Bank of Louisville v. First National Bank of Knoxville.

bill of exchange, and in such case the liability arises from some breach of duty or negligence toward the payee or holder of the bill, and he only can maintain the action, and a voluntary payment by one under no legal liability to pay can give him no right to maintain an action against the negligent or defaulting agent. Story on B. Ex., § 450; Farmers' Bank v. Owen, 5 Cr. Ch. 505.

The defendant, First National Bank, asked the court to instruct the jury, that if they found from the evidence that the plaintiff was not the owner of the bill of exchange, but only an agent for collection of the same, and transmission, the plaintiff could not recover. And further, that where the bill is transmitted successively to several banks, and into the hands of a notary, each party is liable to the owner for its own negligence or want of diligence, and is not liable to any agent in the chain of transmission except by special contract.

Without noticing other instructions requested, and which, with the foregoing, were refused, it is sufficient to say that the instructions asked and above cited are in substance such as in the foregoing opinion we have indicated would have been proper.

The result is that the judgment in favor of Brown is affirmed, and against the First National Bank at Knoxville is reversed, and the cause as to it will be remanded for a new trial.

Reversed and remanded.

NOTE BY THE REPORTER.—In Guelick v. National State Bank of Burlington, Iowa Su preme Court, June 18, 1881, 9 N. W. Rep. 328, a foreign bill of exchange, payable in New York, was deposited with defendant, a National bank at Burlington, Iowa, for collection. In the usual course of business it was sent to the correspondent of the bank in New York. Proper protest and demand for payment was not made by the New York bank, and by reason thereof the drawers and indorsers were discharged. The regular course of business, in such cases, was for the bank receiving the paper to forward it to its correspondent at the place of payment for collection, which course of business was well known to the owner of the paper. Held, that the bank in New York was a sub-agent employed by consent of the principal, and that the superior agent, the bank in Burlington, was not responsible for its acts, but the remedy of the owner of the paper was direttly against the New York bank. The court said: "But there is conflict in the adjudged cases upon the question of the direct liability of the bank, employed as a sub-agent, to the holder of the paper, for negligence or default in its collection. The preponderance of the authorities strongly supports the conclusion we have just reached in this case. The following cases are to this effect: Dorchester and Milton Bank v. New England Bank, 1 Cush. 177: Fabens v. Mercantile Bank, 23 Pick. 330;. Laurence v. Stonington Bank, 6 Conn: 521; East Haddam Bank v. Scovil, 12 id. 303; Hyde: v. Planters' Bank, 17 La. 560; Baldwin v. Bank of Louisiana, 1 La. Ann. 13; Etna Ins. Co. v. Alton City Bank, 25 Ill. 243; Stacy v. Dane Co. Bank, 12 Wis. 629: Fierman v. Commercial Bank, 7 How. (Miss.) 648; Agricultural Bank v. Commercial Bank, 7 Sm. & M. 592; Bowling v. Arthur, 34 Miss. 41; Jackson v. Union Bank, 6 Harr. & J. 146; Citizens' Bank v. Howell, 8 Md. 530; Bank of Washington v. Triplett, 1 Pet. 25; Mechanics Bank v. Earp, 4 Rawle, 384; Bellmire v. U. S. Bank, 1 Miles, 173; S. C., 4 Whart. 105.

Hall v. Carmichael.

Daly v. Butchers and Drovers' Bank, 56 Mo. 93; Smedes v. Bank of Utica, 20 Johns. 373. The following cases hold that the bank to whom a bill or note is sent for collection by another bank is not the agent of the owner of the paper: Allen v. Merchants' Bank, 22 Wend. 215; Downer v. Madison Co. Bank, 6 Hill, 648; Montgomery Co. Bank v. Albany City Bank, 3 Seld. 459; Commercial Bank v. Union Bank, 1 Kern. 203; 8. C., 19 Barb. 391; Ayrault v. Pacific Bank, 47 N. Y. 570; s. C., 7 Am. Rep. 489; Indig v. Brooklyn City Bank, 16 Hun, 200; s. c., 80 N. Y. 100; Reeves v. State Bank of Ohio, 8 Ohio St. 465." The court distinguished Bradstreet v. Everson, 72 Penn. St. 124; s. c., 13 Am. Rep. 605; Lewis v. Peck, 10 Ala. 142; and Pollard v. Rowland, 2 Blackf. 22. See also First Nat. Bk. of Charlotte v. Lineberger, ante, 582.

Fraud - voluntary conveyance by woman pending marriage treaty.

A secret conveyance by a woman of her property to an insolvent for an inadequate consideration, pending negotiations for her marriage and three days before marriage, is fraudulent as to the husband.*

A

CTION to set aside conveyance. The opinion states the case. The complainant had judgment below.

Rogers & Welcker, for plaintiff.

SNEED, J. The bill charges that the complainant became the husband of the defendant, Louisa G. Carmichael, on the 3d day of September, 1871, after a contract of engagement of ten months previous, and that on the second day of the same month and year the said Louisa sold and conveyed a considerable estate, of which she was the sole owner, to the defendant, J. F. Carmichael, by title bond, without notice to complainant, which the bill charges was a fraud upon the marital right of the complainant, and therefore void. The bill prays that the sale be set aside, and that the complainant be put into possession of the property in right of the marriage. The chancellor granted the relief, and the defendant Carmichael has appealed. The theory of the complainant's case is that the defendant Carmichael, being the brother-in-law of the defendant Louisa, and having at the time her implicit confidence, by undue influence and importunity induced her to sell her estate to him, to conceal the fact from the complainant, and thus get pos

*See Butler v. Butler (21 Kans. 521), 30 Am. Rep. 441.

Hall v. Carmichael.

session of the estate. It appears that at the time of the transaction Carmichael was living with the defendant Louisa, who had for several years been the widow of his brother; that he had the supreme control of her farm and stock, superintending the cultivation of said farm and the raising and sale of the stock, thereby supporting himself and family as well as the said Louisa and her children, and that in all things touching the management of her affairs she was guided and governed by his advice. The complainant and the said Louisa, on the said second day of September, had been under contract of marriage for about ten months, and the fact of betrothal was well known to defendant Carmichael. The defendants, Carmichael and Louisa, resided on the farm of the said Louisa in the county of Loudon, and in the neighborhood of the complainant. The defendant Carmichael had gone into bankruptcy, and the proceedings for his discharge were pending at the time of the sale, and were consummated by his discharge some time afterward. A few days before the marriage the contract of sale was agreed upon between the parties, and on said 2d of September, 1871, the two defendants came to the city of Knoxville, where the terms were reduced to writing and signed by the defendant Louisa. On the 1st of February, 1872, several months after the marriage, the defendant Carmichael caused the title bond to be registered. The complainant was kept in ignorance of all these transactions until some time after the marriage. The land thus sold was worth, as we estimate it from the weight of the proof, between fifteen and twenty thousand dollars, and the personalty about three or four thousand dollars. The conditions of the sale on the part of defendant Carmichael were that he was to assume and pay the debts of the said Louisa, estimated by him to be about $8,000, but the amount not ascertained, and pay the defendant Louisa $8,000 in money, $3,000 of which to be paid to her, and evidenced by a not due day of -, 1876, and the other $5,000 to be paid in equal amounts to the two children of the said Louisa, and to be secured by his promissory notes, to be made to the guardian of said children whenever a guardian should be appointed. The article of agreement or title bond is only signed by the defendant Louisa, and the only paper by which the defendant Carmichael is charged is the said promissory note of $3,000, so executed and payable as aforesaid on the 1876. The answer of defendant Louisa admits the facts as charged in the bill, and she VOL. XXXV-88

day of

Hall v. Carmichael.

files a cross-bill in the cause, in which she also seeks an avoidance of the contract for the same reasons alleged in the bill. The answer of defendant Carmichael admits the matters of fact as stated in the bill, but denies and disclaims the fraudulent purpose imputed, and asserts its perfect good faith. Without entering into a careful analysis of the proof, it is sufficient to say that in our opinion the theory of the bill is abundantly sustained by the undisputed facts of the case, without reference to the deposition of the defendant Louisa, whose competency as a witness it is, in our opinion, not necessary to determine. The facts of the known existence of the contract of marriage, the secrecy of the sale, its purposed concealment from the complainant, the insolvency of the purchaser, and the suspicious artifice and contrivance of the whole transaction, sufficiently appear from the other proof and surroundings of the case, and the equities of the parties are clearly developed without the aid of the deposition referred to. Do the facts sustain the ruling of the Chancellor? We are of opinion that they do. An argument of much ability is predicated upon the fact that under the contract an ample provision is made for the children of the defendant Louisa, and that her betrothed husband, himself a man of good estate, while he takes her unincumbered with property, takes her also unincumbered with her debts. This argument might be of more force if the children were made absolutely secure of the alleged provision, and if the complainant was absolutely indemnified against liability for the debts of the wife for which his liability began with the marriage, and will continue until discoverture. The creditors of the defendant Louisa were not consulted touching the arrangement, nor is there the slightest privity of obligation as between them and the defendant. On the other hand, the defendant Carmichael, a bankrupt, has got possession of this large estate upon an indefinite parol promise to pay five thousand dollars at some indefinite time to the children, and a parol promise to pay vendor's debts at a period of time equally indefinite, and a written promise to pay the defendant Louisa three thousand dollars in 1876, and has thus put himself in a condition not only to use the rents and profits of the estate for his own advantage, and for a paltry consideration for an indefinite time, but to defy the creditors, and to throw the burden of satisfying their demands upon the complainant by the quick remedial energies of the law, to which the creditors have a right to resort upon the in

Hall v. Carmichael.

stant of the marriage, rather than the slow and dubious process of a court of equity to enforce a doubtful trust.

It seems to be settled by the adjudged cases in this State that every such transaction by a woman pending a treaty of marriage is not necessarily fraudulent and void because the intended husband was not a party or privy thereto, but that each case must be judged by its own circumstances. Thus if a conveyance be made by a woman in the discharge of the moral duty of providing for the children of a former marriage, it will not be considered as a fraud upon the intended husband, though it had been concealed from him. 1 Col. 409. And in Jordan v. Black, it was said that the meritorious object of the conveyance, or the situation of the intended husband in point of pecuniary means, would form exceptions to the rule. Whether there is fraud or not upon the marital rights must depend upon the circumstances of each case, the conveyance of a married woman, though made immediately before marriage, being prima facie good. Lawden v. Harris, 1 Head, 203. In the case of Logan v. Simmons, 3 Red. Eq., 487, RUFFIN, C. J., discusses this question with his wonted ability, tracing the doctrine down from the fountains of the English common law. The exact point adjudged in that case was that when a woman, who was about to be married, made a voluntary conveyance of all her valuble property, on the day before the marriage, without the assent or knowledge of her intended husband to her son by a former marriage, and it was agreed that this conveyance should be kept secret, it was held that a court of equity would consider it a fraud upon the rights of the intended husband, and declare it void as to him. But the question, says Mr. Tapping Reeve, in all these cases is was the husband deceived and disappointed? It seems to me, he adds, that such deception may be practiced by concealment. Reeve Dom. Rel. 284. The idea seems to pervade all the authorities that such a conveyance, though prima facie good, must be judged by its own particular surroundings, and that a purposed concealment is evidence of a purposed fraud. Thus said Lord THURLOW in the leading case of the courtship of Strathmore v. Bowes, 1 Ves. Jr. 22, "a conveyance by a wife, whatsoever be the circumstances, and even the moment before the marriage, is prima facre good, and becomes bad only on the imputation of fraud. If a woman, during the course of a treaty of marriage with her, makes, without notice to her intended husband, a conveyance of any part of her property,