A post-nuptial voluntary settlement, made by a man who is not
indebted at the time upon his wife is valid against subsequent
creditors.
The statute 13 Eliz. c. 5, avoids all conveyances not made on a
consideration deemed valuable in law as against previous
creditors.
But it does not apply to subsequent creditors if the conveyance
is not made with a fraudulent intent.
A voluntary settlement in favor of a wife and children is not
impeachable on that ground alone by subsequent creditors:
The circumstances that the property thus conveyed constituted a
large portion of the estate of the grantor and that he failed
within a short period after the date of the conveyance may awaken
suspicion and strengthen other circumstances, but, taken alone, are
not proof of fraud.
What circumstances will constitute evidence of such a fraudulent
intent.
This was a bill brought by the appellant, Sexton, in the court
below to subject a house and lot in the City of Washington, the
legal title to which was in the defendant, Sally Wheaton, to the
payment of a debt for which the plaintiff had obtained a judgment
against her husband, Joseph Wheaton, the other defendant.
The lot was conveyed by John P. Van Ness and Maria, his wife,
and Clotworthy Stepenson to the defendant, Sally Wheaton, by deed
bearing date 21 March, 1807, for a valuable consideration
acknowledged to be received from the said Sally. And the plaintiff
claimed to subject this property to the payment of his debt upon
the ground that the conveyance was fraudulent and therefore void as
to creditors.
The circumstances on which the plaintiff relied
Page 21 U. S. 230
in his bill to support the allegation of fraud were that the
said house and lot were purchased by the defendant, Joseph, who,
contemplating at the time carrying on the business of a merchant in
the said City of Washington, procured the same to be conveyed to
his wife and obtained goods on the credit of his apparent ownership
of valuable real property. That for the purpose of obtaining credit
with the commercial house of the plaintiff, in New York, he
represented himself in his letters as a man possessing real estate
to the value of $20,000, comprehending the house in question
besides 100 bank shares and other personal estate. That the
defendant, Sally, knew and permitted these representations to be
made. That the defendant Joseph in the presence of the defendant
Sally applied to General Dayton, the friend of the plaintiff, to be
recommended to a commercial house in New York, and in the statement
of his property, as an inducement to make such recommendation, he
included the premises. That the defendant Sally permitted this
misrepresentation, and did not undeceive General Dayton, although
she had many opportunities of doing so.
In support of these allegations, the plaintiff annexed to his
bill several letters written by the defendant Joseph in the City of
Washington to the plaintiff in the City of New York soliciting a
commercial connection and advances of goods on credit. The first of
these letters was dated 2 September, 1809. The letters stated that
the plaintiff's house had been recommended to the defendant by
their mutual friend, General Dayton,
Page 21 U. S. 231
represented the defendant's fortune as considerable, spoke of
the house in which he was to carry on business as his own, and held
out the prospect of regular and ample remittances.
The bill further stated that upon the faith of these letters and
on the recommendation of General Dayton, the plaintiff advanced
goods to the defendant Joseph to a considerable amount, who failed
in making the promised remittances, and on the plaintiff's
withholding further supplies of goods and pressing for payment, he
avowed his inability to pay, declared himself to be insolvent, and
then stated that the house in controversy was the property of his
wife.
Some arrangements were made by which the goods in the store and
the books of the defendant Joseph were delivered to the plaintiff,
but after paying some creditors who were preferred, a very small
sum remained to be applied in discharge of a judgment which the
plaintiff had obtained in January, 1812, for the sum of $8,249.29
cents. On this judgment an execution was issued, by which the life
estate of Joseph Wheaton was taken and sold for $300, the plaintiff
being the purchaser.
The bill prayed that the property, subject to the plaintiff's
interest therein under the said purchase, might be sold and the
proceeds of the sale applied to the payment of his judgment. It
further stated that improvements to a great amount had been made
since the conveyance to Sally Wheaton, and prayed that, should the
court sustain the said
Page 21 U. S. 232
conveyance, the defendant Sally might be decreed to account for
the value of those improvements.
The answers denied that the house and lot in contest were
purchased in the first instance by Joseph Wheaton or conveyed to
his wife with a view to his entering into commerce, and averred
that they were purchased for Sally Wheaton, and chiefly paid for
out of the profits made by her industry, and saved by her economy
in the management of the affairs of the family while her husband
was absent executing the duties of his office as Sergeant at Arms
to the House of Representatives. The answers also stated that in
January, 1807, when the conveyance was made, Joseph Wheaton was
sergeant at arms to the House of Representatives, expected to
continue in that office, had no intention of going into trade, and
had no knowledge of the plaintiff. The design of going into
commerce was first formed in the year 1809, when, being removed
from his office and having no hope of being reinstated in it, he
turned his attention to that object as a means of supporting his
family. He then, in a letter dated 24 August, applied to General
Dayton as a friend to recommend him to a house in New York, and
received from that gentleman a letter dated the 29th of the same
month, which is annexed to the answer. In this letter, General
Dayton says
"pursuant to your request, I recommend to you the house of
Messrs. Sexton & Williamson, with which to form the sort of
connection which you propose in New York. They have sufficient
capital. . . . The proper course will be for
Page 21 U. S. 233
you to write very particularly to them, stating your present
advantageous situation, your prospects and plans of business, and
describing the nature and extent of the connection which you
propose to form with them, and then refer them to me for my
knowledge of your capacity, industry, probity,"
&c.
The defendant Joseph, in his answer, stated that in consequence
of this letter, he wrote to the said house of Sexton &
Williamson. He admitted that his account of his property was too
favorable, but denied having made the statement for the purposes of
fraud, but from having been himself deceived respecting its value.
He denied having ever told General Dayton that the house was his,
and thinks he declared it to be the property of his wife. Sally
Wheaton denied that she ever heard her husband tell General Dayton
that the house was his property; that she ever in any manner
contributed to impose on others the opinion that her husband was
more opulent than he really was, or ever admitted that the house
she claims was his. She admitted that she saw a letter prepared by
him to be sent to Sexton & Williamson in the autumn of 1809,
which she thought made too flattering a representation of his
property, and which she therefore dissuaded him from sending in its
then form. She then hoped that her persuasions had been
successful.
The answers of both defendants stated that Joseph Wheaton was
free from debt when the conveyance was made, and insisted that it
was made
bona fide.
Page 21 U. S. 234
The court below dismissed the bill, and from this decree the
plaintiff appealed to this Court.
Page 21 U. S. 238
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court,
and, after stating the case, proceeded as follows:
The allegation that the house in question was purchased with a
view to engaging in mercantile speculations and conveyed to the
wife for the purpose of protecting it from the debts which might be
contracted in trade, being positively denied and neither proved by
testimony nor circumstances, may be put out of the case.
The allegation that the defendant Sally aided in practicing a
fraud on the plaintiff or in creating or giving countenance to the
opinion that the defendant Joseph was more wealthy than in truth he
was is also expressly denied, nor is there any evidence in support
of it other than the admission in her answer that she had seen a
letter written by him to the plaintiff, in the autumn of 1809, in
which he gave, she thought, too flattering a picture of his
circumstances. This admission is, however, to be taken with the
accompanying explanation, in which she says that she had dissuaded
him, she had hoped successfully, from sending the letter in its
then form.
This fact does not, we think, fix upon the wife such a fraud as
ought to impair her rights, whatever they may be.
The plaintiff could not know that this letter was seen by the
wife or in any manner sanctioned by or known to her. He had
therefore no right to suppose that there was any waiver of her
interest, whatever it might be, nor had he a right to assume
anything against her or her claims in consequence
Page 21 U. S. 239
of his receiving this letter. The case is very different from
one in which the wife herself makes a misrepresentation or hears
and countenances the misrepresentation of her husband. The person
who acts under such a misrepresentation acts under his confidence
in the good faith of the wife herself. He has a right to consider
that faith as pledged, and if he is deceived, he may complain that
she has herself deceived him. But in this case the plaintiff acted
solely on his confidence in the husband. If he was deceived, the
wife was not accessory to the deception. She contributed nothing
towards it. When she saw and disapproved the letter written by her
husband, what more could be required from her than to dissuade him
from sending it in that form? Believing, as we are bound to suppose
she did, that the letter would be altered, what was it incumbent on
her to do? All know and feel, the plaintiff as well as others, the
sacredness of the connection between husband and wife. All know
that the sweetness of social intercourse, the harmony of society,
the happiness of families depend on that mutual partiality which
they feel or that delicate forbearance which they manifest towards
each other. Will any man say that Mrs. Wheaton, seeing this letter,
remonstrating against it, and believing that it would be altered
before sending it, ought to have written to this stranger in New
York to inform him that her husband had misrepresented his
circumstances and that credit ought not to be given to his letters?
No man will say so. Confiding, as it was natural and
Page 21 U. S. 240
amiable in her to confide, in his integrity, and believing that
he had imposed on himself, and meant no imposition on another, it
was natural for her to suppose that his conduct would be influenced
by her representations and that his letter would be so modified as
to give a less sanguine description of his circumstances. We cannot
condemn her conduct.
A wife who is herself the instrument of deception or who
contributes to its success by countenancing it may with justice be
charged with the consequences of her conduct. But this is not such
a case, and we consider the rights of Mrs. Wheaton as unimpaired by
anything she is shown to have done.
Had the plaintiff heard this whole conversation as stated in the
answer; had he heard her express her disapprobation of the
statements made in the letter and dissuade her husband from sending
it without changing its language; had he seen them separate, with a
belief on her part that the proper alterations would be made in it,
he would have felt the injustice of charging her with participating
in a fraud. That act cannot be criminal in a wife, because it was
not communicated, which, if communicated, would be innocent.
Admitting the representations of this letter to be untrue, they
cannot be charged on the wife, since she disapproved of them and
believed that it would not be sent in its exceptionable form.
So much is a wife supposed to be under the control of her
husband that the law in this district will not permit her estate to
pass by a conveyance executed by herself until she has been
Page 21 U. S. 241
examined apart from her husband by persons in whom the law
confides and has declared to them that she has executed the deed
freely and without constraint. It would be a strange inconsistency
if a court of chancery were to decree that the mere knowledge of a
letter containing a misrepresentation respecting her property
should produce a forfeiture of it, although she had not concurred
in its statements, had dissuaded her husband from sending it, and
believed he had not sent it.
Without discussing the conduct of Mr. Wheaton in this
transaction, it is sufficient to say that it cannot affect the
estate previously vested in his wife. The cause, therefore, must
depend on the fairness and legality of the conveyance to her.
The allegation that the purchase money was derived from her
private individual funds is supported by circumstances which may
disclose fair motives for the conveyance, but which are not
sufficient to prove that the consideration, in point of law, moved
from her. It must therefore be considered as a voluntary
conveyance, and if sustained, must be sustained on the principle
that it was made under circumstances which do not impeach its
validity when so considered.
The bill does not charge Mr. Wheaton with having been indebted
in January, 1807, when this conveyance was made. The fact that he
was indebted cannot be assumed. Indeed, there is no ground in the
record for assuming it. The answers aver that he was not indebted,
and they are not contradicted by any testimony in the cause.
Page 21 U. S. 242
His inability to pay his debts in 1811 or 1812 is no proof of
his having been in the same situation in January, 1807. The debts
with which he was then overwhelmed were contracted after that date.
This conveyance therefore must be considered as a voluntary
settlement made on his wife by a man who was not indebted at the
time. Can it be sustained against subsequent creditors?
It would seem to be a consequence of that absolute power which a
man possesses over his own property that he may make any
disposition of it which does not interfere with the existing rights
of others, and such disposition, if it be fair and real, will be
valid. The limitations on this power are those only which are
prescribed by law.
The law which is considered by the plaintiff's counsel as
limiting this power in the case at bar is the statute of 13 Eliz.
ch. 5, against fraudulent conveyances, which is understood to be in
force in the County of Washington. That statute enacts that
"for the avoiding and abolishing of feigned, covenous, and
fraudulent feoffments . . . which feoffments . . . are devised and
contrived of malice, fraud, covin, collusion, or guile, to the end,
purpose, and intent to delay, hinder, or defraud creditors and
others of their just and lawful actions . . . not only to the let
or hindrance of the due course and execution of law and justice,
but also to the overthrow of all plain dealing, bargaining, and
chevisance between man and man. Be it therefore, declared . . .
that all and every feoffment . . . made to or for any intent or
purpose before declared and expressed shall be
Page 21 U. S. 243
from henceforth deemed and taken only as against that person . .
. whose actions . . . shall or might be in any wise disturbed . . .
to be clearly and utterly void."
In construing this statute, the courts have considered every
conveyance not made on consideration deemed valuable in law as void
against previous creditors. With respect to subsequent creditors,
the application of this statute appears to have admitted of some
doubt.
In the case of
Shaw v. Standish, 2 Vern. 326, which was
decided in 1695, it is said by counsel in argument
"that there was a difference between purchasers and creditors,
for the statute of 13 Eliz. makes not every voluntary conveyance,
but only fraudulent conveyances, void as against creditors, so that
as to creditors it is not sufficient to say the conveyance was
voluntary, but must show they were creditors at the time of the
conveyance made, or by some other circumstances make it appear that
the conveyance was made with intent to deceive or defraud a
creditor."
Although this distinction was taken in the case of a subsequent
purchaser, and was therefore not essential in the cause which was
before the court, and is advanced only by counsel in argument, yet
it shows that the opinion that a voluntary conveyance was not
absolutely void as to subsequent creditors prevailed
extensively.
In the case of
Taylor v. Jones, 2 Atk. 600, a bill was
brought by creditors to be paid their debts out of stock vested by
the husband in trustees for the benefit of himself for life, of his
wife for life, and afterwards, for the benefit of children.
Lord
Page 21 U. S. 244
Hardwicke decreed the deed of trust to be void against
subsequent as well as preceding creditors.
There are circumstances in this case which appear to have
influenced the chancellor and to diminish its bearing on the naked
question of a voluntary deed being absolutely void, merely because
it is voluntary.
Lord Hardwicke said
"Now in the present case, here is a trust left to the husband in
the first place under this deed, and his continuing in possession
is fraudulent as to the creditors, the plaintiffs."
His Lordship afterwards says
"And it is very probable that the creditors, after the
settlement, trusted Edward Jones, the debtor, upon the supposition
that he was the owner of this stock, upon seeing him in
possession."
This case undoubtedly, if standing alone, would go far in
showing the opinion of Lord Hardwicke to have been that a voluntary
conveyance would be void against subsequent as well as preceding
creditors, but the circumstances that the settler was indebted at
the time and remained in possession of the property as its apparent
owner were certainly material, and although they do not appear to
have decided the cause, leave some doubt how far this opinion
should apply to cases not attended by those circumstances.
This doubt is strengthened by observing Lord Hardwicke's
language in the case of
Russell v. Hammond. His Lordship
said
"Though he had hardly known one case where the person conveying
was indebted at the time of the conveyance
Page 21 U. S. 245
that the conveyance had not been fraudulent, yet that, to be
sure, there were cases of voluntary settlements that were not
fraudulent, and those were where the persons making them were not
indebted at the time, in which case subsequent debts would not
shake such settlements."
It would seem from the opinion expressed in this case that
Taylor v. Jones must have been decided on its
circumstances.
The cases of
Stillman v. Ashdown and of
Fitzer v.
Fitzer & Stephens, reported in 2 Atk., have been much
relied on by the appellant, but neither is thought to establish the
principle for which he contends. In
Stillman v. Ashdown,
the father had purchased an estate, which was conveyed jointly to
himself and his son and of which he remained in possession. After
the death of the father, the son entered on the estate, and the
bill was brought to subject it to the payment of a judgment against
the father in his lifetime. The Chancellor directed the estate to
be sold and one moiety to be paid to the creditor and the residue
to the son.
In giving his opinion, the chancellor put the case expressly on
the ground that this, from its circumstances, was not to be
considered as an advancement to the son. He said too,
"A father, here, was in possession of the whole estate, and must
necessarily appear to be the visible owner of it, and the creditor
too would have had a right, by virtue of an
elegit, to
have laid hold of a moiety, so that it differs extremely from all
the other cases. "
Page 21 U. S. 246
In the same case, the Chancellor lays down the rule which he
supposed to govern in the case of voluntary settlements. "It is not
necessary," he says,
"that a man should be actually indebted at the time of a
voluntary settlement to make it fraudulent, for if a man does it
with a view to his being indebted at a future time, it is equally
fraudulent, and ought to be set aside."
The real principle, then, of this case is that a voluntary
conveyance to a wife or child, made by a person not indebted at the
time is valid, unless it were made with a view to being indebted at
a future time.
In the case of
Fitzer v. Fitzer & Stephens, the
deed was set aside because it was made for the benefit of the
husband, and the principal point discussed was the consideration.
The Lord Chancellor said "It is certain that every conveyance of
the husband that is voluntary, and for his own benefit, is
fraudulent against creditors." After stating the operation of the
deed, he added, "Then consider it as an assignment which the
husband himself may make use of to fence against creditors, and
consequently it is fraudulent."
This case, then, does not decide that a conveyance to a wife or
child is fraudulent against subsequent creditors because it is
voluntary, but because it is made for the benefit of the settler,
or with a view to the contracting of future debts.
The case of
Peacock v. Monk, in 1 Vesey, turned on two
points. The first was that there was a proviso to the deed which
amounted to a power of revocation, which, the chancellor said,
Page 21 U. S. 247
had always been considered as a mark of fraud, and 2., that,
being executed on the same day with his will, it was to be
considered as a testamentary act.
In the case of
Walker v. Burrows, 1 Atk. 94, Lord
Hardwicke, adverting to the stat. 13 Eliz., said, that it was
necessary to prove that the person conveying was indebted at the
time of making the settlement or immediately afterwards in order to
avoid the deed.
Lord Hardwicke maintained the same opinion in the case of
Townshend v. Windham, reported in 2 Vesey. In that case he
said
"If there is a voluntary conveyance of real estate or chattel
interest by one not indebted at the time, though he afterwards
become indebted, if that voluntary conveyance was for a child, and
no particular evidence or badge of fraud to deceive or defraud
subsequent creditors, that will be good; but if any mark of fraud,
collusion, or intent to deceive subsequent creditors appears, that
will make it void; otherwise not, but it will stand though
afterwards he becomes indebted."
A review of all the decisions of Lord Hardwicke will show his
opinion to have been that a voluntary conveyance to a child by a
man not indebted at the time, if a real and
bona fide
conveyance, not made with a fraudulent intent, is good against
subsequent creditors.
The decisions made since the time of Lord Hardwicke maintain the
same principle.
In
Stephens v. Olive, 2 Bro.Ch. 90, Edward Olive, by
deed dated 7 May,
Page 21 U. S. 248
1774, settled his real estate on himself for life, remainder to
his wife for life, with remainders over for the benefit of his
children. By another deed of the same date, he mortgaged the same
estate to Philip Mighil to secure the repayment of 500 pounds, with
interest. On 6 March, 1775, he became indebted to George Stephens.
This suit was brought by the executors of George Stephens to set
aside the conveyance because it was voluntary and fraudulent as to
creditors. The Master of the Rolls held
"that a settlement after marriage, in favor of the wife and
children, by a person not indebted at the time, was good against
subsequent creditors . . . and that although the settler was
indebted, yet, if the debt was secured by mortgage, the settlement
was good."
In the case of
Lush v. Williamson, the husband conveyed
leasehold estate in trust to pay, after his decease, an annuity to
his wife for life, and after her decease the premises charged with
the annuity for himself and his executors. A bill was brought by
subsequent creditors to set aside this conveyance. The Master of
the Rolls sustained the conveyance, and after expressing his doubts
of the right of the plaintiff to come into court without proving
some antecedent debt, said,
"A single debt will not do. Every man must be indebted for the
common bills for his house, though he pays them every week. It must
depend upon this whether he was in insolvent circumstances at the
time."
In the case of
Glaister v. Hewer, 8 Ves. 199, where the
husband, who was a trader, purchased
Page 21 U. S. 249
lands and took a conveyance to himself and wife and afterwards
became bankrupt and died, a suit was brought by the widow against
the assignees to establish her interest. Two questions arose: 1.
whether the estate passed to the assignees under the statute of 1
James I, ch. 15, and if not, 2. whether the conveyance to the wife
was void as to creditors.
The Master of the Rolls decided both points in favor of the
widow. Observing on the statute of the 13th of Eliz., he said that
the conveyance would be good, supposing it to be perfectly
voluntary, "for," he added,
"though it is proved that the husband was a trader at the time
of the settlement, there is no evidence that he was indebted at
that time, and it is quite settled that under that statute, the
party must be indebted at the time."
On an appeal to the Lord Chancellor, this decree was reversed
because he was of opinion that the conveyance was within the
statute of James, though not within that of Elizabeth.
In the case of
Battersbee v. Farrington, 1 Swanst. 106,
where a bill was brought to establish a voluntary settlement in
favor of a wife and children, the Master of the Rolls said
"No doubt can be entertained on this case if the settler was not
indebted at the date of the deed. A voluntary conveyance by a
person not indebted is clearly good against future creditors. That
constitutes the distinction between the two statutes. Fraud
vitiates the transaction, but a settlement
Page 21 U. S. 250
not fraudulent by a party not indebted is valid, though
voluntary."
From these cases it appears that the construction of this
statute is completely settled in England. We believe that the same
construction has been maintained in the United States. A voluntary
settlement in favor of a wife and children is not to be impeached
by subsequent creditors on the ground of its being voluntary.
We are to inquire, then, whether there are any badges of fraud
attending this transaction which vitiate it.
What are those badges?
The appellant contends that the house and lot contained in this
deed constituted the bulk of Joseph Wheaton's estate, and that the
conveyance ought on that account to be deemed fraudulent.
This fact is not clearly proved. We do not know the amount of
his estate in 1807; but if it were proved, it does not follow that
the conveyance must be fraudulent. If a man entirely unencumbered,
has a right to make a voluntary settlement of a part of his estate,
it is difficult to say how much of it he may settle. In the case of
Stephens v. Olive, the whole real estate appears to have
been settled, subject to a mortgage for a debt of 500 pounds, yet
that settlement was sustained. The proportional magnitude of the
estate conveyed may awaken suspicion and strengthen other
circumstances, but, taken alone, it cannot be considered as proof
of fraud. A man who makes such a conveyance necessarily impairs his
credit, and
Page 21 U. S. 251
if openly done, warns those with whom he deals not to trust him
too far; but this is not fraud.
Another circumstance on which the appellant relies is the short
period which intervened between the execution of this conveyance
and the failure of Joseph Wheaton.
We admit that these two circumstances ought to be taken into
view together, but do not think that as this case stands they
establish a fraud.
There is no allegation in the bill, nor is there any reason to
believe, that any of the debts which pressed upon Wheaton at the
time of his failure were contracted before he entered into commerce
in 1809, which was more than two years after the execution of the
deed. It appears that at the date of its execution, he had no view
to trade. Although his failure was not very remote from the date of
the deed, yet the debts and the deed can in no manner be connected
with each other; they are as distinct as if they had been a century
apart. In the case of
Stephens v. Olive, the debt was
contracted in less than twelve months after the settlement was
made; yet it could not overreach the settlement.
These circumstances, then, both occurred in the case of
Stephens v. Olive, and were not considered as affecting
the validity of that deed. The reasons why they should not be
considered in this case as indicating fraud are stronger than in
England. In this district, every deed must be recorded in a place
prescribed by law. All titles to land are placed upon the record.
The person who trusts another on the faith of his real
property,
Page 21 U. S. 252
knows where he may apply to ascertain the nature of the title
held by the person to whom he is about to give credit. In this
case, the title never was in Joseph Wheaton. His creditors
therefore never had a right to trust him on the faith of this house
and lot.
A circumstance much relied on by the appellant is the
controversy which appears to have subsisted about that time between
the Post Office Department and Wheaton. This circumstance may have
had some influence on the transaction, but the Court is not
authorized to say that it had. The claim of the Post Office
Department was not a debt. On its adjustment, Wheaton was proved to
be the creditor instead of debtor.
It would be going too far to say that this conveyance was
fraudulent to avoid a claim made by a person who was, in truth, the
debtor where there is nothing on which to found the suspicion but
the single fact that such a claim was understood to exist.
The claim for the improvements stands on the same footing with
that for the lot. They appear to have been inconsiderable, and to
have been made before these debts were contracted.
Decree affirmed.
