Voorhees v. Bonesteel , 21 L. Ed. 268 ( 1873 )

83 U.S. 16 (____) 16 Wall. 16

VOORHEES
v.
BONESTEEL AND WIFE.

Supreme Court of United States.

Mr. J.P.C. Cottrill, for the appellants; Messrs. J. Winslow and J.M. Van Cott, contra.

Mr. Justice CLIFFORD delivered the opinion of the court.

Assignees of the estate of the debtor, in a proceeding in bankruptcy, may be chosen by the creditors, or if they make no choice, at their first meeting, the judge, or, in case there is no opposing interest, the register, may make the appointment, subject to the approval of the judge.^[*] Section fourteen also provides that as soon as an assignee is appointed and qualified, the judge, or where there is no opposing interest, the register, shall, by an instrument under his hand. assign and convey to the assignee all the estate, real and personal, of the bankrupt, and that the title to all such estate, with the deeds, books, and papers of the bankrupt relating thereto, shall, by operation of law, vest in such assignee. Such assignments, it was foreseen, might give rise to controversies, and the second section of the act, in view of that contingency, provides that Circuit Courts shall have concurrent jurisdiction with the District Courts, of the same district, of all suits at law or in equity which may or shall be brought, by the assignee in bankruptcy, against any person claiming an adverse interest, or by such person against such assignee, touching any property or rights of property of said bankrupt, transferable to or vested in such assignee.

Voorhees, the complainant, is the assignee in bankruptcy of the first-named respondent, and he alleges in the bill of complaint that the schedule of debts, filed by the bankrupt, shows that he owed debts to an amount exceeding thirty thousand dollars; that the schedule exhibits no assets except a certain note believed to be worthless; that the other respondent is the wife of the bankrupt; that she has standing in her name, upon the books of the Nicolson Pavement Company, a corporation organized under the general laws of the State of New York, eleven hundred and forty-five shares of the capital stock of said company, of the par value of one hundred and fourteen thousand five hundred dollars, and that she holds stock certificates of the said company for the said shares, which are believed to be of a value exceeding thirty thousand dollars. Apart from those matters the complainant also alleges that he, as such assignee, has received the required instrument, duly executed, assigning and conveying to him all the estate, real and personal, of the bankrupt, and that the said stock, as he believes, is in fact and truth the property of the bankrupt, and as such that it should have been included in the inventory of his property, and that it should be applied to the payment of the debts due to his creditors. All of said shares, it is admitted, are standing in the name of the wife of the bankrupt, but the complainant alleges that the facts and circumstances under which the title was acquired, as confirmed by the conduct of the respondents since that time, affords satisfactory evidence that the property of the shares is in the bankrupt, and he states what the facts and circumstances attending the acquisition were, as he is informed and believes, with great fulness and particularity. Appended to that statement are eleven interrogatories to the respondents, designed to elicit evidence to establish the truth of the alleged circumstances.

Service was made and the respondents appeared and filed separate answers. Among other things the last-named respondent admits that she is the wife of the bankrupt, that the shares mentioned in the bill are standing in her name upon the books of the pavement company, and that she holds the stock certificates therefor, but she alleges that the value of the stock is less than one-third of the sum alleged in the bill. On the other hand she denies that the stock is or ever was the property of the bankrupt, or that he ever had any interest therein, or that the shares should have been included in his inventory, or be applied to the payment of the debts due to his creditors, and she denies that the circumstances under which she became possessed of the stock are correctly set forth in the bill, and each and every allegation in that behalf, so far as the same are different from, or inconsistent with, the statement as set forth in her answer. What she alleges is, that prior to that time she was engaged in the dry goods business, her husband acting as her agent and attorney in fact in carrying on the business; that the business was conducted in her name and for her account, upon capital furnished to her by her father; that he made advances to her exceeding twenty thousand dollars, which she employed in carrying on that business or expended in paying the expenses of their family; that the assignee of the patent described in the bill desired to secure her services and influence, and through her the influence of her friends, in the interest of that improvement, and proposed if she would render such services and procure the aid and influence of her friends for the same purpose that he would give her a one-half interest and right in his assignment or license to lay such pavement in that city, and would also give her husband employment in promoting the enterprise and accomplishing the undertaking; that she accepted the proposition and rendered the promised service in all proper ways in her power, and that the other contracting party, in consideration thereof, conveyed a one-half interest in the enterprise to her as he had proposed, and that such conveyance was made and received in good faith and without any intent of defrauding the creditors of the bankrupt; that none of the money, assets, or property of the bankrupt was used to procure such conveyance, nor is the same in any way represented in the shares of the capital stock of the pavement company now held and owned by the respondent. Suffice it to say, without reproducing the further details of her answer, that she claims and avers' that she is legally and equitably entitled to hold, and that she does hold the shares in question as her separate and individual estate.

Substantially the same defences are set up in the answer of the other respondent. He admits that the first-named respondent is his wife, that the stock stands in her name, and that she holds the stock certificates; but he denies that the stock is or ever was his property; that he has or ever had any interest in the same, or that it should have been included in his inventory, or that it should be applied to the payment of his debts as alleged in the bill. Concurring with the other respondent he also denies that the circumstances under which she acquired the shares are such as are alleged in the bill, and avers that the shares mentioned are the individual and separate property of his wife, as alleged in her answer.

Proofs were taken on both sides, and the court having heard the parties, entered a decree for the respondents, dismissing the bill of complaint, and the complainant appealed to this court.

Before proceeding to examine the errors assigned it becomes necessary to make some further reference to the circumstances of the transaction, in order that the questions presented for decision may be fully understood. Both parties agree that the title to the shares in question came from the owner of the license, granted by the patentee of the pavement invention, to lay that pavement in the city of Brooklyn, and the pleadings and proofs show that the bankrupt, acting as the agent of his wife, negotiated a sale to the firm therein mentioned of one-half of the right for the sum of ten thousand dollars, and that the owner of that license, in consideration of those services and the services in the same behalf rendered by the wife, agreed to assign the other half of the license to the wife, who is the present holder of the shares. Pursuant to that agreement the owner of the license, on the seventh of December, 1866, made an assignment of the whole license, conveying one-half to the last-named respondent, and the other half to the firm by whom it had previously been purchased; and it appears that the sale and transfer were ratified by the patentee on the tenth of May following. By this arrangement the last-named respondent became the owner of one-half of the license interest, but she subsequently sold to William Smith & Co. one-half of her interest so acquired for the sum of ten thousand dollars, and received the consideration to her own use, and expended the money for the support of herself and family.

All the parties interested came together on the fifth of November, subsequent to the execution of the confirmatory license by the patentee, and organized the pavement company, and in consideration of the transfer of that license to the company, the several parties received certificates in due form for their respective proportions of the same, the last-named respondent receiving eleven hundred and fifty shares of the stock, being one-fourth, less four hundred shares reserved for the working capital of the corporation. Forty-four of the reserved shares were subsequently transferred to the same respondent, and the proofs show that she sold the same as her own property and appropriated the avails to pay her family expenses. Five of the shares first allotted to her she gave to her husband that he might be qualified to act as a trustee in the company, leaving the eleven hundred and forty-five shares standing in her name.

It is claimed by the assignee that the half-interest in the license right was transferred to the wife of the bankrupt at a time when he was insolvent, in consideration of the services rendered by the bankrupt, and that the avails belonged to his creditors, and that the ownership vested in the wife is simply a cover and a fraud. Accusations of fraud may well be dismissed, as nothing of the kind is alleged in the bill of complaint, and it is well-settled law that affirmative relief will not be granted in equity upon the ground of fraud unless it be made a distinct allegation in the bill, so that it may be put in issue by the pleadings.^[*]

Suppose, however, the rule was otherwise, and that the complainant may prove fraud, and be entitled to relief upon that ground, even if he has not alleged anything of the kind, still the result must be the same, as he has not introduced any sufficient proof to establish the charge or to warrant the court in adopting that theory, even if the charge was made in the bill. Instead of that, the theory of the bill is that the half-interest in the pavement license was conveyed to the wife in trust for her husband, and that the shares in question are now held by her to his use, as representing to that extent the one-half interest of the pavement license, which, as the complainant alleges, was purchased for the benefit of the bankrupt.

Confessedly the claim in that view is distinctly alleged in the bill, but the difficulty which the complainant has to encounter in attempting to support that theory is that every material allegation of the bill in that behalf is distinctly denied in each of the answers, and that the proofs, instead of being sufficient to overcome the answers, afford satisfactory grounds for holding that the theory of the respondents is correct.

Courts of equity cannot decree against such denials in the answer of the respondent, on the testimony of a single witness. Where the denial is distinct the rule is universal that the complainant under such circumstances must have two witnesses, or one witness and corroborative circumstances, or he is not entitled to relief, as he cannot prevail if the balance of proof be not in his favor, and he must have circumstances in his favor in addition to his single witness in order to turn the balance.^[*]

Evidence is entirely wanting to show that the holder of the shares in dispute, or her grantor, or her husband, ever intended or supposed that the conveyance of the one-half interest in the license was made to the wife in trust for her husband. Taken as a whole, the proofs, instead of supporting that theory, show very satisfactorily that the property was conveyed to the holder of the shares, in pursuance of a prior agreement between her and her grantor that she should have such an interest as her own, and that it was received by her without any suggestion from any source that the title was in any manner qualified, or that it was not to be her own separate property.^[†] Confirmation of that view is derived from the conduct and declarations of all the parties, during the negotiations and at the time of the transfer. Throughout she always treated the property as her own, and the husband constantly acquiesced in that claim. She sold a part of the interest and received the purchase-money, and disposed of it as her own, and when the pavement company was organized, she joined with the others interested in the enterprise, and transferred her remaining interest to the company and became a stockholder, accepting the eleven hundred and fifty shares as her proportion of the stock to be divided at that time among the shareholders. All agreed in treating her as the owner of a quarter interest in the license, and they assigned the shares to her as her separate property, and the evidence shows that she has always dealt with the interest in the license and in the stock as her own.

Attempt is made in argument to show that the conveyance of the one-half interest in the pavement license was made, in part at least, in consideration of the services of the bankrupt, and it must be conceded that some of the proofs tend strongly to support that theory, but the answer to the suggestion made by the respondents, deduced from the same proofs, is satisfactory and conclusive. Those same proofs also show that in rendering those services the bankrupt was acting as the agent and attorney in fact of his wife, that for some time previously he had been engaged in transacting her business, using the money furnished to her by her father, and that the respondent in rendering the services which it is urged constituted a part of the consideration for the sale of the half interest in the pavement license, he was acting in her behalf and to promote her interest.

Under the laws of New York a married woman may manage her separate property, through the agency of her husband, without subjecting it to the claims of his creditors, and it is held that she is entitled to the profits of a mercantile business, conducted by the husband in her name, if the capital is furnished by her and he has no interest but that of a mere agent.^[*] Where the husband has no interest in the business it is also held that the application of a portion of the income to the support of the husband will not impair the title of the wife to the property.^[†] Married women, at common law, could take title to real or personal property by conveyance from any person except the husband, but where no trust was created her personal property vested absolutely in her husband when reduced to his possession, and he became possessed of her chattels real in her right with power to alien them at his pleasure during her life, and if he survived her, they became his absolute property. Statutes, such as those above referred to, are intended to divest the title of the husband, as such, during coverture, and to enable the wife to take the absolute title as though she were unmarried.^[*] Laws of the kind have the effect to modify so far the antecedent disabilities incident to the conjugal relation, as to secure the wife in the beneficial enjoyment of the new interests she is permitted by law to acquire, and it is expressly held that she is at liberty to avail herself of the agency of her husband as if they had not been united in marriage.^[†] Those laws vest in the wife the legal title to the rents, issues, and profits of her real estate as against the husband and his creditors, and it is held that the husband cannot, as formerly, acquire title to such property in virtue of his marital rights. Consequently it is held that where the legal title to property is in the wife, as against her husband, it cannot be seized to satisfy his debts without proof that in the given case her title is merely colorable and fraudulent as against his creditors, which is decisive of this case, as nothing of the kind was either alleged in the bill or established by any sufficient evidence.^[‡]

Apply that rule to the case and it is clear that the decision of the Circuit Court is correct, and the decree is accordingly

AFFIRMED.

NOTES

[*] 14 Stat. at Large, 522.

[*] Noonan v. Lee, 2 Black, 508; Moore v. Greene, 19 Howard, 69; Beaubien v. Beaubien, 23 Id. 190; Magniac v. Thomson, 15 Id. 281; Same Case, 2 Wallace, Jr., 209; Eyre v. Potter, 15 Howard, 42; Fisher v. Roody 1 Cur tis, 206.

[*] Clark's Ex'r v. Van Riemsdyk, 9 Cranch, 160; Hughes v. Blake, 6 Wheaton, 468; Delano v. Winsor, 1 Clifford, 505.

[†] Voorhees, Assignee, v. Bonesteel, 7 Blatchford, 498.

[*] Abbey v. Deyo, 44 Barbour, 381.

[†] Buckley v. Wells, 33 New York, 520; Sessions Acts 1848, 307; Id. 1849, 528; Id. 1860, 157.

[*] Draper v. Stouvenel, 35 New York, 512; Kelso v. Tabor, 52 Barbour, 127.

[†] Owen v. Cawley, 36 New York, 600.

[‡] Gage v. Dauchy et al., 34 New York, 293; Webster v. Hildreth, 33 Vermont, 457.