Stanley v. National Union Bank

The plaintiff sought, in this action, to recover the value of certain personal property alleged to have been wrongfully taken from her by the defendant, and converted to its use. The defendant’s answer justified the taking under certain judgments and executions against one O. M. Stanley, upon allegations that the property belonged to the judgment debtor, and had been conveyed by him to the plaintiff, in fraud of the rights of his creditors.

Upon a trial of the issues, the jury rendered a verdict for the plaintiff, and the judgment entered thereon was affirmed by the general term.

This appeal is sought to be supported by the claim that certain circumstances, hereinafter referred to, afforded conclusive evidence of a fraudulent intent, and that the judgment should, therefore, be reversed, notwithstanding the verdict of the jury in favor of the plaintiff. The plaintiff made title to the property through an alleged purchase upon an auction sale under a chattel mortgage, executed February 7, 1879, by O. M. Stanley to her, she being his wife, to Helen Stanley and Florence Stanley, his daughters, Mrs. Ryder and Mrs. Matteson, sisters of his wife, Mary Weaver, his wife’s mother, one George Babbitt, and Mrs. Membry, to secure the payment, one day after date, of certain debts, therein described, owing by him to the several mortgagees respectively, amounting, in the aggregate, to upwards of $2.700.

This mortgage was duly delivered by the mortgagor, at. the time of its execution, to the plaintiff; as the assumed agent of the several mortgagees named therein, and was duly filed in the clerk’s office of the town where the mortgagor resided on the day of its date. In June, 1879, default

The action of the plaintiff in selling the property in behalf of the several mortgagees was never disapproved by them, but on the contrary has been ratified and approved by them so far as brought to their knowledge. After the sale, she executed and delivered to each of them respectively, with the exception of Babbitt and Mrs. Membry, her several promissory notes for their proportionate shares of the proceeds of such sale, and the same were accepted and retained by them. The plaintiff also made payments upon several of the notes so given.

The property in question consisted of cows, horses, wagons, harnesses, lumber, grain, and farming utensils used in cultivating and carrying on a dairy farm, owned by the mortgagor, and which was continued to be owned and occupied by him until June 10, 1879. Previous to that date, upon proceedings duly had upon a judgment recovered by one Hubbard against him, one E. Collins Baker was duly appointed receiver of all the property and effects of said Stanley. Upon that day the receiver took possession of the farm with Stanley’s consent and on the same day executed a lease thereof to the plaintiff for the term of one year, and delivered the lease and possession of the farm to her. Subsequent to such lease and sale, the plaintiff assumed to occupy and carry on the farm and dairy. The milk produced by the cows, the main product of the farm, was_ de.livered at the cheese factory in her name and she received the proceeds thereof, as well as of other produce of the farm. In all this she was aided and assisted by her husband, and the profits of the business were, to some extent, used in the support of the family.

It will also reflect some light upon the questions determined by the jury, if we refer to the situation of the judg

While the circumstances referred to would naturally call for close scrutiny and criticism, for the purpose of discovering whether any scheme to defraud lurked under the form of the transaction, yet if the transfers were made in good faith for an honest consideration, no rule of law prevented the insolvent debtor from paying one creditor in preference to another, or enabled the unpreferred creditors to take away from those secured a preference honestly received or obtained.

The main contention on the part of the defendants on the trial was that some of the debts included in the mortgage were fictitious and fraudulent. Among others, those of Mary Weaver, his wife, Mrs. Ryder, Mrs. Matteson, and a portion of the debts to the two daughters, were alleged to be of that character. If this claim was well founded, it would undoubtedly invalidate, to a certain extent, the plaintiff’s title to the property.

A brief history of these claims will dispose of this contention. In 1869, 0. M. Stanley, in consideration of money and property, of the value of upwards of $4,000, transferred to him by Mary Weaver, covenanted to support her and her daughter, Mary Ann Weaver, during their respective lives. This covenant he performed until the death of Mary

The claims of Angeline Stanley, Mrs. Ryder and Mrs. Matteson, the three sisters of Mary A. Weaver, grew out of the following circumstances: Previous to 1874, Mary Ann Weaver received one thousand dollars as her share of a brother’s estate, and loaned that sum to O. M. Stanley. In 1874, Mary Ann died leaving her mother and three sisters surviving. During her life time, O. M. Stanley had paid $300 of the $1,000, to her brother George as a gift, at her request, and had paid to Mary Ann Weaver the interest on the balance of the indebtedness. Letters of administration were not issued on Mary Ann’s estate, but the next of kin voluntarily settled the same among themselves. In January, 1875, O. M. Stanley gave Mary Weaver as the next of kin of her daughter’s estate, his note for $700, being the balance remaining unpaid upon the loan. During the same year, Mary Weaver, desiring to give to her three daughters, Mrs. Stanley, Mrs. Ryder and Mrs. Matteson,.the amount of O. M.' Stanley’s obligation to her, upon his promise to pay one-third of such sum to each of her said daughters, destroyed the $700 note, and thereupon he executed and delivered to Mrs. Ryder and Mrs. Matteson his notes for $250 each, and promised to deliver a similar note to his wife, which, however, he neglected to do until the time the chattel mortgage was executed.

The debts to Mrs. Stanley, Ryder and Matteson, mentioned in the mortgage, consisted of the balances remaining unpaid on their several claims above described. The verdict of the jury has settled the bonafides of their several debts.

There is no foundation in the facts of the case for the appellants’ claim, that the sum in question could be considered as a gift from Mary Ann Weaver to O. M. Stanley, and there was no basis for the charge in respect thereto requested of the trial court. O. M. Stanley, long before his embarrassments arose, treated the sum as a loan, and his interpretation of the transaction made it a valid claim against him, and necessarily against all persons claiming through or under him.

We are also of the opinion that the claims of the two daughters, Helen and Florence, were lawful demands, and enforceable against the mortgagor. The evidence in respect to them tended to show that they had received a good education, partially at the expense of their father during their minority, and, having arrived at an age when they were qualified and capable of supporting themselves, proposed to engage in the business of school teaching. ' It was then agreed between them, respectively, and their father, that they should thereafter take care of and support themselves, and that they should be entitled to their time and all that they might thereafter earn by their services. This contract was made in 1874, when the father was supposed to be solvent and able to pay his debts. From this time forward they were engaged away from home much of the time in the occupation of teachers; in which service they earned moneys which were loaned to their father under an agreement that he should repay such loans when demanded, with interest thereon. The larger part of the debts secured to Florence and Helen consisted of such loans. A portion of the debt to Florence consisted of a sum included as payment for household services rendered by her for her parents under an agreement that she should be paid therefor the same as other servants. A small portion of these services were rendered before she arrived at her majority.

The validity of these debts, to a certain extent, depends upon the question whether a parent has power to manu

Whether admitted or not, we suppose it to be well settled that a parent may emancipate an infant child and confer a right upon it to acquire property, and possess it as against all persons whatsoever.

As said by Judge Sutherland in Shute v. Dorr ( 5 Wend., 204 ): “A parent may relinquish his right, and authorize his child to labor for himself, and receive and appropriate to his own use whatever he may earn.” See also Fort v. Gooding ( 9 Barb., 375 ); Lind v. Sullestadt ( 21 Hun., 366 ).

No lawful objection therefore arises over the legality of the debts included in the mortgage for the benefit of the daughters, provided they were found to have been secured in good faith without intent to defraud creditors.

Neither is any question made but that the debts included therein for Mrs. Membry and Mr. Babbitt were valid and lawful debts, justly owing by the mortgagor. It is claimed, however, that the debt of Babbitt was covered by a judgment in his favor, constituting a lien upon real estate sufficient to satisfy the same, and, therefore, as matter of law, it is argued that its inclusion in the mortgage could not have been made in good faith with an honest intent to secure the debt. We are of the opinion that this argument cannot be supported. At the time this mortgage, was given, the debtor was in possession of his property, and having the right to dispose of it in payment of his debts as he saw fit, provided he did so in good faith. He could lawfully have transferred to Babbitt, directly, any of the property included in the mortgage, in satisfaction of his debt, or make any other arrangement which should render its appropriation upon the debt certain and secure. This worked no injury to unsecured creditors, for if the debt should be paid from the mortgaged property, it would reduce the lien upon other property, and expose the surplus thereof to the claims of such creditors. But even if it was the debtor’s object to enhance ' the security of other liens on real estate by paying some of them from the personal property, it was entirely lawful and competent for him to do so. So long as all of the property was devoted to the payment of just debts, it affords no legal presumption of fraud that a creditor was given the right to resort to either of the two separate funds to secure payment of his debt.

It is also contended that, upon the facts, no such actual and continued change of possession of the property has been proved as obviated the requirement of the statute providing for the refiling'of a mortgage to perpetuate its lien.

We think the facts justified a finding of the jury that there had been the change of possession required by the statute.

The property having been taken possession of by a bailiff of the mortgagees, and duly advertised and sold at public auction, and the plaintiff having become the purchaser thereof, she became invested with the lawful title thereto as against the creditors of her husband, and effected a valid change of possession, subject only to the obligation to show that the same was made in good faith and without intent to defraud creditors. Section 5, title 2, chap. 7, part 2, R. S., 2328 (7th ed.). A married woman, under the statute, • has capacity to engage in business for herself, to acquire property and possess it independent of the control or interference therewith by her husband. As a necessary incident of such right, she is competent, although living with her husband, to secure and maintain legal possession of property acquired by her, free and independent of the rights of persons claiming an interest therein, through or under the husband. When the sale of this property was made, she was in possession of the farm, upon which it was situated, under a conveyance thereof from a receiver having lawful possession and legal right to lease it, and when she had purchased the personal property, it immediately became subject to her dominion and control as the owner of the real property upon which it was situated, and in whose cultivation and enjoyment it was employed. Knapp v. Smith, 27 N. Y., 278 .

. It is quite impossible to conceive how the plaintiff could maintain the rights conferred upon her by law, without holding that she had the lawful possession of this personal property. Rowe v. Smith, 45 N. Y., 232 . The law does not require a family to be broken up, or a wife to separate from her husband, to enable her to acquire and maintain possession of property lawfully owned by her. Her possession must be such as the circumstances of the case permit, and such.as.she_is_capable_p£_taking and enjoying, and when

We have no doubt but that these facts fully justified the finding of the jury that there had been an actual and continued change of possession of the property mortgaged, within the meaning of the statute.

The case of Steele v. Benham ( 84 N. Y., 634 ), does not conflict with these views. In that case no circumstances were shown to support the claim of a change of possession. It rested wholly upon the allegation of the assignee of the mortgage, that she had taken possession of the mortgaged property, but it still remained unsold in the mortgagor’s possession upon his farm, and was devoted to his use. It ■ was quite properly held in that case that no change had been effected, and that the statute required a re-filing of the mortgage within a year, to perpetuate its lien.

It is also claimed by the appellants that the receiver acquired no right to lease the farm in question, by reason of some defect in his official bond. If there was any defect in such bond, of which upon the evidence we have some doubt, we do not think the defendants were in a position to raise the question. The receiver had by order of the court been duly vested with title to the debtor’s property ; had, as such, taken possession of his real estate and leased it to a tenant who was put in possession of the property by him. This-lease undoubtedly conveyed the receiver’s right of possession, and was valid as against all persons assailing it collaterally.

Even if the appointment of the receiver was, by reason of the irregularities referred to, voidable, the fact that the lessee had taken possession under a lease from him would justify such possession until the lease was adjudged to be unlawful at the suit of some person rightfully challenging its validity.

The question on the trial was who was, at the time of the sale of the mortgaged property, in fact occupying the premises, and the jury has found that the plaintiff was,, and this finding, we think, is conclusive. The circumjstance.that..the . plaintiff’s. husband was employed as her

We think this case has not, by reason of any circumstance called to our attention, been taken out of the operation of the statute which requires that “ the question of fraudulent intent in all cases arising under the provisions of this chapter, shall be deemed a question of fact and not of law.” Section 5, title 2, chap. 7, part 2, R. S., vol. 3 (7th ed ), p. 2328.

We could not say that there was not evidence in the case upon which the jury was authorized to find the mortgage in question was executed and received with an intent to •defraud the creditors of the mortgagor. The circumstances upon which such a finding might be based are particularly set forth and discussed by the appellants’ counsel in an elaborate brief; but its careful consideration compels us to the conclusion that the question of fraudulent intent was exclusively for the jury, and its finding thereon cannot be disturbed. We may go still further, and say that, under the evidence in the case, we are of the opinion that the verdict accords with the probabilities and justice of the case.

We have carefully examined the numerous exceptions appearing in the record, and can find none worthy of serious refutation, except such as are covered by the discussion already had.

We think, therefore, that the judgment should be affirmed.

All concur.