U.S. Fidelity & Guar. Co. v. Lee

• Citation: 58 Wash. 16,107 P. 870
• Court: United States State Supreme Court of Washington
• Decision Date: 25 March 1910
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. LEE.

107 P. 870

58 Wash. 16

UNITED STATES FIDELITY & GUARANTY CO. v. LEE.

Supreme Court of Washington

March 25, 1910

Department 2. Appeal from Superior Court, Adams County; Henry L. Kennan Judge.

Garnishment proceedings by the United States Fidelity & Guaranty Company against the Old National Bank of Spokane, in which Cordie C Lee intervened. From a judgment granting insufficient relief to the intervener, she appeals. Reversed and remanded.

Merritt Oswald & Merritt, for appellant.

Danson & Williams, for respondent.

MOUNT J.

Cordie C. Lee, the appellant here, intervened in a garnishment proceeding, and claimed as her separate property certain money on deposit in the Old National Bank of Spokane, which money had been garnished upon a debt owing by her husband, O. M. Lee, to respondent. Upon a trial the court found that a part of the money garnished was the separate property of the appellant, and that the balance was community property belonging to the appellant and her husband. The appeal is from the order adjudging the community interest.

There are no disputed facts in the case. Stated in chronological order, the facts are, in substance, as follows: On April 4, 1902, O. M. Lee, then an unmarried man, became a surety to the respondent United States Fidelity & Guaranty Company upon an indemnity bond. On May 24, 1902, Mr. Lee was married to the appellant. At the time of the marriage appellant was possessed of about $6,500, which she had inherited from her mother's estate. On November 9, 1905, appellant purchased a section of land from John Bovee for an agreed price of $3,200. She paid $640 in cash from her separate funds, and agreed to pay the balance in annual payments of $512 each, will interest at 6 per cent. on deferred payments, and, when the purchase price was fully paid, a deed was to be delivered to her. She signed a written contract to that effect, and executed her personal notes for the deferred payments. At the time of this transaction she had separate property in the hands of her brother in Kentucky sufficient to make the whole payment, and she intended to and did use this money to meet the payments when due. On December 1, 1906, she made the second payment of $512 and $153.60 interest out of her separate property. In June, 1907, a judgment in the sum of $3,250 was obtained by the respondent against O. M. Lee, her husband, by reason of the indemnity bond above mentioned. On December 1, 1907, appellant paid out of her separate funds $512 and $122.88 interest, being the installment due on her contract at that time. On March 4, 1908, appellant sold to R. L. Ford the land above referred to for $6,400, and she and her husband joined in the contract of sale and deed. Appellant objected to her husband joining in the transaction, but, upon the request of the purchaser and the advice of her attorneys that this would prevent any question of the community interest of her husband, the joinder was made. On March 30, 1908, a supplemental contract was made by which Mr. Ford agreed to pay to Mr. Bovee direct the balance due by appellant upon the purchase price of the land. This contract and deed were placed in escrow in the Old National Bank of Spokane. On December 1, 1908, Mr. Ford paid to Mr. Bovee $512 principal and $92.16 interest, being the fourth installment due Mr. Bovee on the contract with appellant. On December 28, 1908, a writ of garnishment was served on the Old National Bank, in the action wherein the respondent had a judgment against O. M. Lee. Thereafter the appellant intervened in the garnishment proceedings, and claimed the whole of the property in the hands of the bank as her separate estate. Pending the trial Mr. Ford paid the balance of the purchase price of the land into the bank. The court concluded that $1,664 and certain interest paid by the appellant out of her separate funds entitled her to 1664/3200 interest in the funds as her separate estate, and that the balance paid by Mr. Ford into the bank was community property subject to the payment of the judgment against Mr. Lee. The question in the case is whether under the facts stated the proceeds of the sale of this land are wholly the separate property of the appellant.

The appellant acquired the property after marriage. She acquired it with her separate funds; that is, she made the contract in her own name without her husband joining her, and made three payments thereon out of her separate funds. It is true she gave her individual notes for deferred payments, but at that time she had separate funds sufficient to make the whole payment. She did not desire to pay cash, and credit was extended for her accommodation. The record does not show directly that the vendor who took the contract and the notes relied upon her separate estate. The record is silent upon that question. No deed passed, and it was agreed that the deed should not be delivered until payments were fully made or until a mortgage was given back. The vendor probably relied upon the land as security for the deferred payments, and therefore made no inquiry as to the responsibility of the appellant in her separate right. The appellant, however, had money available sufficient to make the payments, and intended to do so out of her separate funds without assistance from her husband, but, before the time when all the payments became due, she sold the land for double the purchase price, and thereby made a profit of $3,200 upon an investment of $1,939.40. The statutes of this state provide: 'The property and pecuniary rights of every married woman at the time of her marriage, or afterwards acquired by gift, devise, or inheritance, with the rents, issues, and profits thereof, shall not be subject to the debts or contracts of her busband, and she may manage, lease, sell, convey, incumber, or devise by will such property, to the same extent and in the same manner that the husband can, property belonging to him.' Ballinger's Ann. Codes & St. § 4489 (Pierce's Code, § 3867). Property not owned or acquired as above stated, but acquired after marriage, is community property. Ballinger's Ann. Codes & St. § 4490 (Pierce's Code, § 3876). 'Every married person shall hereafter have the same right and liability to acquire, hold, enjoy, and dispose of every species of...