Opinion
12-14-1887
SMOCK v. JONES and others.
Robert Allen, Jr., for A. C. Hartshorne, assignee. Parker & Vredenburgh, for Letta H. Jones.
The object of this action is to determine whether a surplus, remaining after the foreclosure of a first mortgage, shall be paid to the assignee of the mortgagor, or be applied on a second mortgage on the same property given to the mortgagor's wife.
Robert Allen, Jr., for A. C. Hartshorne, assignee. Parker & Vredenburgh, for Letta H. Jones.
BIRD, V. C. The question in this case is whether the assignee of Samuel W. Jones is entitled to a certain fund in court for the benefit of the creditors of Samuel W. Jones, or whether the wife of said Jones is entitled to it. Mr. Jones and his wife are over 80 years of age. In 1879, being largely indebted and insolvent, he made an assignment for the benefit of his creditors. This assignment bore date the seventh day of ——, 1879. On the day before, he executed and delivered a bond to his son George which was conditioned for the payment of $3,000; and executed and delivered to him, also, a mortgage upon his real estate to secure said bond; which bond and mortgage were both delivered to the said George, and by him at once assigned to his mother, the wife of Samuel W. Another mortgage upon the same premises of prior date was foreclosed, the property sold, and this is the surplus part of the proceeds of such sale.
The assignee contends that, as to creditors, this mortgage, given to George, and by him assigned to his mother, was fraudulent. On the other hand, it is insisted that it is not only not fraudulent, but bona fide, and given for a valuable consideration; that it was given in payment of an outstanding indebtedness of the husband to the wife. The consideration upon which Mrs. Jones seeks to establish her claim to this surplus is, in brief, thus detailed by her husband, (she being unable, from age and infirmity of mind, to give to the court any very satisfactory account of how the various transactions, out of which the money she says is due to her, arose:) Mr. and Mrs. Jones were married before 1830. About that time, or soon thereafter, Mrs. Jones' father conveyed to Mr. Jones a tract of land, and when Mr. Jones was paying the money, $1,000 less than the contract price was accepted in full payment thereof by the vendor. Mr. Jones remembers this fact, and speaks of it as one of the first instances of his receiving money which his wife, as he understoodit, was entitled to. In 1835 or 1836 the father of Mrs. Jones died. Mr. Jones was one of the administrators. In 1839 the estate was settled by the administrators finally accounting, and the balance in hand due to Mrs. Jones on the twenty-second day of July, in that year, was $222.51. In September, 1853, Mr. Jones, as the executor of the last will and testament of his mother-in-law, was found, by his account as such executor, to have in hand, and due to his wife, the sum of $385.15. On the nineteenth of April, 1866, there was paid to Mr. Jones, as the husband of Mrs. Jones, $210.26, the proceeds of the sale of real estate of which Mrs. Jones was one of the owners in fee as tenant in common with others. These are the three items of principal, which, it is insisted, with interest, make the $3,000 mentioned in the condition of the bond named. A calculation of interest upon the first item above named ($222.51) shows that, at the time of the execution of the bond, it amounted at simple interest to $756; and of the $385.15, to $623.94; and of the $210.26, to $163.93,—making of principal and interest the aggregate sum of $2,361.79. To secure these items, the said bond and mortgage for $3,000 were given. It was not intended that the first $1,000 should be included.
The creditors being interested, can this claim stand? I can but observe that from the treatment of the case, by Mrs. Jones, from the time of the first transaction, until the period of her husband's difficulties, the inference strongly arises that she not only never contemplated a charge against her husband, but that, upon the contrary, she intended to submit all those moneys to her husband's control absolutely, and in such a manner as to amount in the law to an unqualified gift. So inevitable is the inference in this particular, that counsel made no effort whatsoever to include in the claim the $1,000 which Mr. Jones says was the first that he received on account of his wife, and this same view is greatly strengthened by the fact that, upon no occasion, at no period of time, from that first transaction until the day before the assignment and the making of this bond and mortgage, was there ever any effort upon the part of Mrs. Jones to recover any of these sums, or to have any recognition from Mr. Jones, her husband, of these moneys, as belonging to her.
As to the $222.51, which he received July 22, 1839, it is claimed that Mr. Jones, having that money in his hands at that time as trustee, was and is liable, at any time in the future, to account for it as such trustee, and that no matter what may occur, or what rights may intervene, or what time may elapse, Mrs. Jones, the cestui que trust, has a right to demand of the trustee an account for that money. It is insisted that the relation of trustee and cestui que trust continued to exist. This proposition does not seem to me to be tenable. It is true that, at that particular juncture, that amount of money was by law due to the wife as the proceeds of the personal estate of her father; but it is equally true that, as the law then stood, the husband was entitled to it, and had the right to reduce it to actual possession. That being so, and he having possession of it, it seems to me very clear that the presumption is that he held it and continued to hold it in his own right. It seems to me that, after the lapse of 40 years, the burden of showing that he held it, and continued to hold it, as trustee, is upon those who insist upon the contrary. I cannot believe that the law would impose upon the husband, in such a case, the duty, in the first instance, of turning money over to the wife, in order that she might hand it back to him, or of his making any formal declaration that he held this money as administrator for the benefit of his wife, in the first instance, but that now he holds it in his own right as her husband. But if the declarations of the understanding of the parties be of any value, this branch of the controversy has been settled by what Mr. Jones himself said when upon the witness stand. With reference to what moneys he had, he declares it was understood then that, by the law, what belonged to the wife belonged to the husband; and in my judgment, so faras the $222.51 enters into the controversy, it is settled against Mrs. Jones. But supposing the trust was not actually satisfied, and supposing it be considered that the parties maintained the relations which they held at the very instant of the passage of the final account ascertaining the amount due, then, in such a case, is there anything in the evidence to justify the court in saying that the creditors of Mr. Jones have an inferior right to that of Mrs. Jones? I cannot come to that conclusion. It is said that a trust once created continues without limitation, and that the trustee can at any time be called to account and be compelled to pay. This may be so in very many instances, as between the trustee and his cestui que trust. To enforce this doctrine, my attention was called to the case of Yeomans v. Petty, 40 N. J. Eq. 495, 4 Atl. Rep. 631, where at least 40 years had elapsed after the creation of a trust. The general principle is, perhaps, correctly laid down in that case; but in that case the money was received by the husband for a definite purpose, and upon the distinct declaration that he should hold it as of and for his wife's separate estate, followed by repeated declarations that he held it for such purpose, which declaration was, at length, and many years after the original trust was created, put in writing by the trustee himself; and what is important to have in mind is that creditors were not interested in that ease, and their rights were not considered, as they must necessarily be in this case.
The other two items may fairly be considered together. In the one case the money was received by the husband in September, 1852, 27 years before the execution of the bond and mortgage, and the other about 13 years before the execution of the bond and mortgage. The differences between these claims and the former are that they both originated subsequent to the passage of the married woman's act in 1852, and are both less stale. Every other consideration which is applicable to the former is equally so to the latter two. The testimony establishes the fact that at no time from 1839 until 1879, or from 1852 until 1879, or from 1866 until 1879, was there ever a word said by Mrs. Jones indicating a claim upon her part against her husband for any of those moneys, or by him indicating liability upon his part to her for any of them. There never was any memorandum of any account, or account in any shape, made and submitted, or demanded, to the one or by the other. And at length, when the crisis in the affairs of Mr. Jones culminated, and his burdens became more than he could bear, Mrs. Jones made no claim; at least, if she did, it was not until after she was prompted so to do, and that not by Mrs. Jones recognizing and claiming her just rights, but by her sons, of whom George was one, and who, perhaps, first reminded their father that he had these moneys at one time, and prompted their mother to ask him to secure her. But the inference, to my mind, from the testimony, is very strong, indeed, that the giving of this bond and mortgage was an arrangement upon the part of the sons, with which the mother had little, if anything whatsoever, to do. That she made any demand, or had the slightest thought of any claim, until the sons were informed of the situation of their father with regard to his creditors, is not at all proved. It seems to me that, if creditors can be defeated of their just rights by such circumstances, then, in a multitude of cases, wives, children, and other near relatives may, with the greatest ease, revive stale claims, and interpose them as against creditors. In support of these views I need not look beyond Luers v. Brunjes, 34 N. J. Eq. 19, Id. 561, and the cases cited on page 21.
I will advise that the said bond and mortgage are void as to the creditors of the mortgagor, with costs.