Porter v. Bank of Rutland

Davis, J.

This case involves questions of no little importance. At law, as a general rule, a married woman can neither sue nor be sued, unless in connection with her husband. Exceptions, arising chiefly from the impracticability of associating the husband in certain cases, exist in this as in most general rules. As applicable to husband and wife having adverse interests, there is no exception, unless, indeed, the proceeding seeking a dissolution of the marriage and a consequent arrangement and distribution of the property belonging to them, or one of them, be deemed such. Although she may have, before marriage, or may acquire, afterwards, separate estate, real, or personal, of which she may be despoiled by her husband, she cannot, either alone, or by the intervention of a next friend, prosecute a suit for the recovery of it. This results, not from a unity of estate, for the common law recognizes her separate property, but from a unity of persons.

Chancery, however, proceeds upon different principles; whether upon wiser principles, or not, it is too late to inquire. In that court, in suits affecting the peculiar estate of the wife, whether as plaintiff, or defendant, in respect to all the world besides her husband, there is no absolute necessity of his being made a party, — although often in practice, in conformity to the mode of proceeding at law, the husband has been associated with the wife. Recently it has been found more convenient, to say nothing of other considerations, to pretermit the husband, in cases in which his interests are not concerned. But chancery has permitted a still farther departure from the principles of the common law. Whenever there exists an antagonism of interest between the two, it allows the wife to bring a suit against her husband, and, e converso, the latter against the former, as'ifthey were sole and unmarried. It is merely necessary to introduce the slight machinery of a next friend; and in some cases the court will, by interlocutory order, compel the husband to defray the expenses of the suit on both side, while the right is in suspense.

It is not doubted, but that, in the present instance, Samuel W. Porter, the husband, was very properly made a defendant to the bill. If the fourteen shares in Rutland bank can be regarded as a trust fund, of which the oratrix is the cestui que trust, there was, previ *418 ous to the transfer in August, 1840, no known and recognized trustee, unless the husband can be regarded as such. He is competent to act as such, as well as any other person, if duly appointed; and even he will be sometimes regarded as such, with a view to the protection of the wife’s separate property against his creditors, without any appointment whatever. 2 Kent 162-3.

As between the oratrix and her husband, however, it seems not to be regarded as a matter of any importance, what the rights of the former may be; as the latter declares himself to be insolvent, and possessed of no means of his own to pay whatever may be found due from him. The oratrix, though she has traversed the answer, offers no evidence to controvert this fact. To take an account, therefore, supposing her to be entitled to it, would be a useless proceeding, except so far as it should affect the bank shares. To this, third persons, creditors of S. W. Porter, interpose a claim: and the real controversy here is, whether they or the oratrix have the better claim in equity. In this aspect of the case, it is natural to suppose, that the sympathies of the husband are altogether with the wife ; and nothing has transpired, while it has been in progress before us, to induce a different conclusion.

The bank of Rutland and Nathaniel Fullerton are the only parties, then, whose interests come in collision with those of the oratrix. They resist her pretensions mainly on two grounds; — 1st, Because they say these bank shares were not trust funds in point of fact, but were truly, as confessedly they were in form, held by Porter in his own right; 2d, That if, as between them, the shares are to be regarded as trust property, yet that the trust was a secret one, not apparent in the original certificate of subscriptions or by any transfer, or other evidence, on the books of the bank, until after the attachment at the suit of the bank; and that they, the defendants, neither knew in fact, nor were so situated that the means of knowledge were within their reach, that it was trust property.

The check on the bank for $1000, dated January 15, 1824, is in favor of “ Fanny Porter, or bearer;” and the letter to Mr. Porter, enclosing it, dated May 26, 1824, says, “ I enclose a check on B’o bank for $1000 for Fanny,” — adding “ perhaps it would be well to invest it where it can be secured on real estate to a larger value, so as to ensure the annual payment of interest and the principal sum *419 when payment becomes necessary, or desirable. I leave that to your and her pleasure, what mode to adopt for her and heirs mutual benefit. Mark Richards.” These two papers, as quoted, comprise the whole of the written evidence of the original creation or declaration of a trust. There is, however, additional evidence of a parol declaration on the part of the donor, made to his daughter and her husband previous to drawing the check, which throws farther light upon his intentions. This is contained in his deposition; in which he says, that, before the delivery of the check, he had conversation with both of them, and informed them of his intention to make an advancement of that amount, and that he wished to have it invested in some institution for the benefit of his daughter and her children; that after the books were open for subscriptions for Rutland bank stock, he inquired of Porter if he had invested the money in stock of that bank, and was told he had done so, to the amount of $700, but could not procure stock to the whole amount; and that the deponent made no objection to such investment. The defendants' counsel insist, that neither from the letter, nor the prior verbal intentions, nor from both combined, can be fairly extracted any creation of a trust in favor of the daughter, or her children, or any designation of a trustee. The plaintiffs’ counsel, on the contrary, contend there is ample evidence of both.

By our law an express trust, except in lands, may be created without writing. In respect to personal property it is not a matter of any importance, whether it be by a written instrument, or by párol, or partly in one mode and partly in the other. Trusts, too, may be implied, or may result from certain facts and circumstances requiring their existence for purposes of equity. No prescribed form of words is necessary, to create an express trust. The intention of the party making it affords the only sure test of its creation. In ascertaining this intention we do not torture the language used by any technical constructions, but, as in the case of wills and devises, adopt a liberal construction, and endeavor, in the language of Judge Story, to draw ex visceribus verborum the true sense. 2 Story’s Eq. 243-5; Fisher v. Fields, 10 Johns. 494 ; 2 Blackford 198; Wright v. Atkyns, 1 Turn. & Russ. 157; Smith v. Attersoll, 1 Russ. 266; Taylor v, Moyrout, 4 Dessaus. 505; 1 McCord’s Ch. R. 119. Letcher v. Letcher’s Heirs, 4 J. J. Marsh 593; Chamber *420 lain v. Thompson, 10 Conn. 243 ; 16 Pick. 327 , where the authorities from the old English Chancery Reports are collected and ably commented upon by Judge Wilde.

In designating a trustee to take charge of the fund, no greater certainty, or formality, is requisite, than in the creation of the fund itself. The same liberal constructions and the 3ame implications 'exist here, as upon the other point. But chancery authorities fully warrant us in saying, that, in order to sustain and uphold a trust in equity, it is not indispensably necessary, that a trustee should have been designated in the instrument creating the trust fund, or, indeed, by any simultaneous or subsequent instrument. If no person is appointed, chancery will not suffer the beneficial objects of the trust to fail of being carried into effect for that cause, but will, on application from those in interest, provide all necessary machinery for that purpose; as in Wallingsford v. Allen, 10 Pet. R. 583, where, on a separation between husband and wife, the former conveyed to the latter, on certain consideration, arising fiom a pending suit for alb mony, a female slave; it was insisted by counsel, among other objections to the conveyance, that no trustee was interposed between husband and wife. The ' objection was overruled ; Wayne, J., argues the point at some length, and cites a number of authorities in support of the position established.

Upon full consideration of the language used by Mr. Richards, both verbal and written, in connection with the attending circumstances, — his daughter Fanny then having three children, — I cannot doubt but it was the intention of the father to set apart this fund for the exclusive benefit of Mrs. Porter and her children, or heirs, and that he intended to place it under the control of her husband, as her trustee. This intention, it is true, is not indicated with all the precision that we should look for in an instrument prepared under the eye of legal advisers. His intention cannot, nevertheless, be well mistaken. He then believed his son-in-law to be in good circumstances, and no doubt reposed fell confidence in his discretion and judgment in managing the property so as to effect the object he had in view. He was willing to trust to him to select the proper mode of investing it, where it would be safe, and also yield an annual interest.

A portion, whether the $300 remaining, or not, does not appear, *421 it seems by Porter’s answer was laid out in land. It would seem probable from Mr. Chase’s deposition, which speaks of her owning one house in company with some other person and also the house in which the family then lived, of considerable value, that the generosity of her father was not limited to a gift of $1000. One or both of these were purchased by her father; and although we are ignorent of the time, or times, when this was done, still, the course pursued here'affords some explanation of the general views of Mr. Richards, in making advances to her. Had he merely intended to make a donation to his son-in-law, to be disposed of at his pleasure, and to go into the general mass of his property, although it would not be unnatural to expect a paternal proffer of advice as to the best mode of keeping it intact for the common benefit of the family, yet we should not expect to find directions so to dispose of it, that she and her heirs should reap the benefit of it. It seems to me, that these directions are not susceptible of'any other explanation, than that he had in view a distinct appropriation of the gift for her and their exclusive benefit. V

But is there any evidence, that the bank shares, attached by the defendants, were purchased and paid for out of this trust money? The only direct evidence to that effect is contained in Porter’s separate answer; where the fact is directly asserted. The defendants counsel urge, that his answer cannot be used to prejudice the rights of the other defendants. The general rule is as assumed by them; but as the fact asserted is one with which they have no necessary connection, none, except that resulting from their situation as attaching creditors of Porter, and deriving all their rights to the property from and under him in that character, I am inclined to think he is a competent witness, at the call of the orator, by way of answer, to prove the general fact, that the shares were trust property, not only as it may affect himself, but as it may affect the other des fendants.

■ There is some indirect circumstantial evidence, bearing on this point; such as the communication made to Richards by Porter, that he had invested a' portion of the money in bank stock, which communication could not have been made with any reference to the defendants; the general understanding and conversation in Porter’s family, — when no motive can be supposed to have existed to have *422 produced a false impression, — as stated in the depositions of Jonathan Chase, Frederick A. Porter, Hannah Porter and Samuel Hem-men.way; which, taken together, produces a very satisfactory conviction on the mind, that Mrs. Porter had the beneficial interest in these shares, and that he so regarded it, notwithstanding the fact, that, during all that time, they stood on the bank books in his own name.

The loan of $300 to the last named witness, within a-week after Porter received the cash on the check, and taking a note therefor payable to Mark Richards, tends strongly to show, that Porter, at the time, did not regard the money as his own. The fact, that, during the same year, he subscribed for stock and took transfers from others in his own name, which he paid for out of this money, may be regarded as having an opposite tendency. Perhaps the inconvenience of executing the necessary papers on the successive payments of assessments and of -dividends in the name of his wife may afford a satisfactory explanation of this circumstance, y These shares being thus trust funds, held by Porter in his own name, but the beneficial use of which belonged to his wife, they were not subject to attachment and sale by his creditors; unless, indeed, they were bond fide creditors, without notice of the trust.

;f Were the Bank of Rutland and Nathaniel Fullerton, at the time of the attachment, in this predicament'!''

When I say at the time of attachment, I do not forget, that the plaintiffs’ counsel contend, that the inquiry is not to be restricted to that point of time, — that, though they may not then have had notice, still, if subsequently, before sale on execution, notice were brought home to them, the effect would be the same. In other words, the fact of purchase is to be referred to the final sale, rather than the establishment of the lien by attachment.

Whatever plausibility there may be, at first sight, in this position, there seems to me to be strong reasons for questioning its soundness, y In a controversy between a purchaser by attachment and levy and one in any other mode)'there can be no doubt, that the question of priority of right is to be determined by the time of attachment and notice, provided they are followed by the proper proceedings, after judgment, to perfect the title, Here, however, there is no such controversy. These bank shares were really held in trust at the *423 time of the attachment, though the trust was not apparent; they remained in the same condition at the time of bringing this bill, except that a conveyance had in the mean time been made by S. W. Porter, the trustee, to Charles E. Porter, expressly in trust for Fanny Porter. This was simply a proceeding in furtherance of the trust, rendered necessary, perhaps, for the purpose of bringing this suit, and at all events expedient for purposes of notice generally thereafter. Being subsequent to the attachment, it could create no new rights, militating against those thus acquired.

Supposing, then, the bank to have had no notice at the time of their attachment, but to have subsequently received ample notice, would they thereby be deprived of the right of proceeding, as if no such notice had been received 1 If so, no little hardship might result, in consequence of the accumulation of costs, the omission to avail themselves of other means of satisfying their demands, relying on the security supposed to be obtained, and perhaps intervening insolvency of their, debtor. This point is suggested, by way of qucsre, by Bennett, J., in the case of Pinney v. Fellows, 15 Vt. 542 . It was not necessary then, nor is it here, to come to any definite conclusion upon it. Individually, I incline to the opinion, that notice thus carried home to a creditor, subsequently to the attachment, would h;ive no effect in defeating his rights under it; yet as in the present case we have come to the conclusion, that the bank had in fact notice of the true character of these funds, at the time of their attachment, it becomes of no importance, whether this opinion be well or ill founded.

' The question, then, recurs, whether the defendants, on the 13th of May, 1840, when they made their attachment, had either actual or constructive knowledge, that the shares standing in Porter’s name were held in trust for Mrs. PorterN

The bill directly charges such knowledge in Fullerton, and represents him as the real person in interest, although the attachment was made in a suit by the bank, on a note executed by Porter, made payable to his own order, indorsed by himself and Fullerton, and discounted by the bank; yet it is somewhat remarkable, that it no where charges notice to the bank, or its officers, of the character of the funds. Whether this was the result^of oversight, or arose from the supposition that Fullerton had paid the note, as indorser, and *424 procured the suit to be commenced in the name of the bank, but solely for his own benefit, I am unable to say. If the latter, I apprehend, however the fact might be, the orators proceeded entirely upon erroneous principles.

If a suit could be sustained at all in the name of the bank, on the ground of a legal right in the corporation, it is very clear, it ’ must proceed and be governed by the same rules and principles, as if there were no third person,- having an equitable interest in the subject matter. Notice to them was at least as necessary as to Fullerton ; and perhaps more so; for it is not very apparent, that, for the purposes sought by the bill, there was any necessity of making him a defendant. He was not a party to any proceeding, which sought to appropriate these funds in payment of Porter’s debts. He was a creditor, indeed, or would become so, on payment of the ■ note, and would then, like any other creditor of his, be entitled to proceed against him for satisfaction. The injunction sought for against taking out execution and levying on the shares need not, at any rate, even if it could, have extended to any other person than the plaintiffs in the suit.

But the bank, by their cashier, William Page, as if regularly called upon by the bill, answer distinctly, that they had no knowledge of the gift, by Richards to Fanny Porter, of $1000, or any sum, or of the investment thereof in the stock of the bank, previous to the attachment, and none since, except from the orators’ bill and the declarations at different times of S. W. Porter. If it was necessary for the corporation at all to answer upon this point, it cannot be questioned, but that the answer must be received as evidence. It is responsive to the bill, assuming the bill to have averred notice. Conclusive, of course, it is not. The only evidence there is to contradict this answer, aside of S. W. Porter’s answer, of which I will speak presently, is contained in the deposition of George T, Hodges; who states that Porter, about the time Morris & Nesmith failed, in a conversation in which he proposed to sell the stock standing in his name, remarked, that it belonged to his wife. He adds, that, at the time, he was president of the bank. We have no means of ascertaining when this was, except by referring to the answer of Porter, in which he says Morris & Nesmith failed May 17,1839. This was before the attachment. Luther Daniels’ deposition tends also *425 to establish the date of the conversation, alluded to by Mr. Hodges, as being before the attachment. He was an incompetent witness for the bank, being a director and stockholder; but his testimony was adverse to the party that called him, and therefore admissible on that point. Supposing it to be allowable, as I think it is, to ascertain a date, thus incidentally mentioned, by one defendant, whose statements are not in all points to be received against the others, there is, then, the testimony of one witness in opposition to the answer.

Doubts were suggested in argument, whether notice to the president should be considered as notice to the corporation. I have no doubt it should be. There is no other officer, or agent, to whom it Could, have been made with more propriety. It Would be equally available, no doubt, if made to the cashier, or a director. Nor am I disposed to detract any thing from the weight of this evidence, because there was not a full communication of all the circumstances connected with her ownership. The fact being communicated, and being true, would be sufficient. It is never required, in questions of this kind, that full and accurate details should be given, in order to constitute notice. It is enough, if the party be put upon inquiry, —apprised of the fact in general terms; and he will omit, at his peril, to seek for full information in those places, and of those persons, where it may reasonably be expected to be found. Blaisdell v. Stevens et al., 16 Vt. 179 . Sugd. on Vend. 532. 4 Johns. Ch. R. 39-44. Anderson v. Van Alen, 12 Johns. 343 ,

Porter, in his answer, states, that he gave repeated notice to Fullerton, before the attachment, of the character of the funds, and also, that he gave a similar notice to Mr, Hodges, the president, before June 25,1839 ; but I lay this testimony out of the case, — -being fully satisfied, that, on a question of this kind, his statements, by way of answer, cannot be received to prejudice either the bank, or Fullerton.

This state of the evidence would seem to leave the' point in issue, if it could be regarded as in issue, in no little doubt and uncertainty. Upon ordinary principles, something more than th'e testimony of one witness must be adduced, to overthrow an answer in a point directly responsive. Nothing more than that exists in the present case. I lay out of the case the deposition of Mr. Page, as I have done *426 that of Porter, so far as the Rutland bank is- concerned,- because,being a stockholder, he is incompetent as a witness for them. As respects Mr. Fullerton, there is no impediment to his testimony.

Perhaps the circumstance, that the answer .of the bank is put in by its cashier, as it must necessarily be by some officer, or agent, who swears to matters appearing, or not appearing, upon the bank books and papers, and to such as are within his personal knowledge, but who would not necessarily be cognizant of verbal- communications, made to another officer, might require some modification of the principle above alluded to, concerning the weight of evidence. It seems to me, that it should ; for the answer put in- by the cashier: is not necessarily in conflict with the testimony of Mr. Hodges. It is only necessary to suppose, that the latter had not informed the former of the verbal communication made to him, to see that there is no antagonism between the two. These considerations, on. the whole, incline us to come to the conclusion, that the bank had such notice, as would forbid their attaching the shares as the property of Porter..

But, as already stated, I am Unable to surmount the difficulty, that' the bill contains no allegation of notice, as respects the bank-; and though the answer volunteers to say there Was none, Which answer is traversed by the orators, yet it would require us to overleap principles of chancery practice everywhere recognized, and in their nature most safe and salutary, to regard these circumstances as forming an issue upon that essential point.

As respects Fullerton the case is far less complicated. Notice to him is distinctly charged in the bill, and he as distinctly denies it in his- answer. The orators have no admissible evidence to overeóme the answer. Porter’s answer, as already shown, cannot be received as competent for that purpose. If it should be contended, that, owing to his liability on the note, the deposit of money sufficient to discharge his liability, and the fact, if it be a fact, that he requested the suit to be brought and the shares attached, he is to be affected with- notice given to the bank, as his agent, yet the orators could not prevail'; because the testimony of Mr. Page, which was inadmissible in favor of the bank, encounters no objection, when brought to bear in favor of Mr. Fullerton. His evidence comes strongly in aid of the answer. Allowing the testimony of Mr. Hod *427 ges to come in aid of the bill, in this aspect, there can be no room for.doubt, as to which way the evidence preponderates.

The result is, as to Nathaniel Fullerton, the orator’s bill must be dismissed, with costs, including the costs of this court; and, if the orators consent to that course, the bill will also be dismissed, without costs, as to Samuel W. Porter.

As it will be perceived, that the result arrived at, so far as respects the controversy between the orators and the Rutland bank, is not necessarily conclusive of the rights of the former, it will be competent for the chancellor to allow an amendment to the bill, or perhaps a supplemental bill to be filed, presenting the matter of notice, on such terms and conditions as hé may think just and equitable.

As respects the Rutland bank, the decree of the chancellor is reversed proforma, and the case is remanded to the chancellor for further proceedings.