Court Opinion

ID: 3600900
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:47:23.8248+00
Date Added: 2024-06-11T13:59:19.737295
License: Public Domain

One Edwin Smith failed as a merchant, and became insolvent. His wife, Charlotte A. Smith, was the owner of a separate estate, consisting of between two and three thousand dollars in money, which she received as legatee under the will of her mother. The parties were married in 1835, but the property was not received by the wife until 1849. They had a family of six children. An arrangement was entered into, by which a new mercantile business was to be commenced and carried on, with the wife's capital and on her credit, but in the name of "E. Smith, agent." The business was to be that of the wife, and the husband's compensation was to be his board and clothing. Under this arrangement, the business was conducted for several years — the husband informing those he dealt with, and especially those of whom he asked credit, that he was acting as agent for his wife; and the wife and children were supported by the business, and from time to time took goods from the store as needed for their use and support, and without any account being kept of such goods. The entire capital, except such as may have arisen from profits and from money borrowed, was contributed by the wife, out of her separate estate. The wife took no part in the management of the store. The property was levied on and sold under executions issued on old judgments against the husband; and this action was brought by the assignees of the wife against the sheriff. The referee found, as a conclusion of law, that the plaintiffs were not entitled *Page 523 
to recover, and ordered judgment for the defendant for the costs, and which judgment was affirmed.
The referee does not find that there was any fraud in the transaction. Indeed, it would be difficult to predicate fraud upon such an arrangement. The wife of an insolvent man, having a small separate property, derived from her mother, is naturally desirous that her husband may be engaged in some business, by which, in connection with her estate, a support may be provided for a large family of children. The husband has been a merchant. The wife is willing to embark her property in that business with which her husband was familiar, hazardous though it may be; and she empowers and authorizes him to carry on business for her and on her money and credit, holding himself out to the world as her agent. There was nothing fraudulent in that. There is no law in this State which mortgages to the creditor either the person or the labors of his debtor — no longer a law which consigns the innocent and unfortunate to confinement within prison walls. The duty rests upon him to use his best efforts for the payment of his debts; but there is a duty which he owes alike to the public and to his family which is sacred — and that duty is, to provide for the nurture, education and support of his children. He is said to be worse than an infidel, who neglects it. In seeking employment for that purpose, he may apply to the wife, if she have a separate estate, as well as to a stranger. If the law allows her to hold property — her own at her marriage, or coming from others beside her husband and free from his control — of necessity, she must be permitted to manage it herself, or she may employ others to act for her. As to that separate estate, she and her husband are as distinct before the law as if the marital relation did not exist. As to that property she acts as a femesole, and may deal with her husband as with a stranger, and may, therefore, necessarily employ him and compensate him for its management. As the law was formerly, when the personal property of the wife became the property of the husband so soon as he reduced it to possession, it is easy to see how, when the wife voluntarily gave up the possession to him, such an act *Page 524 
might be considered as an abandonment of ownership on her part, and a free gift to her husband. But now, when the wife holds her property as independent of the ownership and control of her husband as of a stranger, it seems to me to be a manifest perversion of the laws enacted for her benefit and protection, to declare, that, when she employs her husband as her agent, and intrusts the custody of the property to him, to buy and to sell, and, if possible, to get gains for her, thereby she must be considered as having made a free gift of the property to him. If it be a free gift, and the title and ownership is in the husband, so that his creditors may seize and sell it for the payment of his debts, then the husband, it would seem, in violation of his trust, might dispose of the property, as absolute owner, for his own exclusive benefit, and to the exclusion of any right on the part of his wife. This is neither right in morals nor in law. But it is said the wife owes allegiance to her husband, and is bound to serve him, and her time and her labor belong to him, and, therefore, he cannot be treated as her servant or agent. When such a rule existed, the wife could not hold in her own right any property, free and clear of her husband's control, except by the intervention of trustees, and, of course, there was not and could not be any direct employment of him by her in the management of her property. But a new law has changed the rule. Whether, as in the case before us, the wife would be bound by the engagements which the husband entered into as her agent, is a question which concerns rather the creditors of the wife than the creditors of the husband. His creditors have no right to complain if persons are found who are willing to give credit to the wife. If they cannot enforce their claim at law against her, it is their own misfortune, and does not concern or affect the rights of the husband's creditors; and it is difficult to see how it thereby tends to vest the title of the property purchased for her, and for which credit is given to her, in her husband. It is also said that the skill and labor of the husband, when employed by the wife, as in this case, enters into and forms, as it were, a part of the property, and increases its value. If the business is successful, *Page 525 
granted; but the title is not thereby divested. At most, he could have but a lien for his wages. The whole case turns upon the question, whether a wife, having separate property, can employ her husband as her agent. If she can, then the objections raised cannot avail as a defense. This question was distinctly settled in Knapp v. Smith (27 N.Y., 277), where the law is very distinctly laid down, and where it was held that a married woman, having property of her own, could manage it by the agency of her husband, or any other, and hold the profits and increase to her separate use. What was said in Sherman v. Elder
(24 N.Y., 381), and which might be considered in conflict with Knapp v.Smith, was but the dictum of the judge delivering the opinion, and does not appear to have been concurred in by the other members of the court; and the point was not decided in that case. But Sherman v. Elder expressly decides that the wife in this case could make a valid assignment of her claims, and that the action is well brought by the present plaintiffs.
I think this judgment should be reversed, and that there should be a new trial, with costs to abide the event.
All the judges concurred in the foregoing opinions, except DENIO, Ch. J., who dissented.
Judgment reversed, and new trial ordered. *Page 526