Turner v. Davidson

• Decision Date: 02 June 1924
• Docket Number: No. 105.,105.
• Citation: 227 Mich. 459,198 N.W. 886
• Parties: TURNER v. DAVIDSON et al.
• Court: Michigan Supreme Court

227 Mich. 459

198 N.W. 886

TURNER

v.DAVIDSON et al.

No. 105.

Supreme Court of Michigan.

June 2, 1924.

Appeal from Circuit Court, Wayne County; Ira W. Jayne, Judge.

Suit by Harry O. Turner, trustee of the estate of Harry Davidson, bankrupt, against Harry Davidson, Fanny Davidson, and others. From decree of dismissal, plaintiff appeals. Affirmed.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ. Harry J. Lippman, of Detroit (Ralph W. Liddy, and Ernest W. Ver Wiebe, both of Detroit, of counsel), for appellant.

Friedman, Meyers & Keys, of Detroit, for appellees Harry Davidson and Fanny Davidson.

BIRD, J.

Plaintiff filed a bill to subject certain property owned by Fanny Davidson to the payment of building claims owing by her husband, Harry Davidson. After the testimony was closed the trial court denied the relief prayed, and dismissed plaintiff's bill.

It appears that in December, 1916, Harry Davidson had $5,000 in cash which he had saved from his merchandising and from real estate transactions. He invested $4,500 in a lot at the corner of Holcomb and Lohrman streets, in the city of Detroit, and took the title thereto in the name of himself and wife. The next year he arranged to construct thereon a 21-apartment building. He arranged to raise $45,000 by mortgage. He made contracts in his own name with contractors and materialmen. He went forward with the construction until he was indebted in the sum of between $17,000 and $18,000. The broker could not sell the bonds, and he did not get the $45,000. He then attempted to secure other money by mortgage to finance the same to completion, but he did not succeed in this. He attempted to settle with his creditors by giving them a mortgage second to one given to a materialman, but this did not go through. After much negotiation he traded the unfinished apartment building for an equity in two 10-apartment buildings, and took the title in the name of his wife, Fanny Davidson. The equity which they received was estimated at about $10,000. Subsequently she sold these upon contract and acquired interests in other real estate.

Plaintiff seeks to follow the fund which was realized from the unfinished apartment building, and which was exchanged for other property, and subject it to the payment of the debts of Harry Davidson, on the theory that the several deals were made in fraud of his creditors.

When Harry Davidson acquired the Holcomb-Lohrman lot in 1916 the title was placed in both himself and wife. So far as the record shows, neither one of them at that time had any creditors. The wife had assisted him in his business operations prior to the date of taking title, and Davidson testified he thought she was entitled to an interest in the property. He had a lawful right to so invest her with an interest in the property if he had no creditors at the time. There was no showing that the title was so placed with a fraudulent purpose. There was nothing shown to indicate that he intended to contract debts on the strength of his being the sole owner of the property, nor that the entirety was created to defraud his future creditors. There was no excuse for any one to be deceived as to the ownership of the property, because the deed to himself and wife was at once placed of record. A simple investigation of the records would have disclosed who owned the property.

The title so residing in husband and wife, it could not be involuntarily sold or incumbered for the debts of either. Vinton v. Beamer, 55 Mich. 559, 22 N. W. 40;Lewis' Appeal, 85 Mich. 340, 48 N. W. 580,24 Am. St. Rep. 94;Dickey v. Converse, 117 Mich. 449, 76 N. W. 80,72 Am. St. Rep. 568;Gorelick v. Shapero, 222 Mich. 381, 192 N. W. 540.

The argument is made that when their interest in the unfinished apartment building was converted into a title interest in the wife to the two 10-apartment buildings the protection which the law throws around such holdings of husband and wife was released, and that thereafter the property acquired was subject to the debts of the husband. We do not think this argument can be sustained unless additional funds were used in connection with the entirety property to acquire other property. First State Bank v. Wallace, 201 Mich. 673, 167 N. W. 887.

If the interest of Davidson and wife in the unfinished apartment building was beyond the reach of creditors of Harry Davidson, as it appears to have been, we cannot see how his creditors are now concerned with the property for which the exempt property was exchanged. The uniform rule of this court has been that creditors are not concerned with the disposition which a debtor makes of his exempt property. Fischer v. McIntyre, 66 Mich. 681, 33 N. W. 762;Stewart v. Welton, 32 Mich. 56;Wilson v. Bartholomew, 45 Mich. 41, 7 N. W. 227;Anderson v. Odell, 51 Mich. 492, 16 N. W. 870;Buckley v. Wheeler, 52 Mich. 1, 17 N. W. 216;Emerson v. Bacon, 58 Mich. 526, 25 N. W. 503;Cullen v. Harris, 111 Mich. 20, 69 N. W. 78,66 Am. St. Rep. 380. We are of the opinion that the conclusion reached by the trial court on this phase of the case was the proper one.

Another question raised and argued in the briefs needs attention. Plaintiff, at the hearing, called both husband and wife for cross-examination, under the statute. Each protested against the examination, and counsel objected to it, but they were overruled, and plaintiff substantially made all the case he had from their testimony. Error is...