117 Mo. 347 | Mo. | 1893
Lead Opinion
— In a suit by attachment instituted by respondent in the circuit court of Boone county against Eugene .White, among several other creditors, a stock of goods, wares and merchandise and other property was levied upon, which theretofore, on the seventeenth of May, 1889, had been conveyed by deed of trust by the said White to J. H. Waugh to secure the payment of a promissory note of $4,000 of that date to James A. Carlisle. The said Waugh and Carlisle interpleaded in said suits, claiming the property under said deed of trust. The respondent answered, admitting the execution of said deed of trust, but charging that the same was executed for the purpose of hindering, delaying and defrauding the respondent and other creditors of the said Eugene White, and to secure an amount largely in excess of any bona fide indebtedness from the said White to the said Carlisle. Upon this answer issue was joined by the interpleaders, the issue submitted to the jury and found for the respondents, and thó interpleaders appealed.
The following letter from respondents, received by Eugene White, was shown to Carlisle:
“Philadelphia, February 13,1889.
Mr. Eugene White, Columbia, Mo.
Deab Sin: Yours of the eighth received and appears satisfactory. On the strength of your statement we have decided to transfer the account of White*352 & Carlisle to Eugene White & Co., thus releasing Mr. Carlisle from any pecuniary responsibility. We trust our dealings may be mutually satisfactory.
Yours truly,
Alberger, Stoer & Co.”
The main witness for the intervenors was Carlisle. His evidence tended to show that it was his understanding that Meade White remained a member of the firm of Eugene White & Co.; that on the same day the written agreement was signed evidencing the sale aforesaid, to-wit, the thirtieth of January, 1889, Eugene White executed and delivered to him a note in the name of Eugene White & Co., of that date, payable one day after date, for the sum of $6,000; that said note was taken as collateral security for the performance by the said Eugene White & Co. of their obligations under said .contract, which were estimated to be about that amount; that, about the first of May, Eugene White & Co., having failed to pay the debts of White & Carlisle, which they had assumed, and being himself pressed for payment of one of those debts of about $2,000, due the Exchange National Bank, he placed the note for $6,000 in the hands of his attorney; that suit was brought on it in the circuit court of Audrain county, in which county Meade White lived; that on the seventeenth of May he had an adjustment' with Eugene White of the accounts between himself and the firm of Eugene White & Co., under said contract, which resulted in the execution by the said Eugene White in the name of Eugene White & Co. of the note for $4,000, secured as aforesaid by the deed of trust under which intervenors claim; that said note was given for the balance approximately ascertained by an estimate of the liabilities of said Eugene White & Co., to Carlisle on the first of May under the contract as per the following account.
*353 Eugene White & Co.,
In Account with 3. A. Carlisle:
1889, May 1. — To purchase price of goods as per contract, January 30, 1889........................................$4,000 00
Interest on same, three months, 8 per cent................... 80 00
To liabilities as per said contract assumed by White & Co., and not discharged per contract.
Alberger, Stoer & Co........................................$ 584 00
To note at Exchange Bank................................... 2,000 00
To interest on note at Exchange Bank...................... 42 72
To rent to Trimble........................................ 250 00
To balance cash advanced........................,1........... 160 85
To error in charging L. S. Gordon’s account to Carlisle........ 37 50
To error in charging Reynolds’ account to Carlisle............ 45 00
To probable repairs of store as per contract................... 50 00
$7,250 07
CREDITS.
$1,518 55 January 30. — By cask on contract............
30 37 By interest on same, 3 months, 8 per cent...
1,430 51 234 22 By accounts collected on contract............ By one-half losses on account, as per contract.
$3,313 65
To balance........................................$4,036 43
That after the execution and delivery of the note for $4,000 and the deed of trust, the suit on the note for $6,000 was dismissed.
The principal witness for respondents was Eugene White, who testified that all the accounts of the creditors for goods against the firm of White & Carlisle were transferred to the account of Eugene White & Co., and that about the middle of February he showed the letters of such creditors to Carlisle, advising him of that fact; that he executed the note to Carlisle for $6,000 on the twenty-seventh or twenty-eighth day of February, but dated it on the thirtieth of January, the day of the consummation of the trade.
“Q. At that time, what amount of money did you actually owe Carlisle? A. By assumption I owed him
“Q. If you only owed Carlisle $2,600, why did you execute him a note for $6,000! A. We had talked the matter over and had come to an understanding about the thing, and agreed that if the note was made for that amount I should, if I got into any trouble, have the balance of‘ the money myself, over and above his amount. That is, if I should fail in business or in any way have trouble and need the money, I should have the balance of the note, over and above the amount I owed him. I was to get the surplus, in other words.
“Q. Who were you to get it from! A. Prom Mr. Cailisle. He would close the trade and I should have the balance of the money. In other words, if anybody got left it would be the eastern creditors, but he and I would be safe.
UQ, What did he say to you regarding this transaction! A. He said that ‘if anybody had to stand any loss on account of it I think it had better be the eastern creditors, for they are better able to afford it than we are. We will fix ourselves first; I will protect you, and if anybody has to lose anything it will be them.’
“Q. That was the arrangement and understanding between you, was it! A. It was.
UQ. What became of the $6,000 note! A. Mr. Carlisle has it now. After I bought out the firm of White & Carlisle I conducted the business under the name of Eugene White & Co. (the company being nominal), until closed by these attachments. * * * There were no further transactions between us until the seventeenth of May. At this time he had my note for $500 and the $6,000 note. He said he wanted to
“Q. What did you owe him at that time? A. $2,650.
liQ. What did you give him the note for $4,000 for, when you only owed him $2,650? A. I gave him a note for $4,000 and owed him $2,650, and the understanding between us was that the $1,350 over and above the debt I owed him was to come back to me in case there was a foreclosure.
“Q. Was to come back to you, from whom? A. Mr. Carlisle.
“Q. Was that the agreement between you and him? A. Yes, sir; it was.
“Q. Did you execute the note and deed of trust? A. Yes, sir. The deed of trust was on my entire store, fixtures and books, accounts, etc. I gave the deed of trust oh Saturday about noon, and' the next day I found that if had been filed for record.” This evidence of White’s was flatly contradicted by Carlisle.
It further appeared from the evidence that the deed of trust was filed for record on the seventeenth of May, 1889. The petition in the suit against Eugene and Meade White on the $6,000 note was filed in the Audrain circuit court on the same day. And on the twentieth Carlisle wrote the following letter to the respondents:
*356 “Gentlemen. — Please inform me by return mail whether or not the last order made of your firm by White & Carlisle, and subsequently assumed by Eugene White & Co., has been paid and oblige
“(Signed) J. A. Cablisle.”
To which he received an answer, dated May 23, that the account had not been settled; and afterwards received another letter from respondents, dated May 27, that they would look to him for payment of their account.
On the twenty-first of May Eugene White, Waugh, the trustee, and Carlisle entered into a written agreement, by which G. W. Trimble was placed in charge of the property conveyed by the deed of trust with power to conduct the business and apply the proceeds to the payment of the trust debt. On the twenty-fourth of May the creditors of Eugene White & Co. began filing suits by attachment. On the fourth of June, 1889, the suit of Carlisle against the White in Audrain county was dismissed, and in October Carlisle wrote the-respondents the following letter:
“Messrs. Alberger, Stoer & Co.
“You are among the attaching creditors of Eugene White & Co., insolvent firm, late of this city. The net proceeds of receiver’s sale under order of sale in attachment can not possibly exceed $4,000. The attaching creditors, dates of attachment and amounts. sued on, are as follows:
C. M. White, May 24, $1,800 with interest.....................$1,920 00-
Columbia Savings Bank, May 24, $1,000 with interest.......... 1,060 00
Joseph M. Hays Woolen Co., May 24, $300................... 300 00
Longley, Lowe & Alexander, May 28...... 240 00'
Longley, Lowe & Alexander, May 29.......................... 170 00'
John B. Ellison & Sons, May 30............................. 1,350 00
Balm Bros. & Co., May 30.................................... 260 00
Excelsior Laundry Co., May 31............................... 150 00
Alberger, Stoer & Co., May 31............................... 580 00-
*357 “You will thus discover that about $5,400 must be paid out of $4,000 before a cent can be paid to you. The undersigned was a member of the old firm of White •& Carlisle, to whom your above-named account was first charged, and who were predecessors in business to said Eugene White & Co. I shall be interested in each •of said suits as interpleader for property attached. Your interest and mine in the suits are identical, if the original liability of White & Carlisle to you has not been discharged. If such be the fact, concerning which I do nót commit myself, and my interest prevails you will enjoy the full benefit of my success. •Owing to your present attitude in court, and consequent complication with other attaching creditors which I need not explain, I cannot now give you the facts from which your above-mentioned relations to me arise; but if you will in honorable confidence keep this statement from all persons here whomsoever, and send a man here with power to act, I can show him how your debt will be saved, whereas in the present condition of things it will certainly be lost. It is important for us both that you communicate with me directly and with no one ■else. If you send a man, send immediately and notify me of the fact when he will be here, as I live some distance in the country.
“Yery respectfully,
“J. A. Carlisle.”
To which respondents replied on the seventh of October that their claim was in the hands of their attorneys and referring him to them.
The foregoing summary presents the salient features of the case presented by the evidence, on which, the court gave the following instructions for the respondents; of which the appellants complain of numbers 2. 3, 4 and 5 as erroneous:
*358 “1. The court instructs the jury in this cáse that if they believe, from all the facts and circumstances admitted in evidence, it was agreed between the inter-pleader J. A. Carlisle and Eugene White, at the time the deed of trust and note of $4,000 were executed and delivered, a part of said amount of $4,000 was, when collected, to be paid back to said Eugene White, and thereby prevent his other creditors from getting such part, then said deed of trust and note are fraudulent and void, and your verdict must be for the plaintiff in the attachment.
“2. Although interpleader J. A. Carlisle had a legal right to take and receive a note, and have it secured by deed of trust on the property of Eugene White, for any Iona fide debt or liability of said White to him, whether due or to become due, yet, if the jury believe that at the time of the execution of the note and deed of trust from White to Carlisle, offered in evidence, said White was largely indebted to other parties, and that said note was for a larger or greater amount than said White owned, or was liable to said Carlisle for, and both White and Carlisle knew that fact at the time of the execution and delivery of said note and deed of trust by White to Carlisle, then the note and deed of trust are fraudulent and void as to such creditors, and your verdict should be for the plaintiffs in the attachment.
“3. The jury are instructed that direct and positive evidence is not required to established or prove fraud, but it may be gathered or inferred from all the facts and circumstances in this case; and if the jury believe from all the facts and circumstances in evidence in this case, that Eugene White gave the note and deed of trust read in evidence, to James Carlisle with the intent to hinder, delay or defraud the said Eugene White’s creditors, and that Carlisle had knowledge of such fraudulent intent, and aided or in any manner assisted*359 him (White) in carrying out said fraudulent intent, then your verdict must be for plaintiffs in attachment, to-wit, Alberger, Stoer & Co.
“4. The jury are instructed that, although they may believe from the evidence that the note and deed of trust read in evidence were executed by White to the interpleader, Carlisle, and that White, Carlisle and Waugh afterward executed an instrument of writing (read in evidence) to Gr. W. Trimble, authorizing him to take possession of the stock of goods levied upon under the writ of attachment issued in this cause, still, if the jury further believe from the evidence that said deed of trust and said other instrument of writing were made by White with the intent to hinder, delay or defraud the creditors of White in the collection of their debts, and that Carlisle knew of the purpose of White in making and executing said instrument, and participated in such intent in any ma/nner, then such instruments were void as to the attaching creditors of White, whether said Carlisle had a valid debt secured by said deed of trust or not.
“5. If the jury believe from the evidence that Eugene White, defendant in the attachment, executed and delivered to interpleader James A. Carlisle the four-thousand'-dollar note read in evidence, and the deed of trust conveying to James H. Waugh, as trustee, the said stock of goods, wares and merchandise in controversy in this ease, with the intent or purpose to hinder, delay or defraud the creditors of said White, other than Carlisle, and that Carlisle had knowledge of, and participated in, such fraudulent intent, then the verdict of the jury must be for the plaintiffs in the attachment, to-wit, Alberger, Stoer & Co.”
The foregoing statement of the case was made by Judge Brace in division number one, and, being so
I. The interpleader complains only of instructions. The second instruction is challenged for the reason that he conceives it limited the right of the interpleader to “take and receive a note, and have it secured by deed of trust on. the property of Eugene White, for any Iona fide debt or liability of said White to him, — Carlisle,” thereby excluding the right of interpleader, Carlisle, to take a note and deed of trust to secure himself against the old firm obligations of White & Carlisle.
Under the issues and facts in this case, this point is not well taken. The instruction referred to the evidence in the case. It covered fully the liability of White to Carlisle. This liability grew out of his assumption of the very firm debts which counsel claim were excluded by the instruction. The word was used to cover the contingent liability of Carlisle in case Eugene White should not discharge the firm obligations of White & Carlisle, which he assumed, and stand half of the losses on the firm accounts.
The sole issue was whether the note only included these Iona fide obligations. The creditors claimed that White and the interpleaders had fraudulently included in the note a sum largely in excess of White’s debt or liabilities growing out of his purchase of the said firm’s assets. No other liabilities were under consideration, and there is not the slighest probability the jury construed the instruction in the way learned counsel claims they were authorized to do.
The instruction was pertinent and we think comprehensive enough to cover the issues on trial.
II. Learned counsel urges that in the third instruction the court invaded the province of the jury, usurped their functions and practically decided the case against the interpleader.
“3. The jury are instructed that direct and positive evidence is not required to establish or prove fraud, but it may be gathered or inferred from all the facts and circumstances in evidence in this case; and if the jury believe, from all the facts and circumstances in evidence in this case, that Eugene White gave the note and deed' of trust, read in evidence, to James Carlisle, with the intent to hinder, delay or defraud the said Eugene White’s creditors and that Carlisle had knowledge of such fraudulent intent and aided, or in any manner assisted him (White), in carrying out said fraudulent intent, then your verdict must be for plaintiffs in attachment, to-wit, Alberger, Stoer & Co.” The criticism is that the court gave the jury his opinion that the facts and circumstances in this particular case, established fraud.
It may be conceded that a particular emphasis upon the article “the,” and the clause, “m this case,” at first blush, are open to the construction now placed upon them by the appellants; but let us look at the instruction in another light. The court was instructing in this case, not another, and the jury were trying this case, not another. Let us transpose the clause, “in this case,” and place it at the commencement of the instruction. It will then read: “In this case, the court instructs the jury that direct and positive, evidence is not required to establish or prove fraud, but it may be gathered or inferred from all the facts and circumstances in evidence.” Had it been in this last form, certainly it would have been authorized by repeated decisions of this court. Burgert v. Borchert, 59 Mo. 84; Albert v. Besel, 88 Mo. 154. But, reading it as it was given, has the court said more than this, — fraud may be shown by the facts and circumstances in evidence in this or any other case, .where it is the issue. If it may so
Clearly, if the trial court had considered that the facts were not debatable, and established fraud as a matter of law, he would not have submitted it to the jury to find it from the facts and circumstances. And, on the other hand, if there were no facts and circumstances from which fraud could properly be found in this case, it was error to submit it in any form to the-jury. If there was evidence from which fraud might have been found — and this the interpleader does not controvert — then the jury were properly instructed that it was not necessary to prove the fraud by direct or positive evidence, but might so find it from the evidence in this case.
But the instruction is not to be declared erroneous by a hypercritical test of the first clause alone. This first part is but the reiteration of the law, in an abstract way, as to the amount and character of proof demanded in these cases, and following it, in the same immediate and direct connection, and coupled with it by the copulative conjunction, the jury are told that, if from all the facts and circumstances in evidence, they, the jury, not the court, shall find certain ultimate facts existed, then they must find for the attaching creditor; so that, when taken as a whole, the jury were simply authorized to find that Eugene White executed the note and deed of trust with the intent to delay, hinder or defraud his other creditors, from the facts and circumstances, and it was left for them to say whether they found and believed White was guilty of fraud and that Carlisle knew it, and, knowing it, aided or assisted him in any manner, in carrying out the fraudulent intent.
The meaning of this instruction must be gathered from it as a whole and not by critically separating it,
So much for the verbal criticism. Let us see if the instruction is otherwise obnoxious to the principles of the law. The law, in cases similar to this, seems to be well defined, in this state. A creditor has a perfect right to take security for an honest debt from his debtor, although he may know that the effect of taking it will be to delay or hinder the other creditors of his debtor in the collection of their debts, and though he may also know that the debtor thereby intends to hinder, delay or defeat his other creditors, provided, always, the creditor so preferred does not participate in the fraudulent purpose or intent of his debtor. Shelley v. Boothe, 73 Mo. 74; Holmes v. Braidwood, 82 Mo. 610; Albert v. Besel, 88 Mo. 150; Frederick v. Allgaier, 88 Mo. 598.
Measured by these decisions, there can be no objection to this instruction. It recognizes fully inter-pleader’s right to take security for his honest debt, even though he knew White was intending to defraud his other creditors; but it required that he should stop at securing his debt, and declared that if he did not, but went further and aided or assisted the fraudulent debtor in carrying out his fraudulent purpose, his preference- so obtained should be avoided.
III. The error assigned in the fourth instruction is that it enunciates a proposition legally and morally impossible. The instruction declares that, notwithstanding the jury should find that White executed the note .and deed of trust to Carlisle, and that White, Carlisle and Waugh placed Trimble in possession of the .goods attached in this case, still if the jury shall further find from the evidence that the said deed of trust and the instrument by which Trimble was put in possession were made by White with the intent to hinder, delay or defraud the creditors of White in the •collection of their debts and that Carlisle knew of the purpose of White in making and executing said instrument and participated in such intent in any manner, -then such instruments are void as against the attaching •creditors of White, whether Carlisle had a valid debt ■secured by said deed of trust or not.
The instruction in all essential particulars is based on the same principles already discussed as to the third
In Frederick v. Allgaier, 88 Mo. 598-603, Judge-Sherwood says, speaking of the difference between a. creditor purchasing to save a debt or taking a security, and a purchaser who was not a creditor: “In the one-instance mere knowledge on the part of plaintiff of Rhodes’ fraudulent intent is sufficient to defeat his action; in the other he must have been a participant in that fraitdulent intgnt in order to defeat his recovery.” For an illustration we need not go beyond the facts of this case. It may have been, — indeed, it does not seem to be questioned, — that White honestly owed Carlislesomething. This being true, Carlisle had a legal and moral right to the deed of trust given to secure that debt, but if he knew that White intended to delay,, hinder or defraud his creditors and permitted White to-include in the deed of trust, not only the-debt which he-might lawfully secure, but an amount in excess thereof, and agreed to account to White for this excess over, his-debt, then we say he was not only securing a lawful debt, but he went further, and participated in White’s-fraudulent intent to defeat his creditors.
In Van Raalte v. Harrington, 101 Mo. loc. cit. p. 612, Black, J. says: “It makes the vendee a participant in the fraudulent purpose of the vendor,” etc.
In State ex rel. Robertson v. Hope, 102 Mo. 428, Brace, J. arguendo, says: “If the creditor is guilty of fraud it is because he is a participant in the fraudulent intent of the debtor.”
Whatever difficulty counsel may have in solving this mental proposition, it is one that seems never to have given the different members of this court trouble, nor do we think the bar generally regard it as unsolveable or impossible.
Dissenting Opinion
(dissenting). — 1. The criticism on instruction number 2 is that it limits the right of the inter-pleader, Carlisle, “to take and receive a note and have it secured by deed of trust on the property of Eugene White for any bona fide debt or liability of said White to him” (Carlisle), thereby excluding the right of the said Carlisle to take a note and deed of trust embracing liabilities of the old firm of Carlisle & White to third parties. We do not think this a fair construction of the instruction. It was conceded that the whole consideration of the $4,000 note, except White’s original note of $500 and interest, and the money which Carlisle had loaned him from time to time amounting to $160.85, about which there was no dispute, consisted of losses on the accounts of White & Carlisle assigned to the latter, one-half of which White was to pay, and liabilities of that concern to third parties, which White had assumed, and of these liabilities there was no dispute about the item of $2,000, due the Exchange bank and interest. So that the whole matter in dispute was the bona fides of the liabilities of White to Carlisle on account of the losses on the assigned accounts and the liabilities of the old firm to third parties, which White in his contract with Carlisle had assumed to pay, and which the interpleaders claim went to make up the remainder of the consideration of the note. This was the issue to which the evidence was directed.
These were the only liabilities about which there was any dispute. These were evidently the liabilities to which the instruction referred, and the jury could
2. The objection to instruction number 3 is more serious. For, by this instruction, the jury are, in effect, told that fraud in fact, on the part of Carlisle, may be inferred from all the facts and circumstances of the case, provided they find that Eugene White gave the note and deed of trust with intent to hinder, delay or defraud his creditors and Carlisle had knowledge of such fraudulent intent and in any manner assisted White in carrying out such intent. The settled law in this state is that a creditor is not deprived of the right to secure the payment of an honest debt, by taking a security therefor that may have the effect of hindering or delaying other creditors, although he may know that the motive that prompts his debtor is not alone to give him the preference, but is coupled with an ulterior one to hinder and delay such other creditors or even to defeat the collection of their debts. Sexton v. Anderson, 95 Mo. 373; Albert v. Besel, 88 Mo. 150; Holmes v. Braidwood, 82 Mo. 610; Shelley v. Boothe, 73 Mo. 74.
His taking the security may assist his debtor in accomplishing his purpose as. to such creditors, but unless he himself has the same purpose, and does some act towards its accomplishment, he is not guilty of a fraud that will vitiate his security, and the question whether he took the security with such guilty purpose on his part, is a question of fact for the jury, whose province the court invaded in this case, when it told them that the facts and circumstances of the case were such as to warrant the inference of fraud. That was an inference that the jury should have been left at liberty to draw or not to draw, according to their own
3. Instruction number 4 was calculated to mislead the jury. Under its direction, although the jury may have found that Carlisle took the note and deed of trust for the purpose of securing an honest debt, and did no other act calculated to hinder or delay White’s other creditors, yet, if they found that White’s purpose in executing the securities was to hinder, delay or defeat his other creditors, and that Carlisle knew it, and “participated in such intent in any manner,” then his securities are void; and in the fifth instruction repeating this hypothesis, the jury are told in such case to find for the attaching creditors. These instructions should not have been given. They are erroneous in themselves and were well calculated to confuse the minds of the jurors and distract their attention from the real issues in the case, which were fairly well presented in the first two instructions given for the respondents. They present the solecism of a man guilty of no fraudulent act, yet guilty of fraud, by reason of some sort of occult participation in the fraudulent intent of another. We can understand how two minds can be said to participate in a fraudulent act, if such act be the joint product of a fraudulent purpose upon the part of each, and how each should be held responsible for the fraud. But it is impossible to conceive, except perhaps upon some principle of hypnotism or clairvoyance (of which we are not well advised) how one mind can participate in the intent of another, or how a person, committing no fraudulent act can become vicariously responsible for the fraudulent act of another by some sort of undefined participation not in the fraudulent act but in the fraudulent intent of that other person. The law holds no man responsible
If Carlisle, in taking White’s promissory note for $4,000 and the deed of trust, knowingly included an amount in excess of White’s actual liabilities to him, direct and contingent, either for his own benefit, or as a secret trust for White, he was guilty of a fraud, upon White’s other creditors that would vitiate his security as to them, and the respondents ought to have recovered. In the first two instructions for the respondent the jury were in effect so told by the court. After ■covering the real issues in the case by these instructions the court erred in going beyond and suggesting to the jury in the last two that, although they might not find that Carlisle committed this fraud, they might find for the respondents on account of some sort of fraud that might be imputed to him through the intention of White.
It is impossible to say whether the verdict was the result of the jury’s conviction that Carlisle was actully guilty of the fraud defined in the first two instructions, and in issue in the case, or of some vague, suppositious fraud that seemed to be shadowed forth in the last two, or of some like fraud that they were told in the third instruction they were authorized to infer. In such case the only proper course to pursue is to reverse the judgment and remand the cause for new trial.