Opinion
No. 32417.
November 23, 1936. Suggestion of Error Overruled January 4, 1937.
1. WITNESSES.
In suit against husband and wife and their grantee to set aside, as fraudulent, conveyance of homestead owned by wife and to enforce judgment against husband and wife, neither husband nor wife could be called as an adverse witness, though homestead was owned by wife, since husband had interest in homestead, and any material evidence that either would give would affect interest of both (Code 1930, sec. 1528).
2. STATUTES.
Statutes providing that all persons whether interested, or parties to suit, or not, make competent witnesses, that either party to suit shall have right to force adversary to testify, that examination of interested witnesses may be had in open court, and that, where husband or wife is party litigant, the other shall not be competent as witness without consent of both, must be construed together, and so as to except latter statute from operation of other statutes (Code 1930, secs. 1527, 1528, 1549, 1550).
3. CONSTITUTIONAL LAW.
Statutes providing that, where either husband or wife is party litigant, the other shall not be competent as a writness without consent of both, held not to deny due process by depriving opposing party of material evidence, since statute prescribes mere rule of evidence and does not affect substantial rights of parties (Code 1930, sec. 1528).
4. APPEAL AND ERROR.
Finding of chancellor on issue of facts will not be overturned unless such finding is against great preponderance of evidence.
APPEAL from the chancery court of Hinds county. HON. V.J. STRICKER, Chancellor.
Green, Green Jackson, for appellant.
The chancellor erroneously dismissed the bill and denied appellant the right to cross-examine adverse parties under section 1549, Code of 1930, as to separate property severally owned, subject to appellant's judgment lien.
4 Wigmore, sec. 2227; Stirling v. Whitney Natl. Bank, 170 Miss. 674, 150 So. 654; Sections 1063, 1549, 1550, 1528, 1527, Code of 1930; Sections 94 and 159(a) and (f), Constitution; Virden v. Dwyer, 78 Miss. 763, 30 So. 45; Griffith's Chancery Practice, secs. 24, 500; Horb v. Hurwitz, 231 P. 1116; Frankenthal v. Solomonson, 55 P. 754; Rankin v. Taylor, 214 N.W. 625; Churchill Alden Co. v. Ramsey, 172 N.W. 779; Jacobsen v. Andrews, 189 N.W. 114; Metler's Adm. v. Metler, 18 N.J. Eq. 277; 4 Wigmore (2 Ed.), sec 2228; 5 Wigmore (2 Ed.), secs. 2285, 2334; 1 Wigmore (2 Ed.), page 1032; Picard v. Clancy, 113 N.E. 838; Stalcup v. Jepsen, 224 N.W. 16; Farmers' Merchants' State Bank v. Moore, 206 P. 907; Strauss v. Hudson, 104 Miss. 637, 61 So. 594; Leach v. Shelby, 58 Miss. 688; Byrd v. State, 57 Miss. 243; Lockhart v. Luker, 36 Miss. 68; Dunlap v. Hearn, 37 Miss. 471; Stuhlmuller v. Ewing, 38 Miss. 447; Aveson v. Kinnaird, 6 East. (New Ed.), 356; Saffold v. Horn, 72 Miss. 470; Barry v. Sturdivant, 53 Miss. 493; Rushing v. Rushing, 52 Miss. 330; Hedges v. Aydlett, 46 Miss. 107; Ellis v. Alford, 64 Miss. 8; Turner v. State, 60 Miss. 351; Hanover Natl. Bank v. Klein, 64 Miss. 141; Solomon v. Smith, 58 Miss. 408.
Stirling being agent for his wife must account in court thereasto and the privilege is waived.
Sections 1943, 1944, 1945, Code of 1930; Rivers v. Eastman Cotton Oil Co., 159 Miss. 449, 132 So. 328; 4 Wigmore on Evidence (2 Ed.), sec. 2232; Robison v. Robison, 44 Ala. 234; Bach v. Parmely, 35 Wis. 240; Baldassare v. Fed. Union Life Ins. Co., 268 Ill. App.? 243; 5 Modern Law Evidence, Chamberlayne, page 5221, sec. 3658; 70 C.J. 133; 28 R.C.L. 561; 40 Cyc. 2377; 5 Wigmore on Evidence, sec. 2311; Nebham v. Mansour, 162 Miss. 48, 139 So. 167, 578; Southwest Metals Co. v. Gomez, 4 F.2d 215, 39 A.L.R. 1416; Coca Cola Bot. Wks. v. Simpson, 158 Miss. 390, 130 So. 479; Billingsley v. Gulick, 256 Mich. 606, 240 N.W. 46, 79 A.L.R. 166; Epstein v. Penn. R. Co., 250 Mo. 1, 156 S.W. 699, 48 L.R.A. (N.S.) 394; Natl. Life Acc. Ins. Co. v. Bell, 291 P. 106; Okla. Pro. Assn. v. Montgomery, 16 P.2d 135; Stalker v. Breeze, 114 N.E. 968; Pittsburgh, etc., R. Co. v. O'Connor, 171 Ind. 686, 85 N.E. 969; 1 Greenleaf on Evidence (16 Ed.), sec. 247a; 4 Columbia Law Review, Art. R.W. Purrington, 388; 48 L.R.A. (N.S.) 395; 5 Jones Commentaries (Rev. Enlarged), sec. 2197; Rosser v. Peases, 37 Okla. 222, 131 P. 534; McDonnell v. Montieth, 231 N.W. 854; Lazzell v. Harvey, 49 P.2d 519.
That thus at issue is when appellee, Mrs. Stirling, constituted her husband a general agent for the transaction of her business, did she not waive this statute for it is impossible for business to be carried on unless she so did? Having waived, by the appointment of her husband, he in his testimony claimed as her agent and was testifying for her that which he held on her account and not against her, being estopped by his agency to dispute her title.
In order to avail themselves of this statute it is necessary that the consultations be confidential. Therefore, if they take place in the presence of a third person, the relationship is not confidential and is not entitled to the protection of the rule. The very nature of the transaction and the circumstances surrounding it, are inconsistent with the idea that the consultations were intended to be confidential.
28 R.C.L. 561; 40 Cyc. 2377; 5 Wigmore on Evidence, sec. 2311; Nebham v. Mansour, 162 Miss. 48, 139 So. 167, 139 So. 578.
Herein the banks were taken into the confidence as to property acquired, income received, disposition made, and that concealed is alone the amount realized therefrom.
Southwest Metals Co. v. Gomez, 4 F.2d 215, 39 A.L.R. 1416; Coca Cola Bottling Works v. Simpson, 158 Miss. 390, 130 So. 479.
Prior to the trial appellees made a voluntary election to utilize the banks as agents for acquisition, transfer, disposition. So having done, the Stirlings are estopped from allowing full development as to how much money they have on hand.
Billingsley v. Gulick, 256 Mich. 606, 240 N.W. 46, 79 A.L.R. 166; Epstein v. Pennsylvania R. Co., 250 Mo. 1, 156 S.W. 699, 47 L.R.A. (N.S.) 394; Natl. Life Acc. Ins. Co. v. Bell, 291 P. 106; 40 Cyc. 2405; Herpolsheimer v. Citizens Ins. Co., 79 Neb. 685, 113 N.W. 152; Okla. Prot. Assn. v. Montgomery, 16 P.2d 135; Stalker v. Breeze, 114 N.E. 968; Pittsburgh, etc., R. Co. v. O'Connor, 171 Ind. 686, 85 N.E. 969; 1 Greenleaf on Evidence (16 Ed.), sec. 247a; 4 Columbia Law Review, Art. R.W. Purrington 388; 4 Wigmore, Evidence, sec. 2388; 5 Jones Commentaries, sec. 2197; Rosser v. Peases, 37 Okla. 222, 131 P. 534; McDonnell v. Montieth, 231 N.W. 854; Lazzell v. Harvey, 49 P.2d 519.
If section 1528 thus construed, it violates the Fourteenth Amendment. Herein it is now held by the court, assuming the foregoing points decided against us, that with a judgment against Stirling and Mrs. Stirling, with each having in their respective possessions money privately owned, derived from transactions which were passed through a bank, that this statute precludes the utilization of them as witnesses.
Metropolitan Cas. Co. v. Brownell, 294 U.S. 583, 79 L.Ed. 1072; Yazoo, etc., R. Co. v. Decker, 150 Miss. 621, 116 So. 287; Alford v. U.S., 282 U.S. 691, 75 L.Ed. 625; Funk v. U.S., 290 U.S. 371, 78 L.Ed. 369; Brown v. Walker, 161 U.S. 821, 40 L.Ed. 597; Western, etc., R. Co. v. Henderson, 279 U.S. 639, 73 L.Ed. 884; Manley v. Georgia, 279 U.S. 1, 49 Sup. Ct. Rep. 215.
The sole predicate for the validity of this statute was the secrecy of the relation, but when that secrecy has been bared voluntarily in accordance with the terms of the statute, the statute may not then be utilized as an instrumentality to defraud.
Mayflower Farms v. Ten Eyck, 80 L.Ed. 477.
Herein, appellee has voluntarily made a full disclosure, utilizing his position as a witness. Having so thus done, is there then, as between this appellee so having done and appellant, such a basis for discrimination as would allow appellee to suppress the true facts revealing the secret to defraud appellant who was by appellee's false statement led not to cross-examine.
Metropolitan, etc., Co. v. Brownell, 294 U.S. 583, 79 L.Ed. 1072; Power Mfg. Co. v. Saunders, 274 U.S. 490, 71 L.Ed. 1165; Kentucky Finance Corp. v. Paramount, 262 U.S. 444, 67 L.Ed. 1112; Hanover F. Ins. Co. v. Harding, 272 U.S. 494, 71 L.Ed. 372; Sandford v. Dixie Const. Co., 157 Miss. 626, 128 So. 887.
The bill specifically shows ownership of furniture in excess of the statutory exemption. The bill avers this transfer to Sweitzer. Sweitzer shows, however, that he did not take possession thereof, but left said possession with appellees, etc., with this admitted asset subject to this lien, the bill was dismissed. Therein was error.
Herein, the averment of the bill not denied, showed the resident to have been worth approximately thirty thousand dollars conservatively. This property was obviously of a value in excess of the debt against it, and so being, should have been offered for sale pursuant to the proof herein and thereasto the chancellor was in error,
Sweitzer knew the property was thought then to be worth thirty-five thousand dollars to forty thousand dollars.
While mere inadequacy in price is not necessarily evidence of fraud, very gross inadequacy may be so under certain circumstances.
Foster v. Pugh, 20 Miss. 416; 27 C.J. 484.
This trade was not "in the usual course of business." Herein, Stirling, the president of the First National Bank, then about to fail, offered to sell to a friend, residing with him, at a specified sum. There was no negotiation by Sweitzer seeking to reduce the price, but he forthwith took it at that which it was offered.
27 C.J. 489.
The evidence of large indebtedness is an important element in marshaling badges of fraud to overturn fraudulent conveyances.
27 C.J. 492.
Retention of possession is likewise a badge.
27 C.J. 494.
However, a transfer between near relatives may in connection with other circumstances carry a suggestion of fraud, or even furnish satisfactory proof of fraud. Transfer to Sweitzer who had no apparent use for the property is a badge of fraud.
J. Morgan Stevens and J.M. Stevens, Jr., both of Jackson, for appellee, Charles McGregor Sweitzer.
A bill to set aside a fraudulent conveyance must not only charge fraud in specific terms but the burden of proof is upon the complainant to make out a case by evidence positive and unequivocal. No presumptions are to be indulged in.
Mississippi Chancery Practice, Griffith, pars. 501, 502, 589.
The bill and the proof shows that the North State street property constituted the exempt homestead of Mr. and Mrs. Stirling at the time it was conveyed, and complainants hold no legal or equitable right to have it upset.
Zurosky v. McIntyre, 93 Miss. 806, 47 So. 435; Orgill Bros. v. Gee, 152 Miss. 590, 120 So. 737; Miers v. Miers, 160 Miss. 746, 153 So. 133; Hodges v. Pickett, 67 Miss. 715; Willoughby v. Pope, 85 So. 705.
The final decree appealed from is upon the pleadings and the facts and certainly, as to the defendant Sweitzer, this case should be affirmed.
Earl Brewer, of Jackson, for appellees.
Learned counsel for the appellant in this case knows that this court would not reverse the chancellor on the decision of a case where it was decided upon the law and facts, unless he made a radical departure in his finding from the overwhelming preponderance of the evidence which is not the case in this case. Therefore he was driven to one conclusion, that he must show that the refusal of the chancellor to allow him to examine the witness Stirling to his entire satisfaction, denied to them due process of law under the Fourteenth Amendment to the Federal Constitution and I answer that contention by referring this court to the case of New Orleans Northeastern R.R. Co. v. Jackson, 145 Miss. 702, 110 So. 586, wherein practically the same question was before the court and thoroughly answered by the Supreme Court of the state of Mississippi.
The statute, sec. 1528, Code of 1930, prescribes in plain English language, in what manner and under what circumstances a husband shall be a competent witness or that the wife may be a competent witness against the husband and then provides: "But in all other cases where either of them is a party litigant the other shall not be competent as a witness."
It is not contended that any of the instances prescribed by the statute where a husband or wife may be used by an adversary is covered by this statute, and this statute has been upheld so many different times by the Supreme Court of Mississippi.
Leach v. Shelby, 68 Miss. 681; Strauss v. Hutson, 104 Miss. 627; McQueen v. State, 139 Miss. 457; Spencer v. O'Brien, 140 Miss. 474.
This is a case tried by the chancellor on oral proof where the complainants had prayed for a discovery and obtained an order of the court requiring a discovery under oath and they got it regardless of the statute and we contend that it is evidence and there is nothing to overthrow it or deny it, consequently the chancellor undoubtedly decided the case clearly on the facts and dismissed their bill for want of merits.
I feel like it would be an imposition on this court for me to undertake to argue further the constitutionality of the statute that renders the husband or wife incompetent as a witness where the other is a party to the suit, for the benefit of the person suing, because it has been so firmly held constitutional by this court.
Metropolitan Life Ins. Co. v. McSwain, 115 So. 555, 149 Miss. 455.
J.B. Stirling, of Jackson, for appellees.
The answers in this cause were evidence for the defendants, owing to the facts that the bill was not sworn to as required by law in order to overcome the responses of a sworn answer demanded in the bill.
An oath by an agent or an attorney, unless shown to have personal knowledge of the matter, will not avoid the rule requiring two witnesses or one with corroborating circumstances to overturn sworn answers, as would be the case if the complainant himself swore to the bill.
If sworn to by agent or attorney to state "is informed and believes," is not sufficient, but he must state that he is informed and believes and now charges on information and belief, or words of similar effect.
Miss. Chancery Practice, par. 189; 51 Miss. 882; 15 So. 141; 15 So. 40; 53 Miss. 500.
And where bill is sworn to by attorney who is not shown to have any personal knowledge of the matter, it is in effect an unsworn bill.
Griffith's Miss. Chancery Practice; 15 So. 141; 81 So. 653.
Attorney making oath should show whether facts stated are on his information and belief or that of his client.
53 Miss. 500; 66 Miss. 495; 6 So. 244.
The bill is in violation of section 1528, of the Code, Mississippi, 1930, in that the bill in praying discovery endeavors to force husband and wife to give evidence against each other.
Husband and wife were incompetent to give evidence against each other, at common law, when parties defendant to suit as in instant case.
Leach v. Shelby, 58 Miss. 681; Buckingham v. Wesson, 54 Miss. 526.
And our statute, Code 1930, section 1528, expressly exempts them from testifying or making discovery of matters and communications between them, or in any way becoming a witness or answering interrogatories, and demurrer is declared by our court to be proper method of objecting to any attempt to violate the provisions of this statute.
Strauss v. Hutson, 104 Miss. 637, 61 So. 594; Byrd v. State, 57 Miss. 243, 34 Am. Rep. 440.
Husband and wife are incompetent witnesses against one another at the suit of a creditor to vacate conveyance from husband to wife. Conveyance from husband to wife reciting a legal consideration is prima facie valid.
Spencer v. O'Bryant, 106 So. 6; Leach v. Shelby, 58 Miss. 681; Virden v. Dwyer, 30 So. 45; Strauss v. Hutson, 104 Miss. 637, 61 So. 594; 7th Decennial Digest, Discovery, sec. 10; McCartney v. Fletcher, 10 App. D.C. 572; McGrew v. McGrew, 298 Fed. 204; Brewer v. Miss. Valley Trust Co., 128 So. 83; Bank v. Covington, 150 So. 208.
In permitting J.B. Stirling and Mrs. H.C. Stirling, husband and wife, to be introduced as witnesses, the court at first seemed imbued with the idea that some of their testimony might be competent against themselves, and not involve one another, and the court might thus, to use a bucolic expression, separate the chaff from the wheat, and to that extent not violate the provisions of section 1528. This court will not indulge in any such experiment involving judicial repeal of the principal provisions of section 1528. Their lips are sealed like those of a physician called to disclose incidental matters not communicated to him by the patient.
Metropolitan Life v. McSwain, 149 Miss. 455; Provident Life Ins. Co. v. Jemison, 153 Miss. 53.
Having forced discovery from defendants, husbands and wives, over their protest and in violation of the expressed provisions of section 1528 of the Code of Mississippi, 1930, the discovery when obtained did not help complainants' cause as all defendants testified that so far as they knew the transactions complained of were legitimate, based upon valuable and adequate consideration, and without fraud.
There is no presumption of fraud where adequate consideration has been paid. Adequate consideration was paid and proved in every instance of transfer complained of in this cause, and it is not even charged as to Sweitzer that he did not pay valuable consideration for the dwelling.
Virden v. Dwyer, 78 Miss. 763, 30 So. 45; Surget v. Boyd, 57 Miss. 485; Burkes v. Moody, 106 So. 528, 141 Miss. 370; Tuler v. Chase, 66 Miss. 476.
The chancellor heard all the testimony, the facts brought out by the discovery, inspected the records introduced by the defendants, uncontradicted, and then rendered his decision upon the facts and dismissed the case, which action should be sustained as the chancellor will not under such circumstances be reversed on the facts.
Griffith's Chancery Practice, sections 673, 674, 675.
Argued orally by Garner Green, for appellant, and by Earl Brewer, for appellee.
Appeal recovered a judgment in the District Court of the United States against appellees, J.B. Stirling and his wife, Mrs. Hallie Carter Stirling, in the sum of fifty thousand six hundred one dollars and seventy-five cents. That judgment is the basis of this suit. Appellant filed the bill in this case against the Stirlings, their son, his wife, their daughter, her husband, and also Charles McGregor Sweitzer, seeking to set aside as fraudulent and subject to its judgment certain real estate and personal property charged to have been conveyed and transferred by the Stirlings to Sweitzer and their son and daughter-in-law, and daughter and son-in-law, and seeking a discovery of such property. The cause was heard by the chancellor on bill, answers, and proofs, resulting in a decree dismissing the bill. From that decree appellant prosecutes this appeal.
As the cause progressed in the trial court it narrowed down to two principal questions: (1) Whether the Stirlings could be forced to testify in the case; and (2) whether the conveyance of their former homestead in the city of Jackson to appellee Sweitzer should be set aside as fraudulent and subjected to the payment of appellant's judgment.
The First National Bank of Jackson failed and went into liquidation on January 19, 1931; a large majority of its stock was owned by Mr. and Mrs. J.B. Stirling. Besides their double liability as stockholders, they owed large debts outside, and appellant's judgment represents one of them. Mrs. Stirling owned the home in Jackson on the northeast corner of the interesection of High and State streets. It was worth considerably more than the exemption allowed by statute. On the same day the First National Bank closed, they conveyed the homestead to appellee Sweitzer, whose principal residence was the Army and Navy Club in the city of Washington, the consideration was seventeen thousand dollars, which the evidence shows without dispute was paid to the grantors. The bill seeks discovery of the whereabouts of the seventeen thousand dollars, or the remainder of it, as well as any and all other moneys and personal property owned and controlled by J.B. Stirling and wife.
On the trial appellant called J.B. Stirling and wife as adverse witnesses by whom it sought to prove the allegations of the bill. They objected on the ground that their evidence would be against the interest of each other, and therefore, under section 1528, Code of 1930, they could not be forced to testify. The court sustained their objection. Section 1528 provides, among other things, that in all instances where either husband or wife is a party litigant the other shall not be competent as a witness and shall not be required to answer interrogatories or to make discovery of any matters without the consent of both. Was it possible in this case to confine the testimony of each of the witnesses to his or her interest? Putting it differently, was it possible for the one to testify against his or her interest without at the same time giving evidence against the other? We are of the opinion that this question must be answered in the negative. Although the homestead was owned by Mrs. Stirling, her husband was interested in it, and, of course, that is true of the proceeds of the sale of such homestead. Appellant's judgment, which he seeks to enforce, is a joint judgment against both; each is, therefore, jointly and severally liable for the entire amount. It is inconceivable that one could give material evidence in the case that would not affect the interest of both — using the language of the chancellor in his opinion in the record: "It would not be practically possible to confine them to a channel of individual and separate and distinct interests; . . . they could not travel on two separate, though parallel, tracks, in support of a bill which operated on one track."
Appellant refers to sections 1527, 1549, and 1550, Code of 1930, as authority for forcing the husband and wife to testify in this case. Section 1527 makes competent as witnesses all persons whether interested, or parties to the suit, or not. Section 1549 provides that either party to a suit shall have the right to force his adversary to testify. Section 1550 provides for the examination of interested witnesses in open court. These statutes are to be construed together so as to make each occupy its place without encroaching upon the others. So construing them, it is clear that the last clause of section 1528 is excepted from the others.
Appellant contends that that construction of section 1528 violates the due process provisions of the State and Federal Constitutions, in that it deprives it of material evidence. We think this contention is without merit. The statute prescribes a mere rule of evidence — it does not affect the substantial rights and obligations of the parties. The same statute was involved and applied in Leach v. Shelby, 58 Miss. 681; Strauss v. Hutson, 104 Miss. 637, 61 So. 594; McQueen v. State, 139 Miss. 457, 104 So. 168; Spencer v. O'Bryant, 140 Miss. 474, 106 So. 6. By analogy New Orleans N.E.R. Co. v. Jackson, 145 Miss. 702, 110 So. 586, is decisive of this question against appellant's contention. There was under consideration in that case the statute making privileged communications between physicians and patients. The court held that the statute prescribed a mere rule of evidence and did not affect the substantial rights and obligations of the parties.
It is argued that the chancellor's finding of facts on the issue of fraud as between J.B. Stirling and wife and Sweitzer in the conveyance of the homestead by the former to the latter was not sufficiently supported by the evidence. This court has held time and again, so often, in fact, that it seems useless to cite authorities, that the finding of the chancellor on an issue of fact will not be overturned on appeal unless such finding is against the great preponderance of the evidence. We cannot say with confidence that that is true in this case.
We do not think the other questions raised are of sufficient merit to require a discussion.
Affirmed.