SAVAGE v. SAVAGE, 141 F. 346

MORRIS, District Judge (after stating the facts). The deed of trust of March 8, 1898, between Ralph Savage, of the first part, R. T. Barton, trustee, of the second part, and M. Adah Seabright, of the third part, recites the obligation of Ralph Savage to pay to -M. Adah Seabright as alimony $400 a year in monthly installments of $33.33, which had been decreed in her favor by a decree dissolving a marriage between herself and Ralph Savage and granting her alimony, and recites that the decree had been recognized as a lien on his real estate.

It further recites that she had agreed to release his other property from the lien of the decree in consideration of the grant to the trustee of the specific property described in the deed as security for the payment of the said yearly sum of $400 for life. The deed provides that, upon default in payment of the debt secured by the deed of trust or of any installment, it should be the duty of the trustee to sell the property and out of the proceeds to invest so much of the proceeds as would be sufficient to produce to the said M.

Adah Seabright $400 a year, or else, as she might elect, to pay to her as her absolute property the commuted value of the annuity at the date of sale. The: ■deed in very clear terms expresses the contract between the parties. She released the rest of his property. He secured to her $400 a year for life by a specific lien on the Main street property, or, in default of payment, at her election, the commuted value of that annuity during her life. It was a valid agreement, made upon a valuable consideration, and there were then no existing creditors.

By agreement of the parties the $400 a year ceased to be alimony and subject to the control of the court which decreed it, and became a fixed annuity for life, and its payment secured by an unqualified deed of trust duly executed and placed upon record March 22, 1898. On March 31, 1898, the parties were remarried, and it is urged, in support of the petition to revise, that the marriage invalidated this annuity and the deed to secure it, for the reason that the $400 a year had originally been alimony, and that by the remarriage the consideration for its payment failed.

Obviously, when the deed was executed, the parties were competent to make any contract with respect to the $400 a year they might agree upon. If, for the sake of relieving other property from liability as recited in the deed, or for any other reason, Savage chose to agree to convert alimony into a contractual obligation to pay an annuity for life, there was nothing unlawful, or immoral, or against public policy in the transaction.

The parties made the agreement and evidenced it by a formal instrument of writing, which they recorded, and by the agreement the $400 a year became an annuity •subject to no contingency except duration of her life. They both testified in these proceedings that the deed of trust was made in contemplation of marriage and as a marriage settlement, and to prevent the release of the claim for alimony which would have resulted from the proposed marriage, had no such contract been made!

This is not the consideration recited in the deed; but as the deed of trust was recorded on March 22d, and the parties were remarried on March 31st, it appears highly probable that it was made in contemplation of marriage. For such a settlement the marriage is a sufficient consideration to support the deed. It is regarded in law as a consideration of the very highest value. Prewit v. Wilson, 103 U. S. 22-24, 26 L. Ed. 360. In either aspect, it cannot be successfully contended that the consideration for the deed has failed, or is affected by the subsequent marriage.

By the Virginia Code it is enacted that a married woman shall have the right to acquire, hold, use, and dispose of property as if she were unmarried. Under such an enactment, if the wife is a creditor of her husband, and if the debt is bona fide and established by proof, she is to be neither postponed nor preferred to other creditors solely because of their marital relation. Bean v. Patterson, 122 U. S. 496-500, 7 Sup. Ct. 1298, 30 L. Ed. 1126. Here we have a covenant by the husband to pay, which he has not performed, and a recorded lien •on land to secure performance.

It follows that monthly payments were due from the grantor to the cestui que trust, and, as they were not paid, she is entitled to the arrears and entitled to resort to the land for payment. The bond mentioned in the deed was for $3,000, but the real agreement was to pay $400 a year, and the deed provides explicitly that the commuted value is to be paid to the beneficiary, if she so elects, in case of a sale after default.

With regard to the deed of June 19, 1899, conveying the Washington street property, that was a deed of gift from husband to wife, duly recorded, and also made at a time when there were no creditors to be injured by it. It is urged on behalf of the petitioner for revision that this conveyance should be regarded as having paid off and discharged the sums secured to the wife by the deed of trust, but this is a mere assumption, without a word of proof to sustain it.

The. testimony of both husband and wife is that it was a gift from him to her as a provision for the future comfort of herself and children, and such a gift he had an undoubted right to make to her. Wallace v. Penfield, 106 U. S. 260-262, 1 Sup. Ct. 216, 27 L. Ed. 147. And even if the testimony of the husband and wife should be held to be within the restriction of Va.

Code, 1904, p. 1770, § 3346a, and should be excluded as incompetent in such a controversy as this, the case is without any testimony to show that the conveyance was a payment, and as the conveyance from husband to wife requires no consideration other than the marital relation to support it, there is no presumption that it was a payment. Jackson v. Jackson, 91U. S. 122-126, 23 L. Ed. 258. A gift from husband to wife, not made in prejudice of creditors, evidenced by a deed duly executed and recorded, “is valid, and needs no consideration other than the marital relation to support it. Sexton v.

Wheaton and Wife, 8 Wheat. 229, 5 L. Ed. 603; Jones v. Clifton, 101 U. S. 225-228, 25 L. Ed. 908; Bean v. Patterson, 122 U. S. 499, 7 Sup. Ct. 1298, 30 L. Ed. 1126. With regard to the objection urged against the order to sell the bankrupt’s remaining real estate free from the wife’s contingent right of dower, it is sufficient to say that it is nearly always desirable, in making sale of a bankrupt’s real estate, if the wife will consent, to sell free from her inchoate right of dower, and to compensate her by a fair allowance out of the proceeds for her release of that right.

It is common practice to do so when it is possible, and we think the practice is to be approved, as it gives the purchaser an unincumbered title, and ordinarily results in advantage to creditors by obtaining a better price, for a clear title than can be obtained for property the title to which is clouded by such a possible incumbrance. There remains the question whether it was proper to allow interest upon each installment of the annuity from the date it fell due, as was done by the referee. In A. & E.

Encylopedia of Law, vol. 2, p. 407, this statement is found: “The cases are somewhat conflicting upon the question of the allowance of interest on arrears of annuities. Generally the English courts seem to be inclined against it, and the courts of the United States in favor of it.'’ In Adams v. Adams, 10 Leigh (Va.) 527-533, it is stated to be the general rule that annuities do not bear interest. In Isenhart v. Brown, 2 Edw. Ch. (N. Y.) 341-347, it is stated that the weight of authority is against allowing interest upon arrears of annuity. In Laura Jane v.

Hagen, 10 Humph. (Tenn.) 332-336, it is stated that whether interest shall be allowed on an annuity must depend upon the circumstances of each case, and is not a matter of positive law. In cases of annuities, where there is no express direction or contract for interest, we think it may be fairly said to be discretionary. Mower v. Sanford, 63 L. R. A. 629, note. If interest be discretionary, this is clearly a case in which that discretion should be exercised against allowing it.

During the six years in which the arrears were accumulating the wife was living with her husband, and was being supported and maintained by him. It was by his default that the installments were not paid to her; but to impose the addition of interest, which the deed of trust does not provide for and which is not part of the contract, would not be to put a penalty upon him for his default, but to deplete the residue of the proceeds of the property which is to go to creditors. Wormley’s Est., 137 Pa. 101-112, 20 Atl. 621.

As to all the orders of the district court,' except the order allowing interest on the arrears of the annuity, the petition for revision is dismissed, and as to the said allowance of interest the petition to revise is sustained. .It is so ordered, and that each party pay his and her own costs in this court.