Jones v. Hogan

116 S.W. 21, 135 Mo. App. 347, 1909 Mo. App. LEXIS 611

• Court: Missouri Court of Appeals
• Decided: January 26, 1909
• Status: Published

Opinion

GOODE, J.

(after stating the facts). — The court below found the purchases of property made by Hogan prior to 1897 in the name of his wife were voluntary, but.as be was then unembarrassed by debts, held they were lawful, as being no more than a reasonable provision for her out of his property and made with no intent to defraud prior or subsequent creditors. [Eddy v. Baldwin, 32 Mo. 369; Fehlig v. Busch, 165 Mo. 144.] The same ruling was made regarding the note for |4,000 executed by Hogan under the style of Robert G. Hogan & Co. to indemnify her against loss of the homestead mortgaged to raise money for him. Plaintiff’s counsel argues the mortgage was satisfied which this note was given to indemnify her against, and hence the note ceased to be a valid obligation. The property was not sold from Mrs. Hogan under this mortgage, but under a prior one; but the conclusion is reasonable that she lost it in consequence of the mortgage given for his benefit increasing the incumbrances on it to an amount that could not be paid. It is true that after the property had been sold, the note secured by the mortgage executed to raise money for Hogan, was satisfied, partly by the proceeds of the foreclosure and partly by payments made by him. Nevertheless, his note of indemnity was given to protect his wife against the loss of her home, and as she lost it in consequence of having incumbered it for'his benefit, it looks like the consideration for the ' indemnity remained intact. The court found, too, the payment of $500 made by Hogan on the purchase price of the lots in question at the time of the purchase (May 1, 1901) and the further payment of $1,000 on the price made by Hogan December 1, 1902, were treated by Hogan and wife as credits on- his note to her and that it was lawful for him to pay said sums for her. The court found $1,300 of the sum of $1,800 entered as a credit on the note, actually belonged to Mrs. Hogan as the proceeds of her separate property; and this being true, the credit was, to that extent, a mistake. Those matters were- all settled in /avor of Mrs. Hogan by the findings and decree, and as plaintiff did not appeal, and the items involved in de-defendant’s appeal are independent of them, we really have nothing to do with them. All the transactions between the husband and wife were upheld by the court as valid except these four items: $900 expended by Hogan for improvements on the lots in question, $900 interest on the note given for part of the price, $300 for taxes and $100 for insurance premiums; which items the court found were not intended by either Mr. or Mrs. Hogan as payments on the note of indemnity. This finding was not made in so many words, but is covered by the finding that no payment made prior to May 1, 1901, by Hogan for the benefit of his wife or her property, and none made thereafter except the sums of $1,800 and $1,000, was intended as a payment on said note. The court found Hogan paid said four items without any consideration moving from his wife, and that they were “made by both of them with intent to hinder, delay and defraud his said creditors above mentioned.” Elsewhere the findings recite that all payments made on account of the property in dispute after May 1, 1901, except-the sums of $1,800 and $1,000, “were made with the intent on his part to hinder, delay or defraud his creditors and she (i. e., Mrs. Hogan) had knowledge thereof and accepted the same with the same intent.”

The briefs of counsel go at length into the question of whether, after Hogan’s wife knew he was insolvent, there could be a valid contract between them for him to expend money for the benefit of the homestead in lieu of rent he otherwise would pay for a home. That is to say, whether, if he was insolvent, any payments to her or for her benefit must be regarded as voluntary and in fraud of his creditors. The findings of the court below hardly call this question into the case; a lien having been fastened on Mrs. Hogan’s property for the four items mentioned," on the ground that Hogan paid them with intent to defraud his creditors and she partook of this intention. If these findings are justified by tbe evidence, the decree ought to be affirmed; because, though the law may have accorded them the right to contract in good faith for the payments, if they used this right in a colorable mode, their real design being to screen part of his means from process for his debts, the payments were fraudulent. [Balz v. Nelson, 171 Mo. 682, 689.] Study of the evidence has convinced us the agreement between Mr. and Mrs. Hogan was not made to hinder or defraud creditors, but in good faith for its avowed purpose. The law laid on Hogan the duty to provide a home for his family (Gruner v. Scholz, 154 Mo. 415, 426; Brundage v. Munger, infra), and he preferred to discharge this duty by renting one; but yielding to Mrs. Hogan’s .wish, a home was purchased, largely on credit, and the title taken in her name, she paying $1,300 of the price, or, we may say, $2,800 of it; for the court found the payments of $500 and $1,000 made by Hogan, went in discharge of what he owed her. The reasonable rental value of the premises was one thousand dollars a year, and the sums paid by Hogan as rent, or in lien of what he would have paid for the rent of another home equally desirable, amounted to $2,200 and extended over three years. Therefore he paid a little over seven hundred dollars a year, or considerably less than a reasonable rental for the property. In comparison with his earnings, a home of that cost was not an excessive provision for his family. Accepting these facts as true, the arrangement between Mr. and Mrs. Hogan was natural and reasonable. As she owned a residence, likely it was more economical and satisfactory for the family to live there than elsewhere, if Hogan would furnish the money needed to discharge the interest on the unpaid purchase price, make repairs and pay taxes and insurance premiums. No other resource was available from which to procure money for these necessary disbursements, and a self-respecting husband and father could do no less than advance it, if he was able to do so. Moreover, tbe question occurs bow Hogan’s creditors would be damaged more by bis making these payments than they would be by bis paying rent.

Our next inquiry is whether tbe arrangement by which Hogan was to discharge the items in controversy in lieu of paying rent, fell within the pale of law. Cases not decided upon statutes vesting in married women the exclusive right to the rents and profits of their real estate, and giving them the right to contract, look adverse to the validity of the agreement, but are not in point in this State because their doctrine has been abrogated by legislation. “The rents, issues and products of the real estate of any married woman, and all moneys and obligations arising from the sale of such real estate, and the interest of her husband in her right in any real estate which belonged to her before marriage, or which she may have acquired by gift, grant, devise or inheritance during coverture, shall, during coverture, be exempt from attachment or levy of execution for the sole debts of her husband,” etc. [2 Mo. Ann. Stat., sec. 4339.] “All real estate and any personal property, including rights in action, belonging to any Avoman at her marriage, or which may have come to her during coverture by gift, bequest or inheritance, or by purchase with her separate money or means, or be due as wages of her separate labor, or has groAvn out of any violation of her personal rights, shall, together with all income, increase and profits thereof, be and remain her separate property and under her sole control, and shall not be liable to be taken by any process of law for the debts of her husband,” etc. [2 Mo. Ann. Stat., sec. 4340.] Under those statutes any rent obtained for Mrs. Hogan’s property would have been her separate property and not disposable by her husband or subject to his debts, and as the duty to provide a home for the family was his and not hers, she was under no obligation to permit the use of her premises by the family without compensation. But if she was disabled by the law from contracting with him for the payment of rent, perhaps his creditors might follow the payments he made for her as voluntary alienations of his assets made while he was insolvent. Conveyances or transfers of property by an insolvent debtor upon no consideration, are fraudulent as against existing creditors, regardless of an intent to defraud. [White v. McPheeters, 75 Mo. 286, 294.] And a transfer by a husband to his wife will be scrutinized by a court with care, to ascertain whether it was voluntary or for a consideration, and bona fide or meant to defeat creditors. [Gruner v. Scholz, 154 Mo. 415.] The case just cited is a strong authority, however, in favor of upholding agreements in favor of a home for a debtor’s family when honestly made. The opinion well says: “Our anxiety to uncover fraud must not lead us to deny that men still have natural affections and say that gratitude no longer exists.” In the Re-, vised Statutes of 1899, a section appeared which empowered a married woman to act as a femme sole, transact business on her own account, contract and be contracted with, sue and be sued, enforce and have enforced against her property such judgments as might be rendered for or against her, and sue and be sued at law or in equity, with or without her husband being joined as a party. [R. S. 1889, sec. 6864, R. S. 1899, sec. 4335; 2 Mo. Ann. Stat. 4335.] In Rice v. Sally, 176 Mo. 107, 129 et seq., the Supreme Court held the intention of the Legislature in the enactment of the several statutes cited supra; was to remove the legal disabilities of a married woman, and that the language of the statutes was broad enough to permit her to enter into contracts with her husband which would be as enforceable as those made with other persons. It follows there was no legal obstacle to Mr. and Mrs. Hogan agreeing he should pay, in lieu of rent, the expenses incident to the maintenance of her homestead, and a contract for that purpose was not necessarily voluntary and fraudulent as to creditors, but would rest' upon a consideration, and its validity as against creditors depend on the purpose which inspired it. We have declared our belief that the purpose of Mr. and Mrs. Hogan was honest.

Many cases are cited by counsel in support of their respective contentions and we have read them all, but without finding reason to doubt that our conclusion about the law and the facts of this case are sound. We will compare with it a few of the authorities relied on bv plaintiff. In Kirby v. Bruns et al., 45 Mo. 234, an insolvent debtor had put improvements amounting to $2,500 or $3,000 on his wife’s land and the land was charged with a lien for it. This case arose before husband and wife could contract with each other; and, indeed, it does not appear he made the improvements pursuant to any agreement or for a consideration. The facts in Garrett v. Wagner, 125 Mo. 450, are similar in many ways to those before us, but the contract by which that husband agreed to pay the building and loan dues on his wife’s property in lieu of paying rent, was entered into before a married woman could enter into contracts and, therefore, the payments were voluntary on his part. Moreover, there were vivid traces of actual fraud in'that case which do not stain this one. In Hardware Co. v. Horn, 146 Mo. 129, the defendant Horn had paid out of his own means part of the purchase price of property taken in his wife’s name. The payment was made when he was insolvent and not upon an agreement or for a consideration, and being purely voluntary, was, of course, fraudulent as to creditors. In Wolfsberger v. Mort et al., 104 Mo. App. 261, the insolvent husband had mingled his money with his wife’s in a joint bank account, out of which the property in controversy (a piano) was purchased by her. It further appeared he furnished the money to meet the family expenses’. Under those circumstances we held the property could be proceeded against for his debt because “to permit an insolvent husband, having creditors, to systematically and continuously give Ms wife practically all Ms earnings, and to allow the wife with these gifts to acquire in her own name and for her separate use, personal property and hold it exempt from the just demands of the creditors of her husband, when if the same property had been acquired directly by the husband, it would have been subject to levy, would work a gross fraud on the husband’s creditors.” The controlling fact in Delo v. Johnson, 110 Mo. App. 642, was that Johnson had paid off mortgages with his own means on his wife’s property to the amount of more than §20,000 when he was insolvent. Manifestly these payments were void as to creditors bechuse there was no consideration. Those cases are perhaps the most relevant of any cited for plaintiff on the proposition that the payments by Hogan in lieu of rent were illegal. The case cited infra relied on as authorities for the same doctrine, are out of point because of a number of distinguishing facts; mainly because the payments or transfers of property by husbands to wives, did not take place pursuant to an agreement and for a consideration rendered by the wife, or because the decisions were controlled by the common law incapacity of married women. [Dillman v. Nadelhoffer, 162 Ill. 625; Burt v. Gorzian, 102 Fed. 937; Wright v. Craig, 66 Pac. (Ore.) 807; Burt v. Timmons, 29 W. Va. 441; Lynde v. McGregor, 95 Mass. 182; Farr v. Hauenstein, 61 Atl. (N. J.) 147.] Some of those cases (e. g. Wright v. Craig and Lynde v. McGregor) distinctly recognize the right of the husband to prefer his wife as a creditor, or reimburse her for money which she in good faith had advanced for him, by taking the title to property in her name or making payments for her benefit. The same proposition was declared by our Supreme Court in Hart v. Leete, 104 Mo. 315, 337, wherein it was said: “That deed antedates the judgment under which plaintiff purchased the property, and, if it was made in good faith in payment of a debt due the wife, it should stand; for s. debt due the wife stands on as good footing as a debt due to any other person and she may be given a preference over other creditors.” The exact question at bar has not been determined in this jurisdiction, but cognate questions have been. An insolvent husband may render services to his wife in managing her business, or give time and labor to the improvement of her separate property, without his creditors acquiring a right as against her or her property. [Seay v. Hesse, 123 Mo. 450; Gruner v. Scholz, 154 Mo. 415; Bartlett v. Heckart, 88 Mo. App. 544; Magees v. Kaiser (Miss.), 121 L. R. A. 623 and note.] These appropriations for her benefit are kept, by some courts at least, within moderate bounds. [Boggess v. Richards (W. Va.), 26 L. R. A. 537.] In a standard treatise it is said if a debtor lives in his wife’s property, he may keep it habitable and in repair; and, in reasonable limits, this may be regarded as a proper discharge of his obligation to support his family. Further, that an insolvent debtor may enter into a contract to work for another in consideration of the support of his family, and if a wife has a separate estate, she may employ her husband and pay him for services performed on it. [Bump, Fraudulent Conveyances (4 Ed.), secs. 218, 223, 224 and cases cited in the notes.] As stated, transfers of money or property from an insolvent husband to his wife must be looked into carefully, because they afford opportunities for the easy evasion of Ms liabilities. He ought not to be allowed to divert more of his earnings or property to the use of his family, or under some arrangement with his wife, than is necessary. But while this is true, it is also the law that if an agreement between man and wife is found to have been made in good faith and ón a consideration, and to be just and reasonable, the circumstances considered, it will be upheld against the attacks of creditors, like similar transactions between other parties. [Seay v. Hesse, 123 Mo. loc. cit. 464.] Agreements similar to the one in hand have engaged the attention of courts of other jurisdictions and have been upheld. In Gage v. Dauchy, 34 N. Y. 293, the property in dispute had been seized in execution as the husband’s, whereupon the wife sued in trespass. She owned a farm.' which he worked on, but not under an agreement for wages, and he also managed her trading. The property had been bought with money obtained from the sale of grain grown on the farm, and on the theory that his labor helped raise the crops, his creditors levied on the property. This case was decided before husband and wife had power to contract with each other in New York, but when there was a statute similar to ours, giving her the separate use of the rents, issues and profits'of her real estate, and excluding the same from the disposal of her husband or liability for his debts. The court said that as the Legislature left the husband the right, and made it his duty, to live with his wife, he must necessarily have lived on her farm, if they had no other place to live, and it could not have been intended to deprive the wife, in that contingency, of the benefit of his services; that the law required him to support his wife and family, and their entire support might be cast on him while she used the rents and profits of her estate to enlarge her wardrobe or engage in business on her own account. We notice this case because its doctrine, that the law absolutely requires a husband to support his family, was approved expressly by our Supreme Court in Seay v. Hesse and Gruner v. Scholz, and in the former case the court said also, by way of quotation from Gooper v. Ham, 49 Ind. 393: “It is firmly settled the first and highest obligation of a husband is to provide for the support, maintenance and education of his family, and that, after this has been accomplished, he should give the best exertions of his mind and body to accumulate means for the payment of his debts.” In the same connection the court said Hesse might give his personal services and skill to the management of his wife’s property without any further compensation than the support of his family. In that case the attempt was to charge real estate owned by Mrs. Hesse with a judgment in favor of her husband, on the ground that he bought the property in her name while he was insolvent, for the purpose of defrauding creditors. Originally her own money was used to buy property whose value after: wards passed into the estate sought to be charged, but it appeared the husband’s labor had contributed also toward paying for said estate. Nevertheless it was exonerated from liability for his debts. In Gruner v. Scholz, supra, very strong expressions regarding the sanctity, as against creditors, of means devoted by a husband and father to the necessities of his family, are quoted from a text work and from judicial decisions; remarks of the same tenor as those made in Bump’s treatise. In Brundage v. Munger, 66 N. Y. 1014, we have a case in all respects like this one. That husband had conveyed a homestead to his wife when solvent and had. afterwards paid money for insurance, taxes, interest on a mortgage executed for the purchase price of the home, and repairs. These payments were made pursuant to an understanding which was satisfactory to both parties, that they should be in lieu of rent, but with no positive agreement to that effect. Creditors of the husband sued for a lien on the property and were denied, the payments being held valid. In Robinson v. Hoffman, 15 B. Mon. (Ky.) 80, an insolvent husband had paid out several hundred dollars for repairs on his Avife’s property used by them as a homestead, and his creditors attempted to lay a lien on the property to the extent of the payments. In Dick v. Hamilton, 1 Deady 322, the husband had disbursed money while insolvent in improving a homestead owned by his wife and occupied by the family. We refer to the opinions in those cases for sound expositions of the grounds for holding the agreement in question valid. The courts disposed of the causes on these rules of law: it is the duty of a husband to support his family and furnish them a home. A wife need do nothing toward these ends out of her separate estate, and his creditors will not be harmed by his paying reasonable amounts to her or for Iter instead of paying rent to some one else. Other cases in point are: Graumen v. Davis, 13 Ky. L. Rep. 591; McFavin v. Carter, 62 Tenn. 335; Webster v. Hildreths, 33 Vt. 457. We have no doubt of the capacity of Hogan and his wife to contract as they did, that a valuable ‘consideration supported their .contract and that it contemplated what was no more than a reasonable provision for the family.

The judgment will be reversed and the cause remanded with the direction to the court below to dismiss plaintiff’s bill.

All concur.