BEAN V. PATTERSON.
BEAN
and others
and others.
(Okcu4t Oourt, W. D. Mi8souri, W;D. October Term,'1881.) bSOLvENT DEBTOR-PREFERENCE TO (''REDITOnS. ,
The creditors of a contractor in failing circmhstances agreed together to buy his land, and to be 'interested therein in proportion to their several claims, and a deed therefor was made 9Y the debtor and his wife to two of the creditors for the parties interested:in the purchase; the purchase money to be made up of various items of indebtedness of the debtor to the parties interested in the purchase, who had, on their part, to remove the liens of two judgments, which judgments were not paid 011, but were assigned to the parties to be held for contingencies. Subsequently an attachment was. sued out against the land. Held, that the deed from the debtor and wife be set aside, and the deed of sale of the land to one of the defendants, under an assignment of the trust deed of the wife made to her for a debt due her by the husband, be set aside: and that the land attached be sold, and the fund applied, 1irst, to the payment of taxes; next, to the amounts of the judgments, with interest; next, the amount for which the deed of trust was assigned, with interest; and next, the complainants, the amount of their judgment, with interest-the difference between the amounts of the wife's trust deed and the amount fOI' which she assigned it to be reserved for further consideration.
In Equity. Botsford ct Williams and John P. Lewis, for complainants. Vories, Pike ct McKill{)p, for defendants. KREKEL, D. J. The bill in this case alleges that complainants in 1873 contracted with defendant William Miller for work to be done on a railroad then building, in Ohio; that during the years of, 1873 and 1874 work amounting to $16,000 was done under said contract; that on defendant failing to pay for same suit was instituted by plaintiffs in Atchison county, Missouri, and 13undry tracts of land out; that judgment for $14,276 attached by virtue of process was obtained in the suit; that exe.cution issued, and $3,257 and costs were collected thereunder; and that the remainder remains unpaid. The bill proceeds to allege further that on examination of the title the land attached, such as was not sold under the execu.tion spoken of was found to be encumbered by liens, namely, a deed of trust given in 1873 by William Miller, the defendant in the attachment suit, to Patterson, as trustee for his wife, Mary Miller, for $10,000, due in 1876, and a judgment lien of Koontz for $2,071, which encumbrances it is claimed were made and sought to be'maintained for the purpose of hindering and delaying the enforcement of liabilities of said William Miller, and specially the complainants, who instituted proceed. ings in the state courts to remove the clouds upon the title so asJ()
740
FEDERAL REPORTER.
enable them to sell the land and collect their claims. The proceed. ings spoken of, instituted in the state courts, were, by change of venue, removed .into this court, a:t;ld constitute the subject-matter in litigation. The bill further charges that, after the institution of their attachment suit and proceedings to remove the clouds from the title of the land attached, defendants 'William Miller and wife, On the third dayof January, whole of the land in litigation to Horn and Weaver, two of the dMendants, but that, aside from them, other defendants were therein; that at the time of said conveyance the trust deed heretofore spoken of was pretended to have been assigned to defendant, Saeger, in consideration of $12,. 000; that said conveyance and assignment were in fact for the mutual benefit of the defendants named in the bill, a:pd were contrivances to defraud the creditors of William Miller. The bill proceeds further to charge that the Koontz judgment was in reality paid off a;nd satisfied, and kept alive by assignments, so as to encumber and cloud the title. The bill next proceeds to state that when the deed of trust fell due in 1876, Saeger, as assignee thereof, as stated, had the land thereby conveyed sold, and that he, Saeger, became the purchaser thereof, but that in fact said sale and purchase were made under the collusive arrangements charged, for the benefit of the conspirators. The bill thereupon pra.ys tlia;t the deed of trust from William Miller to his wife be deciared null and void; that the Koontz judgment be declared no lien; and that the defendants interested be made to account for the rents and profits of land during the time they bad the same in possession. . . " The defendants, answering the bin, say that the transactions had regarding the lands in controversy were all made in good, faith and for valuable considerations'; deny 'the intent of hindering or delaying creditors and their liabilities for rent. The testimony tends to show that William Miller, about 1870, was a man of considerable property, engaged in large undertakings as a contractor; that his own means were not sufficient to carry them on; that his wife owned property worth $14,000, aside from a farm which Miller purchased and had conveyed'to her; that to raise funds for his purposes he borrowed money as early as 1870 and 1871, and to secure it Mrs. Miller's property was mortgaged; that the property mortgaged was sold and the debts incurred by Miller paid with the proceeds. The preponderance of the testimony shows the ednesB from Miller to his wife to have existed long prior to any claim the complainants had against Miller; indeed, the trust deed given by
v.
PATTERSON.
741
William Miller to his wife was made and recorded a.bout the time the work under the contract between Miller and the complainants was done. Stress is laid by complainants on the fact that Mrs. Miller assigned her deed of trust to Saeger, one of her husband's creditors, who is charged to be in the combination and c,onspiracy to defraud, hinder, a,nd delay Miller's creditors. But for this fact there could scarcely be any doubt that Mrs. Miller would be entitled to her deed of trust and the control of it. Is' this fact alone, without any'proof of her acting in bad faith, to deprive her of the right t,o dispose of her property as she chooses? The law allows the wife to hold property and deal with it in· her own way, and the rules applicable to dealings generally apply to her. When there are ,questions as to whether the wife has property of her own, and doubts exist whether the husband is seeking to use the wife's name to cover up his property from creditors, the acts done between husband and wife pertaining to property claimed by the wife will be closely scrutinized to see that their dealings are in good faith. So, also, in cases where the property of the wife, by her consent, is so mixed up and used by the husband that it cannot well be distinguished. In the case before the court the assignment made of the trust deed to Saeger at most amounts to but a choice among creditors of her husband, for there is not a doubt that Saeger was,a bonafide creditor of her husband. Nothing went to the wife under the assignment of her deed of trust. It is quite cleal"from the testimony that in 1876 and long prior thereto Miller was indebted to Saeger, Horn, Weaver, and the Bank of Catasauqua, and, finding that he was in, failing circumstances, they agreed together to buy the'land in controversy; and to be interested therein in proportion to the amount of their several claims against Miller; They purchased the land at $36,400, and the deed therefor was made by Miller and wife to Horn and Weaver for the parties interested in the purchase. The testimony show8 the purchase money to have been made up of various items of indebted. ness of Miller to the parties interested in the purchase. The purchasers had to remove the liens of two judgments,-one, in favor of Koontz, now amounting to near $4,000, and another to Van Sycle of $700,-which were liens on the land, to make good their title. These judgments were not paid off, but were assigned to the parties interested to be held for contingencies. Six thousand of the $36,400 were retained by the purchasers for the same purpose. What these contingencies were is not difficult to define. An attachment for
742
$16,100 had been sued out by complainants and levied on the land in controversy. Notice had been filed in the recorder's office of Atchison county of the levy of the attachment at the time of issuing the same. Contingencies arising from this source were to be provided for, and hence the precautions taken. The whole transaction amounts to this: Here are a number of creditors seeking to collect their debts. By the purchase of the farm they get into their possession all the debtor .had. The deed of trust and the judgments were liens on the land prior to the attachment, and could not, therefore, be defeated by it. If the attachment prevailed over their deed, the amount of the deed of trust and moneys advanced on the judgment would be refunded, so that nothing could be lost in that direction, but something might be saved, if the farm sold for more than the liens, debts, and the attachments. This being the condition of the case, the court sees no difficulty in arriving at a proper adjustment of the matter. The deed from Miller and wife to Horn and Weaver, dated January· 3, 1876, will be set aside and held for naught. Saeger, as assignee of the trust deed of Mrs. Miller, having caused the land to be sold under the trust deed, himself becoming the purchaser and taking a deed therefor, that deed will be set aside and for naught held. The cs,se will be referred to a master to take an account for rents since the possession taken under the deed from Miller and wife to Horn and Weaver, and report the value of any permanent improvements or repairs made during the tittle of their possession, and the amount of taxes paid thereon, and taxes now due, if any. Upon the coming in of the master's report an order of sale will be made for the whole of the land attached, excepting the quarter section sold by the sheriff, the proceeds whereof have been paid to the complainants. The funds will be applied &s follows: First, to the payment of unpaid taxes; next, the amounts of the Koontz and Van Sycle judgments, with interest; next, the amount for which the deed of trust was assigned, with interest, (the difference between the amount of Mrs. Miller's trust deed and the amount for which she assigned it to Saeger is reserved for further consideration;) next, the complainants the amount of their judgment, with interest.
OOUNTY OF BERGEN
V.
MEROHANTS' EXOHANGE NAT. BANK.
74&'
BOARD OF CHOSEN FREEHOLDERS OD' THE COUNTY OF BERGEN 'D. MAROHANTS' EXCHANGE NAT. BANK OF NEW YORK, impleaded, etc. (Oircuit Cowrt, S. D. NetIJ York. July 11, 1862.) MUNICIPAL BONDS-AuTHORITY TO liE STRICTLY CONBTRtTED. :
Where municipal bonds do not contain recitals asserting them to be issued conformably t,o law, a purchaser for value cannot recover.:
J. D. Bedleand HamiltonWalUB, for complaina.nt. Stephen P. Nash, for defendJint. ' WALLAOE, C. 'J. This suit is brought to compel 'the' defendant to surrender 102' bonds for $'500' each,Jiow held by the defendant, which purport to'be the n.egotiable obligations of the corporation complainant, but which, asis alleged, are not in fact the obligations of the complainant, but are una.uthorized and fraudulent instruments executed and issued by one Bogert, some of them while he was the collector of Bergen county, and some of them after he ceased to be such collector. Prior to 1876 the complainant had issued, pursuant to law, certain bonds known as "bounty bonds," which were to become due July 1, 1876, and upon which' there would be then payable the sum of $362,800. By an. act of the legislature of New Jersey of April 5, 1876, it was provided that the board of chosen freeholders of any county of the state might renew any loan for which bonds had theretofore been issued by law, when the same might thereafter become due, by the issuing of new bonds for the loan in any part thereof. Such bonds were to be either coupon or registered llonds, in the discretion of the board, and were to be numbered; and the collector of the county was required to make a register of the number, denomination, date of issue, and time of payment in a book to be provided by the board for that purpose. The act provided that such bonds should be executed by attaching the seal of the corporation, and be signed by the director of the board and the clerk thereof, and be countersigned by the collector. Under the authority of this act the corporation resolved to issue new bonds. Proposals for the purchase of bonds to the amount of $360,000 were invited by advertisement, and 800 coupon bonds for $500 each were lithographed and' prepared for the signature of the proper officers, in blank as to the name of the payee and as to the time of payment, and having the signature of the collector lithographed upon the coupons. Instead of selling the bonds at public