Case ID: wis_117/html/0206-01.html
Source: Caselaw Access Project
Author: {"author": "Cassoday, O. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Scott, Trustee, Appellant, vs. Holman and another, Respondents.
    
      February 5
    
    March 21, 1903.
    
    
      Fraudulent conveyance: Purchase,of homestead by insolvent in wife's name: Rebutting presumption of fraud: Resulting trust.
    
    Pending an action against a husband, his wife purchased a house and lot for $970, paying $700 down, taking title in her own name, and giving back a mortgage for $270. Of the amount paid down $250 was the wife’s separate property and $450 had been saved by the husband to buy a homestead. Before judgment against the husband in said action, they occupied the premises as a homestead. After judgment and before execution was issued the husband paid upon the mortgage $170 saved by him out of his earnings after the purchase. Afterwards the husband was declared bankrupt. Held, that the facts stated rebut the presumption arising under sec. 2078, Stats. 1898, that the conveyance to the wife was fraudulent as to the husband’s creditors.
    Appeal from a judgment of tbe circuit court for Waupaca county: J. J. Feuit, Judge..
    
      Affirmed.
    
    On February 26, 1900, one Charles A. Spencer commenced an action for the breach of a lumbering contract entered into by him November 29, 1892, with the defendant Luzern Holman and one Ira W. Baggs. Pending said action, and on February 21, 1901, the defendant Margaret Holman, wife of Luzern Holman, with knowledge of the pendency of such action, purchased of one Milo Clark the house and lot in the city of Waupaca, therein described, and was to pay therefor $910. She paid $700 cash down at such purchase, of which $250 was of her own money and. $450 thereof she received from her husband, Luzern Holman, about the time of such purchase. At the same time Milo Clark conveyed the house and lot to the defendant Margaret, and she gave back to him a note for $270, secured by mortgage on the house and lot. The value of the house and lot and appurtenances did not exceed $1,000, and the lot does not exceed one fourth of an acre. The only buildings upon the lot are a dwelling house and stable. Margaret and her husband moved into the house and on the premises March 1, 1901. On March 26, 1901, Spencer recovered judgment in the action so pending against Luzern Holman and Ira W. Baggs for $1,100 damages and costs, and the same was duly docketed March 30, 1901. On April 15, 1901, Luzern Holman paid on the note and mortgage $70, which he had saved out of his earnings between Eebruary 21, 1901 and that time. On June 25, 1901, he paid thereon the further sum of $100, which he had saved from his earnings between April 15, 1901, and that time. Execution was issued on such judgment July 1, 1901, and the same was returned wholly unsatisfied July 19, 1901. On August 27, 1901, the defendant Luzern was duly examined before the county judge in proceedings supplementary to such execution. On August '30, 1901, Luzern was adjudged a bankrupt on his voluntary petition in the district court of the United States for the Eastern District of Wisconsin. On September 26, 1901, the plaintiff was appointed trustee of his estate in bankruptcy, and accepted the trust.'
    Thereupon the plaintiff, as such trustee, commenced this action to have the transfer and gift of the moneys so advanced and paid by the husband to the wife and by her used in the purchase of the house and lot, and of the moneys paid by him on the note and mortgage to Clark, adjudged fraudulent and void as to the creditors of the husband, and that the house and lot, mentioned, be charged and impressed with a trust in favor of the plaintiff for the amount of such moneys, and that the defendants be decreed to convey tbe same to tbe plaintiff to satisfy said judgment. Tbe defendants separately answered by way of admissions, denials, and counter allegations.
    At tbe close of tbe trial tbe essential facts were stipulated by tbe parties, and tbe court found, in effect, tbe facts stated, and also, in addition thereto, tbat tbe defendants were married in 1898; tbat at the time of such marriage tbe defendant Margaret possessed $250, which she bad kept and invested as her separate property; tbat there is still dire on tbe note and mortgage to Clark $100; tbat ever since their marriage tbe defendants have been saving money to buy a borne; tbat they have always been residents of tbe state, and down to tbe time of such purchase lived in a rented bouse in Waupaca; tbat they have lived in and occupied tbe bouse and lot in question ever since March 1, 1901; tbat tbe husband has paid on tbe bouse and lot and mortgage in tbe aggregate $620; tbat tbe wife knew tbat her husband bad a lawsuit with Spencer; tbat tbe only thing she ever beard her husband say about it was tbat he did not owe Spencer anything; tbat she believed tbat her husband could bold a bouse and lot as exempt without giving it to her; tbat she claimed tbe bouse and lot as her homestead, and exempt under sec. 2983, Stats. 1898, and tbe husband claims tbat whatever interest he has in tbe bouse and lot is bis homestead and exempt from seizure and sale on execution, under sec. 2983, Stats. 1898, as amended.
    And as conclusions of law from such facts tbe court found tbat tbe money furnished by tbe defendant Luzern Holman to bis wife, with which she partly paid for their homestead, constituted no fraud; tbat no fraud, either in law or in fact, was committed by tbe defendant Luzern Holman; and tbat judgment should be entered in favor of tbe defendants, and tbat tbe plaintiff’s complaint herein should be dismissed on tbe merits, with costs in favor of tbe defendants; and ordered judgment to be entered accordingly. From tbe judgment so entered tbe plaintiff appeals.
    
      Eor the appellant tliere was a brief by Gate & Dahl, and oral argument by G. M. Dahl.
    
    Tbey contended, inter alia, that where title to property is taken by the wife, the husband partially or wholly paying the consideration money, no trust results in favor of the husband; he has no interest in the premises. A trust does result in favor of the creditors of the husband and neither the husband nor the wife can claim a homestead in the premises. Rogers v. McCauley, 22 Minn. 384; Sumner v. Sawtelle, 8 Minn. 309; Hamill v. Henry, %% Iowa, 152, 28 N. W. 32; Fairbairn v. Middlemiss, 47 Mich. 372, 11 N. W. 203.
    
      John G. Hart, for the respondents.
   Cassoday, O. J.

Counsel for the plaintiif insist that the case is governed by two sections of our statutes, which declare that:

“When a grant for a valuable consideration shall be made to one person and the consideration therefor shall be paid by another, no -use or trust shall result in favor of the person by whom such payment is made; but the title shall vest in the person named as the alienee in such conveyance subject only to the provisions of the next section.”
“Every such conveyance shall be presumed fraudulent as against the creditors of the person paying the consideration, and when a fraudulent intent is not disproved a trust shall result in favor of such creditors to the extent that may be necessary to satisfy their just demands.” Secs. 2077, 2078, Stats. 1898.

The whole consideration paid for the house and lot in question was $970. Of that sum the husband furnished to his wife at the time of her purchase $450, and subsequently he paid upon the note and mortgage which she gave back to secure a part of the purchase price $170, making his contribution to the purchase of the house and lot $620; and counsel contend that under the statutes quoted such payment by the husband, to the amount stated, must be presumed to be fraudulent as against his creditors, and to that extent the wife must he regarded as holding the title to the house and lot in trust for such creditors. But by the express language of the last section quoted such can only be the result “when a fraudulent intent is not disproved.” Here the court found from the admitted facts that there was no such fraudulent intent. Counsel insist that the presumption of such fraudulent intent has not been rebutted, and yet counsel concede, as they must under the decisions of this court, that it would have been perfectly legitimate for the husband to have purchased the house and lot in question, and taken the title thereof in his own name, and held it as his homestead, and then conveyed it to his wife, without subjecting it to the claims of his creditors. Hibben v. Boyer, 33 Wis. 319; Pike v. Miles, 23 Wis. 164. This is on the theory that it may be legitimate for an insolvent debtor to use moneys or nonexempt property in procuring a homestead. This court has held that “the mere fact that an exchange of nonexempt for exempt property might be highly advantageous to an insolvent debtor is not conclusive evidence of an intention to defraud his creditors.” Kapernick v. Louk, 90 Wis. 232, 234, 62 N. W. 1057; Palmer v. Hawes, 80 Wis. 474, 50 N. W. 341. Since he may do that, we perceive no good reason why he may not join with his wife, who may have separate property of her own, in procuring a homestead for both of them. Thus it was held by this court more than forty years ago that, “A homestead being exempt from forced sale upon execution, it matters not whether the title remain in the execution debtor or be held by his wife as his trustee.” Dreutzer v. Bell, 11 Wis. 114; Rozek Redzinski, 87 Wis. 525, 531, 58 N. W. 262. At the time of the purchase of the house and lot the wife had $250, and her husband had $450, which he had saved from his earnings for the purpose of buying a homestead. There was a lawsuit pending against the husband,and another man upon a contract made eight years before. There is no evidence of any other claims being made against bim at the time. They used tbe moneys they both had in buying a homestead and taking the title in the name of the wife. There is nothing nnnatnral in the transaction, nor anything indicating an intent to defraud creditors. It was said by the late Justice NewmaN, speaking for the court:

“The right of the owner to have his homestead exempt from liability in any form for his debts is superior to the equity of a creditor to have it applied to the payment of his debt. However it may have been formerly, and in the absence of a statute declaring his right, it is now the settled policy of the law to prefer the homestead right as against the rights of creditors.” Clancey v. Alme, 98 Wis. 230, 73 N. W. 1014.

The admitted facts rebut any presumptions of fraudulent intent arising from the statute.

By the Court. — The judgment of the circuit court is affirmed.