231 Mo. 236 | Mo. | 1910
Alpha is the sister and Sarah the wife of Samuel I. Cole. Charles is his brother. Averring she has title as owner in fee of an undivided one-sixth of the south half of the northeast quarter, the southeast quarter of the northwest quarter, the east half of the southwest quarter, the west half of the southeast quarter — all in section 16 — and.the north half of the north half of the northwest quarter of section 21, all in township 37, range 4, containing 320 acres, in St. .Francois 'county, Sarah sues Alpha and Charles to quiet title under section 650, Revised. Statutes 1890 (now sec. 2535, R. S. 1909, as amended), alleging that the remaining undivided five-sixth interest is not in dispute, that she has no interest therein, that defendants claim adversely to her said estate in said undivided one-sixth, she prays the court to ascertain and determine her title and that of defendants respectively therein.
Alpha answers separately. Her defense is a misjoinder of the parties defendant in that Robert I. and Addie F. Cole are necessary parties as owners of an un-. divided fee-simple interest in the real estate — they being in joint possession and enjoying rents and income with Alpha and her codefendant, Charles; that no judgment can be entered determining -the interest of plaintiff that will not affect theirs in each and every undivided portion thereof; that Robert and Addie acquired their interest by a deed, dated Mav 12. 1807. recorded in a certain named hook and page of the land records of St. Francois.
Her further answer, by way of affirmative matter and second defense, is that plaintiff claims under a conveyance from defendant, Charles; that such conveyance was a covinous contrivance, a part of a fraudulent scheme concocted by plaintiff and her husband, intended to hinder, delay and defraud his existing and subsequent creditors ; that he was insolvent on the 10th of January 1895', prior thereto and ever since that time,
For a third defense Alpha pleads substantially the same facts elaborated in her second defense and avers the deeds from Samuel and plaintiff to Charles, and from Charles to Plaintiff, purporting to convey Samuel ’s interest, were fraudulent contrivances intended to hinder and delay present and subsequent creditors, and were executed and spread of record to that end, are a cloud upon the title and interest of Alpha, so acquired through her sheriff’s deed, and should be cancelled and annulled to remove it. For such, and all other meet and proper relief, she prays, averring that Sarah has no title or interest whatever.
The separate answer of Charles pleads the same misjoinder of parties defendant and in interest set up in Alpha’s answer, denies plaintiff has any legal or equitable right in the land and asserts that the disputed interest is the property of his codefendant, Alpha.
A conventional reply was filed
The case made is this: Plaintiff, given the opening and close over objection made and exception saved, introduced a warranty deed, dated May' 12, 1897, from Charles E. Cole and wife to Alpha, Sarah E. (wife of Samuel), Robert I. and Addie F. Cole, consideration $1500, conveying to them an undivided two-thirds interest in the land described in the petition, share and share alike, subject to a deed of trust, dated four days prior, securing $1925 to one McCormack, and rested.
Thereupon defendants asked an instruction, viz., that a defect of parties defendant appearing, the case must abate until they (Robert I. and Addie F. Cole) are brought in. On its refusal, defendants introduced deeds, judgments and oral testimony to establish the issues on their behalf as follows:
A warranty deed, in form, dated January 2, 1895, from Samuel I. Cole and Sarah, his wife, to Charles E. Cole, consideration $1000, conveying an undivided one-ninth interest in the land described, acknowledged on the 10th of that month and spread of record.
It appears sufficiently from admissions and from oral testimony that Mary J. Cole, the mother of Samuel, Charles and Alpha C'ole, was the common source of title, dying intestate, seized of the land and left nine children, each inheriting an undivided one-ninth.
Defendants next put in the judgment and files in a partition proceeding between the heirs of Mary J. Cole, in the St. Francois Circuit Court in 1906. Plaintiff was not a party to that proceeding, but Samuel, her husband, was. The partition decree found and adjudged that Charles had acquired by purchase the interest of Samuel and a sister, Mrs. Boggs, and that, in his own right and as such purchaser, he was the owner of an undivided one-tliird, and the remaining children of an undivided one-ninth each; that the land was not susceptible of partition; that an order of sale be made, etc. In pursuance of a sale made under such order, "on
They next introduced a trust deed on the land from Charles E. Cole, Sarah E. Cole and others to the Missouri Trust Co., securing $3500, put of record, date, September 18, 1899.
Next, a transcript judgment, dated June 30, 1898, in favor of John O. Long and against Samuel I. Cole for $108.
Barring some notes, evidencing indebtedness of Samuel, the foregoin'g is all the record and documentary evidence. The Long judgment was put in as part of the proof tending to show indebtedness and insolvency of Samuel.
Supplementing such record evidence, defendants put in oral testimony, viz.:
By Charles E. Cole, that his brother, Samuel, was insolvent on January 10, 1895', and remained' insolvent from that day to the date of the trial; that he owed named debts on that date and subsequently which he did not and could not pay. (It will serve no necessary purpose to go into the details of this indebtedness, because there is no dispute about the debts or the insolvency of Samuel at the time of the conveyances in question or afterwards.) Witness was surety for Samuel to the amount of $160. In January, 1895', Samuel was in the livery business in Bonne Terre. He owed John Lyons part of the purchase money. Lyons sold the note to the Farmers’ and Miners’ Bank. Samuel came to witness' and explained .that the bank was “pushing” him for the money, that he didn’t have it and on that account he wanted witness to accept a deed to his interest in the land and then reconvey to Sarah, his wife. The next day witness and his wife went to the home of Samuel, in Bonne Terre, and there Sarah and Samuel told him that Samuel “was badly in debt and wanted to get the land out of his hands so that the Farmers’ and Miners’ Bank and John O'. Long couldn’t
On cross-examination, witness disclaimed any interest or title to that part of the land in dispute. It belongs to his sister, Alpha. At the time of the conveyance in January, 1895, Alpha was Samuel’s creditor. Shortly thereafter, in a day or two, she came down to get her money. Samuel told her he didn’t make the deed “to beat her; I only did it to beat the Farmers’ and Miners’ Bank.” Alpha knew that Samuel was insolvent. Samuel at the time of his marriage (in 1894), was in the livery business. He went out of that and into the saloon business. Did not know whether Samuel was doing business on his wife’s money. Samuel did not state- that the consideration moving in the conveyances to his wife was money he had used of hers. Witness had never seen the (first) deed he made to Sarah since it was delivered. Found out afterwards it was not of record. Samuel told him the reason he didn’t want it put on record was, “He didn’t want the creditors to know the land was transferred back to his wife.” Inquired of when the debt was contracted, . afterwards merged into the judgment under which the land was sold to Alpha, witness said he didn’t know of the day of the month but it was about two years prior to the time it was sold. (Note: This would make the date of the indebtedness about 1901.) In and about the purchase at the sheriff’s sale, witness was the agent of his sister, Alpha, and bid for her. He had examined the records before that to see whether the deeds had been placed on record. In further explaining why Sarah was not made a party to the partition suit, witness said it was because Samuel said the deed was never placed on record, “He put the title in me to hold for him,” and he didn’t Want creditors to know it had been retransferred to his wife.
Defendant Alpha testified in substance that she' knew Samuel was considerably in debt; he owed her and never paid her: her debt was paid afterwards by
After the immaterial testimony of J. H. Lyons, defendants introduced the record of a judgment in favor of the Farmers’ and Miners’ Bank against Samuel for $332.50, dated November 19, 1895. (This judgment
To sustain the issues on her part, plaintiff took the stand, testifying in substance as follows: She married Samuel Cole in 1894. Was then the widow of Alex Rairden. “Q. Will yon state to this court what money, notes, property and effects you brought to the marriage altar? ... A. Something over, I guess, $1000,1 don’t remember just exactly.” Inquired what became ‘ ‘ of that money ’ ’ she replied: ‘ ‘ Cole got away with it, some way, I couldn’t state just how.” “He got. it;” she either “let him have it or he got it some way. ’ ’ Asked what indebtedness or money was owing her from her husband in January, 1895, on the day they made a deed to Charles, and Charles and his wife made a deed to her, she replied; “All he ever got from me he still owes me.” Then followed these questions and answers: “Q. How much was that? A. Of course, I don’t know how much money, and all my stock, what I had, he had gotten away with some of that. Q. How muda did it amount to, about, that he was owing you at that time? A. I don’t know just how much. Q. Yoaa can’t approximate it? A. I don’t know how much we had left after that, I don’t remember.” The deed was made to make good what money and property he got from her, to pay what he owed her. She denied entering into any conspiracy with her husband to defraud his creditors by hindering or delaying them. There was “never a word between us” relating to that. Witness didn’t think she knew about his debts at that time. She remembered, however, she was on one or two of his notes. The deed from Charles to her (the one made in 1895) was put in the dresser drawer and when Mr. Cole went away from home she never saw it any more. (Note: Other testimony shows that Samuel
Samuel I. Cole testified in behalf of plaintiff, in substance that he owed his wife in 1895, at the time the deeds were made; that he made the deed to pay the debt; lie denied entering into any conspiracy with his wife or Charles to delay, cheat or defraud his creditors; there were no judgments against him at that time. He was then in the livery business at Bonne Terre and owed a joint note to the Farmers’ and Miners’ Bank for the purchase of the livery stable with his brother-in-la\t, Bogy, who signed the note as joint maker. This note was afterwards paid by a loan from Dr. McCormack, or the Missouri Trust Co. Charles made the deed of trust and took up the note. At the time of the. •conveyances in 1895- witness, in reply to a question whether he contemplated engaging in any hazardous undertaking other than the livery business, said, “No, I don’t know that I was.” Afterwards he borrowed money from the St. Francois County Hank (this was the loan merged into the judgment under which Alpha Cole bought). That loan was made three or four years ago. Witness did not know the date, but his approximation brought it about the year 1900' or 1901. The money was borrowed to go into the restaurant business. In 1895 he had no undertaking like that in view. On cross-examination witness testified that he was not now in any business; had no property producing any income or means of living; was living with his sister, Miss Cole; was paying no board, but was doing work
Such was the testimony.
After taking time to consider, the chancellor entered a decree finding that Samuel conveyed an undivided one-ninth interest on January 2,1895, to defendant, Charles; that afterwards and after the partition sale Charles conveyed a one-sixth interest to Sarah. The decree makes no mention of the unrecorded conveyance made by Charles to the plaintiff, but goes on to find that Charles became the purchaser of all the interest in the land at the partition sale and then conveyed Sarah one-sixth; that Charles paid nothing to Samuel for his deed; that, at the partition sale Charles paid nothing for Samuel’s one-ninth interest; that his conveyance to Sarah thereafter was without consideration and that all these deeds were fraudulent as to Samuel’s then existing creditors; that Samuel was then insolvent and remained so; that defendant Alpha purchased the interest of Samuel in 1903 on an execution sale on a
It is assigned for error, first, that the decree is inequitable and for the wrong party; second, that the chancellor erred in ruling adversely on the contention that a decree could not go unless other necessary parties were brought in; and third, in giving plaintiff the opening and close at the trial.
Attending to the main point, we conclude the decree was for the wrong party. In arriving at such conclusion certain facts and propositions of law may be assumed as so well established as to be put beyond all question on this record, viz.: That Samuel Cole was in business, was embarrassed, was made insolvent by the conveyances of January, 1895, and May, 1897, and left without ability or disposition to pay his then existing debts; that, as to Samuel and as to all his then creditors (besides his wife), he beggared himself by putting all property subject to legal process out of his hands to hinder and delay them, ergo as to them the deeds were fraudulent in fact and law; and that Samuel continued in business, flitting from keeping a livery stable to keeping a tippling-house and then a victualling-house —at all times independently broken and insolvent, contracting debts as formerly and not paying them. He seems a litigious and selieming man, lightly assuming and then throwing off the burden of the yoke of pecuniary obligations.
In the foregoing views the case is so narrowed as to be encompassed by these questions: Did Sarah, his wife, participate in his fraudulent-intent to-hinder and
In stating grounds for such affirmative answers we shall assume it good doctrine that, under our married woman’s enabling acts, a wife may freely contract with her husband. That, if she be a bona fide creditor, her debt stands on as sure a foot as that of anyone else; he may prefer her since those acts, as before, by securing her debts to the exclusion of others, existing or subsequent, notwithstanding she may have known of his indebtedness and insolvency, notwithstanding she knew that the fact ■ of her preference would have the ultimate effect of hindering and delaying his other creditors, and notwithstanding: the husband intended to hinder and delay his creditors — all this, so long as, and provided always, she keep her hands clean by not participating in and becoming a party to his fraudulent intent. There is thin ice there and one who walks thereon has need of great care.
Fraud is easy to accomplish and hard to prove. It is a sound proposition that, as the marital relation affords a convenient cover for fraudulent property transactions between husband and wife, courts, where fraud is charged as the gist of the action, will closely eye such transactions (when in conflict with the claims of creditors) to see they do not hide and consummate fraud — being always mindful, withal, that judicial zeal to uncover and smite fraud must not be pushed so far as to dam up a natural and proper flow of marital affection or whittle away the duty of a husband to be just to his wife. . To her (as to others) he should live honestly, .should hurt nobody and render everyone his due, thereby observing the great commandment of the law.'
(a) . The evidence of the extent, items, date and character of the indebtedness from Samuel Cole to his wife is scant and inconclusive. We set some store on the fact that no note, memorandum or book account, checks or bank account were produced. The principal item of $253' which she gave him on the street to put in the bank to her credit and which he put to his own, was given him in the summer of 1895', long after the first dee*! from Samuel and Sarah to Charles Cole for Samuel’s one-ninth interest in the mother’s homestead and Charles’ reconveyance to her. When it is sought to,sustain a conveyance under such circumstances, a chancellor looks anxiously for corroborative proof, or, failing in that (as here), for those badges of good faith, arising from specification in details, date, amount and other indicia earmarking the ordinary run of business transactions, and making the proof fairly certain.
(b) . But if it were conceded that such indebtedness is established at th'e date of the deeds, yet we are confronted with evidence, practically uncontradicted, that Samuel and Sarah admitted to Charles and Alpha Cole and Mr. Marbury, the prosecuting attorney, that the purpose in making the deeds was to wrest Samuel’s property away from his creditors. The fact of indebtedness from Samuel to his wife rests alone on their testimony. The force of the latter is largely spent in establishing a debt. They deny the conspiracy in general terms, but they do not deny otherwise than faintly and impliedly the conversations proving it. Moreover, there is evidence not contradicted that plaintiff treated the property as her husband’s. She borrowed money on it after the conveyances to pay some of his judgment creditors as well as some at large, and part of the loan went into his pocket. This was but shadowing forth and effectuating the original fraudulent purpose. It was tantamount to an admission that she was seized to
(c) . The failure to record the first conveyance from Charles Cole to plaintiff, while not of controlling, is not entirely without some significance. Samuel’s explanation of this is vague and we may not grasp it. Sarah makes none. She put the deed in a drawer and left it there until it disappeared. The absence of such record certainly concealed the fact that Samuel had conveyed his property to his wife, and for over two years left the public to understand there had been an out-and-out sale to Charles. The latter sale invited less suspicion than the former would have done and was less liable to attack. Obviously, the absence of the record of her deed furthered the fraud.
(d) . Again, some stress is due to the fact that Sarah made no request or demand of her husband for restitution of moneys converted by him or for payment of a debt due from him. The absence of so natural a thing marks the transaction as novel and out of the usual course, thereby challenging attention. Both of them put the conveyances on his sole spontaneous act. A derelict husband, pricked, however tardily, by an awakened conscience, might make restitution to a wife he had wronged without her request or demand. Verily restitution is the beginning of reformation, even as the fear of the Lord is the beginning of wisdom. But there is nothing in this case showing the conscience of tMs husband was awakened or pricked into action.
(e) . Again, when honest conveyances are made to pay debts, there is usually a correspondence in value between the property and the debt — such disproportion as an excessive conveyance is a badge of fraud. In tMs case, absent satisfactory evidence of value, we must take the scant and uncontradicted evidence ye have. That was to the effect that the property was worth $35,
(f). In this connection there is another circumstance tending to throw suspicion on Sarah’s title. At first, recognizing that Samuel had only a one-ninth interest, that interest was conveyed to Charles. All sides agree that simultaneously it was reconveyed to Sarah and the deed delivered. If Sarah was not party to the partition suit two years later, the judgment was not res judicata as to her, her prior acquired title was not affected by that suit. Now, if her first deed was made to pay a debt and she accented it as such payment (as she claims) and, if, after the partition suit, Charles, who assumed to have purchased the whole interest in the land (ignoring the fact that Sarah was not a'party thereto), conveyed to her, on the order of her husband, without any new consideration, a one-sixth interest, he thereby conveyed a one-eighteenth in excess of that covered by the first deed. All sides agree the last deed was made in lieu of the first and on no new consideration. We must conclude, then, that by some unexplained arrangement between the Cole heirs Samuel became entitled to one-eighteenth more than was cast upon him by inheritance from his mother, and that by his order the title thereto was put in his wife. Not only so, but singular as it may seem, Sarah says she knew nothing about such order, or the last convey
(g). There is evidence indicating that the wife expected the husband to continue in business and, presumably, contract debts in accordance with his known bent and the usual course of business. Now and then she seems to have gone his surety after January, 1895, though she says she paid and intended to pay nothing on that account. She knew, then, that he was making debts in his business precisely as he made them before, with this difference, that her husband’s property was now screened by the conveyance to her from the hazard of his new enterprises, except in so far as it might be bound through her suretyship. Intent to defraud may be deduced from circumstances tending to prove such intent. In the- nature of things, it is not susceptible of direct proof. There is evidence not only showing that her mind cooperated with his in concocting the original fraud to hinder and delay existing creditors, but there is satisfactory inferential evidence showing the fraud was intended as a continuing one against subsequent creditors. "What was done certainly had that effect and the natural effect of 'that act is presumed to have been intended. If, therefore, it was necessary, on top of actual fraud intended to existing creditors, to show an intent to hinder and delay subsequent creditors, the case is not without evidence to sustain the latter.
Section 2881, Revised Statutes 1909 (formerly Sec. 3398, R. S. 1899), so far as pertinent, reads: “Every conveyance ... of any estate or interest in lands . . . made or contrived with the intent to hinder, delay or defraud creditors of their lawful . . . debts or demands . . . shall be from henceforth deemed and taken, as against said creditors and! purchasers, prior and subsequent, to be clearly and! utterly void. ’'
Nor can there be any doubt that where an element of the purpose in a fraudulent scheme, as appears to exist here, is to continue in business, a.conveyance- contrived to screen property from not only existing but subsequent creditors, from debts springing from the hazards and incidents of the new enterprise, is void.
The views expressed, within the doctrines of a line of cases, stand on reason and authority. Thus:
In Pawley v. Vogel, 42 Mo. l. c. 303, the court was dealing with subsequent creditors in a case passing judgment on transactions between husband and wife, referring to the transactions thus: “ .... hutas between him and his creditors, prior and subsequent, being attended with badges of fraud, it can be regarded in no other light than as a continuous scheme of fraud upon them.”
In a leading case, often cited, Payne v. Stanton, 59 Mo. l. c. 160, we find this pertinent language as to the effect of actual fraud, borrowed from Chancellor Ej?nt.: “. . . actual fraud, or fraud in fact, must be proved in order to set aside a prior voluntary conveyance at the suit of subsequent creditors. ” The case
In Shelley v. Boothe, 73 Mo. 77, the issue was between two creditors, one preferred and both then existing. It was ruled that where the creditor preferred participated in the wrong intent of the debtor to hinder and delay other creditors, the debtor’s fraud became the fraud of both..
In Sexton v. Anderson, 95 Mo. 373, it was held that if a preferred creditor “acts in good faith and tabes the money or the property for the sole purpose of saving a bona fide debt,” the transaction will stand. To overthrow it he must participate in the debtor’s fraudulent intent as to other creditors — mere knowledge of it is not sufficient.
In Snyder v. Free, 114 Mo. 360, it was held tnat the statute, quoted above, makes no distinction between subsequent and prior creditors, and that under it subsequent creditors are as much within its protection as prior creditors, the only difference being in the mode and extent of the proof of the fraudulent intent. So long as any of the class of subsequent creditors can show that the intént to hinder and delay related to them, such class is let in to share the benefits of the statute.
Lander v. Ziehr, 150 Mo. 403, was a case of a subsequent creditor. In addressing itself to the question, “What then are the circumstances which would justify a court in holding a conveyance fraudulent as to subsequent creditors!” it was said: “A design or purpose to hinder, delay or defraud those to whom he is about to become indebted, are some of the marked indicia of fraud. In a word, an intent to contract
But it is excess of labor to continue the discussion. The curious and inquiring, inclined to exhaust the matter, may consult such cases as Frank v. Caruthers, 108 Mo. 569; Gruner v. Scholz, 154 Mo. 415; Balz v. Nelson, 171 Mo. l. c. 691; Krueger v. Vorhauer, 164 Mo. l. c. 163 et seq.; Johnson v. Murphy, 180 Mo. l. c. 611 et seq.; Welch v. Mann, 193 Mo. 304; Bracken v. Milner, 99 Mo. App. 187; Loehr v. Murphy, 45 Mo. App. 519.
.The decree in favor of the plaintiff does not accord with the propositions announced, and the facts found to exist. The conclusion reached determines the case without deciding the other assignments of error. The decree is accordingly reversed and the cause is remanded with directions to enter a decree finding the issues in favor of defendant, Alpha Cole, sustaining her conveyance, decreeing title in her, cancelling the conveyances made to Sarah B. Cole by Charles E. Cole and removing the cloud thereof.