198 Mo. App. 41 | Mo. Ct. App. | 1917
This action, commenced by plaintiff below, now respondent as well as plaintiff in error, counts on a promissory note dated at St. Louis, February 1, 1910, for $2991.18, the note signed by appellant and defendant in error, the amount payable after date on demand with interest to be compounded annually. Judgment is asked for the amount of the note and interest.
The answer, admitting the execution and delivery of the note, after denying any indebtedness thereon, by way of defense states that in the years 1907 and 1908 and prior thereto, defendant was engaged in the mercantile business as a retail dealer in general merchandise in Ozark, Arkansas;. that in those years he became heavily involved financially and failed in business, and .was indebted to many different creditors in various amounts aggregating in all several thousand dollars; that plaintiff was one of these creditors and that defendant at that time owed plaintiff $7623.34;.
By way of a counterclaim, defendant, repeating the averments in his answer, alleges that by reason of plaintiff’s secret and fraudulent demands that he do so,' he had paid plaintiff the sum of $1181.16 in
The plaintiff replied to 'the. answer by a general denial and after a general denial of the averments of the counterclaim it is set up that on September 21, 1909, defendant filed a petition in bankruptcy and received his discharge in bankruptcy on January 18, 1910, after the alleged transactions in the defendant’s counterclaim; that the amount alleged in defendant’s counterclaim to have been paid by him to plaintiff was not scheduled among his assets or filed by the defendant in the bankruptcy proceedings, and that any right, title or interest that defendant may have had in and to the amount alleged in the counterclaim has been divested by the bankruptcy proceedings, and that defendant is thereby estopped to • set np any claim thereto.
What is called a replication was filed to this answer to the counterclaim, denying the averments of it.
The cause was submitted to the court, a jury being waived, and after being taken under advisement the court found for defendant on plaintiff’s cause of action and for plaintiff on defendant’s counterclaim, rendering judgment accordingly. On the same day upon which the court rendered its finding and judgment, the court, at the request of counsel for defendant, filed instructions or declarations of law, two of which were given and one refused. The first of those given was to the effect that if the note sued on was given under the circumstances set out in the answer, plaintiff could not recover. The one marked third asked and given was to the effect that if the court, sitting as a jury, found from the evidence that a few of the credi
We will notice the second declaration asked and which ■ was refused wherf we hereafter treat of the counterclaim, as it was. pertinent to that alone.
Following the decision of the court, plaintiff moved for a hew trial on the finding of the court against it on its cause of action, which motion was overruled, and plaintiff, excepting, sued out its writ of error.
The defendant also filed a motion for a new trial on'the' finding against him on his counterclaim, which motion was overruled, defendant excepting, thereupon appealing to our court.
Counsel for the respective parties raise many points and have favored us with very elaborate arguments, these arguments accompanied by the citation of numerous authorities. In our view of the case it lies within a very narrow compass.
Considering .the position of plaintiff as plaintiff in error and covering the action of the court in finding against it and for the defendant on the note sued on, we think that the action of the trial court in so finding was sustained by the facts and by authority.
In 5 Ruling Case Law, p. 874, section 7, it is stated:
“The weight of authority is clear that a creditor not guilty of fraud may recover on the original claim and ignore a general composition where another creditor has secretly obtained an undue advantage and a fraudulent preference in the composition.”
We have no such situation here. After stating the rule as above, that authority proceeds:
“But a creditor guilty of a fraud on the other creditors in obtaining a secret preference cannot recover on a note or other contract for the balance of*53 Ms original claim remaining after receiving payment under the composition.”
The note at page 38, 27 L. R. A. (1895), to Hanover National Bank v. Blake, 143 N. Y. 404, is cited for this, and a reference to that shows abundant authority in support of the text. To the same effect see 8 Cyc., commencing with paragraph B, page 468, as also 12- Corpus Juris, pp. 289 and 390, section 89, subdivision e.
There was ample evidence in this case warranting the trial court in arriving at its conclusion that this plaintiff had been guilty of fraud on the other creditors in exacting a note from the defendant for the balance unpaid on its claim, the plaintiff having been an active agent in procuring the signatures of other' creditors to the composition and in obtaining releases at the rate of fifty cents on the dollar from a few creditors outside of those signing. In considering the matter of the 'counter claim, we will go into the facts somewhat more at length and refer to what we there say as to them. It is sufficient to say here that there is evidence to the effect that plaintiff executed the note for which this is a substitute as a condition of signing the so-called composition and concealed that from the other signing creditors, whose signatures it procured.
But it is said that the note sued on is not the note which was- given- at the time the composition agreement was entered into but was .a new note given for the difference unpaid on the old account, after the composition agreement had been fully executed and after defendant had been discharged in bankruptcy, it being claimed that a moral obligation to pay the debt,, although discharged from its payment, was a good and sufficient consideration. It is true that if a party who has gone into a composition with his creditors, or who has been discharged in bankruptcy, afterwards voluntarily promises his debtor to pay the unpaid part of the' original debt, that the moral obligation is a good and valuable consideration for the note or "for a promise to pay. Without going out
Learned counsel for plaintiff, however, claims that as many of the creditors of defendant, who were such at the time this composition was entered into, had not signed it, it was of no effect and never became of legal force, and so complain of the declaration numbered third. The answer to this is,- that this plaintiff is in no position to make any such claim here. It was the procuring cause of the signatures to the proposed composition by all the creditors who signed it and who accepted fifty cents on the dollar on their claims, or who, without signing, accepted the composition; and plaintiff distinctly represented to all these that practically all the defendant’s creditors, whose signatures were important, had signed or agreed to the composition. Learned counsel for plaintiff argues that other creditors who were paid not having in fact signed the composition, their acceptance of the fifty cents on the dollar on their claims, is of no effect'. That may be, but that did not make it void, but voidable only, as see Crowder v. Allen-West Commission Co., 129 C. C. A. Reps. 521, 1. c. 525. Undoubtedly, the learned trial judge found that it does not lie in the mouth of plaintiff to urge either of these defenses, plaintiff having been active in procuring releases from a large number of the creditors. So it is said in 12 Corpus Juris, p. 292, sec. 94, citing many authorities to that effect. Even conceding that a number of creditors, who were holding among them large claims, did not sign, still plaintiff held out to those signing that the composition had been perfected, and on this, induced them to enter with it and accept the fifty per cent agreed upon.
We hold that the action of the trial court, under the evidence in the case and under the law applicable
That brings us to the consideration of the claim of appellant and defendant in error to the action of the trial court in finding against him on his counterclaim.
The facts peculiarly applicable to that transaction are these:
Along in the early part of March, 1908, it appears that defendant, who was engaged ■ in the mercantile business at Ozark, Arkansas, became embarrassed financially and that the Ferguson-McKinney Dry G-oods Company, learning of that, its secretary Mr. Bogy, requested defendant to meet him at Fort Smith, Arkansas.- Defendant at that time, admittedly, was indebted to plaintiff on general, account for merchandise -sold and delivered, in the sum of $7623.34. Accordingly Mr. Bogy went to Fort Smith, arriving there on March 22, 1908, that being Sunday. He there met defendant, who was accompanied by a Mr. Turner, who at that time -was the cashier of the Peoples Bank of Ozark, Arkansas. Apparently for the first time Mr. Bogy, representing plaintiff, was then made aware of the bank’s claim, which amounted in round numbers to something over $20,000; After some discussion between the parties, that is Turner,- Beuckman and Bogy, a .lawyer of Fort Smith, referred to in the testimony as Judge Reed, was called in for consultation over the situation. Whether Bogy or Beuckman or Turner called, this gentleman in, does not clearly appear. At any rate, as the result of the conference between all four, it was arranged that all the effects of defendant should be sold out and the proceeds turned over to the.Peoples Bank, out of which the bank was to pay such creditors as would accept the composition and retain whatever balance might remain in payment of the' amount due it, as far as it would go. How much the property sold, for brought is not very clear. The cashier of the bank said it brought about $17,740.4%. It appears that on September 21, 1909, Beuckman instituted proceedings in bankruptcy, which resulted in his discharge January
The oral testimony in the case does not specifically give the date at which this sale was made. It does appear, however, from the testimony that this sale was arranged for on this 22nd of March, 1908, in the interview between Beuckman, Turner and Bogy, and apparently under the advice of Judge Reed. It furthermore "appears by the oral testimony of defendant and of Mr. Turner, that in point of fact the sale of the merchandise, etc., was made, not to the bank, but to a firm called Conatser, Hill Company, composed of M. B. Conatser and a Mr. Hill and a Mr. Tolleson, Conatser at that time being the president of the Peoples Bank, and the proceeds of the sale turned over to the Peoples Bank. According to the testimony of Mr. Bogy and of Mr. Turner, it was then known that not only did Beuckman have St. Louis creditors, who were listed, but also creditors in other places, and that he owed the Peoples Bank a large sum. At that meeting at Fort' Smith on March 22, 1908, according to the testimony of defendant, Mr. Bogy had first insisted that his firm should be paid, after first trying to have the whole .amount paid, seventy cents on the dollar. When Bogy found he could not get that he finally wanted 60 per cent, and when he could not get that, “Finally,” (as the defendant testified) “we agreed at fifty-five cents. I objected to that but I couldn’t do anything better.” Mr. Bogy insisted on this extra five
Creditors, whose account aggregated about $10,-095.04, the plaintiff signing through Bogy for $7623.34, signed this and all were paid 50 per cent on their accounts, the payments made through drafts on Beuckman, through the Peoples Bank of Ozark, or through drafts on the bank, the Ferguson-McKinney Dry Goods Company, however, receiving not only 50 per cent on the $7623.34 of its account but also an additional 5 per cent, amounting to $381.16, a total of $4192.83:
Plaintiff drew a sight draft on defendant, of date March 25, 1908, payable to the order of the Peoples
According to the testimony of defendant, his indebtedness to the Peoples Bank at that time was about $20,000, in round numbers, and he testified that using the proceeds of the sale of his stock for the settlement with creditors and the Peoples Bank, that bank received about fifty cents on the dollar on its claim. That statement is hardly consistent with other testimony in the case, particularly in connection with that furnished by the schedule filed by defendant in his bankruptcy proceeding, and the testimony of the cashier of the bank. It would seem from an examination of this testimony that' the signing creditors, including plaintiff, if paid at the rate of fifty cents on the dollar, should have received something over $5000, which would leave about $12,700 for the bank to apply on its claim of something over $20,000. Even with this claimed excess payment of 5 per cent., amounting to $381.16, and which included the $200 paid the attorney, and leaving $181.16 to apply to the travel-ling and other expenses of Mr. Bogy, it would seem that the Peoples Bank realized considerably more than 50 cents on the dollar of its own claim. However that may have been, it is very clear that the money which paid thé extra five per cent was the money of the Peoples Bank and not the money of the defendant. By turning over the proceeds of the sale of his stock to the bank in the manner in which that was done, the defendant lost all interest in it, beyond the right to have the bank account to him for its proper distribution. It follows therefore that in so far as this $381.-16, which forms part of the $1181.16 demanded in the counterclaim, defendant certainly cannot recover. -
The remainder of that counterclaim is based on the payment of $828.45 made on the account on April 14, 1908.
We think that under the facts in the case, this must be considered as- a voluntary payment • and cannot be recovered, even conceding but not deciding, that this draft then belonged to defendant. It is claimed as to that by the learned counsel for plaintiff below that as that draft was the property of the wife, under our statute, it could only become the property of defendant by his wife’s express direction in writing authorizing him to take it into his possession. Authorities are cited to the effect that the mere blank indorsement by the wife is not sufficient to vest title in the husband. That point, however, we need not and do not decide. We proceed on the assumption that the draft belonged to defendant'and that out.of it he paid this $828.45 or $832 on his account. It will be observed that this occurred about the 9th of April, sometime after the so-called composition arrangement of March 23, 1908, had' been executed, and as far as the evidence tends to show after all the parties signing
In the very lucid opinion of Circuit Judge Sanborn speaking for the United States Circuit Court of Appeals of this Judicial Circuit, in Crowder v. Allen-West Commission Co., supra, that learned judge, at page 525 has very concisely stated the rule which we think here applicable: “The debtor may recover back the excess, • which he has paid to the preferred creditor above the fixed percentage before the composition was made, and the excess he has been compelled to pay thereafter. But he may not recover anything which he has voluntarily paid after the composition was made pursuant to his agreement with the - preferred creditor. ’ ’
In that it ignored the question of lack of coercion under whch defendant paid over the money sought to be recovered by the counterclaim, and in fact, while purporting to cover the facts necessary to a recovery on the counterclaim, the learned trial judge committed no error in refusing the second declaration of law asked by defendant and purporting to cover the counterclaim.
Our conclusion on this counterclaim is, that the action of the learned trial judge in declining to allow it in favor of defendant is supported by substantial evidence and is warranted b.y the law under the facts in the case. In the view we take of the case we do not think it necessary to pass on the point made by counsel for plaintiff,' that in failing - to include the claim now made for the amount covered by the counterclaim in his schedule of assets filed in the bankruptcy' proceedings, defendant cannot now assert it.
Upon the whole case we hold that the judgment, in so far as it finds for defendánt on plaintiff’s cause of action is correct and should be affirmed, and that
It is accordingly so adjudged, further adjudging that the costs of the appeal be taxed equally against the respective parties.