Court Opinion

ID: 7891280
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:13.079497+00
Date Added: 2024-06-11T16:31:55.610507
License: Public Domain

Le Grand, C. J.,
delivered the opinion of this court.
This is an action to recover from the appellant, who was the defendant below, a sum of money alleged to have been improperly and illegally paid to the husband of the plaintiff during his life, said sum being claimed as belonging to and as part of her sole and separate estate. The circumstances of the case may be thus briefly stated: The plaintiff, contemplating an intermarriage with a gentleman, who subsequently became her husband, together with him and another, executed the instrument of the 7th day of June 1858. This paper is designated in the record as the “marriage settlement,” and was doubtless intended by the parties to it to convey out of her the legal title to her estate and to vest it in a trustee for her sole and exclusive use. It is not very artistically drawn, and did not, in our opinion, accomplish, in this particular, its intended office. We regard all those portions of it which refer to the interference of the third party (Louis R. Deluol) with her property, as covenants between the parties that her estate should be reserved to her free from the control of and liability-for the debts of her intended husband. But, whilst we do not consider the instrument as directly divesting her of the legal estate, we deem it sufficient to authorize her to direct the manner in which it should be “invested and appropriated,” and for “such purposes” as she might “think fit.”
In this state of marital relations between the plaintiff and her husband, a portion of her estate was disposed of to J. Spear Nicholas, who gave his notes for it. They promise to pay to the “order” of the plaintiff, “use of her separate estate.” These notes were paid at the banking-house of Josiah Lee & Co.', of which firm, the defendant was a member. From the evidence it appears they were endorsed in blank, and, in this condition, were in the possession of the husband *99of the plaintiff, who obtained advances on them from the defendant. A portion of these advances were made on the checks of the plaintiff, and the residue paid to her husband. It is to recover this residue that this action was brought, it being insisted, that the defendant having received and collected the notes, knowing that they belonged to the separate estate of the plaintiff, he received them and their proceeds, subject to, and charged with the trust, and that the payments, other than on the checks of the plaintiff, were made by the defendant in his own wrong.
It is admitted that the defendant paid the whole amount received by him, part on the checks of the plaintiff, and the balance of it to her husband.
In the view we have of this case it is not important to inquire, whether, the plaintiff had the right, under the terms of the ante-nuptial contract, to appropriate the proceeds of the note, if she thought “fit,” to her husband, or, whether, by the law governing negotiable paper, she had, by the very terms of the note, power to confer title on the holder, either by a special or blank endorsement. If the power existed in either supposed case, then, clearly, this action cannot be maintained. But, we do not decide the case on such ground.
When a trust is created in behalf of a married woman, and there is no legal trustee created by the settlement, her husband becomes her trustee by operation of law, and as such, has the right to reduce into possession her ckoses in action for her sole use and benefit. And, like any other trustee, he and his representatives are responsible to her separate estate for whatever funds he may receive belonging to it. In virtue of this principle the husband of the plaintiff became her trustee, and was entitled to collect the note in question. If he misapplied the proceeds, his estate is liable to her claim, and not the party who has once honestly paid the amount of it. The case of Bennet vs. Davis, 2 Peere Williams, 316, is to the point, that where there is a devise to & feme covert for her separate use, without appointing any trustee, a court of equity will supply the want of one by regarding the husband as such.
*100(Decided June 12th, 1860.)
It is the duty of trustees, as of executors, to render available the choses in action of their cestui que trust, and to enable them to do this, they have the right to resort to the proper means for their collection. Their receipt and release is a sufficient acquittance to the debtor. The only exception to this is, where the debtor knows the trustee intends to commit a breach of trust; in such a case, it would not, according to some of the authorities, be safe to pay to the trustee, whether he has an express power of signing receipts or not. But, even in such cases, the fact of such knowledge must be brought home to the person paying, so as to make him particeps criminis, a privy to the fraud. Lewin on Trusts, 331, marginal.
In the case now before the court, there is no pretence or allegation of fraud against the appellant; all that has been contended for is, that the circumstances under which he received the notes were sufficient to inform him that they belonged to a trust fund. This was not sufficient to invalidate his payments to the trustee; something further was necessary; a knowledge on the part of the debtor of a purposed fraudulent misapplication of the fund by the trustee.
Prom what we have said, it will appear, we are of opinion the plaintiff cannot recover against the defendant on the facts in this case, and, it is, therefore, not necessary we should consider the form of the instructions granted or refused by the court. We reverse the judgment without procedendo.

Judgment reversed.