Strong v. Strong, 149/215.

• Decision Date: 23 March 1944
• Docket Number: 149/215.
• Citation: 36 A.2d 410
• Parties: STRONG v. STRONG et al.
• Court: New Jersey Court of Chancery

36 A.2d 410

STRONG

v.STRONG et al.

149/215.

Court of Chancery of New Jersey.

March 23, 1944.

Bill in chancery by Lucille Kurth Strong against James H. Strong and another to annul a deed executed by defendant and to have title to the premises conveyed restored to complainant.

Decree for complainant.

1. In transactions between strangers, the payment of the consideration for the conveyance draws to it a presumption of the beneficial ownership, but where the parties are attached by the relationship of husband and wife, and the husband pays the consideration and has the conveyance made to his wife, the presumption is that a gift or settlement was intended.

2. The presumption of a gift or settlement may be demolished by definite, trustworthy and convincing proof of a contrary intention.

3. The proofs which shall raise a resulting trust, or rebut the presumption of a gift or settlement in the case of a wife, must be of facts antecedent to or contemporaneous with the transfer or else immediately afterwards, so as to be in fact part of the same transaction. A resulting trust cannot be raised from matters arising ex post facto.

4. In the absence of proof of a contrary intent, the expenditure by a husband of his own moneys in the improvement of the property of his wife is presumed to be a gift to her.

5. Where a husband acts as the agent of his wife, the validity of his acts will be determined, and the extent of his power measured, as in the case of other agents, by the scope of authority conferred and the obligation of fidelity to the interests of the principal.

6. An agent will not be permitted to pervert his authority to his own personal advantage.

Albert B. Kahn, of Trenton (William Reich, of Trenton, of counsel), for complainant.

Herman H. Levy, of Trenton (Alexander Budson and Joseph J. Felcone, both of Trenton, of counsel), for defendants.

JAYNE, Vice Chancellor.

Not uncommonly, where the concord of marital faith ends, strife begins. Such an exigency has kindled the present litigation. The complainant and the defendant James H. Strong were married in 1928. Each upon recriminatory accusations is seeking in this court a dissolution of the marriage. The present cause, however, injects a controversy between them concerning the ownership of property. Endeavors to assuage the conflict involving the property by mutual concessions have failed. Therefore, the law must pursue its course.

Mr. Strong graduated from the United States Naval Academy at Annapolis in 1913 and engaged in the service of the Navy until 1934, when he resigned with the rank of Lieutenant Commander. The following year he accepted a position with the Colombian government as a military consultant at an annual salary of $24,000. He retained that position for one year. He had been seriously cogitating for some time the design and eventual production of some structural and mechanical device for the training of individuals with reasonably assured safety in the use of parachutes. He acquired several basic patents, and in 1936 he was undoubtedly eager to subject his plans to actual experimentation. He accordingly became associated with Mr. Switlik, presumably in the relationship of partners, in the endeavor to materialize his project. A tentative tower was erected on some land owned by Mr. Switlik near New Egypt, New Jersey, and operational experiments were inaugurated. The tower, it is said, displayed a somewhat spurious appearance and dummy objects were elevated to the top by means of a cable attached to a motor truck.

Despite the conflicting testimony, there remains an inclination to believe that Mrs. Strong was skeptical; her observation of the crudity of the structure and of the operations contributed to her suspicions that the objective by which her husband seemed to be entranced was visionary and fanciful. Mrs. Strong was then residing at a much less commodious and less spacious residential property than that previously occupied by her and her husband. Reference to these incidents is permissible because they were probably among the variety of factors of gradational significance which fashioned the subsequent conduct of the parties.

The sequential occurrences of materiality are that a corporation was organized and named ‘Safe Parachute Jump Company’; Mr. Switlik personally contracted on August 21, 1935, to purchase a tract of level and in Washington Township, Mercer County, New Jersey, from The First-Mechanics National Bank of Trenton upon terms which accorded him immediate and continued possession contingent upon monthly payments on account of the purchase price, and it was upon this property that two experimental towers were promptly erected and also a shop 14 x16 feet in dimensions. In January, 1936, Mr. Strong acquired the stock of Mr. Switlik in the corporation, and Mr. Switlik assigned to Mrs. Strong his contractual right to purchase the tract of land. On February 24, 1936, Mr. Strong notified the bank by letter of the assignment of the contract by Mr. Switlik to Mrs. Strong.

It was also in 1936 that Mr. Strong divulged to his wife his purpose to construct a suitable dwelling house on the property to be acquired from the bank with a subsidiary portion of it adaptable to the architectural and mechanical development of his contemplated parachute contrivances. He resolved to consummate the purchase of the property; he chose to borrow funds on a government veteran's policy of insurance of which his wife was the designated beneficiary, deposited the proceeds of the loan to the credit of her personal bank account, directed the bank to convey the property to her, and on October 27, 1936, she paid by her own check the balance of the purchase price amounting to $3,081. Incidentally, Mrs. Strong initially protested that the insurance policy of $5,000 payable to her in the event of her husband's death was her only financial safeguard, and Mr. Strong appeared her despair by informing her that he would have the property conveyed to her. By deed dated November 17, 1936, the tract of land was conveyed by the bank to the complainant ‘her heirs and assigns, to the only proper use, benefit and behoof’ of Mrs. Strong, ‘her heirs and assigns forever.’

During 1937 while the house was in the course of construction, Mrs. Strong with the consent of her husband visited her relatives at Seattle, Washington. During her absence the State Highway Commissioner determined to acquire a portion of the premises for highway purposes, and Mr. Strong caused to be prepared a general power of attorney by which Mrs. Strong empowered him, inter alia, to ‘grant, bargain and sell * * * all my land and real estate or any part thereof’ and ‘in my name to make, execute, acknowledge and deliver good and sufficient deeds and conveyances for the same * * *.’ The instrument was dispatched to Mrs. Strong for execution. She declares that her husband impliedly represented that the sole purpose of the document was to enable him to consummate the sale of the small parcel desired by the state. She executed and acknowledged the instrument on May 19, 1937, and returned it to Mr. Strong.

In 1941 when the marital relations of Mr. and Mrs. Strong disintegrated, he originated a corporation to be known (with no false modesty) as ‘Stronghold, Inc.,’ and to be utilized by him as an invulnerable receptacle for the retention of his own assets. On September 30, 1941, a deed was made in terms designed to convey the tract of real estate to Stronghold, Inc. The deed was executed by Mr. Strong in his individual capacity and by him as attorney in fact of Mrs. Strong, in the exercise, he claims, of the authority conferred upon him by the power of attorney. Mrs. Strong, who has continued to reside on the property, had no knowledge of the deed until some information concerning it was imparted to her by a tax collector. Mr. Strong frankly acknowledges that Stronghold, Inc., is his personal implement, that no consideration whatever was paid for the conveyance to the company and that his purpose was ‘to protect my own interest and prevent her from deeding this to some third person * * *.’

Succinctly stated, the complainant seeks a decree annulling the deed to Stronghold, Inc., and restoring to her the title to the premises. Mr. Strong avers that the property is his own and that the complainant has no beneficial interest or estate in it.

The solicitor of the defendant Strong characterizes the complainant's contention as ‘an ambitious attempt at a triumph of form over substance.’

Nevertheless, certain principles, applicable to a case of this nature are too firmly inwrought in our jurisprudence to be either englected or evaded. Assuredly there are transactions between strangers in which the payment of the consideration for the conveyance draws to it a presumption of the beneficial ownership, but where the parties are attached by the relationship of husband and wife and the husband pays the consideration of the purchase of lands and has the conveyance made to his wife, the presumption is that a gift or settlement was intended. The presumption does not command conclusive effectiveness. It may be demolished by definite, trustworthy and convincing proof of a contrary intention. Yet, where the wife's title is evidenced by a duly executed and recorded deed made at the express request of the husband which declares by its terms that she is to hold the premises for her own exclusive use, public policy concerned with the stability of titles also...