Drury v. Briscoe

Husband and Wife — Choses in action — Inability of the Estate of a Husband for a debt contracted by him in favor of his Wife, as against the claims of Subsequent Creditors — Effect of taking a second Mortgage to secure a Debt, — the first Mortgage for the same debt not being released, — as against intervening liens. A married woman being entitled to a distributive share of the proceeds of the real estate of her father, sold under proceedings for a partition, sold her share with the consent of her husband, and took the note of the purchaser for the purchase money. This note the husband collected as a loan by his wife to him upon an agreement with her, to repay it to her with interest, and gave her his note for the amount due her. Afterwards the husband ' becoming embarrassed, in order to protect his wife’s claim paid two judgments against himself and caused them to be entered to her use. The validity of this transaction being impeached by subsequent creditors of the husband as in fraud of them, it was Held : 1st. That the husband did not reduce the chose in action of his wife into his possession by virtue of his marital rights, but in pursuance of his agreement with his wife obtained control of the note: and his agreement to repay her the amount he collected on it was founded upon an adequate consideration. 2nd. That the claim of the wife, was manifestly just and should be allowed. Where a mortgage was given to a guardian to secure a debt due his wards, and subsequently a new g’uardian was appointed in his place, who in ignorance of the existence of subsequent incumbrances upon the property, agreed that the time of payment of the mortgage debt should be extended, and took a new mortgage on the same property to secure its payment but without releasing the first mortgage, it was Held : That the debt secured by the two mortgages was the same and should have the benefit of the lien of the first mortgage.

Appeal from the Circuit Court for Anne Arundel County, in Equity. The questions in this case arise upon exceptions to the auditor’s report distributing the proceeds of the sale of the real and personal estate of John H. Drury, of H., sold by trustees to whom he had conveyed it, for the benefit of his creditors. One of the claims, the rejection of which is excepted to by the appellants, is that of Mary R. Drury, the wife of said John H. Drury, of H., upon two judgments against him entered to her use. The facts in relation to this claim are set forth in her answer, as follows : “This respondent respectfully showeth, that she is the equitable holder of the two judgments set forth in the annexed short copies herewith filed, marked ‘M. R. D., Exhibit A.’ That the consideration of said assignment to her was legal and valuable, aud arose out of the fact, that in the year 1851, your respondent became and was entitled to receive from the executors of her deceased father, or the trustee who sold the real estate for partition among the devisees of her said father, the sum of eight hundred and fifty dollars, out of which she was entitled to an equitable provision, and in consideration thereof, her husband, John H. Drury, of H., agreed with her, that if she would consent to his receiving said money, without interposing her claim thereto, he would receive said sum of money as a loan by her to him, and would repay it with legal interest from the time of such receipt,-whenever the same should be demanded of him. That thereupon the said John H. Drury received the said sum of money, not in virtue of his marital rights, but as a loan made by this respondent to him. “Your respondent further showeth, that no interest-having ever been paid on the loan, and no part of the principal having been paid, there remained due to her, on the 18th of October, 1855, the whole of said debt, with interest thereon. “This respondent further showeth, that since her said marriage, she was also enabled, by her personal skill and labor, in raising and selling poultry, butter, pork, &c., to realize a large sum of money for her sole and separate use, which she had loaned to her husband, which, on the 18th October, 1855, amounted, with the debt and interest first aforesaid, to the aggregate sum of $1475 ; for which said several amounts said husband, upon a full settlement of accounts with her, duly passed his note to her, (witnessed and stamped, as will be seen by inspection thereof,) and which is herewith filed. “This respondent further showeth, that in the year 1869, her said husband having become unfortunate in business, and embarrassed, he was anxious to pay his debt to her, and with that view he did, by her authority and with her privity, appropriate money in his hands to the purpose of procuring the assignments to be made to her, as set forth in Exhibit A, as aforesaid; which assignments she holds as security for said debts so due by her husband, and represented in said note.” Another claim in question was that of Joseph O. Collin-son and Stephen Beard, under two mortgages, in regard to which they make the following statement in their answer : “As to the two mortages mentioned in the said bill, these defendants answering say, that the said Joseph C. Collinson was the guardian of Joseph Collinson and David Collinson, infant children of John Collinson, deceased, and as such, invested part of the estate of said wards, to wit: the sum of three thousand five hundred dollars, in a mortgage on the land of the said John H. Drury, in which, his said wife joined, the said mortgage being dated the 20th day of May, 1863; that afterwards, the said Stephen Beard was appointed guardian to the said minors in the place of the said Joseph, and being willing that the said money should remain thus invested, it was agreed by and between the said Joseph and Stephen, and the said John H. Drury, that the credit on said debt should be extended, and that Drury and his wife would give another mortgage for the same land to the said Stephen, and that the first mortgage should he released by the said Joseph. “The defendants aver, that at that time they were not aware that there were any liens on the said land, and relying on the assurance of said Drury that there were none, they did not examine the records, and agreed that such mortgage should be executed, which was done on the twentieth day of May, 1869, hut they soon after discovered that there were judgments to a large amount binding the said land, and the said Joseph G. Collinson refused to execute a release of the mortgage to him, and they have ever since considered the first mortgage as a lien on the land, and they now claim that it should he paid in priority to all other liens of a subsequent date. “And if this Honorable Court should he of opinion that under the circumstances, the said first mortgage is discharged as a lien, as of the time of its being recorded, they claim and rely on the mortgage to said Beard, as a valid lien on the’ said land, insisting, however, that the lien reaches hack, under the mortgage, to Oollinson, and that the one to Beard is only a security for the same debt, in which view of the question, they signed agreement, marked íf¡,’ to come in under the deed.” The other facts are sufficiently stated in the opinion of this Court. The agreement made between John H. Drury and wife, the appellants, and William Jones, for the sale of the wife’s real estate, for which Jones delivered to the wife his note, payable to her for her use, was a bona fide and legal agreement, being for a valuable consideration — the wife’s title and interest in her own real estate- — which a Court of Equity will enforce in favor of the wife. State, use of Stevenson, vs. Reigart, 1 Gill, 25 and 26; Stockett vs. Holliday, 9 Md., 489; Kuhn vs. Stanfield, 28 Md., 215; Duvall vs. Farmers’ Bank, 4 G. & J., 282; Mayfield vs. Kilgour, 31 Md., 240. While the original title and interest of the wife in her own real estate remained in her, subject only to this agreement of sale to Jones, proceedings were instituted by her and her co-heirs to sell this, their real estate, and the same was sold to Jones, and the wife’s share of the proceeds of sale made payable to Jones, as the assignee thereof, under the agreement between him and John H. Drury and wife, hut before such assignment of the proceeds of the wife’s estate to Jones, and before any payment thereof, and whilst the wife had a right to proceed in equity, and have the wife’s equity in these proceeds of sale paid to her, her husband, Drury, agreed, that if she would allow him to collect this note to her,.and receive these proceeds of sale, he would take this money as a loan to him from her, and pay or secure the same to her on demand, with interest; which agreement was entered into, and the money paid accordingly. These facts constitute a valid and bona fide agreement in the wife’s favor, obligatory on the husband and all claiming under him. Jones vs. Jones, 18 Md., 465; Norris vs. Lantz, 18 Md., 260; McNamee vs. Withers, 37 Md., 180. The decision of the Court below allowed to Mrs. Mary R. Drury more than she was entitled to claim out of these trust funds, but inasmuch as the appellees did not appeal from this decision, such opinion cannot now be modified or reversed by this Court, so as to exclude her claim entirely. The testimony shows that there was no consideration for the said pretended debt of Drury to his wife. The appellees will rely on the following cases in support of their exceptions. As to the husband’s right to the dioses in action of the wife. Wiles vs. Wiles, 3 Md., 1; State vs. Krebs, 6 H. & J., 31; Newcomer vs. Orem, 2 Md., 297; Peacock vs. Pembroke, 4 Md., 280; Turton vs. Turton, 6 Md., 375; Stockett vs. Holliday, 9 Md., 480; Taggart vs. Boldin, 10 Md., 104; Stockett; vs. Bird, 18 Md., 484; Duvall vs. Farmers’ Bk., 4 G. & J., 282. How a wife may become the creditor of the husband. Bowie vs. Stonestreet, 6 Md., 430; Jones vs. Jones, 18 Md., 464; Mayfield vs. Kilgour, 31 Md., 240; Kuhn vs. Stansfield, 28 Md., 210; Stevenson vs. Reigart, 1 Gill, 1; Unger vs. Price, 9 Md., 558. As the first mortgage was not .released it stands as a security for the debt. Under the agreement of the parties, the second mortgage could not stand as security for the debt before the first was released. When it was discovered that Drury had deceived Oollinson and Beard, the former was not bound to release his mortgage, so as to let in the intervening judgments. These judgment creditors ought not to complain of this, because they did not credit in ignorance of the prior lien. If Drury were now insisting that Oollinson should release his mortgage, he would not he listened to, on account of his deception. His creditors ought not to he in a better position, and derive benefit by his fraud. If the first mortgage had been released, the case might stand on a different principle. But for the answers of these parties, it would not appear hut that the two claims were different debts, when the answer is resorted to by the judgment creditors for the purpose of defeating the claim under the first mortgage, because another security was taken, they make the answers evidence, and are hound by the averment as to the manner in which the credit on the debt was to be extended, and by the averment of the deception that was practiced by Drury. It is not like the case of Woollen vs. Hillen, 9 Gill, 185, where a release had been executed, reciting that the debt had been paid. But the Court intimate that if there had been fraud, the result might be different.