Kehr v. Smith - 87 U.S. 31 (1873)
U.S. Supreme Court
Kehr v. Smith, 87 U.S. 20 Wall. 31 31 (1873)
Kehr v. Smith
87 U.S. (20 Wall.) 31
A deed by which a husband, on articles of separation between him and his wife, binds himself to pay, in trust for her, a certain amount of money (capital) and interest on it till paid becomes a voluntary settlement if, before payment is made, the parties are reconciled, make null all the covenants of the articles of separation, and cohabit again with an agreement that the settlement shall stand as agreed on except that the husband shall not pay interest while he and his wife live together.
A voluntary settlement of $7,000 cannot be sustained against creditors where the person owes $3,306 and has, of all sorts of property, the same being not cash, not more than $16,132.
Smith, assignee of Martin Meyer, a bankrupt, brought a bill in equity in the District Court for the Eastern District of Missouri to set aside as fraudulent a deed of trust given by the bankrupt in August, 1867, to one Kehr on a house and lot where he lived, and owned by him, to secure two promissory notes, of even date with the deed, for $2,500 each, payable respectively in one and two years from date, with interest, which the bankrupt executed to a certain Schaeffer, as trustee of Clara Meyer, his wife.
The case was thus:
In August, 1867, Meyer, a trader in St. Louis, and his wife agreed to separate, and entered into an agreement for this purpose. They were to live separate from each other without molestation, and the rights given to one in the articles of separation were secured to the other. In order that the wife might have sufficient means for her support, the husband covenanted with a person named that he would pay to him, as trustee for the wife, the sum of $7,000 on the execution of the instrument. In consideration of these and other agreements, the trustee and the wife covenanted with the husband to accept the stipulated sum in full satisfaction of any claim for maintenance or support, and also for any claim for alimony or dower in case of the husband's death. The trustee also covenanted to save the husband harmless from any debts the wife might contract
on his account. No fault was imputed by one to the other, but each was left at liberty, if so disposed, to prosecute an action for divorce. Two thousand dollars of the seven was paid in money to the trustee, and the balance was secured to be paid by the deed of trust, which was the subject matter of this controversy.
At the time of this settlement by Meyer, his pecuniary condition, as assumed by the district court, a report of whose opinion in full is given in the reports for the Eighth Circuit, [Footnote 1] was thus:
He owed . . . . . . . . . . . . . . . . . . . . . . . . . $9,306
He had property as follows:
The property charged in favor of his wife, about the
value of which witnesses differed, one valuing it at
$10,500, a sum which, free from all encumbrances,
it brought at public sale . . . . . . . . . . . $10,500
Other real property, at most. . . . . . . . . . . 632
Personalty. . . . . . . . . . . . . . . . . . . . 5,000
Deduct amount settled on his wife . . . . . . . . 7,000
Leaving to pay all his debts. . . . . . . . . . . . . . . $9,132
The circuit court estimated the real estate charged at about $2,000 more than did the district court, noting, however, that being the party's homestead, the homestead right (in Missouri $1,000) was chargeable on it. The result was, of course, not much different.
After the execution of the deed of separation, the parties separated, but within two and a half months became reconciled, and, with the trustee, entered into articles of reconciliation, rescinding the whole of the previous agreement except in the matter of the separate estate created by it; agreed to forget past differences and to live together as husband and wife, it being further agreed that the husband was not to pay any interest on the notes during their reconciliation. The covenants in the first articles, except in the particular named, were declared to be void, and each party
released the other from any breach of them. A "complete condonation" was also declared by the new arrangement.
The husband and wife lived together for some four years, when the husband left the country, and soon after this, he was declared a bankrupt. After the filing of the bill in this case, the property on which the notes to Mrs. Meyer were secured was, with the assent of the parties litigant, sold by the order of the court, and the right reserved to the parties to proceed against the fund. The question for decision was whether Mrs. Meyer should have these notes paid to her out of the proceeds of this property to the exclusion of the creditors of her husband.
There was some effort to prove that Mrs. Meyer had received from a first husband's estate a considerable amount of money, which Meyer, who was her second, had received and used for his own purposes, and that this use of it by him was the equitable basis of the settlement of $7,000. The deed of settlement, however, did not allude to this as a consideration, nor allude to it otherwise, and there was no sufficient proof of the fact that when she married Meyer, she had any property, or that afterwards she ever got any from any source independently of Meyer himself.
The district court decreed in favor of the assignee, and, the circuit court having affirmed that decree, the wife and her trustee took this appeal.