NOEL v. KINNEY

NOEL v. KINNEY. N. Y. Court of Appeals ; June, 1887. [Reversing 15 Abb. N. C. 403.] 1. Partnership; husband and wife.] Husband and wife may be liable as partners to third persons. Whether they may be partners as between themselves, Query ? 2. Liability of married woman upon partnership obligation.] A married woman who has acquired, from a person other than her husband, property, or received from such person benefit for her separate estate upon the faith of her promise, may be held liable therefor, although the form of her promise or obligation involves a contract or relation with her husband which, as between them, she was not competent to make. 3. Estoppel against married woman.] The rule that a married woman may be estopped by her acts and declarations in any matter in which she is capable of acting sui juris, re-iterated. 4. Proof of partnership in action against several as partners.] In an action against several as partners, failure to prove the allegation of partnership is not necessarily fatal. Where defendants, who were husband and wife, were sued on a promissory note made as part ners,—Held, that after judgment against the husband'on his individual liability, there could be Judgment against the wife on the ground that the consideration was for the benefit of her separate estate. Appeal from judgment ordered on exceptions which had been directed to be heard in the first instance at General Term of the City Court of Brooklyn. August Noel and August Noel, Jr., sued Frederica M, and John P. Kinney (who were husband and wife) as partners. The action was upon a note signed “ J. P. Kinney &■ Co.,” payable to the order of plaintiffs at bank, for $505,. value received. The complaint contained allegations usual in such cases, and-sufficient to charge defendants as partners under the name affixed to the note. Frederica M. Kinney alone answered, and her sole-defense was, that at the time stated she was a married woman, and that the note was executed and delivered by her husband . But there was no allegation that it was made- . without her knowledge and consent, nor that it was made without her authority. Upon the trial the plaintiffs put the note in evidence, and the defendant proved her marriage with the other defendant. But there was evidence from which the jury might have found that she was the owner of improved real estate in the city of Brooklyn, that the consideration of the note was the purchase price of mirrors placed in houses built upon her land, and that the mirrors were unpaid for; that the note was' fairly taken and the consideration delivered upon the representation by the husband that the wife was-the sole owner of the property, and that the name of J. P, Kinney & Co., was used as a mere matter of convenience in transacting her business. It did not appear that there was-any business, except in relation to the houses. No question was made as to the authority of defendant’s husband to-execute the note, nor as to the truth of his representations. At the trial the defendant, Frederica, moved to dismiss the complaint upon the ground that as to her the note was invalid, “ its form,” as her counsel stated, “ showing it was not given in respect to her separate business or estate.” The trial judge directed a verdict for the plaintiff, subject to the opinion of the court. It was so rendered ; but, on motion of the defendant’s counsel, was afterwards set aside by the same judge, and judgment ordered for the defendant. Exceptions taken by the plaintiffs to this ruling were directed to be heard in the first instance at general term, judgment in the meantime to be suspended. The Brooklyn City Cowl at General Term, overruled the exceptions and ordered judgment for the defendants^ holding that at common law, the unity of husband and wife precluded the existence of a co-partnership between them, and that this disability had not been removed by the enabling acts of 1848, 1849, 1860, and 1862 ; and therefore that a married woman could not be held liable upon a note-signed by her husband in the name of a firm composed of her husband and herself. Following Fairlee r. Bloomingdale (14 Abb. N. C. 341), and opposing Graff v. Kinney (15 Id. 397). Nicholson P. O'Brien (Frank N. O'Brien, attorney),, for the plaintiff, appellant. G. Storms Carpenter, for the defendant, respondent. Since May 28th, 1884, by the act of the legislature of this State of that date, a “ married woman may contract to the same extent, with like effect and in the same form as if unmarried, and she and her separate estate shall be liable thereon, whether such contract relates to her separate business or estate or otherwise, and in no case shall a charge upon her separate estate bo necessary.” L. 1884, c. 381, § 1. But this act is not to affect or apply to any contract that shall be made between husband and wife. Ib. § 2. By L. 1887, c. 537, it is provided that “any transfer or conveyance of real estate, hereafter made by a married man directly to his wife, and every transfer Or conveyance of real estate hereafter made directly by a married woman to her husband, shall not be invalid, because such transfer or conveyance was made directly from one to the other without the intervention of a third person. Reported in full in 15 Abb. N. C. 403. [MAJORITY — Danforth, J.] Danforth, J. [After stating the above facts.] It is obvious that the contract in fulfillment of which the-note was given was of value to the defendant, for by it she acquired articles for the improvement of her property. She retains those articles ; and has thus far avoided payment upon the ground that she and her husband, upon contracting and consummating marriage became one person, and so incapable of thenceforth contracting one with the other; that therefore they could' not be partners ; and as the contract sued on was in form a copartnership contract, it could not be enforced against her. If this is the present rule of law, then the statutes which enable the woman to acquire and hold property, to bargain, sell, assign and transfer it, to carry on any trade or business and perform any labor or service on her own account, and which protect her in the enjoyment of her earnings from her trade, business, labor or services, and permit her to use and invest those earnings, are effectual only so far that she may alone, or jointly with any person or persons save her husband, derive profit and increase from her work and gain from the use of her estate. If they are to be so limited in her favor, they may easily, as in this instance, become not merely enabling statutes for her benefit, but also in her hands instrumentalities of fraud. Upon the, precise question presented the opinion of the ■court below assumes that the decisions of other courts are conflicting, but we are referred to no case in this court where .a women has successfully asserted her coverture as a defense to an action for the price of goods purchased by her; and I .am unable to see why, as against creditors, she should be permitted to interpose the mere form of her promise as an •obstacle to .their recovery. It is settled that the things which the statutes above referred to permit her to do in person, she may also do by another as her agent. This is necessarily so, for she is allowed to act in respect to them as if unmarried ; and it cannot be doubted that the improvement of her land or the management of her personal property, whether for preservation or business, may be conducted by her by means of any agency which any other owner of property might employ, and that the produce and increase thereof will be hers (Knapp v. Smith, 27 N. Y. 277; Abbey v. Deyo, 44 Id. 344). So she may do those things through her husband as her .agent (Abbey v. Deyo, supra; Rowe v. Smith, 45 N. Y. 230). She may also have such a community of interest with .him in relation to real estate as will render her liable for his frauds relating to it; and when he, professing to act as her agent, makes false representations, although without her .knowledge, and she receives the proceeds, she cannot retain the fruits of his fraud (Krumm v. Beach, 96 N. Y. 398). Again ; as to all contracts relating to her separate estate, or made in the course of her separate business, she stands at law on the same footing as if unmarried, and can, therefore, make negotiable paper which will be governed by the law merchant and can be sued upon in the ordinary way by general complaint and without special statements (Frecking v. Rolland, 53 N. Y. 422). Nor can she escape liability because she and her husband are joint makers of the note sued on. In Frecking v. Rolland (supra), the action was upon a joint promissory note signed by the defendants, who were husband and "wife. lie set up usury and she set up coverture. The court directed a verdict for the wife, and the jury gave a verdict against the husband. The creditor appealed. The general term affirmed the verdict in favor ■ of the wife, and the creditor appealed to this court. Against the appeal it was argued: 1, that being a married woman .she was not liable for the note in suit; 2, that the complaint, being general and not specific, was insufficient to charge her property. Neither objection prevailed, and the judgment in her favor was reversed. There the husband, acting for himself and as the agent of his wife, borrowed money with which to pay for a factory bought by her. The money was loaned to them and was in fact so applied in part payment. The note was given for the money loaned and for services. 'The court in answering the defendant’s objections, shows that the .capacity of a married woman to malee contracts1 relating to her separate business, is incident to the power to' conduct it, for the latter would be barren and useless if disconnected with the right to conduct it in the way and. by the means usually employed. In the case cited she became a joint contractor with her husband, but she was as much bound to perform the joint engagement as if the undertaking had been several, and she did not escape liability because-her joint contractor was her husband. It was not necessary to inquire in that case whether the-one paying could obtain contribution from the other, nbr is it necessary to go into that question here. In that case both undertook to pay the creditor ; in this case both undertook to pay the creditor. Gan it make a difference in the measures of liability that- in one case the married woman entered in her own name and her husband in his name into the execution of a joint obligation, and in the other cas'e in a name which represents also joint liability, but which may in effect also be several ? Partners are at once principals and agents ; each represents the other ; and if in the relation of partnership there are obligations which a married woman cannot enforce against her husband', or the husband against the wife, they involve no feature of the present action, which asserts only the obligation of a debtor to discharge her debt or the obligation of a promisor to fulfil her promise. More like the present, case is that of Scott v. Conway (58 N. Y. 619), where in an action for the price of labor.and materials supplied to a theater, carried on by Sarah T. Conway and her husband, Frederick B.r under the name of Mrs. F. B. Conway’s Brooklyn Theater, and in which the-wife and husband were jointly interested, it was held to be no defense, against one who dealt with her in ignorance of the partnership, that she had a dormant partner, and that the rule was not changed by the fact that the partner was her husband. In Bitter v Rathman (61 N. Y. 512), it was held that a. •married woman, who in secret trust. for her husband 'becomes a member of a co-partnership, is to be regarded as the owner of the interest she represents and might maintain ■an action for the dissolution of the co-partnership and for .an accounting. The defendant in that case denied that she •was a partner, and claimed that he alone was interested in the business, claiming that being a married woman she -could not in law be his partner. The court held otherwise; and also that, having suffered herself to be regarded by the public as a partner, she was liable as such to the creditors of the ostensible firm, although it might be otherwise as regarded her husband and his creditors; but as to any liabilities of the ostensible firm she would be entitled to protection as against the defendant and her husband. It would seem therefore that by becoming a partner, .either with a husband or another person; a married woman loses no right of property. And no principle is suggested •upon which her estate can be increased at the expense of ■creditors, nor how, either in her own name or in her own name and that of another, or with another, she can purcchase goods on credit to the advantage of her separate estate .and not become liable for their payment. In Coleman v. Burr (93 N. Y. 17), cited by the appellants, the sole question was whether the conveyance of property by the husband to his wife was sustained by a consideration good as against his creditors, who impeached it. Here the wife was as capable of contracting as if she had 'been unmarried; as capable of adding to her estate by fresh .acquisitions ; and she should not be permitted to escape payment by joining to her own name that of her husband, .or by combining the two into a firm or partnership name. It was by that name she chose to contract, and as between Jierself and creditor she is bound by it. Individuals may be liable as partners to third persons, while as between .themselves they are not. Here then the question is not between husband and wife. Assume that as to and with him she has no capacity; it by no means follows that she shall not be held upon a contract made by him upon a consideration moving to her, where a third person who parted with that consideration in relian coupon the husband’s apparent agency, seeks to enforce the contract. If the adoption of a firm name was a mere contrivance to carry on the business jointly (and at the same; time to put the property acquired, and added to the wife’s separate property, out of the reach of creditors dealing with either bona fide as. the partner of the other), it should not be-permitted to have that effect. If, as the testimony shows,the wife was the sole owner of the property, the husband had no interest in it, but that for convenience they were-doing her business in the name of J. P. Kinney & Go., her liability for a debt contracted in that name is entirely consistent with the fact, if it be a fact, that as between the parties themselves no partnership exists. This is so although the plaintiffs allege in the complaint that the defendants are partners, and that allegation is not denied. For the purposes of the action it may be true. The plaintiffs gave credit to them • as such, but the goods they sold were intended by them to be annexed to the wife’s separate estate and they were so annexed. If the arrangement was valid between all parties there is no pretense of a defense; if invalid only as between the defendants, the wife, who received the fruits of the transaction, cannot, as against a creditor,, assert its invalidity. Although married she may be estopped by her acts and declarations in any matter in respect of which she is capable of acting sui juris (Bodine v. Killeen,. 53 N. Y. 93). In this instance the plaintiff proved the contract, that it was made by her authorized agent, and that it had reference to the improvement and benefit of her separate-estate. She had capacity to do all these things, and if the arrangement which led to the use of her husband’s name as-joint promiser or partner, was beyond her power to enter into, she must meet that liability without regard to any question whether her husband is also liable, or as to what-rights of indemnity or otherwise she might have against-him. She was a principal and he was her agent. He neither exceeded his power, nor were her act's to his prejudice ; and if by reason of any technical incapacity they could not contract with each other, or together as constituting that artificial entity, a firm or copartnership (a question we do not decide), she is liable, and the contract enforceable against her in favor of the plaintiffs whose property has been added to her estate upon the strength of a promise made in her name by her authorized agent. We think the court erred in directing judgment for the defendant. It should be reversed, and the plaintiffs have judgment upon the verdict. This makes a contract for the benefit of her separate estate within1 the late statute, L. 1884, c. 381. Nash v. Mitchell, 3 Abb. N. C. 171,. and note, 180. See Cashman v. Henry (5 Abb. N. C. 230), and cases, cited in foot-note.