O'LEARY against WALTER

O’LEARY against WALTER. City Court of Brooklyn, General Term, June, 1871. Married Woman.—Levy on Property Claimed by Wife.—Estoppel. In ah action by a wife to recover for a levy of an execution against her husband, on property claimed by her, it appeared that business was done ostensibly by the husband, but it was alleged that the capital was wholly furnished by the wife, and he received no compensation except board and clothing. Held, that the question of fraudulent intent. in such an arrangement was one for the jury. The actual ownership is first to be determined in such cases, and then (if found to be in the wife), the question whether the management has been such as to estop her from asserting her ownership as against the husband’s creditors. In such cases the husband's course of conduct in the management of the 'busi jss is a proper subject of investigation, and evidence on that pob t is admissible. The inten .on of the married women statutes was to encourage and protect chose unhappy in their marital relations. Though he husband may act as her agent, he may not be her unpaid servar c while defrauding his creditors. Appeal from a judgment. This action was brought by Eliza O’Leary to recover the value of some property taken by the defendant, Anthony Walter, sheriff of Kings county, on execution, under a judgment recovered against Thomas O’Leary, plaintiff’s husband, at suit of one Fredeke. Defendant claimed that the property belonged to the husband; and on the trial, after a refusal to direct the jury to render a verdict for plaintiff, the judge charged the jury that the questions of ownership and fraud were for them to consider. A verdict was rendered for defendant, and plaintiff appealed. William L. Gill, for plaintiff, appellant. Crooke, Bergen <fi Clement, for defendant, respondent.- See also Kluender v. Lynch, 4 Keyes, 361. The following recent cases illustrate the case in the text. Where the claim of a wife to chattels seized on execution against her husband, rested simply on allegations that her husband had from time to time made her gifts of money; that she had returned the money to him for investment, as her agent; and he had, as such agent, purchased for her the chattels in question;—Held, that this was not enough to sustain her title. To make such a gift valid, there must be a change of possession and control (Little v. Willets, 55 Barb., 125; S. C., 27 How. Pr., 481). Where husband and wife separate, the husband transferring property to a third person tor her use, the transfer being followed by possession, the courts will uphold the transfer, except as against then existing creditors; and the permission of the husband to the wife to carry on business on her own account,, does not render him liable for her purchases therein on credit (Ct. of Appeals, 1868, Griffin v. Banks, 37 N. Y., 621). If a husband duly authorizes his Wife to dispose of certain of his property as if it were her separate estate, he cannot revoke the power after its execution by her, conferring interests upon third persons who will be prejudiced by such revocation. Nor can subsequent creditors of the husband object to the validity of such a transfer made by her (Ib.). In an action by a wife against a sheriff for a levy, she was permitted to prove that the farm, the produce of which was levied on under an execution against her husband, belonged really to herself; that it was conveyed to her husbrad by mistake, and the mistake had been corrected by a transfer of the title to her. Under such circumstances the title, while nominally in the husband, was a mere naked title with out interest, and not bound by a judgment against him (Supreme Ct., 1868, Garrity v. Haynes, 58 Barb., 596). Upon a purchase of cows at the request of a wife who owned a farm, the husband and another pron, both acting as her agents, gave their note for them. Meld, that in the absence of proof of fraud, the property was in the wife, as against the execution creditors of the husband, levying even before the wife had paid the note (lb.). A wife’s title to a farm owned by her, and carried on by her and a minor son, was cut off by a foreclosure; and while she was holding over, in the absence of her husband, she sold crops which they had harvested before judgment, to the plaintiff;—Meld, that in the absence of proof of fraud, plaintiff acquired a good title to the crops sold, as against the purchaser of the land at the foreclosure sale (Ct, of Appeals, 1867, Van Etten v. Currier, 3 Keyes, 329; affirming 89 Barb., 644, sub nom. Van Ellen v. Carrier). The fact that the crops were raised in part, by the labor of herself and a son of her husband did not affect her title to them (Supreme Ct., 1859, Van Ellen v. Carrier, 29 Barb., 644). As to the mode of conveying, it was held in Lockwood v. Cullin, that the rule that to make an effectual gift to a married woman, as her separate property, there must be something on the face of the instrument transferring the property, indicating the intention of the giver to vest the property in the donee as her sole and separate estate, and to exclude the husband from any participation therein,—has no application where the husband is himself the giver, during coverture; but in such case the bare fact of his making the gift is as strong evidence of his intent that it shall be the sole and separate property of his wife as any declaration in writing would be (4 Robt., 129). In an action by a purchaser for value from a married woman, of land which her husband purchased, but which was conveyed to her in her own name, and which she afterward conveyed to plaintiff, the action being brought to recover possession of the land, neither a parol agreement between the husband and the wife, though made before the plaintiff’s purchase, that the land should be considered as belonging to a child of the husband and wife, and should be held by the husband in trust for the benefit of such child, nor the fact that the husband procured the conveyance to his wife for the purpose of securing a home for himself and family in case of future misfortunes, forms any defense (Gray v. Croquet, 4 Abb. Pr. N. S., 113). The validity of a deed made by a husband, as a provision or advancement for his wife, to a trustee, since the act of 1848, depends upon the same circumstances of good faith and solvency which would be considered in testing the validity of such an advancement made before that act took effect. Such a conveyance cannot be impeached by a subsequent creditor of the grantor, unless it appears that it was made with a fraudulent intent (Wilbur v. Fradenburgh, 52 Barb., 474; Barnum v. Farthing, 40 How. Pr., 25). In respect to the rights of creditors, the general principle is that gifts and voluntary conveyances by a husband to his wife, made without fraudulent intent, at a time when he was indebted to no one, are in equity valid and effectual, and are not to be called in question in a court of equity by his subsequent creditors. Subsequent indebtedness cannot be invoked to make that fraudulent which was honest and free from impeachment at the time (Phillips v. Wooster, 36 N. Y., 412 ; S. C., 3 Abb. Pr. N. S., 475, and cases cited; and see Holmes v. Clark, 48 Barb., 237). See also Mattingly v. Nye (8 Wall., 370), where a voluntary settlement for the benefit of wife and children, made without fraud, by one not then indebted, was upheld against subsequent creditors. Where the husband possessing property and credit, and indebted to an inconsiderable amount, most of which was afterward paid, conveyed property to one, who immediately conveyed it to the wife, as a provision for her; and she erected a dwelling, with moneys her hus.band gave her, for the purpose, in small sums, from time to time, during several years previous,—Held, that the circumstances repelled any presumption of fraud arising from the husband’s indebtedness at the time of the transfer. And the husband having, after the conveyance to his wife, paid a sum due upon a mortgage which was a lien thereon when he purchased, and which he assumed to pay as part of the pur chase-money,—Held, that such payment could not be considered as voluntary, or in fraud of creditors, he being liable to make it (Wilbur v. Fradenburgh, 52 Bard., 474). But, on the other hand, a conveyance by a man about to engage in business, transferring his existing property to his wife, for the purpose of securing it to himself and family, he retaining the possession and the apparent ownership, the conveyance being made in order that the property might not be liable to subsequent creditors whom losses in such business may render him unable to pay, is within the statute which forbids conveyances for the purposes of hindering, delaying, and defrauding creditors, although the grantor be wholly free from debt at the time it was made (Case v. Phelps, 89 N. Y., 164). So, where a debtor transferred his real estate to his wife and children, for a nominal consideration, yet continued in possession without any apparent change of ownership, and continued in business, paying past indebtedness by obtaining new credit, and contracting new debts, until he failed in business, the transfer was held fraudulent and void, even as to subsequent creditors. In such case the fraud consists in a design to obtain credit by means of continued possession and apparent ownership, after attempting to place the legal title of his property beyond the reach of his creditors. The fact that he paid up all indebtedness existing at the time of the transfer, by means of credits obtained afterwards, is only a transfer, and not a payment of the then existing indebtedness (Savage v. Murphy, 34 N. Y., 508 ; affirming S. C., 8 Bosw., 75). The husband's ageney in carrying on business does not necessarily affect the wife’s rights, but he may be regarded in this respect as a stranger would be if employed in the same way. This rule is sustained by many casesjbut the fact that the husband’s agency was a continuation of the control he had, before he transferred to her the property in question, may in some cases be held, as was the case in Little v. Willets (cited above), to disprove the validity of the alleged transfer to her, as against his creditors. In Lockwood v. Cullin (4 Robt., 129), such a transfer, the husband continuing to act as agent, was held valid as against debtors, the demands against whom were assigned to the wife. In Coming v. Lewis (54 Barb., 51; S. C., 36 How. Pr., 425), it was held that a wife’s separate estate cannot be charged for the price of merchandise purchased by her husband, although the sale was induced by fraudulent representations, and the merchandise was used to improve the separate estate, where the purchase and representations were made without the authority, sanction, or knowledge of the wife. [MAJORITY — By the Court.—Neilson, J.] By the Court.—Neilson, J. The plaintiff, having purchased, as she alleges, with her own means, premises on Classon-avenue, had a saloon, professedly carried on for her own benefit. She claims that her husband acted for her in the business. A small sign, with his name on it, was up in the saloon. The plaintiff had previously had a saloon at the corner of Adams-street, and, for a portion of the time, a partnership with one Henry, the plaintiff’s husband acting in that business with the same sign up there. The plaintiff did not personally take part in conducting the business. She says that that saloon was sold out, but that none of the proceeds of that sale went into the saloon on Classon-avenue. While the Adams-street business was being carried on, the plaintiff’s husband engaged Fritz Fredeke to repair the billiard tables—gave a note for the amount of the bill, and on that note judgment was obtained against him. Execution having been issued on that j udgment, property in the Classon-avenue saloon was seized by the sheriff, and this action was brought to recover that property or its value. The plaintiff testified that the property belonged, to her. On the trial, the first question was whether the property did really, and in her own exclusive right, belong to the plaintiff; and, in that case, then, secondly, whether the business, which she also claims belonged to her, had been so carried on as to lead persons dealing with the concern, or with her husband, to believe that he was the proprietor, so that it would be inequitable to allow her to assert her title as against the creditor. The plaintiff owned the dwelling where the Classonavenue saloon was, and resided there. She did not own the Adams-street building, or reside there, and the lease was arranged for, and signed by, her husband. It does not appear how far he acted in acquiring the property on Classon-avenue, but he did buy out Trabant, by whom the Adams-street saloon had been previously carried on. The connecting links between the two places are the sign with the husband’s name on, used at both saloons, and the continued and active business management of the husband throughout. The business commenced at the first place was continued at the other. It would seem that neither the landlord of the premises in Adams-street, nor Trabant, Fredeke, or the sheriff, had any reason to apprehend that the plaintiff was the proprietor of that business. It was admitted on the trial that the license to carry on the business in Classon-avenue was in the name of the husband, a married woman not being competent to obtain such license—a strong circumstance tending to show that the husband was the proprietor. The separate property of the married woman, and her earnings from her trade, business or labor, are secured to her by our recent statutes; are put beyond the reach of her husband and of his creditors. The real intent was to give relief to a woman who, while competent to carry on business, and to earn a livelihood, was unfortunate in her marital relations; had a husband idle, intemperate, or improvident. Under the prior law, however industrious she might have been, her earnings belonged to the husband; and it seemed not only just but consistent with sound policy, that the wife should be encouraged in her efforts to earn something for herself and for her children, and, to that end, be relieved from the disabilities which had repressed and thwarted her efforts. It was the general view of the profession, when those statutes were adopted, that the intent was to secure to a married woman a separate business (the fruit of her skill or labor), as distinguished from that of her husband; that her business would necessarily be separate and apart from that of her husband; not that he would serve and she have the entire benefit. The creditors of the husband have no lien upon his labor or earnings, but they have strong claims to be considered where a fraudulent combination exists between him and Ms wife. But, in giving a liberal construction to those statutes, our courts have held, that, in the management of her separate property or business, she may avail herself of the aid of her husband, that she may act by him as her agent (27 N. Y., 277; 33 Id., 518; 35 Id., 294; 35 Id., 600). That construction is to be accepted. But. in each instance where the business is carried on ostensibly by the husband, secretly by the wife through him, and where they, or either of them, come in conflict with a creditor, special attention must Tbe given to all the circumstances. It must be considered whethér the relation of the wife to the business is not merely formal; his relation to it actual and with an interest. The intent necessarily enters into the question, and if the transaction be merely colorable—a device to defraud creditors —it finds no countenance in the statute. It is, moreover, highly impolitic to allow the husband and wife to be so engaged in business that they may be able to elect which of them shall come forward as proprietor, according to the promptings of interest in an emergency. It would seem, also, that the intent was to allow the married woman to engage in business which she could legally carry on, and if she cannot obtain a license to keep a liquor saloon, she is thus far under a disability, operating as a restraint. If, notwithstanding that, she has her husband take out that license for a business to be carried on by him, and necessarily in his name, he, alone, being subject to the excise law, and to the municipal regulations in respect to such places of resort, her claim as proprietor, in a contest with his creditors, is seriously impaired. But, in the very nature of the case, it is difficult, often impossible, for a creditor to impeach the motives of the parties, or to establish a fraudulent intent. That can only be done by such light as the circumstances may reflect from the general course of the business. In this instance the husband had no wages or salary, only his victuals and clothing ; and it seems hard to believe that the legislature intended that the husband might thus be the unpaid servitor of the wife, while his creditor is put at defiance. The plaintiff testified that she owned the property ; but so also did she testify that the business," at both saloons, was carried on for and belonged to her ;—that in A dams-street, where the husband rented the premise*! in his own name, giving references, and bought out the previous occupant;—and that in Classonavenue, where the right to transact business was under a license to the husband. Her testimony was to be considered by the jury with reference to all the circumstances. It was said by Denio, Ch. J. (27 N. Y., 280), that “ if the husband be indebted, there is more or less reason to suspect that such arrangements are adopted as a £ cover,’ ” and “whether, in a given case, the transaction is sincere and bona fide, or a colorable device to cheat the creditors of the husband, is a question of fact to be determined by the jury.” In this case there was enough to justify the learned judge in submitting the case to the jury. Several exceptions were taken on the trial, to which a brief reference may suffice. Fredeke having stated that he had performed work for Thomas O’Leary at the saloon, that his name was up—was asked : 6 £ What did Thomas point out to you % What did he want done V’ And to each of the inquiries objection was made, and exception taken to the ruling of the judge. If the actiou had been against Mrs. O’Leary to charge her with the payment for that work, those inquiries would have been proper. If a married woman confides the management of her business to her husband, he may give' directions to others in that business. That is but an incident. A part of the business being the use of billiard tables, and repairs being necessary, it. would have been within his province to procure repairs to be made. He had implied power to give directions. ■ Equally were those inquiries proper in this case; they had reference to the character of the business, to his relation and management. The plaintiff says that he managed the business. In that management he could order those repairs, give directions, as he might have done as to a ton of coal needed for use. If, in an action to charge the plaintiff as the principal, the effort had been to put in his declarations to the effect that he was her agent, or if, in this case, the effort had been to show that he said he was the owner of the property, a different principle would have been applicable. But, with some such obvious limitations, it is evident that the husband’s course of action in the management of the saloon, and in the business connected with it, was open to investigation. The exceptions taken to other inquiries which followed were equally untenable. The questions objected to were as to the doing of the work, and the non-payment. The witness had previously, and without objection, stated that he did the work, and the additional questions referred to matters related to the principal fact,-the performance of the work'. In cases where fraud is alleged, where the secret arrangements of the husband and wife are involved, and his agency questioned, a much more liberal course of inquiry thau the counsel taking these objections seems to have considered proper, has generally been allowed. The plaintiff’s theory is, that her husband was at the saloon, acting for her, and as her agent. It was competent to contradict that by circumstances, the course of action and dealings; to show that he was acting for himself. The objections to the testimony as to the part Thomas O’Leary took in the renting of the Adams-street saloon, and the other matters connected therewith, were not well taken. The circumstances tending to illustrate the course of business, the manner in which it was carried on, and his office in it, were proper for the consideration of the jury. With the same view, the lease signed by the husband was properly received in evidence. Henry, named by the plaintiff as partner for a short time in the business, was asked who had charge of the business, and whether the plaintiff had anything to do with the saloon. The objections taken were not to the form of the questions. It is difficult to conceive how a creditor could ever contest the claim of the debtor’s wife, if such inquiries were not allowed. It was one mode of impeaching the plaintiff’s claims. As she had sent him out to act, it will not do to say she was not present, and that nothing which occurs in her absence can be given in evidence. It is to be observed that the objections were hot stated to be on the ground that, as the proceeds of the Adams-street saloon did not go into the purchase of that on Classon-avenue, or, cas there was a distinction in respect to the place and time of keeping the two saloons, nothing occurring at the first place could prejudice the plaintiff in respect to the other place. We need not consider what might have been the ruling of the learned judge if such specific objection had been made. The request that a verdict should be directed for the plaintiff was properly refused; there was matter for the jury. It does not become necessary to consider the instructions given to the jury, as only an exception in the most general form was taken: The judgment should be affirmed, with costs. Judgment affirmed, with costs. Present, McCue and Neilson, JJ.