Nicholson v. Condon

Bryan, J., delivered the opinion of the Court. This was a bill for the specific performance of a contract for the purchase of certain leasehold property in the City of Baltimore. The defendant in his answer makes defence as follows : “And this defendant further answering the bill in this respect, states that the complainant acquired the said property by purchase of and proper conveyance, from one Maggie T. McCauley, then wife of David McCauley, dated-December 24th, 1888, and that said Maggie T. McCauley acquired the same during her coverture with him, the said David McCauley, by a conveyance thereof from one Boston Fear and his wife. And this defendant further answering the bill, says, having been advised, as matter of law, that by a presumption of law, all property acquired by a married woman during her coverture, was paid for by her husband, or from his means; and that the burden of proof is on her to show that she paid for it out of money belonging to her separate estate, the title of a ⁶²² married woman to property thus acquired, is, for that reason, as a matter of fact, unmerchantable in the market; and the complainant’s title to the property he proposes to sell unto this respondent, being thus acquired, is unmerchantable in the hands of the said Maggie T. McCauley, and is not now merchantable, as charged in the bill; wherefore he declined to make the cash payment therefor, and to accept a conveyance of the property.” The evidence shows that no other objection is made to the title of the complainant.

The Court decreed a specific performance. The first section of the forty-fifth Article of the Code has been in force with very little change for nearly thirty years. It enables a married women to acquire real and jiersonal property by purchase and in other ways, “provided that no acquisition of’property passing to the wife from the husband after coverture shall he valid, if the same has been made or granted to her in prejudice of the rights of his subsisting creditors.” If made in this way, a purchase by the wife, or in the name of the wife, would be fraudulent and void as against them. And of course the deed would he set aside and annulled, on proper proceedings to that end.

But it has never been supposed that a bona fide purchaser without notice would not obtain a good title, although he may have purchased from a fraudulent grantee. When it is said that deeds in fraud of creditors are Amici, the doctrine must he understood with the limitations which are necessarily imposed by the well settled principles of law and equity. Judge Stoby in a few felicitous words thus states the result of all the learning on this subject: 1 Story’s Equity Jurisprudence, sec. 381: “It is proper'to he remarked that although voluntary and other conveyances in fraud of creditors are thus declared to he utterly Amid, yet they are so, only so far as the original parties and their privies and others claiming under them, who have notice of the fraud, ⁶²³ are concerned. For bona fide purchasers for a valuable consideration, without notice of the fraudulent or voluntary grant, are of such high consideration that they will be protected, as well at law as in equity, in their purchases.” Eo possible reason can be suggested why a purchaser from a married woman should stand on a footing different from that of a purchaser from any other grantee, whose title may be assailable for fraud of creditors.

We therefore hold that the facts stated in the answer show no reason whatever for impeaching the title of the complainant. We were informed at the argument that an opinion prevails with many members of the profession adverse to titles derived from married women; and it is attributed to what was said by this Court in Levi vs. Rothschild, 69 Md., 348 . The effect of a decision cannot be determined by considering a detached passage, wrested from its natural connection. We must know the nature of the question before the Court, and see how it has been decided; the opinion must then be read as an exposition of the law on the matter in controversy.

Any other rule o£ interpretation is distorted and unnatural. In Levi vs. Rothschild the allegation was that one Levi purchased certain leasehold estate with his own money, and for the purpose of defrauding his creditors caused the title to be made in the name of his wife. The proceeding was directly against the husband and wife. The husband being shown to be insolvent, one of the questions was as to the burden of proof; and on this point the language of the Court was as follows: “It can hardly be necessary to say, that where a conveyance is made to the wife of an insolvent debtor, the burden of proof is upon the wife to show that the property was purchased and paid for out of money belonging to her; and that in the absence of such proof, the presumption is that the husband furnished the means of payment.” In thus declar ⁶²⁴ ing the law, the Court follows the decision of the Supreme Court of the United States in Seitz vs. Mitchell, 94 U. S., 580 , decided in 1876.

The Supreme Court say “Purchases of either real or personal property, made hy the wife of an insolvent debtor during coverture, are justly regarded with suspicion, unless it clearly appears that the consideration was paid out of her separate estate. Such is the community of interest between husband and wife; such purchases are so often made a cover for a debtor’s property, are so frequently resorted to for the purpose of withdrawing his property from the reach of his creditors and preserving it for his own use; and they hold forth such temptations for fraud, that they require close scrutiny. In a contest between the creditors of the husband