Douglass v. Cissna

17 Mo. App. 44 | Mo. Ct. App. | 1885

Lead Opinion

Opinion by

Philips, P. J.

In this case the plaintiffs asked twenty instructions, of which the court gave eight. The court also gave twelve instructions on behalf of defendant. We are asked in this case to review all those refused and those given. The habit of counsel in thus multiplying instructions, has time and again been animadverted upon and censured by the supreme court. But instead of curing the evil practice, it seems to be on the increase. If the court decline to accept the pressing invitation of counsel to look carefully and minutely through such a labyrinth of propositions to discover, if possible, some inconsistency or incongruity as the basis of error, it must be understood that the court is satisfied that, taking the instructions altogether which the trial court gave, the issues were fairly presented, or that they are immaterial, and that our duty is to administer the law in the interest of justice. ■

The case seems to have been tried throughout by the' plaintiffs on the theory that the motive and intent of the defendant in making the deed to Tootle, Hosea & Co. was' the main issue, • and so the instructions given by the court, as well as those refused; placed the case principally on the theory that if defendant intended to prefer one creditor to another, and to postpone one creditor until another was paid, etc., it was sufficient to maintain the attachment.

As, under the undisputed facts of record, the deed in' question, whatever it may be called, had been fiiade, and the real ground of controversy is as to the effect of the instrument, the inquiry should be limited to the seventh clause of section 398 of the Attachment act.

That inquiry isHas the defendant fraudulently conveyed or assigned his property -or 'effects so as to hinder' or delay his creditors? If this deed was fraudulent in and of itself, as matter of law it would be a fraudulent conveyance or assignment within the meaning of said section. And if the judgment of the law denounced it as fraudulent, it would support that allegation of the affidavit. — Reed v. Pelletier, 28 Mo. 177.

The intent, the motive which prompted the conveyance or assignment, in the absence of a secret trust or understanding dehors the instrument, could have no effect, because the intent to defraud might have been entertained by the grantor and yet the legal effect, of the deed make valid the conveyance, so . that as matter of law it would and could not hinder or delay any creditor.

It is to be borne in mind that the intent,- the motive of the grantor, is applied only to instances under the 5th and 6th clauses of said section concerning attachments. So Richardson, J., in Reed v. Pelletier, supra, said:

“There are thirteen cases in which an attachment may issue under our statute, and it will be observed that the ‘intent’ of the party liable to the writ is not a necessary ingredient except for the causes enumerated in the fifth and sixth clauses of the first section. The affidavit will be good if it follows the language of either of the clauses, and it is never necessary to prove more than the party is required to swear to. If the attachment is based on either the seventh, eighth, ninth, or tenth clauses, it will be sustained on proof that the defendant fraudulently had or was about fraudulently to do any of the prohibited acts; and whether the act be fraudulent will depend on the judgment which the law pronounces upon it.”

This section of the statute again came under review; in the supreme court of this state in the case of Bullene v. Smith (73 Mo. 151), where the proposition is well sus-' tained that each of the several clauses of said section presents a separate, distinct, and independent ground of attachment; and that the legislature did not employ the several specified grounds as convertible terms. Each enumeration constitutes a cause of action and each of the terms employed possesses its own peculiar meaning and office in law. Therefore, the supreme court holds that a fraudulent disposition of property will not support a charge of a fraudulent conveyance or assignment, and vice versa.

Now there is no just pretence in the case at bar of any other attempt to transfer the property in question, than what is expressed or consummated by the written instruments in evidence. All other allegations, therefore, of fraud contained in the affidavit and the issues taken thereunder, may be eliminated from this inquiry. Nor does the proof, giving to it the most rigid scrutiny. in quest of the evil design of the defendant, in our judgment warrant any jury in finding there existed in the breast of the defendant any purpose inconsistent with' the language employed in the written instrument. We fail to discover in this record any tangible proof of the existence of any secret trust or hidden arrangement between the parties for the benefit or protection of the defendant against the just rights of his creditors, outside of the papers themselves.

The fact that the deed contains a provision that any surplus remaining after the satisfaction of the grantor’s debts should be returned or paid to him, cannot be held .to be a fraudulent reservation to his use as against creditors, for that is precisely what the law, in the absence of any such stipulation, would direct. He reserves to himself no interest as against any of his creditors or the assignee, but only stipulated that the surplus, if any after satisfying all of his creditors, should be returned to him. This the law would accomplish for him with or without such express provision. And what the courts would enforce cannot be held to be fraudulent. — Burrill on Assignments, 4 ed. sects 206, 207..

This case, in this respect, is unlike that of Bigelow et al. v. Stringer et al. (40 Mo. 195), in its facts. There it appeared on the face of the deed that the debtor had conveyed an amount of property largely in excess of the aggregate of his debts; and by the very terms of the instrument, he tied up his property in the hands of the trustee, postponing his general creditors, for two years, manifesting thereby a purpose to secure to himself an increased surplus; again, by delaying and hindering his creditors in the collection of their debts. That was a fraud in law apparent on the face of the instrument. We fail to discover in this record, fairly and reasonably interpreted, any such disparity between the value of the property conveyed and the aggregate of the defendant’s debts as would warrant the impeachment of the deed on .that ground. In fact it is not too much to say, on this record, in view of the actual results of sales of such property under trustees or assignees, that if the creditors should realize the amount of their debts it would be quite unusual.

Nor are we able to perceive how the fact of the execution of the bill of sale, which Campbell induced the defendant to make, after the execution, delivery, and recording of the deed, can be construed as an abandonment of the assignment. The transfer by deed was an accomplished fact, and no subsequent act of the debtor, without the consent of all parties thereto, could effect the legal operation of the consummated conveyance. Nor do we think it just, under the circumstances disclosed by the evidence, to say that it furnished such proof of a fraudulent combination between the debtor and the trustee, as to have warranted the jury in pronouncing a verdict thereon in favor of the plaintiffs. It is but fair to presume that Campbell supposed from the telegram received that the firm’s lawyer had advised that the deed made might not avail for the protection of his house, and that he sought by taking the bill of sale to strengthen his case. That it was not designed to constitute an abandonment of the deed, is manifested by the fact that it was expressly stipulated on the back, of the bill of sale that it should not so operate.

The issue, on trial, being: had the defendant.fraudulently conveyed or assigned his property or effects so as to hinder or delay his creditors, it mattered not what opinion the grantor or assignor entertained as to the import of the terms employed in the instrument of conveyance. Its construction and effect are for the court as a question of law. If, as a matter of law, the effect and operation of the deed constituted an assignment for the benefit of creditors generally, pari passu, it is difficult to conceive how it can be said the defendant has fraudulently assigned his property so as to hinder or delay his creditors. The law, on the contrary, favors such assignments, as they operate for the protection and equality of all the creditors. — Milliken v. Dart, 26 Hun. 24.

There does not appear to be any serious controversy between counsel that the legal effect of the deed is an assignment under the statute; and such, we are of opinion, is its correct construction. — State ex rel. v. Benoist at al., 37 Mo. 500, 508; Burrill on Assign., sects. 2, 3, et seq.; Page v. Smith, 24 Wis. 371, 372; Lord v. Devendorf, 54 Wis. 491; Norton v. Kearney, 10 Wis. 443.

Campbell appears to have qualified as assignee under the deed. Then by virtue of the statute, the transfer inured to the benefit of all creditors, pari passu, notwithstanding the expressed desire of the debtor to prefer one of his named creditors. — Rev. Stat., sect. 354; Hard-castle v. Fisher, 24 Mo. 70; Shapleigh v. Baird, 26 Mo. 326; Crow v. Beardly, 68 Mo. 455; Lord v. Devendorf, supra.

Should the plaintiff maintain his action he thereby seeks to accomplish that of which he complains, a preference over the other creditors, — an inequality and injustice which it is the design of the assignment law to prevent. It is held in New York that an attachment cannot be levied on property in the hands of an assignee under a general assignment of the debtor, notwithstanding the assignment is fraudulent in law. — Thurber v. Blank, 50 N. Y. 80; Smith v. Longmire, 24 Hun. 257.

Appellants make the objection to the assignment that the assignor failed, at the time of the execution of the instrument, to make a statement accompanying it, as required by statute. — Rev. Stat. sect. 362. The deed was executed and put to record on the 6th day of December, and the required statement was made on the 8th. We do not think this delay of the assignor would defeat the conveyance in favor of the creditors, as they had no control of the assignor in performing a duty imposed on him by the statute, after the making of the deed.— Hardcastle v. Fisher, supra; Duvall v. Raisin, 7 Mo. 499; Robert v. Casey, 25 Mo. 590.

We are of opinion that on the real issue .in this case the plaintiffs had a fair trial, and that the ends of justice will be best subserved by affirming the judgment of the circuit court, which is accordingly done.

Ellison, J., concurs; Hall, J., not sitting.

---

Rehearing

On motion for rehearing:

Opinion by

Philips, P. J.

As many of the questions raised in the motion for rehearing have been fully considered and determined in the opinion filed herein, we • will notice only such additional suggestions as are deemed material.

I. It is claimed that the deed executed by Cissna was-not operative at the time of levying the writ of attachment because the assigned property was not then in the-hands of any named assignee, nor was. any person, then named, capable of acting as such assignee, inasmuch as a partnership cannot act as assignee. . This suggestion is-incorrect, both in fact and law. The evidence showed, without contradiction, that at the time of the levy of the writ .of attachment Campbell was in the actual, visible possession of the goods and store. He was one of the parties named in the deed as grantee, or trustee. The deed was made to Milton Tootle, Wm. E. Hosea,. Chas. W. Campbell, W. W. Wheeler, and Joshua Motter. They were partners doing business under the firm name-of Tootle, Hosea & Co..

“An assignment for the benefit of-creditors may be made to a single individual or to several.” — Burr on Assignments, sect. 91, 4th ed. And when it is made to-several it is not essential to its validity that, all should accept. Only those who do accept .are required to act. An assignment to partners is good, and the acceptance of', of the trust by one of the firm is sufficient. — Burr on Assignments, sect. 91; Forbes v. Scannel, 13 Cal. 243-288.

II. It is next insisted that Campbell did not qualify as-such assignee until after the attachment was sued out, and that he did so only because coerced thereto by attachment proceedings. The statute..prescribes what action the assignee shall take, and the time in which ho shall qualify. The deed was delivered to Campbell, and by him put to record before- the levy of the writ of attachment. This, without more, would be evidence of acceptance under our statute, where the assignee had taken possession of the property. — Price v. Parker, 11 Iowa 144; Forbes v. Scannel, 13 Cal. 287. The statute, section 355, allows the assignee fifteen days within which-to file his inventory, and by section 362 he is allowed three days, after filing the deed for record, to give bond as such assignee. This Campbell did within two days-after filing the deed, .and within three days from its. ■execution and delivery. 'These were the statutory evidences of his acceptance and qualification. Moreover, the deed of assignment took effect and became operative :as such the moment it was delivered and accepted, and the assignee- being in possession of the assigned property, the deed would-prevail over any process intervening between that date and the giving of the bond by the .assignee. This must be so because the statute allows .him three days in which to' further qualify. — Brown v. Lyon, 17 Ala. 659; Claytin v. Johnson, 36 Ark. 406.

The overzealous plaintiffs rushed in and seized the ■goods in the hands of the assignee before the statutory period had elapsed for filing the bond as assignee, and now their counsel assert that he did so only because of their hasty action. Admit that Campbell and Cissna ■contended that the deed gave Tootle, Hosea & Co. a preference, and that they said they would not regard it as a -deed of assignment, how could this fact justify the .attachment proceedings? Cissna had already made a ■ deed of assignment. Campbell had accepted it, recorded it, and taken possession of the goods. The plaintiffs Anew this fact when they sued out the writ of attach•ment. The statute then imposed on the assignee the ■ duty to qualify as such by giving the bond and filing the inventory. He yet had three days in which to. act. Plaintiffs had their plain remedy and recourse, if he failed to qualify and administer the trust. The courts never permit a trust to fail for the want of a trustee. — Shockley v. Fisher, 75 Mo. 502; Burr on Assignments, 268. ■ One of the grounds, and the chief one, on which assignments for the benefit of creditors are supported is, “that ■ courts of equity can compel the fair and faithful execution of the trusts they create. . . . After the assignee had taken possession of the property, the title and trust be- ■ came fixed and executed, and it was not in the power of the assignors to defeat ox affect it.” — Forbes v. Scannel, supra.

Counsel in the discussion of this case seem not only to ■overlook the fact that deeds of assignment are favored by the law and should be upheld by the courts because1 they beget equality among all the creditors by securing” the adhiinistration of the assets under the supervision of the court, but, also, that from the moment the deed is. executed and delivered each and all of the creditors, acquire an interest in the trust estate, and have a right to have the trust promptly administered under the-statute. It is on this account that the courts quite uniformly hold that no act or word of either the assignor or the assignee, subsequent to the delivery of the deed, can, without the consent of the creditors, in any wise' affect the validity and operation of the conveyance.— Union National Bank v. Bank of Commerce, 94 Ill. 27; Gates v. Lebeaume, 19 Mo. 27.

“The rights of creditors are fixed by the assignment,, and without their knowledge or consent cannot be varied, by any subsequent act of the assignor or assignee. If. valid in its creation, no subsequent fraudulent or illegal acts of the parties can invalidate it.” — Burr on Assignments, sects. 26N351, and citations. As is said by Wagner, J., in Valentine v. Decker (43 Mo. 544): “Where' an assignment is fair and valid, the legal estate or title will pass to the assignee without any assent expressed, by the creditors, and neither a subsequent judgment or lien creditor will acquire any interest in the property assigned, nor can he attack the assignment unless upon the ground of fraud. This doctrine flows from the common-law rule, that it is not necessary to the creation of a trust by deed in favor of any persons, that the cestui que trust should either be a party or assent to it. If the trust be for his benefit, the law presumes his assent to it till the contrary is shown. Such trusts have always been executed on the idea that the deed was complete when executed by the parties to it.”

III. We are referred by counsel to Bump on Fraud, where he says: “The instrument must stand or fall upon the character impressed upon its face by the parties, and by them sent out to the world as expressing the contract and purposes of the parties to it.” We think the learned ■counsel unfortunate in this reference for their purpose. It is no authority for their contention that the character of the instrument -is-to be gathered from the outside declarations of the parties, or the legal construction they may have placed upon it. It must stand or fall by the character impressed upon its face. There is ho ambiguity about the deed. It is plain and explicit. ' What the parties, in the meaning of the author, sent out to the world was impressed upon the face of the papers and spread upon the records of the county.' And, as we have already stated, no subsequent bill of sale, with or without the endorsement on the back of it, could in any degree lessen the legal effect and operation of the sole act of conveyance. Otherwise it could be that a debtor, after making a formal deed of assignment, might avoid it and vacate it as against all the other creditors by executing to the assignee creditor a mere bill of sale.

IY. It is in this connection that we are referred by the motion for rehearing to numerous decisions of the supreme court of this state as having been overlooked by us in writing the opinion herein. •

These cases all bear upon the doctrine of estoppel in pais. But we are' unable to conceive how the plaintiffs can invoke the doctrine of estoppel against the defendant. ■ They were not content with what Campbell and ¡Cissna said about the sale, but their attorney demanded ¡to see the evidence of the transfer,- which was exhibited ¡to him. The original was then on record. ' There was no 'concealment. The deed spoke for itself. The parties had impressed upon its face the nature of their arrangement. 'Even to the unlearned in- the law, the maxim applies that every one is presumed to know the law, and we may be pardoned for applying it to the instance of one learned in the law. On its' face it was a deed of- assignment, executed and recorded, and it was not in the power of the parties to alter, modify, of evade it without the consent of these very plaintiffs. The very basis of an estoppel in pais is fraud. The representation relied upon Ymust have been made with the knowledge of the truth to one ignorant of it.” If A say to B that he has sold to C a horse, and at the time exhibit to B the bill of sale ■calling for a cow, and B at the time is shown the cow, how conld he claim that A was estopped from after-wards denying that it' was a horse ? . An estoppel is always removed by proof that the party asserting its existence, even though mistaken as to his rights in law, had notice of the true state of the facts when he acted.— Big. on Estop. 520. And this is especially so in respect of a question of title or right under a deed, where the deed is open to the inspection of the party, and the more so where he actually sees it. — Bales v. Perry et al., 51 Mo. 453; Kingman v. Graham et al., 51 Wis. 246. It is only where the conduct or representation of the party “becomes a fraud that it postpones.” “If the truth be known to both parties, or if they have equal means of knowledge, there can be no estoppel.’5 —Bales v. Perry, supra.

The whole truth of this matter is, that the plaintiffs misconceived the character and legal effect of the instrument of conveyance, and brought their attachment on the idea that it was a mere deed of trust, improperly attempting to prefer one creditor to the hurt of another; and because the plaintiffs did not know their rights they want the deed interpreted as they understood it.

V. It is claimed that the court did great injustice to counsel for plaintiffs in the opinion in saying that they had tried the case below, throughout, upon the question of the- intent of defendant in making the deed, whereas In fact they “argued for a reversal against such construction being put to the jury.” We have re-examined the instructions asked by the plaintiffs, some of which the court gave, and we again assert, that in fourteen instructions asked, the question of the defendant’s intent in making the deed is made the foundation of recovery by plaintiffs; and the court was asked to declare to the jury, in one or more instructions, that if the defendant designed by deed to prefer Tootle, Hosea & Co., they should find for plaintiffs.

It is true, that in their brief, filed in this court, counsel face about and argue that “the private or secret motives” which influenced the defendant in making the-deed should not have gone to the jury. This but illustrates a frequent occurrence. Parties too often try the-case on one theory in the court below, and then argue-another in the appellate court. But our province is to-review the case as tried below, and to determine whether-the trial court committed error to appellant’s injury.

YI. Among the many controlling decisions of the supreme court, with which our opinion is alleged to conflict, is that of Potter v. McDowell (31 Mo. 69). In our humble-opinion, the case is in perfect harmony with the views expressed by us in the opinion under review.

Scott, J., says: “The l'aw does-not concern itself with the private or secret motives which may influence the debtor. It does not deal with his conscience. He may make the deed with the most upright intentions, really believing that he has the right to do so, and yet if that deed was voluntary and hinders and delays creditors, it-is fraudulent.”

YII. I apprehend that some confusion often exists, in-the minds of both judges and counsel in dealing with these questions, in confounding the grounds of attachment under our statute with the action to set aside deeds-under the statute concerning fraudulent conveyances. Under the latter statute, “the intent to hinder, delay, or defraud creditors of their lawful actions” is made the gist of the action. But under the former statute, as we-attempted to develop in the opinion herein, the imputed fraudulent conveyance must be such as to hinder or delay creditors.

And on farther reflection and consideration we are persuaded that it is a contradiction in terms to say that a deed which amounts to an assignment under our statute, and operates for the benefit and protection of all the-creditors of the debtor, can be held to hinder or delay creditors. As no motive or purpose of the grantor can possibly thwart its operation, or interrupt,, or divert it» beneficent end, it would practically annul the statute of assignments to say that such a deed, accomplishing by its legal construction what the statute designed, c’ould be assailed by a creditor in any form of action, simply because the debtor had some ulterior object outside of the deed in making it.

Speaking for myself, I very much question whether property in the hands of an assignee under a deed of assignment is the subject of seizure under an attachment. In the hands of the assignee it is in custodia legis, and not amenable to process. But it is not necessary to go so far in this case.

Yin. We reaffirm, also, after a re-examination of the evidence in this .case, that there is nothing in this record which would warrant any jury in finding that there was any “trick or contrivance to defeat creditors,” outside of the deed, which it was designed to promote or aid.

Counsel lay much stress upon the fact that there was evidence tending to show that Campbell had promised Cissna that he would'“stock up the goods.” Campbell testified that he told Cissna it was his intention to “stool?; up the goods,” but it was not his agreement, and that he did not do so because Cissna did not ask him to do it. There was no evidence that it was to be done out of the proceeds of the stock conveyed, or that there was to be any delay in foreclosing the trust. And- it is not conceivable that if the assignee, out of his own funds, should have bought new goods and put with the old to aid and enhance their sale, how any creditor could have justly complained. But it is sufficient to say, that the deed being an assignment, the statute prescribes the precise course of procedure by the assignee; and it was not possible for him to so conduct the trust so as, in contemplation of law, to hinder or delay any creditor. There was nothing on the face of the deed to make it inoperative as an assignment; and that is the end of this controversy.

We may not inappropriately conclude this review by applying the language of Lord Ellenborough in Pick-stock v. Lyster (3 Man. & Sel. 371): .“The assignment is to be referred to an act of duty rather than of fraud, when no purpose of fraud is proved. The act arises out of a discharge of the moral duties attached to his character of debtor to make the fund available for the whole body of creditors. It is not .the debtor who breaks in upon, the rights of the parties by this assignment, but the creditor who breaks in upon them by proceedings in this suit.” In the same case, Bayley, J., said: “It seems to me that this conveyance,, so far from being fraudulent, was the most honest act the party could do. He felt that he had not sufficient to satisfy all his debts, and he proposed to distribute his property in liquidation of them; this was not acceded to, for the plaintiff endeavored by. legal process to obtain his whole debt, the obtaining of which would have swept away the property from the rest of the creditors.”

It is, therefore, with little grace that plaintiffs now complain, if their attachment is not maintained, they will lose all, as they cannot be admitted to share in the distribution under the assignment after assailing it.— Valentine v. Decker, 43 Mo., supra.

Duos qui sequitur lepores, neutrum capit.

The motion for rehearing is denied.

Ellison, J., concurs, Hall, J., not sitting.