Medsker v. Bonebrake
108 U.S. 66 (1883)

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U.S. Supreme Court

Medsker v. Bonebrake, 108 U.S. 66 (1883)

Medsker v. Bonebrake, 108 U.S. 66 (1883)

Decided March 3, 1883

108 U.S. 66

Syllabus

1. Where a wife lends to her husband money which is her separate property upon his promise to repay it, it creates an equity in her favor which a court of equity will enforce in the absence of fraud.

Page 108 U. S. 67

2. If the husband, being insolvent, mortgages real estate to secure such a debt to his wife, previously incurred, a court of equity will not set aside the mortgage as fraudulent against the assignee in bankruptcy if the wife was ignorant of the insolvency and if there was no fraud.

3. One of two partners files a voluntary petition in bankruptcy, alleging that the other partner will not join him, and praying to have him declared a bankrupt. Held that this, as to the other partner, is a case of involuntary bankruptcy within the meaning of the Act of June 22, 1874, c. 130, § 10, 18 Stat. 180.

4. On a reference in equity to a master, the findings of the master are prima facie correct. Only such matters are before the court as are excepted to, and the burden of sustaining the exception is on the objecting party.

This was a suit in equity by an assignee in bankruptcy to set aside a conveyance of real estate made shortly before the bankruptcy by the bankrupt to his wife through the intervention of a third party. The following extracts from the report of the master show the facts found by him:

"On the 2d day of August, 1876, John R. Medsker and wife conveyed the land described in the bill to Cyrus J. McCole, who, on the 4th of same month reconveyed the same to the wife, Elizabeth Medsker, the defendant. At the time of these transfers, the land belonged to John R. Medsker in fee simple."

"On the 1st day of December, 1876, one Poe, with whom Medsker was in partnership in the hardware business, filed his petition (voluntary) in bankruptcy alleging that Medsker would not join him and making him a party, praying that he be adjudged a bankrupt."

"On the 29th of December, 1876, Medsker comes in, confesses bankruptcy, and is adjudged accordingly."

"* * * *"

"The defendant, the evidence shows, married the bankrupt Medsker some thirteen years ago. During the last ten years, her husband came into possession of moneys belonging to her, proceeds mostly of lands, inherited from her father, amounting in the aggregate to $5,600. She expressly testifies that he agreed to return it to her, and she always claimed that he was her debtor to that amount. Under the evidence, I think there is no doubt she was a creditor at the time of the conveyance. I think the evidence shows that he was insolvent also at that time, though not that she knew it. I think the conveyance was made

Page 108 U. S. 68

and accepted to prefer her to other creditors. Under the evidence as to the value of the land, which is conflicting, I cannot find that his indebtedness to her was not a reasonable consideration for the conveyance of the land, or that there is such great disparity between the land and the debt it was conveyed to satisfy as to indicate bad faith and a purpose to defraud other creditors."

The master found as law that the bankruptcy was involuntary on Medsker's part; that the transaction was not void under the statute, and that it was not void for fraud.

The assignee's counsel excepted to this report. 1st. That the evidence showed that Medsker was a voluntary bankrupt. 2d. The wife was not a creditor, and knew of the insolvency when the security was taken. 3d. The conveyance was made with intent to defeat and defraud creditors, and they also excepted to the conclusions of law. The court sustained the exceptions and decreed that the conveyance should be set aside, from which decree the wife appeals.

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