Atl. 453, it is said: "These successive conveyances and pretended sales to which we have alluded were but devices * * * to place his property beyond the reach of his creditors, subsisting and subsequent, whilst he continued in the full use and enjoyment of it himself. This is the direct result of his conduct, and, of course, must have been so intended by him. The very methods to which he resorted, and the agencies which he employed, proclaim his fraudulent purpose." It is often said that fraud is constantly assuming new forms, and that for this reason it is difficult to detect, but in this case we find that an old and well-known device has been adopted. One of the witnesses called to testify for the appellees said that he had some business transactions with Mrs. Carruthers in 1889, and on cross-examination he explained that the reason he supposed he was dealing with the wife, rather than the husband, was because he knew there was a judgment against the latter, and the witness did not think Carruthers would carry on business in his own name with a judgment hanging over him. So common, indeed, has the device adopted in this case become, that he who avails himself of it must, when his creditors attack him, be prepared to show that his conduct is fair and honest. In the case of Seitz v. Mitchell, 94 U. S. 583, Justice Strong, delivering the opinion of the court, said: "Such is the community of interest between husband and wife; such purchases are so often made a cover for a debtor's property, are so frequently resorted to for the purpose of withdrawing his property from the reach of his creditors and preserving it for his own use, and they hold forth such temptations for fraud,—that they require close scrutiny. In a contest between the creditors of the husband and wife there is, and there should be, a presumption against her, which she must overcome by affirmative proof. * * * To hold that conveyances thus taken and thus paid for are sufficient to protect the property against creditors of an insolvent debtor would be making fraud both profitable and easy." The attempt made by the appellees to vindicate their conduct cannot succeed. It is conceded that, at the time the husband pretended to retire from the management of the business, he was insolvent. There is no satisfactory evidence in the record to show that the money with which the property was purchased came, or could have come, from any other source than the profits or earnings of the husband's business. And having thus, from time to time, stripped himself of all his property, by having it, as he purchased it, conveyed to his wife, he made application for the benefit of the insolvent law, and was duly declared an insolvent without any assets whatever. Under these circumstances, we think it our duty to aid the appellant, who, as tr...