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HITZ v. NATIONAL METROPOLITAN BANK.

May 5, 1884

HITZ
v.
NATIONAL METROPOLITAN BANK.



[Syllabus from pages 722-723 intentionally omitted] [Statement of Case from page 273 intentionally omitted]

The opinion of the court was delivered by: Miller, J.

Enoch Totten and R. D. Mussey, for appellant.

R. K. Elliott and Leigh Robinson, for appellee.

This is a bill in chancery brought by the bank against John Hitz, Jane C. Hitz, his wife, and Metzerott and Cross, trustees, to declare void a deed, so far as it affects rights of the bank, made by Hitz and wife to Metzerott and Cross, as trustees, for the benefit of the wife. The deed was made December 9, 1878, and filed for record in the proper office, May 13, 1879. The property conveyed, which was real estate in the city of Washington, came to Mrs. Hitz by inheritance from her father, and by the birth of children before the married woman's act of congress of April 10, 1869, (16 St. 45.) Hitz had become entitled to a life estate in it as tenant by the curtesy. It is this right which is the subject of the present controversy. The bank, as creditor of Hitz, obtained a judgment against him on the twenty-eighth day of April, 1879, for the sum of $10,000, with interest and costs, and on the fifth day of June a writ of execution was issued on said judgment and returned nulla bona the same day. On the next day plaintiff caused another execution to be issued on the same judgment, and levied by the marshal on the interest of the said John Hitz in the property described in the trust deed of Hitz and wife to Metzerott and Cross.

We will notice the grounds on which the validity of the deed is assailed, in their order:

1. It is said that the deed was never delivered to the trustees. But the testimony of Mr. Metzerott, complainant's witness, shows clearly that he did receive the deed and kept it for an indefinite length of time, and then placed it in a box which he bought for that purpose, and handed it to Mrs. Hitz, that she might deposit the box with this and other valuable papers in the Bank of the Metropolis. This was done. It is also objected that it was delivered to Metzerott as an escrow, to be recorded, as he expresses it, only when Hitz should have made some adjustment of his indebtedness to the German-American Bank, which has never been done. It is quite obvious, and perhaps natural, that Metzerott should confound his holding the deed as an escrow and withholding it from record as meaning the same thing; and it is very clear from all his testimony and that of Mr. Cross, the other trustee, that only the latter was in question. Both of these gentlemen had been consulted before the deed was made, and had consented to act as trustees in it. As soon as the deed was executed and acknowledged, it was placed in the hands of Metzerott, who received and held it for some time, and then gave it to the party chiefly interested for safe-keeping Leaving out the testimony of Mrs. Hitz, of Hitz, and their sworn answers, in which they both deny that they had ever heard of the deed being delived as an escrow, it is plain that it was executed, delivered, and the trusteeship accepted, and the deed thus became a valid instrument as between the parties to it.

2. As regards the understanding that it was not to be recorded until Hitz's debt to the bank was adjusted, it rests upon Mr. Metzerott's testimony alone. Mrs. Hitz swears that though she was advised by Mr. Cox, her lawyer, who drew up the deed, that it was better not to record it at once, and that Mr. Metzerott expressed the same views to her, she did not adopt them, and made no promise to withhold it from record. Hitz, whose interest in the property was the thing conveyed, says that he had no such understanding, and Cross, the other trustee, knows nothing of it except what was told him by Metzerott. There can be no reason favorable to the purpose of the deed, the interests of Mrs. Hitz, the cestui que trust, why it should be withheld from record, or why she should have made such a promise.

3. This brings us to the third objection to the deed, namely, that it was voluntary, was without consideration, and designed to defraud creditors. It appears that up to a very short time before this deed was made, Mr. Hitz had the entire management of his wife's affairs, and she had trusted him unreservedly. It was a complete surprise to her when she learned that with the failure of the bank, of which her husband was president and principal manager, her own fortune, inherited from her father, had also disappeared. The evidence leaves no doubt that she at once took the management of her affairs out of his hands, not even permitting him to receive or collect for her the rents of what remained, of which the property now in suit was the main part. It appears that, to save himself from prosecution by the bank, or for other reasons, he desired to convey to the bank some real estate, the title of which was in his own name, though it had been purchased partly by her money. He wished her to join him in conveyance of this property to Keyser, the receiver, who had been appointed to close up the affairs of the bank. He had also conveyed to Hatch and wife, for some purpose of his own, a valuable business house on Pennsylvania avenue, which was part of her inheritance, and then had procured these persons to mortgage it to the bank of which he was president, to secure a large debt due by him to the bank. But it had been discovered that Mrs. Hitz had never signed or otherwise executed any conveyance of this lot. Mr. Hitz was in an embarrassing condition with regard to this matter. It was after some resistance on her part to making these matters straight for Mr. Hitz that it was agreed, if he would make the deed of trust by which all the estate in the lots mentioned in it, including his interest, whatever it might be, and hers also, should be secured to Mrs. Hitz and her children by the intervention of trustees, she would make good the title of the lot on Pennsylvania avenue which he had pledged to the bank, and would join him also in the deed to Keyser, the receiver, of what was asserted to be his property. The trust deed was, therefore, made on a valuable consideration. The value of the avenue property alone conveyed by Mrs. Hitz is sworn to be $18,000. What her interest in the other property was worth is not proved, and could not easily be ascertained. No estimate of the value of Hitz's interest in the lots conveyed to the trustees is shown. When, sitting as a court of equity, we see this man trying to rectify the wrong done his wife, we are not required to scan closely the value of what she gave at the moment for his relinquishment of his marital rights in her remaining property. The case is wholly free from fraud. Mrs. Hitz had the same right to buy his curtesy in her real estate, to have it barred by a proper conveyance, as any one else had or could have had. er equity was as good as that of any other creditor, and he could secure her as well as he could the bank. As the present complainant had no lien on the property, the joint right of husband and wife to sell it for value was undoubted, and the right to sell to her by the intervention of trustees is equally clear. The property she gave in exchange for his interest in her lots did not go to him to be secretly used in fraud of his creditors, but was conveyed directly to creditors in satisfaction of his debts. The conveyance was not without consideration, and it was without fraud.

We do not concur in the view of the learned court below, that because the sum of one dollar is mentioned in this trust deed as the consideration, the true consideration cannot be shown by parol evidence.

It is always understood that the one dollar in such connection is merely nominal, and is never actually paid. In this case it means no more than that nothing was paid by the trustees, who took no beneficial interest. It neither contradicts nor varies this statement to show that a valuable consideration passed from Mrs. Hitz to her husband for his conveyance of his life estate to the trustees for her benefit. The question is unimportant in this case, because the bill of complaint calls upon the defendants to show under oath the true consideration of the deed in the following language: 'That defendants by their answers under oath may disclose what was the real and true consideration and purpose for the making of said deed.' That the answer thus called for, showing a valuable and meritorious consideration, which answer is uncontradicted by any evidence whatever, and is well supported on cross-examination of defendants in their depositions, can be disregarded as inadmissible because unfavorable to the party who demanded it, would be to permit the party to trifle with the powers of the court at its pleasure.

4. There remains to be considered the effect to be given to the fact that complainant recovered its judgment against Hitz before this deed was recorded, but issued no execution until after it had been filed according to law with the proper officer for record. On this question a petition for a rehearing points out a mistake in the opinion of the court as originally delivered, in regard to the date of the act repealing the recording statutes as found in sections 446 and 447 of the Revised Statutes, whereby we were misled to believe that the sections mentioned governed the case. It is apparent, however, that the new statute was approved April 29, 1878, and not 1879, and its provision as to the effect of recording, or failing to record, the instrument in question, which was executed in December, 1878, must be governed by that act. It is in the following language: 'That all deeds, deeds of trust, mortgages, conveyances, covenants, agreements, decrees, instruments in writing, which by law are entitled to be recorded in the office of the recorder of deeds, shall take effect and be valid, as to creditors and subsequent purchasers for valuable consideration without notice, from the time such deed, deed of trust, mortgage, conveyance, covenant, agreement, or instrument in writing shall, after having been acknowledged, proved, or certified, as the case may be, be delivered to the recorder of deeds for record, and from that time only.' Supp. Rev. St. 315.

As the deed of trust in question was not recorded until several weeks after the judgment of the bank against Hitz was recovered, and as there is no evidence that the bank ever had actual notice of its existence until after execution was issued and levied on Hitz's interest in the property, we entertain no doubt but that the conveyance would be ineffectual against the bank, or any purchaser at the sale under that judgment. But as this deed interposed no obstruction to the sale, and none to the title of a purchaser, it is not easy to see on what ground the interposition of a court of equity is sought, since the bank having levied on Hitz's interest in the property, which was a legal estate if it was anything, it could be sold under that execution, if liable to sale for his debts, without the aid of a court of equity, the whole proceeding being one at law, and its effect, when completed, a mere question of statutory construction. It may be, however, that the bank had a right to remove the apparent cloud which this deed would throw upon the title of the purchaser at the sale, and this demands of us an examination of the argument advanced at the hearing, that this interest of Hitz in the property of his wife was not liable to sale for his debts, by reason of section 727 of the Revised Statutes for the District of Columbia, which is as follows: 'In the district, the right of any married woman to any property, personal or real, belonging to her at the time of marriage, or acquired during marriage in any other way than by gift or conveyance from her husband, shall be as absolute as if she were unmarried, and shall not be subject to the disposal of her husband, nor be liable for his debts.' There can be no question that this statute exempts the wife's property from the control of her husband, and liability for his debts as to all property coming to her from any source but him, after its enactment. This was on the tenth of April, 1869, and it is insisted that the right of Hitz, as tenant by the curtesy, had then become vested, because the inheritance had then come to Mrs. Hitz, the marriage had taken place, and issue had been born of it.

It is argued with much force that congress did not intend by this statute to destroy an existing vested right of the husband under such circumstances, and that if it did so intend it had not the power to do so. We should be slow, however, to impute any such purpose to congress, unless the language in which its statutes are framed demands it. The question does not arise in the case before us.

Three distinct departures from the old law are announced in this new statute in regard to the husband's relation to his wife's property, both real and personal: (1) That her right to it shall be as absolute as if she were unmarried; (2) that it shall not be subject to the disposal of her husband; (3) that it shall not be liable for his debts. In regard to the first of these, it may be conceded that where, at the time of the enactment of this law, the husband had acquired a vested right in the property, congress did not mean to destroy it, and that to that extent her right would not be as absolute as if she were unmarried. It would result from this, that, as between Mrs. Hitz and her husband, his right by the curtesy would remain. It is not necessary to decide in this case whether he could, in view of the second clause of the statute, transfer that right to another by sale or otherwise. If he retained the right to its possession and its use so long as he lived, even after her death, it seems reasonable that a statute which limited his power over it to that use and possession would not be liable to the charge of destroying a vested right. In regard to the third clause, that it shall not be liable for his debts, the argument is still stronger, for that divests him of no right, and does him no injury. What effect it might have as against an existing creditor at the time the law was passed, as impairing the obligation of a contract, we need not decide, for it does not ...


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