Sexton v. Wheaton
APPEAL from the Circuit Court for the District of Columbia and county of Washington. This was a bill brought by the appellant, Sexton, in the Court below, to subject a house and lot in the city of Washington, the legal title to which was in the defendant, Sally Wheaton, to the payment of a debt for which the plaintiff had obtained a judgment against her husband, Joseph Wheaton, the other defendant.
The lot was conveyed by John P. Van Ness, and Maria, his wife, and Clotworthy Stepenson, to the defendant, Sally Wheaton, by deed, bearing date the 21st day of March, 1807, for a valuable consideration, acknowledged to be received from the said Sally. And the plaintiff claimed to subject this property to the payment of his debt, upon the ground, that the conveyance was fraudulent, and, therefore, void as to creditors.
The circumstances on which the plaintiff relied, in his bill, to support the allegation of fraud, were, that the said house and lot were purchased by the defendant, Joseph, who, contemplating at the time carrying on the business of a merchant in the said city of Washington, procured the same to be conveyed to his wife; and obtained goods on the credit of his apparent ownership of valuable real property. That for the purpose of obtaining credit with the commercial house of the plaintiff, in New-York, he represented himself, in his letters, as a man possessing real estate to the value of 20,000 dollars, comprehending the house in question, besides 100 bank shares, and other personal estate. That the defendant, Sally, knew, and permitted these representations to be made. That the defendant, Joseph, in the presence of the defendant, Sally, applied to General Dayton, the friend of the plaintiff, to be recommended to a commercial house in New-York, and in the statement of his property, as an inducement to make such recommendation, he included the premises. That the defendant, Sally, permitted this misrepresentation, and did not undeceive General Dayton, although she had many opportunities of doing so.
In support of these allegations the plaintiff annexed to his bill several letters written by the defendant, Joseph, in the city of Washington, to the plaintiff, in the city of New-York soliciting a commercial connexion, and advances of goods on credit. The first of these letters was dated the 2d of September, 1809. The letters stated, that the plaintiff's house had been recommended to the defendant by their mutual friend General Dayton; represented the defendant's fortune as considerable, spoke of the house in which he was to carry on business as his own, and held out the prospect of regular and ample remittances.
The bill farther stated, that, upon the faith of these letters, and on the recommendation of General Dayton, the plaintiff advanced goods to the defendant, Joseph, to a considerable amount, who failed in making the promised remittances; and on the plaintiff's withholding farther supplies of goods, and pressing for payment, he avowed his inability to pay, declared himself to be insolvent, and then stated, that the house in controversy was the property of his wife.
Some arrangements were made, by which the goods in the store, and the books of the defendant, Joseph, were delivered to the plaintiff; but, after paying some creditors who were preferred, a very small sum remained to be applied in discharge of a judgment which the plaintiff had obtained in January, 1812, for the sum of 8,249 dollars and 29 cents. On this judgment an execution was issued, by which the life estate of Joseph Wheaton was taken and sold for 300 dollars, the plaintiff being the purchaser.
The bill prayed, that the property, subject to the plaintiff's interest therein under the said purchase, might be sold, and the proceeds of the sale applied to the payment of his judgment. It farther stated, that improvements to a great amount had been made since the conveyance to Sally Wheaton, and prayed, that, should the Court sustain the said conveyance, the defendant, Sally, might be decreed to account for the value of those improvements.
The answers denied that the house and lot in contest were purchased in the first instance by Joseph Wheaton, or conveyed to his wife with a view to his entering into commerce; and averred, that they were purchased for Sally Wheaton, and chiefly paid for out of the profits made by her industry, and saved by her economy in the management of the affairs of the family while her husband was absent executing the duties of his office as serjeant at arms to the House of Representatives. The answers, also, stated, that in January, 1807, when the conveyance was made, Joseph Wheaton was serjeant at arms to the House of Representatives, expected to continue in that office, had no intention of going into trade, and had no knowledge of the plaintiff. The design of going into commerce was first formed in the year 1809, when, being removed from his office, and having no hope of being reinstated in it, he turned his attention to that object as a means of supporting his family. He, then, in a letter dated the 24th of August, applied to General Dayton, as a friend, to recommend him to a house in New-York, and received from that gentleman a letter dated the 29th of the same month, which is annexed to the answer. In this letter, General Dayton says, 'pursuant to your request, I recommend to you the house of Messrs. Sexton & Williamson, with which to form the sort of connexion which you propose in New-York. They have sufficient capital,' &c. 'The proper course will be for you to write very particularly to them, stating your present advantageous situation, your prospects and plans of business, and describing the nature and extent of the connexion which you propose to form with them, and then refer them to me for my knowledge of your capacity, industry, probity,' &c. &c. &c.
The defendant, Joseph, in his answer, stated, that in consequence of this letter, he wrote to the said house of Sexton & Williamson. He admitted, that his account of his property was too favourable, but denied having made the statement for the purposes of fraud, but from having been himself deceived respecting its value. He denied having ever told General Dayton that the house was his, and thinks he declared it to be the property of his wife. Sally Wheaton denied that she ever heard her husband tell General Dayton, that the house was his property; that she ever in any manner contributed to impose on others the opinion that her husband was more opulent than he really was; or ever admitted, that the house she claims was his. She admitted, that she saw a letter prepared by him to be sent to Sexton & Williamson, in the autumn of 1809, which she thought made too flattering a representation of his property, and which she, therefore, dissuaded him from sending in its then form. She then hoped that her persuasions had been successful.
The answers of both defendants stated, that Joseph Wheaton was free from debt when the conveyance was made, and insisted, that it was made bona fide.
The Court below dismissed the bill, and from this decree the plaintiff appealed to this Court.
Mr. Key, for the appellants, argued, 1. That the evidence in the cause was insufficient to prove the fact alleged, that the house in question was purchased with the funds of the wife. The case of Slanning v. Style, 3 P. Wms. 335-37, which is the stronger, as it excepts creditors from the operation of the right where it exists, goes to show, that it was not bought with funds which could be considered as hers. The fund accruing from the thrift and economy of the wife, does not constitute her separate estate. 1 Cas. in Ch. 117. Still less could such an accumulation for her separate use, from the presents of her friends, or as a compensation for services rendered her husband, be warranted by any case or principle.
2. If, then, the purchase was not made with the separate property of the wife, were the circumstances of the husband such, at the time this settlement was made, as to justify him in making it, to the prejudice of subsequent creditors? All the cases concur in showing that he cannot do so, and that the subsequent creditors may impeach it. Fletcher v. Sidley, 2 Vern. 490. Taylor v. Jones, 2 Atk. 600. Fitzer v. Fitzer, 2 Atk. 50. Stillman v. Ashdown, 2 Atk. 481. Hungerford v. Earle, 2 Vern. 261. Roberts on Fraud. Convey. 21-30. Atherly's Fam. Settlem. 212. 230-236. And it makes no difference that it is the case of a settlement by a purchase, and the deed taken to the wife. This notion of certain elementary writers (Fonbl. 275; Sugd. 424; Roberts, 463), has been exploded, and the anthorities are decisive against it. Peacock v. Monk, 1 Ves. 127; Stillman v. Ashdown, 2 Atk. 481; 2 Vern. 683. 4 Munf. 251. Partridge v. Goss, Ambl. 596. Atherly's Fam. Sttlem. 481. Nor is there any difference between a deed to defraud subsequent creditors, and one to defraud purchasers. Anderson v. Roberts, 18 Johns. 515. And a subsequent sale, after a voluntary settlement, creates the presumption of fraudulent intent in the previous settlement under the statute 27 Eliz. Roberts on Fraud. Conv. 34. If so, there is the same ground for similar presumption, where debts are contracted after a previous voluntary settlement. This must especially apply where the settlement is of all the settler's property, and the debts are large, and contracted almost immediately after the settlement.
3. But, supposing the settlement was fairly made, here is evidence of collusion of the wife in the misrepresentation which was made to the prejudice of creditors, and she is bound by it. The principle is well established, that the property of a married woman, or that of an infant, may be rendered liable to creditors by their concurrence in acts of fraud. Roberts, 522; Sugd. 480; Fonbl. 161; 1 Bro. C. C. 358; 2 Eq. Cas. Abr. 488.
Mr. Jones, for the respondents, contra, insisted, that many of the cases cited on the other side, might be disposed of upon their peculiar circumstances, without touching upon the general doctrine for which he contended. He admitted, that whether a settlement was within the letter of the statutes relating to fraudulent conveyances or not, if there was actual fraud, a Court of equity would lay hold upon it, and redress the injured party. But the settler must be indebted at the time of the execution of the deed in order to set it aside on that ground. And there must be an allegation, and proof of that fact, or the bill will be dismissed. [i] According to the original rudeness of the feudal system, the husband and wife were considered as one person, and all her rights of property were merged in his. But this is a doctrine wholly unknown to the civilized countries governed by the Roman code; and Courts of equity have constantly struggled to mitigate its rigour. For this purpose, they consider the husband as a trustee for the wife, in order to preserve her property to her separate use. It does not follow, that because voluntary settlements are void against subsequent purchasers, that they are, therefore, void against subsequent creditors. There is a well established and well known distinction in this respect between the statute 13 Eliz. and the statute 27 Eliz. Taking the present case, then, as a mere voluntary conveyance on good consideration, independent of actual fraud, it must stand. Whatever discrepancy there may be in some of the old cases, this
[i] Lush v. Wilkinson, 3 Ves. 384. Battersbee v. Farrington, Swanst. Rep. 106. Stevens v. Olive, 1 Bro. Ch. Cas. 90. is now the settled doctrine in England. Thus, in the case of a voluntary bond, and arrears under it, a conveyance to secure those arrears was sustained against creditors. [j] So, also, the substitution of a voluntary bond by another is good. [k] And a post-nuptial settlement is only void as against creditors at the time. [l] A voluntary conveyance in favour of strangers is valid against subsequent creditors, the party making it not being indebted at the time. [m] And in a very recent case, a voluntary settlement by a husband, not indebted at the time, was established against subsequent creditors. [n] But this is not a mere voluntary conveyance on a moral obligation; it is for a valuable consideration in the wife's services. 3 P. Wms. 337. The case cited from 1 Cas. in Ch. 117. has no bearing on the present question, and has been overruled since. Besides, the case of Slanning v. Style 3 P. Wms. 337, is better vouched, more modern, and of greater authority in every respect. The pretext of collusion in actual fraud between the husband and wife, in the present case, is utterly devoid of any foundation in the evidence.
[j] Gillam v. Locke, 9 Ves. 612.
[k]Ex parte Barry, 19 Ves. 218.
[l] Williams v. Kidney, 12 Ves. 136.
[m] Holloway v. Millard, 1 Madd. Rep. 414. Hobbs v. Hull, 1 Cox, 445. Jones v. Bolter, id. 288.
[n] Battersebee v. Farrington, 1 Swanst. Rep. 106. See, also, Jones v. Bolter, 1 Cox, 288.
Mr. Chief Justice MARSHALL delivered the opinion of the Court, and, after stating the case, proceeded as follows:
Lush v. Wilkinson, 3 Ves. 384. Battersbee v. Farrington, Swanst. Rep. 106. Stevens v. Olive, 1 Bro. Ch. Cas. 90. is now the settled doctrine in England. Thus, in the case of a voluntary bond, and arrears under it, a conveyance to secure those arrears was sustained against creditors.
^j So, also, the substitution of a voluntary bond by another is good. ^k And a post-nuptial settlement is only void as against creditors at the time. ^l A voluntary conveyance in favour of strangers is valid against subsequent creditors, the party making it not being indebted at the time. ^m And in a very recent case, a voluntary settlement by a husband, not indebted at the time, was established against subsequent creditors. ^n But this is not a mere voluntary conveyance on a moral obligation; it is for a valuable consideration in the wife's services. 3 P. Wms. 337. The case cited from 1 Cas. in Ch. 117. has no bearing on the present question, and has been overruled since. Besides, the case of Slanning v. Style 3 P. Wms. 337, is better vouched, more modern, and of greater authority in every respect. The pretext of collusion in actual fraud between the husband and wife, in the present case, is utterly devoid of any foundation in the evidence.
Gillam v. Locke, 9 Ves. 612.
Ex parte Barry, 19 Ves. 218.
Williams v. Kidney, 12 Ves. 136.
Holloway v. Millard, 1 Madd. Rep. 414. Hobbs v. Hull, 1 Cox, 445. Jones v. Bolter, id. 288.
Battersebee v. Farrington, 1 Swanst. Rep. 106. See, also, Jones v. Bolter, 1 Cox, 288.