Maloney v. Hale

240 S.W. 707, 153 Ark. 462, 1922 Ark. LEXIS 391

• Court: Supreme Court of Arkansas
• Decided: May 8, 1922
• Status: Published

Opinion

Hart, J.

(after stating the facts). Counsel for the plaintiff seeks to reverse the judgment upon the doctrine laid down in Roberts v. Bodman-Pettit Lumber Co., 84 Ark. 227; McClintock v. Skinner Co., 126 Ark. 591, and Talley v. Davis, 136 Ark. 604. In those cases, as well as other cases, this court has held that where a married woman permits her husband to hold her personal property out as his own and to use it as an apparent basis of credit, she will be estopped as against her husband’s creditors to claim it as her own.

On the other hand, counsel for the defendants seek to uphold the decree on the doctrine of Sharp v. Fitzhugh, 75 Ark. 562. In that case it was held that the wife’s property is not liable to her husband’s creditors for its increase or enhancement in value on account of any reasonable contribution of his time, labor, or skill in the management of it. The reason is that creditors cannot compel the husband to work for them, and cannot command Ms skill or labor. The wife has the right to control the profits of her own property, and her husband may manage it for her. There is a marked distinction, however, between the wife’s entrusting the entire management and control of her separate property or business to her husband when the business is openly conducted as her own, and in suffering her own money to be .used in a business by her husband, and blended with his earnings so that it cannot be separated. Equity looks to the substance of a transaction and not its form. It disregards all matters of form and is governed by the facts. The substance of the present transaction is that the wife permitted her money to be used by her husband in carrying on a business under the name of Hale & Co. Her money and the business skill and industry of her husband cannot be separated. He used her money in building up the business and gained credit on the faith ■ of it. A preponderance of the evidence shows that the husband devoted his whole time, energy and skill to the management and conduct of the mercantile business. The bills were sent out in the name of Hale & Co. The wife never gave any attention whatever to the business. Her husband obtained credit on the faith of its being his own business. Husband and wife occupy the most confidential relation in life, and it is well settled that the wife cannot give her money to her husband and permit him to use it for a long series of years in obtaining credit and then claim that the profit derived from the use by her husband is exempt from the claims of his creditors.

We are of the opinion that the course of conduct of Mr s. Hale in permitting her husband to use her money and property as an apparent basis of credit estops her from claiming the property against.the plaintiff, who extended credit to her husband on the faith thereof.

Therefore the chancery court erred in dismissing the complaint of the plaintiff for want of equity, and for that error the decree will he reversed and the cause remanded, with directions to grant the prayer of the plaintiff’s complaint, and for further proceedings in accordance with the principles of equity.