
    CASE 96 — ACTION BY M. N. JONES AGAINST THE LOUISVILLE TOBACCO WAREHOUSE COMPANY.
    September 24, 1909.
    Jones v. Louisville Tobacco Warehouse Co.
    Appeal from Franklin Circuit Court.
    R. L. Stout, Circuit Judge.
    Judgment for defendant, plaintiff appeals.
    Reversed.
    1. Fraudulent Conveyances — Transfers Between Husband and wife — Validity as to Third Persons — Registration.—■ Under Ky. St. Sec. 2128 (Russell’s St. Sec. 4631), providing that a transfer of personal property between husband and wife shall not be valid as to third persons, unless in writing and recorded, a surrender of tobacco by husband to wife, not reduced to writing or recorded, was invalid as to his other creditors.
    2. Fraudulent Conveyances — Rent Lien — Effect of Invalid Transfer of Property to Landlord. — A surrender of tobacco by husband to wife being invalid, as to other creditors under Ky. St. Sec. 2128 (Russell’s St. Sec. 4631), because not reduced Lo writing and recorded, leTt unchanged her superior landlord's rent lien, under section 2317 (Russell’s St. Sec. 4574), on the tobacco raised on the land leased by him of her.
    3 Landlord and Tenant — Rent- Lien — Enforcement — Loss of Right. — Under Ky. St. Sec 2317 (Russell’s St. Sec. 4574), giving the landlord a superior lien for a year’s rent on produce of the leased farm, but for no rent that has been due for more than 120 days, and providing that if the produce be removed openly from the leasedi premises, without fraudulent intent, and not be returned, the landlord shall have his lien on it for 15 days from its removal, and may enforce it against the property wherever found, where after the end of the year for which a farm was rented, at which time the rent became due, the tenant, being indebted for the rent, surrendered tobacco raised 'on the farm to the landlord, which surrender was invalid as against the tenant’s other creditors because the landlord was his wife, and she then shipped the tobacco to defendant to sell as her agent, and it .sold it, applied the proceeds on the tenant’s debt to it, and refused to pay the landlord, all this within 15 days after the removal of the tobacco from the premises and 120 days after the termination of the lease — the landlord’s right of action against defendant to enforce its lien against the proceeds accruing when it refused to pay her the same was not lost by failure to bring the action within 120 days after the rent became due.
    4. Fraudulent Conveyances — Partial Individuality. — A lease by the wife of the lessee and another not being recorded, its provision that the landlord shall have a lien on the crop for the rent is invalid as to creditors so far as concerns the lien given the wife.
    5. Subrogation — Nature and Theory of Right. — Subrogation is only allowed where there is some equitable reason for it.
    6. Subrogation — Voluntary Payment. — One who pays a debt for another voluntarily is not ordinarily subrogated 'to the rights of the creditor.
    7. Pleading — Subrogation—Conclusions.—The allegation of the petition that plaintiff, one of two landlords, who paid to the other landlord her part of the rent was subrogated to the rights of the other, is a mere legal conclusion; it being necessary to state the facts showing a right of subrogation.
    B. G. WILLIAMS and J. MORGAN CHINN for appellant.
    BROWN & NUCHOLS for appellee.
   Opinion of the Court bt

Judge Hobson

Reversing.

Appellant, Maggie N. Jones, brought this suit against the Louisville Tobacco Warehouse Company to recover the proceeds of certain tobacco which she alleged she had shipped to it in March, 1900,- and it had sold as her agent. The warehouse company claimed the right to hold the money as the property of John W. Jones, the husband of Maggie N. Jones, on account of a debt which he owed to it contracted about the year 189'6. The circuit court sustained a demurrer to the plaintiff’s reply to the defendant’s answer, and, she declining to plead further, dismissed her petition. From this judgment she appeals.

■ The facts admitted by the demurrer are these: Maggie N. Jones and her mother, Minerva Noel, owned a farm in Franklin county, and on March 1, 1905, they entered into the following written contract by1 which they rented the farm to J. W. Jones: “For and in consideration of the sum of nine hundred dollars ($900.00) to be paid on or before the first day of March, 1906, we, Mrs. Minerva Noel and Maggie N. Jones of the first part have this day rented to J. W. Jones of the 2nd part of our farm known as the S. M. Noel farm, for the term of one year. Parties of the first part reserve for their own use the tenement house at front gate, the two tenement houses at the mouth of branch, the pump house and right of way to said tenement house and pump house right of way over and for repairing of pipe line by the distillery company and also the slop privilege at the new cattle sheds. First parties also reserve a lien on all crops grown on said farm until moneys for rent are paid. First parties reserve all right for seeding purposes in the fall of. the year. First parties are not to repair any fencing on said farm. Possession of farm to be given 1st of March, 1905, given up March 1st, 1906. . Second party is- allowed to work lands on farm any way he wants to, or to sublet any lands that he wants to, or to plow any lands, and is to do all the repairing on barns, fencing, etc., at second parties own expense. Minerva Noel, Maggie N. Jones, J. W. Jones.” On March 1, 1906, Jones owed $550 of the rent, and Maggie-N. Jones then paid to Mrs.-Noel her part of the rent, and thus became entitled to all the rent as between her and her husband. He had sublet tbe farm, the year before to a number of tenants who had raised a crop of tobacco on it, under contracts by which they were to have one-half of the tobacco and he one-half. J. W. Jones then surrendered to Maggie N. Jones his half of the tobacco which was then on the place, and she took possession of it and shipped it to the warehouse company. The net proceeds of half of the tobacco' when sold by the warehouse company amounted to $214.54. The rent contract above quoted was not recorded. The arrangement by which J. W. Jones surrendered to his wife his one-half of the tobacco was verbal, and not reduced to writing or recorded. Section 2128, Ky. Stat. (Russell’s St. $ 4631), which gives‘the-wife the right to make contracts as' a single woman, contains this proviso: “A gift, transfer or assignment of personal property between husband and wife shall not he valid as to third'persons, unless the same be in writing, and acknowledged and recorded as chattel mortgages are required by law to'be acknowledged and recordedbut the recording of any such writing shall not make valid any such gift, transfer or assignment which is fraudulent or voidable as to creditors or-purchasers.” It is insisted for the warehouse company that, as the transfers between the husband and wife were not recorded, they were void, and the title to the tobacco still remained in the husband. Section 2317, Ky. Stat. (Russell’s St. § 4574) is as follows: “A landlord shall have a superior lien on the produce of the farm or premises rented, on the fixtures, on the household furniture, and other per■sonal property of the tenant, or undertenant, owned by him, after possession is taken under the lease-but such lieu shall not be for more than one year’s rent due or to become due, nor for any rent which lias been due for more than one hundred and twenty days. And if any such property be removed openly from the leased premises, and without fraudulent intent, and not returned, the landlord shall have a superior lien on the property so removed for fifteen days from the date of its removal, and may enforce his lien against the property wherever found.” It is conceded that under this section the wife had a lien on the tobacco for her rent; but it is insisted that this lien was lost because it was not asserted within 120 days after the rent fell due or within 15 days after the removal of the tobacco from the premises.

In Eberhardt v. Wahl, 124 Ky. 223, 98 S. W. 994, 30 Ky. Law Rep. 412, Mrs. Eberhardt and her husband, Jacob, executed two notes to a bank for $250 for money borrowed by him. To secure the first note he pledged 10 shares of stock which he owned and to secure the second note she pledged 10 shares of stock which she owned. She paid to the bank $250 of her own money, intending to pay the note which was secured by the pledge of her own stock. DBut the bank applied it to the payment of the first note which was secured by the pledge of her husband’s stock. She applied to the bank to correct the mistake, and was told by the bank' officers that all that was necessary was that her husband should deliver to her the 10 shares of stock which had been released to secure her in the $250 which she had paid, and protect her against liability on the second note. This was accordingly done, but the agreement was not recorded. In this condition of things another creditor attached the husband’s 10 shares of stock. It was held by this court that the arrangement between the husband and wife was void, and that the wife acquired no lien on the husband’s 10 shares of stock by reason of the transfer of the stock to her by him. Bnt it was also held that the bank had a lien on the 10 shares of stock, and that the wife, having-paid the note to the bank which was secured by the-stock, was entitled to be subrogated to the lien of the bank under the circumstances, independently of any transaction between her and her husband. See, also, Stroud v. Ross, 118 Ky. 630, 82 S. W. 254, 26 Ky. Law Rep. 521. In Marquess v. Ladd, 100 S. W. 305, 30 Ky. Law Rep. 1142, the tenant, while the tobacco was on the leased premises, turned over his interest in the crop to the landlord under an agreement that he should retain possession of it and place it upon the' market with the Dark Tobacco Protective Association, where it was to remain until sold, and that out of the proceeds of it when sold the landlord was to pay himself what the tenant owed him and pay the remainder to the tenant. Under this arrangement the landlord took possession of the tobacco, and in stituted no proceedings to enforce his lien. More than 120 days after the expiration of the lease suit was brought to enforce a mortgage given by the tenant before the tobacco was turned over to the landlord; and it was insisted that the landlord had lost his lien by failing to institute proceedings to enforce it. Rejecting this claim the court said: "When the agreement between the landlord and the tenant was made in November, 1904, the landlord had a superior lien upon' the tenant’s interest in the tobacco to secure the payment of the money and property advanced to him, and the crop was on the leased premises. This lien he had the right under the statute to enforce at any time within 120 days after the expiration of the tenancy. The purpose of the statute was to secure the. landlord for advances made to his tenant by giving; him a lien upon the crop. If, after the crojo bas been planted and at any time during the period for which the lien of the landlord exists, the tenant for any reason concludes to deliver his interest in the crop to the landlord as security -for advances made, we cannot percieve any reason why the lien in this way may not be perserved. An agreement of this kind does not extend the lien of the landlord beyond the statutory period, as the legal effect of it is, the same as if the landlord had instituted legal proceedings to enforce the collection of his lien, and had acquired possession of the crop under process of the court. Creditors of the tenant cannot be prejudiced by an agreement of this character because the landlord holds the tenant’s interest as a pledgee, and must acount for whatever surplus remains after discharging his debt.”

Under the statute, a gift, transfer, or assignment of personal property between husband and wife is invalid as to third persons unless in writing, acknowledged and recorded as chattel mortgages are required to be acknowledged and recorded. The surrender of the tobacco by Jones to his wife was a transfer of personal property, and, not being reduced to writing or recorded, was invalid. After that arrangement was made, the parties stood where they were before it was made. It took from the wife no right she then had and it added nothing to her rights. Before that surrender was made, she had a lien on the tobacco for her rent under the statute, and this superior lien she continued to have after the arrangement was made. The rent was not due until March 1, 19U6. The tobacco was sold during that month. When the tobacco was sold, her demand against the warehouse eompany accrued, and, it then refusing to pay her the money, her right to the money was in no wise affected by the fact that she did not bring her suit against the warehouse company until December 10, 1906. The tobacco having been sold and the proceeds being in the hands of the warehouse company, her right of action against it accrued when it refused to pay the money over to her, and, this all having occurred within 120 days after the rent became due, her delay m suing after the liability accrued did not prejudice the warehouse company. There is nothing in the case to show that the tobacco had been removed from the premises more than 15 days before it was received or sold by the warehouse company and the proceeds applied by it upon its debt against J. "W. J ones. No opinion is indicated as to what would be the effect of such removal in a case like this. The circumstances indicate that only a short time elapsed after the removal of the property from the premises before its receipt and sale by the warehouse company.

The written lease provided that the owner of the land should have a lien on the crop for the rent, but, as this was not recorded, the special contract was invalid so far as - it stipulated for a lien on the crop in favor of the wife. It was valid, however, as to Mrs. Noel. She had a lien by virtue of the contract on the crop of tobacco as against the warehouse company whose debt was created in the year 1896. It is alleged in the petition that Mrs. J ones when she paid Mrs. Noel her part of the rent became subrogated to her rights. But no facts are alleged showing a right of subrogation. One who pays a debt for another voluntarily is not ordinarily subrogated to the rights of the creditor. Subrogation -is only allowed where there is some equitable reason for it. The allegation that the plaintiff was subrogated to the rights of Mrs. Noel is only a conclusion of the pleader. The facts must be stated showing a right of subrogation, if the plaintiff bases her right of recovery upon the lien given Mrs. Noel in the lease; but the plaintiff is entitled to a lien under the statute for the rent due her.

We therefore conclude that the court erred in sustaining the defendant’s demurrer to the plaintiff’s reply. On the return of the case the parties will be allowed to amend their pleadings if they desire to do so.

Judgment reversed, and cause remanded for further proceedings consistent herewith.

Extended Opinion and Response to Petition for Rehearing.

O’Rear, J.

It appears that Mrs. Jones shipped the tobacco to appellee as her factor. Section 4768, Ky. St. (Russell’s St. § 2530); J. S. Phelps & Co. v. Barkley, 40 S. W. 384. Appellee, as factor, could not deny the title of its principal. When it accepted her consignment of tobacco as her property, it became estopped thereafter to deny to appellant’s prejudice that the title to the tobacco was hers.

. Appellee argues that the lien is given by statute upon the property — not its proceeds. But the statute de'als alone with the status, independent; of a contract enlarging or restricting it. It is still competent for the parties to contract with respect to property of the tenant or leased premises. While, as between husband and wife, such contracts must be in writing, to affect “third persons,” by the expression it is meant that others may deal with the former owner on the faith of his ostensible ownership, unaffected by seeret transfers. The provision as to recordation of the contract is to give a notice of the changed title. Obviously, if' the party dealing with it knows equally well from other sources that the title is in the wife, but he buys from the husband, knowing that the wife is ignorant of the transaction, he is not the kind of 1‘third person” intended to be protected by the statute. The statute aims at promoting honesty, not trickery, and is meant to enlarge, not to restrict, married women’s property and contractual rights. It ought to be given a liberal construction to effectuate the legislative purpose.

The transaction between the husband and wife was not meretricious. The transaction itself was valid. The only thing lacking was the publicity necessary to protect “third persons” who might deal with it. The possession of the wife was of itself notice that she had some sort of claim upon the property. If her possession was obtained in fact by reason of the transfer of the tobacco in'satisfaction of her lien, it preserved her lien, independent of the statute, as against all the husband’s creditors who had notice of the facts; and her possession was of itself notice of the facts. The relation of landlord and tenant between the husband and wife gave her, under the statute, a lien,1 regardless of the contract between them, which is attacked by the appellee because not recorded. She never relinquished that lien. Her consignment of the tobacco to appellee for sale was in line to preserve her dominant equity; and, when appellee accepted the consignment on her account, it undertook as her agent to sell the tobacco on her account alone, and to remit to her the proceeds of the sale, less its commissions and expense in the matter. The 15 days given by ihe statute has no place in this case. Nor has the 120-day provision. They were merged in her consummated equity, when she took charge of the tobacco to sell it on account of her liens in liquidation of the rent due her.

Petition overruled.  