Court Opinion

ID: 8762050
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:10:06.054454+00
Date Added: 2024-06-11T17:01:37.895831
License: Public Domain

ALDRICH, District Judge
(dissenting). In this case a wife seeks to prove a claim, based upon a supposed gift from her husband, against a bankrupt partnership of which her husband is a member.
Under the law of Massachusetts, if the gift in question is established as one passing title to the property from the husband to the wife (a proposition to which I do not assent), the wife cannot enforce a claim in respect to it against a firm of which her husband is a member, either at law, Edwards v. Stevens, 3 Allen (Mass.) 315, or in equity. Fowle v. Torrey, 135 Mass. 87; Bank v. Tyndale, 176 Mass. 547, 57 N. E. 1022, 51 L. R. A. 447; Woodward v. Spurr, 141 Mass. 283, 6 N. E. 521; Clark v. Patterson, 158 Mass. 388, 33 N. E. 589, 35 Am. St. Rep. 498.
If the title passed from the husband to the wife, which I am far from assuming, and if she loaned the stock to Frederick M. Tucker, her claim, under the circumstances and under the assignment, would be against Frederick M. Tucker alone. Clark v. Patterson, 158 Mass. 388, 391, 33 N. E. 589, 35 Am. St. Rep. 498.
The property rights óf married women rest upon local law, and if there could be no recovery under the statutes and decisions of Massachusetts, there should be none in the United States courts.
Provable claims under section 63 of the bankrupt law of July 1, 1898, c. 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3447] are such claims as have a legal, or equitable, enforceable status under the local law of the State. It was not the purpose of the bankrupt law to enlarge the rights, or the remedies, of creditors and give them more in the federal courts than they are entitled to have under the state law.
In James v. Gray, 131 Fed. 401, 402, 403, 65 C. C. A. 385, 386, 387, 1 L. R. A. (N. S.) 321, the opinion of the majority proceeded upon the distinct ground that the claim there in question would have no legal or *937equitable standing in the courts of Massachusetts, and the majority decision was based upon the supposed existence of a broader equity power in the federal courts. From that view I dissented upon the ground that if there was no property right enforceable under the law of the state, there was nothing here to remedy in any form of proceeding. See Meade v. Beale, Fed. Cas. No. 9,371, opinion by Chief Justice Taney; Lumber Co. v. Ott, 142 U. S. 622, 627, 628, 12 Sup. Ct. 318, 35 L. Ed. 1136; District of Pella v. Beard (C. C.) 83 Fed. 5, 15-16.
The general rule is stated by Pomeroy (Pomeroy’s Equity Jurisprudence [Ed. 1881] § 297) as one which must constantly be borne in mind:
“Since the original jurisdiction of the United States courts, especially of the circuit courts, in large measure depends upon the state citizenship of the litigant parties as its sole basis, it follows that in most cases of ordinary controversies — in all those which do not directly arise under statutes of Congress or provisions of the United States Constitution — the subject-matter of the suit, the primary rights, interests, or estates to be maintained and protected, are created and regulated by state laws alone.”
It is further observed by the same author that while the equitable jurisdiction of the national courts and their power to entertain suits and grant remedies, derived from the Constitution and the laws of the United States, remain unabridged by any state legislation, on the other hand, the primary rights, interests, and estates which are dealt with in such suits and are protected by such remedies, are within the scope.-of state authority, and may be altered, enlarged, or restricted by state laws, and the notes illustrate the proposition by referring to the rights of married women as something to he regulated by local law.
I do not understand that direct gifts from a husband to a wife are valid and enforceable by the wife in the courts of Massachusetts, either as a claim direct against the husband or as a claim against a firm of which he is a member. In Spelman v. Aldrich, 126 Mass. 113, 317, it is said that:
“A married woman cannot acquire property to be held as her sole and separate property by gift from her husband. Gen. St. 1800, c. 108, § 10. Though such a gift may be so far valid as to give the wife a right to the property at the death of the husband, as against his heirs or executors, it is invalid as to his creditors. Property thus given remains the property of the husband during his life, and may he demanded by him or attached by his creditors.”
I do not understand that Brown v. Brown, 174 Mass. 197, 54 N. E. 532, 75 Am. St. Rep. 292, which was a case simply presenting questions of estate administration based upon rights as between husband and wife, and therefore in no way involving creditor rights in an insolvency situation, at all questions or qualifies the law declared in Spelman v. Aldrich. On the contrary, while distinguishing Spelman v. Aldrich from the case then under consideration, it not only expressly recognizes the binding force of the rule of that case as to direct gifts, but, at page 199, in stating the rule as to gilts which undertake to pass property from tlie husband to the wife through the agency of a third party, far from accepting such a situation as creating a perfect gift good against creditors, expressly makes the validity of indirect gifts subject to the important qualification “if not fraudulent as to creditors.”
*938It seems to me that in a local creditor situation, like that involved in the proof, and allowance of contemporaneous claims in bankruptcy, that a wife’s claim based upon a transaction with a bankrupt husband, like the one in question, though not assailed by proof of actual fraud, is in contemplation of Massachusetts law constructively fraudulent as to creditors, because the recognition of such a gift would be giving an effective status to a claim not enforceable against the husband or his assets to which the creditor interests attach under the local law of the state.
In this case the wife had no separate property or independent estate, and Judge Rowell finding the facts in the District Court (131 Fed. 647) in a careful opinion, supplemented'by a further opinion not reported, treated the transaction as one involving a direct and pure gift from the husband to the wife and as void under the statutes of Massachusetts; and, while the majority opinion here treats the gift as one accomplished through the instrumentality of a third party, it accepts the situation a-s one not involving the separate estate of the wife, the transaction as one not involving consideration, and the claim of the wife as one depending upon the gift or gifts from her husband. In my view the stock transaction in question does not warrant the third party assumption. The gift was direct from the husband to the wife, and at the time of the pretended loan to Frederick M. Tucker the wife had no title which she could transfer to him by loan or otherwise. The certificates indorsed in blank were in the possession of the husband as his property, and were filled out and delivered to the wife by the husband as a direct gift. If the transaction was a valid one in contemplation of law, the title passed then and there, and the mere formal insertion, without consideration by the transfer agent of the corporation, of the wife’s name in certificates relating to shares of stock owned and in the possession of the husband, which he intended to give to the wife without consideration, in no legal sense constituted a case of the receipt of property by a wife from a stranger within the meaning of section 1, c. 153 (1902), of the Revised Laws of Massachusetts, nor did it in any substantial sense constitute a transfer of the title through a third party wihin the meaning of the Massachusetts decisions, and especially that of Brown v. Brown, 174 Mass. 197, 54 N. E. 532, 75 Am. St. Rep. 292, where there w'as a contract direct between the.bank and the wife, in which the bank, through a bankbook in her name, engaged to deliver money actually in the bank at the time the contract was made.
The possession of Mrs. Tucker was merely nominal and under circumstances which at least create suspicions of a-cover and of an entirely ficticious transaction. The certificates were at once indorsed by her in blank and returned to the husband, who passed them to Frederick M. Tucker for the use of the firm, and the transaction of the assignment of the Stock Exchange seat, though nominally in the wife’s name, was really a transaction between Frederick M. Tucker find Tracy Tucker, the actual owner.
In Jaquith v. Massachusetts Baptist Convention, 172 Mass. 439, 52 N. E. 544, there was a solemn conveyance by deed from the husband *939to a third party, who, in turn, conveyed to the wife. The proceeding was not by the wife to enforce a contract with her husband, and so was not within the prohibition of section 2, c. 153, of the Revised Raws of 1902, as construed by the Massachusetts courts. There the suit was by an assignee in insolvency to vacate a judgment of foreclosure of a mortgage upon the property given by the husband and wife to secure the husband’s creditors, and thus it in no way presented the questions involved here.
I agree with the reasoning of Judge Rowell in the District Court that: a decision sustaining the claim of Mrs. Tucker in this case would make altogether inoperative the laws of Massachusetts governing the relations of husband and wife; and the effect would be to establish two rules of law in Massachusetts as to local business dealings. It vrould establish a substantive right in behalf of the wife in respect to gifts from her husband, which does not exist under the laws of Massachusetts. Giving such a claim an effective status would be in fraud of creditors, because it would sweep out of the estate a certain amount of asset which would otherwise, and according to their rights under the local law, be distributed among them.
In this case there is nothing in the transaction or the questionable possession of the wife which, either upon grounds of sanctity of contract or upon equitable considerations, requires this claim to be upheld against actual creditors for value, and a decision giving the claim of Mrs. Tucker an enforceable status would go far beyond what was held in James v. Gray, 131 Fed. 401, 65 C. C. A. 385, 1 L. R. A. (N. S.) 321, in the direction of establishing within a certain domain two' sets of law, or two measures of equity, respecting property rights. In that case T gave the reasons for my dissent at considerable length. I must adhere to the position there taken, and I refer to mv dissent in that case as the ground for not concurring in the majority opinion here.