Voorhees v. Bonesteel and Wife - 83 U.S. 16 (1872)
U.S. Supreme Court
Voorhees v. Bonesteel and Wife, 83 U.S. 16 Wall. 16 16 (1872)
Voorhees v. Bonesteel and Wife
83 U.S. (16 Wall.) 16
1. Affirmative relief will not be granted in equity upon the ground of fraud unless it be made a distinct allegation in the bill.
2. Nor will a trust alleged in a bill to exist be considered as proved when every material allegation of the bill in that behalf is distinctly denied in the answer, and the proofs, instead of being sufficient to overcome the answer, afford satisfactory grounds for holding that there was no trust in the case.
3. 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 when he has no interest in the business, the application of a portion of the income to his support will not impair her title to the property.
Appeal from the decree of the Circuit Court for the Southern District of New York, dismissing a bill filed by
one Voorhees, assignee in bankruptcy of John Bonesteel, against the said Bonesteel and Sophia his wife, to get possession of 1,145 shares of the stock of the Nicolson Pavement Company, of Brooklyn, which, though standing in the name of the wife, he, the assignee, asserted were held in fact and truth for the husband, but which the husband and wife asserted were not so held, but belonged, on the contrary, to the wife alone, and were her separate property.
The case was thus:
John Bonesteel, above named, at first resident in Chicago and afterwards in New York, a man of active and scheming turn of mind, but always embarrassed, and Mr. S. B. Chittenden, also first of Chicago but afterwards of Brooklyn, a man of property and standing in that place, the second largest taxpayer in the place and editing or controlling the editorship of the Brooklyn Union, an influential paper there, had married in 1848, or thereabouts, each of them, a daughter of one Hartwell, a person of property in Bridgeport. At the date mentioned, Bonesteel was engaged in business in Chicago, and dealing not unfrequently with his brother-in-law, Chittenden, who was also in business there, but who appears to have always rather distrusted Bonesteel's capacity for the practical management of affairs. In 1853, or 1854, said Mr. Chittenden, in giving testimony in the matter,
"It became apparent to me that he was insolvent, and I told his wife's father that I thought so. In 1855, perhaps, I told him he had better do no business with me. From that time to 1859, Mr. Hartwell very frequently advanced money to him, as often as twice a year. When he came to New York to pay his debts, he would advance money to him to help him through the season. In 1859, he failed and made an assignment. A year or two later, I think in 1863, he came to New York to reside, Mr. Hartwell furnishing him money to pay his board. He had no occupation. After he had been there boarding, Mr. Hartwell furnishing his daughter money for the support of the family, a year or longer, he began to do a brokerage dry goods business. He came and bought goods of me. I knew that he was bankrupt, and we
never delivered goods until he paid for them. He was my brother-in-law, but I refused to allow my firm to sell him goods on any other condition, because I thought somebody might attach them. I think, within the last year, while pursuing this business, his father-in-law wrote me a letter stating that he had concluded, 'at the request of John's wife, to advance him another $3,000,' and he ordered me to pay the money over to him. I paid him the $3,000, but I wrote to Mr. Hartwell that he would lose it; that I didn't think Mr. Bonesteel would ever be able to return it. He said, 'I do it for my daughter.'"
In this condition of things, about the year 1865, one Taylor, who had also been a resident of Chicago, but had now come to reside in New York -- had purchased from Samuel Nicolson, the patentee of that sort of pavement called by his name, a license to furnish it to certain places, including New York and Brooklyn, in the East and was now seeking to get the pavement into general public use. He gave this account of things:
"When I first came to New York, I was an entire stranger in the city. Being intimately acquainted with Mr. Bonesteel, and Mrs. Bonesteel, too, and desiring to get the influence of her and her husband, and other influential parties, I made up my mind to give Mrs. Bonesteel one-third interest of Brooklyn, at that time, being satisfied that it was for my interest to give it to her. I had a conversation with her, in the end of June or beginning of July, 1866. The substance of the conversation was Mr. Bonesteel had been exerting himself with me, going round and seeing parties for a month or more, in reference to introducing the pavement. She felt uneasy about his neglecting his own business, and running round for me about 'the Nicolson,' which, she was afraid, would amount to nothing. I impressed upon her that it would be a good thing, provided I could get certain influences -- the influence of Mr. Chittenden, the only person whose influence was wanted -- to help me along. She stated that she had let her husband have some money to engage in business, and that by his neglecting that, he would lose what he had and not make anything out of the pavement. I told her I was satisfied that she would make four times as
much out of the pavement as Bonesteel would in trafficking in goods."
Bonesteel, the bankrupt, gave an account of things not dissimilar, as follows:
"Mr. Taylor was a stranger in the city and was anxious to introduce the pavement here, and at the same time had a large contract at Elmira, New York; and, knowing that I had many acquaintances and friends here who could be of assistance to me in the obtaining of contracts for introducing the pavement, wished me to secure them; showing me, at the same time, that there was a good profit in the work; that if I would devote and give my time to it, I should have all the profit, over $1,000, realized therefrom. . . . He was constantly coming to me, at my place of business, and taking up my time in calling upon influential parties and property owners. I said to him that my wife had furnished to me several thousand dollars in money to use in the purchase and selling of merchandise, to assist in the making of money to maintain the family, and that I did not feel it was right or proper under the circumstances to give up so much of my time. I called his attention frequently to his taking so much of my time. He said she should not be made the sufferer by the misappropriation of my time."
The account given by Mr. Chittenden, as appearing in interrogatories put to him and answers received, was thus:
Question. When did you first hear of the Nicolson pavement in connection with Brooklyn?
Answer. Sometime in the year 1866, standing in the sub-treasury building, I saw Mr. Bonesteel. I asked him what he was about. He spoke of a new pavement. I asked him where the pavement came from, and what the merits of it were. He told me about it, and I asked him to come to my office and talk to me about it. After hearing his story, I said, "John, you were always wild. I don't believe in it, but I will investigate it." I sent to Chicago and Milwaukee, wrote to gentlemen to whom he referred me, and made inquiries.
Q. Did you have any interview with Mrs. Bonesteel on the subject?
A. I was in the habit of visiting her constantly, and talked with her about it frequently.
Q. What did she propose to you about it, if anything?
A. I don't know that she proposed absolutely anything to me in the early part of it.
Q. At any time, about introducing it?
A. According to my recollection, I said, if I can ascertain that this is a good pavement for Brooklyn, I will do all I can for it; and I also said, if I do it, Mr. Taylor ought to give you at least a half interest in it.
Q. Had she then expressed a desire to have you aid her in the matter?
A. She at first expressed a strong disinclination to have her husband have anything to do with it, because she had no faith in it.
Q. Later, was her opinion changed?
A. When I became satisfied it was a good pavement, she was very glad to have my assistance.
Q. You did finally assist in introducing the pavement into this city?
A. I laid it in front of my own property, and in front of my neighbor's property, both sides of the street, at my own expense.
A. Because I believed that it was the best pavement that could be possibly devised for Brooklyn.
Q. How, in your mind, was that to benefit Mrs. Bonesteel?
A. I told her husband and told her that, in consideration of the advocacy which I could give it, and which the newspaper which I had the management of could give -- as it was a good pavement -- the least he could do, if he was a reasonable man, was to give her half. I urged and insisted on this. But I did not make this a condition of my advocating the pavement. I had a double object: I knew it was a good pavement and I desired to benefit Mrs. Bonesteel.
Q. You knew she was embarrassed somewhat by her husband's difficulties?
A. I knew perfectly well that her family were living at the expense of her father.
Q. You knew that they were living at her father's house?
A. In her father's house, and I had reason to suppose that he had never returned any of the money that he had received from
him many years, which I think he once said to me had amounted to $30,000.
Q. Did Mrs. Bonesteel confer all along with you as her adviser in reference to the management of the business?
A. My impression is that nothing important was done in the matter without consulting me. When she required money she came to me.
Q. So that she took an active part in the matter herself?
A. She took an active part in it; as much as any lady would who trusted in her husband and confided in his good intentions.
Q. You say that you said to Mrs. Bonesteel that she ought to have half; who did you suppose at that time was to have this right for Brooklyn? Who was to have the other half?
A. I was asked to buy an interest in it, and refused to give $100 for the whole of it. I had a doubt whether it was worth $100. I was well aware of the difficulties of introducing matters of this kind into a city like Brooklyn.
Q. You say that you said that Mrs. Bonesteel, you thought, ought to have half. Who was to have the other half?
A. Mr. Taylor owned the whole. My argument was this to Mr. Bonesteel: "Mr. Taylor owns the whole; by your industry you may possibly work up something; if you do, it is fair that be should give your wife a half interest."
Q. Then you expected that Mr. Taylor and Mrs. Bonesteel would go on together?
A. I presumed that Mr. Taylor would sell out if he could, and as quick as he could.
Q. How many conversations did you have with Mr. Taylor, and to what effect?
A. Two conversations perhaps. We talked on various subjects. I told him I believed it was a good pavement, but I doubted whether there was any money to be made in it. I told him I was willing to advocate it, and I did advocate it. I gave instructions to the editor of the Brooklyn Union to get all the information he could on the subject, and to advocate it as strongly as the facts would admit of.
Q. Was there anything ever said by you, or in your presence, relative to this interest being transferred to Mr. Bonesteel?
A. Not a word?
Q. Or to Mrs. Bonesteel, in preference to being transferred to him?
A. It was distinctly understood that Mr. Bonesteel was a bankrupt, and it would be of no use to put it in his name, and if it was transferred at all, I understood that Mr. Taylor gave it to Mrs. Bonesteel as he would a silver cup to her child.
After Mr. Chittenden had laid the pavement in front of his own house, as described, and after it was advocated in the Brooklyn Union, one-half the license for Brooklyn was sold largely through the efforts of Mr. Bonesteel (acting, as his wife testified, as her agent), to Messrs. Page, Kidder & Co., for $10,000; and by the same instrument of conveyance by which this was done the other half was transferred to Mrs. Bonesteel herself.
Bonesteel, the husband, testified that he considered that the transfer was thus made to her, in consequence of what he had told Taylor about taking up his time away from business that he was carrying on as his wife's agent, and with her money; more especially since by his not attending to her business, he let the right reason for selling pass, and so caused a loss to his wife of several thousand dollars.
How a half came now to be transferred to Mrs. Bonesteel instead of a third, which Taylor by that part of his testimony already quoted, stated that he meant originally to give her, was thus explained or sought to be by himself.
When so good a sale as the one to Page, Kidder & Co. for $10,000 had been made, Bonesteel, it seemed, had urged upon Taylor that he ought to be content with such a good sum of money, and give the remaining half to him or his wife. Taylor knew that Bonesteel had failed; and in regard to the whole matter stated thus:
"I said to Mr. Bonesteel when he insisted upon my giving the interest between the third and the half, that I wanted to keep it myself, and should not let his wife have it, but upon his urging matters I told him that I would not give it to him, but to his wife, as I did the other, for he was in debt, and if I did, his creditors would get it, and that I had nothing to give them.
I had not previously conveyed the one-half to his wife, but had made up my mind to give it to her as promised, and therefore considered it as given. He claimed that it was through Chittenden's influence that I sold the half of Brooklyn for what I got, and I thought it was, and I conveyed it. . . . I would not have conveyed the half if I had not thought thus of Mr. Chittenden's influence. I thought his influence of great importance, as he was rich and a prominent man in Brooklyn."
Page, Kidder & Co., being thus owners of one-half the licenses, and Mrs. Bonesteel holding the other half, they two -- Bonesteel, the husband, acting for her, and as she testified as her agent -- organized under the general law of New York, the Nicolson Pavement Company of Brooklyn; and transferring each their half of the license to the company received in return stock in its capital, this capital being fixed in the charter at $500,000.
As the result proved, Bonesteel was not "always" wild. This particular project, at least, proved a good one. Mrs. Bonesteel soon sold to a certain W. Smith & Co. one-half of her stock (a quarter of the capital) for $10,000, receiving the purchase money and using it as her own; she left 356 shares in the company as working capital; sold 44 other shares for $2,000, and used the money; gave her husband 5 shares, enough to enable him to become a trustee and president of the company, which he now was, at a salary of $4,000, and had 1,145 shares, charged to be worth $30,000, and impliedly admitted to be worth about $10,000, remaining in her own name.
It was these 1,145 shares which her husband's assignee in bankruptcy, by the bill filed against him and her, now sought to recover for his creditors.
The bill set forth debts to the amount of $30,000, and assets, one worthless note; charged that the one-half interest vested in Mrs. Bonesteel was in truth conveyed to her in consideration of her husband's services, in negotiating and selling the other half; that the stock was therefore in fact the property of her husband, the now bankrupt. It charged further that since the organization of the company, Bonesteel
had participated in its management, and had no other business; that many very profitable contracts had been since made with the city Brooklyn for paving &c. The bill prayed an account and transfer of the stock to the complainant, the assignee.
Both husband and wife answered, each denying every material allegation in the bill, her answer specially averring, that when the Nicolson pavement was brought forward, her husband was acting with her knowledge and approval as her agent, with money owned by her, advanced to her by her father, and with other sums used in support of the family and advanced by her, to be charged on any distribution of his property at his death as advances; that her husband continued to act as her agent in the matter of the pavement; that she had laid out large sums of her own money in advancing and protecting her interests in the company; and setting up generally a history such as the reader can readily infer from the case as already stated.
The reader will thus perceive that the question was really one of evidence on the facts, and one where the evidence was pretty much one way.
The court below dismissed the bill, and from that decree it was that the present appeal was taken.