A husband may settle a portion of his property upon his wife, if
he does not thereby impair the claims of existing creditors, and
the settlement is not intended as a cover to future schemes of
fraud.
When a husband settles a portion of his property on his wife, it
should not be mingled up or confounded with that which he retains
or be left under his management or control without notice that it
belongs to her.
This was a creditor's bill to reach property conveyed by the
debtor to his wife, and have it applied to the payment of the debt.
The decree below sustained the conveyance, from which the creditor
appealed.
Page 111 U. S. 118
MR. JUSTICE FIELD delivered the opinion of the Court.
It is no longer a disputed question that a husband may settle a
portion of his property upon his wife if he does not thereby impair
the claims of existing creditors and the settlement is not intended
as a cover to future schemes of fraud. The settlement may be made
either by the purchase of property and taking a deed thereof in her
name or by its transfer to trustees for her benefit. And his direct
conveyance to her, when the fact that it is intended as such
settlement is declared in the instrument or otherwise clearly
established, will be sustained in equity against the claims of
creditors. The technical reasons of the common law growing out of
the unity of husband and wife, which preclude a conveyance between
them upon a valuable consideration, will not in such a case prevail
in equity and defeat his purpose.
Shepard v. Shepard, 7
Johns.Ch. 57;
Hunt v. Johnson, 44 N.Y. 27; Story's Equity
§ 1380; Pomeroy's Equity § 1101;
Dale v. Lincoln, 62 Ill.
22;
Deming v. Williams, 26 Conn. 226;
Maraman v.
Maraman, 4 Met. (Ky.) 85;
Sims v. Rickets, 35 Ind.
181;
Story v. Marshall, 24 Tex. 305;
Thompson v.
Mills, 39 Ind. 532. Such is the purport of our decision in
Jones v. Clifton, 101 U. S. 225. His
right to make the settlement arises from the power which everyone
possesses over his own property, by which he can make any
disposition of it that does not interfere with the existing rights
of others of others. As he may give it or a portion of it to
strangers or for objects of charity without anyone's being able to
call in question either his power or right, so he may give it to
those of his own household, to his wife or children. Indeed,
settlements for their benefit are looked upon with favor and are
upheld by the courts. As we said in
Jones v. Clifton:
"In all cases where a husband makes a voluntary settlement of
any portion of his property for the benefit of others who stand in
such a relation to him as to create an obligation, legally or
Page 111 U. S. 119
morally, to provide for them, as in the case of a wife or
children or parents, the only question that can properly be asked
is does such a disposition of the property deprive others of any
existing claims to it? If it does not, no one can complain if the
transfer is made matter of public record and not be designed as a
scheme to defraud future creditors. And it cannot make any
difference through what channels the property passes to the party
to be benefited, or to his or her trustee, whether it be by direct
conveyance from the husband or through the intervention of
others."
While property thus conveyed as a settlement upon the wife may
be held as her separate estate, beyond the control of her husband,
it is of the utmost importance to prevent others from being misled
into giving credit to him upon the property that it should not be
mingled up and confounded with that which he retains, or be left
under his control and management without evidence or notice by
record that it belongs to her. Where it is so mingled or such
notice is not given, his conveyance will be open to suspicion that
it was in fact designed as a cover to schemes of fraud.
In this case there was much looseness, and the transactions
between the husband and the wife touching the property were well
calculated to excite suspicion. It is therefore with must
hesitation that we accept the conclusion of the circuit court. We
do so only because of its finding that there was no deception or
fraud intended by either husband or wife; that the appellants were
not led to give him any credit upon the property, but acquired
their interest in the judgment which they are seeking to have
satisfied long after the transactions complained of occurred; that
the title to the Dearborn Avenue property was taken by mistake in
his name, and that the mistake was rectified before this litigation
commenced; that the bonds and notes in bank which the creditors
seek to reach represent the money advanced by her from the sale of
this Dearborn avenue property for the purpose of meeting an alleged
deficit in his account as administrator of the estate of Maxwell,
and in equity belong to that estate; that the money applied in
satisfaction of the mortgage upon the Lincoln avenue property was
part of
Page 111 U. S. 120
the proceeds of that sale, and that she was entitled to have the
conveyance to her from Mrs. Maxwell treated as security for that
money. Such being the case, the creditors have no claim upon the
bonds and notes superior in equity to that of the Maxwell estate,
nor upon the Lincoln avenue property superior to that of the
wife.
Decree affirmed.