John V. Farwell & Co. v. Meyer

| Mo. Ct. App. | Dec 8, 1896

Rombauek, P. J.

This is a proceeding by a judgment creditor of defendant Meyer to have certain mortgages executed by the latter to his codefendant Wolff, to be declared fraudulent and void, and to have Wolff account to plaintiff for the proceeds he realized from such mortgages. The court upon a full hearing on the merits dismissed the bill and rendered judgment for defendants. The plaintiff appeals and complains that the court erred in not rendering a decree in its favor, claiming that it was entitled to such decree upon the weight of the evidence. The piaintiff also complains that the court treated his petition as presenting the sole issue of fraud against creditors in the execution of said mortgages, although his petition presented the further issue that such mortgages being executed cotemporaneously with a general assignment were executed for the purpose of evading the statutes' of the state of Missouri forbidding preferences in deeds of assignment for the benefit of creditors. Plaintiff also complains that the court ref used to it leave to amend its petition after decree rendered, so as to conform to the evidence adduced in charging the defendant Wolff as a copartner of defendant Meyer, and so as to contain the further allegation that defendant Meyer was but a tool in the hands of Wolff, and that the whole scheme of executingthe mortgages and assignment was in fact designed by defendant Wolff. The court evidently took the view of the case, that the sole aim of the petition was to charge the defendant Wolff as a fraudulent mortgagee, and the first question for our consideration is whether the court erred in taking that view.

The allegations of plaintiff’s petition which bear upon .the question are as follows:

“And plaintiff states that it is informed and believes that in truth no consideration passed from defendant Wolff to defendant Meyer for said notes and chattel mortgages and that .said notes and mortgages were given without any consideration whatever, and for an entirely inadequate consideration, and for the purpose of hindering, delaying, and defrauding the creditors of said Levi H. Meyer, and so far as there was any consideration for said chattel mortgages, if there was any consideration whatever therefor, for the purpose of' evading the statutes of the state of Missouri forbidding preferences in deeds of assignment given for the benefit of creditors.”

“And plaintiff states that defendant Wolff was at the time said notes and mortgages were given him, fully cognizant of the fact that they were given for the fraudulent purpose aforesaid, and participated in said purpose.”

“Wherefore plaintiff prays the court to decree that the notes and mortgages given by defendant Meyer to defendant Wolff, as aforesaid, be null and void, and that defendant Wolff render a full, true, and perfect account of all sums he -has realized from the sales of the property of defendant Meyer, taken by him as aforesaid; that said Wolff be required to apply so much of all the sums he has realized as may be necessary to satisfy the same to the satisfaction of the judgment held by plaintiff against defendant Meyer, and above referred to. And plaintiff prays for an injunction restraining defendant Wolff from paying any portion of the amount realized from the aforesaid sale to defendant Meyer, until the judgment of plaintiff against said Meyer be fully realized, and for such other and further relief as equity and the nature of the case may require.”

It will be seen that there is nothing in plaintiff’s petition charging the defendant Wolff as a partner of defendant Meyer. Some evidence was introduced upon the trial by plaintiff having a tendency to show that fact, but as this evidence was competent for showing the influence of Wolff over Meyer, who was his son-in-law and greatly dependent on him, the evidence was relevant to the question of fraud in the mortgages, and no amendment of the petition was requisite to entitle it to consideration by the court. There is nothing in the record indicating that the court did not fully consider it, except the memorandum of the court’s opinion, which although printed as part of the abstract, forms no part of the record. But whether the court considered it or not, it is not excluded from our consideration, and we have considered it in reaching our conclusions. We see no just ground of complaint which the plaintiff has on that score.

Nor is the plaintiff’s complaint just, that the court erred in not permitting him to amend his petition after decree, so as to show that the mortgages and assignment were part of one transaction, and hence the preference attempted to be given by the mortgages was in contravention of the assignment laws of the state. The petition is drawn on no such theory. Had it been, the assignee would have been a necessary party, and the prayer should have been to declare the assignment, and let the plaintiff share in its results pro rata, and not as the prayer is, to have Wolff account to the plaintiff alone for the proceeds of the mortgages, which are claimed to have been fraudulent.

The record is very voluminous (covering one hundred and ninety pages of printed matter) and setting out the testimony in detail would extend this opinion far beyond the legitimate limits of such a paper. The court upon the hearing seems to have been of the opinion that the main question for its consideration was whether the mortgages given to Wolff were supported by an adequate consideration, — that is to say, whether Wolff’s claim against Meyer was bona fide to the extent stated in said mortgages, and whether Wolff took such mortgages for the pm*pose' of securing said claim. The court seemed to have given but secondary consideration to the main proposition involved, that although the mortgages were given to secure a bona fide .debt, yet if the additional purpose on part of the mortgagor and mortgagee was to hinder, delay, and embarrass other creditors of the mortgagor in the collection of their just claims, the mortgages as to such creditors were fraudulent. It is well settled in this state that even a general assignment for the benefit of all creditors, which is deemed to be a conveyance for full consideration, may be avoided by any of such creditors if made with the intent to hinder and delay the collection of their claims. State to use v. Benoist, 37 Mo. 500" court="Mo." date_filed="1866-03-15" href="https://app.midpage.ai/document/state-ex-rel-holliday-v-benoist-8001872?utm_source=webapp" opinion_id="8001872">37 Mo. 500; Crow v. Beardsley, 68 Mo. 435" court="Mo." date_filed="1878-10-15" href="https://app.midpage.ai/document/crow-v-beardsley-8006090?utm_source=webapp" opinion_id="8006090">68 Mo. 435.

We have analyzed the evidence as thoroughly as our limited time will permit.' The testimony bearing on the question may be summarized as follows: Meyer was a former partner of the defendant Wolff in a store in Rich Hill, Missouri. He was also his son-in-law, and as far as the evidence shows was wholly dependent on him. He appears to have been almost wholly under the influence of Wolff, who according to the testimony of disinterested and unimpeached witnesses, dealt with the store after the dissolution of the firm, in a manner seemingly exercising complete control over it. That Meyer in course of time became indebted to his father-in-law appears by all the testimony, but the amount of that indebtedness is shown by neither vouchers, notes, nor book accounts, and no satisfactory evidence is adduced upon the trial why written evidence of some sort of such indebtedness is not produced. Nor is the evidence satisfactory at what time such indebtedness, even as far as shown, did accrue. This being the condition of affairs the defendant Wolff with his attorney called upon the defendant Meyer on the sixth day of June, 1896, with four instruments previously prepared, and prepared as far as the evidence discloses without any previous consultation with Meyer, and. caused the latter to execute such instruments. One of them is a chattel mortgage on the goods to secure a bank in Rich Hill for a loan recently made to Meyer upon the indorsement of Wolff, the other two are chattel mortgages on the same goods to defendant Wolff to secure an indebtedness to him of $5,000 and the last is a deed of general assignment for the benefit of Meyer’s creditors. The weight of the • evidence shows that the goods thus transferred were of an invoice wholesale value of from $12,000 to’$14,000, or about twice the value of the amount of the mortgages. The instruments are recorded in the order above given. The defendant Wolff takes possession of the store under his mortgages. The former owner Meyer immediately departs and is not afterward heard from in connection with the store. The assignee is not notified beforehand, and is also not heard from ever afterward. It is further in evidence that the defendant Meyer -shortly before this failure contracted a heavy indebtedness for merchandise, upon- fraudulent representation as to his indebtedness. Some of these creditors attach the goods, and Wolff settles the attachments at heavy discounts. The goods are finally closed out under the mortgages, and are at the solicitation of Wolff bought in by some St. Louis merchants, friends of his, Wolff loaning them some money for the purpose of facilitating the purchase. Another son-in-law of Wolff’s who is also a broken merchant, is immediately afterward put in possession of the goods by these St. Louis merchants and disposes of them. as he claims on their account. No books or vouchers of any kind are produced evidencing such accounting, but the testimony concedes that the residue of the goods-is finally turned back to Wolff at fifty cents on the dollar, and is found in the possession of Meyer at Centralia, Missouri, a place several hundred miles from Rich Hill, where he sells them as agent of Wolff.

There was direct testimony in the case to the effect that the whole transaction was designed for the purpose of staving off Meyer’s creditors, and that such purpose would have been consummated, but for the action of the attaching creditors. The court wholly disregarded this evidence, apparently because the witness who gave it was impeached as to his general reputation for veracity, and because it was improbable. The court seems to have lost sight of the legal proposition that the impeachment of a witness as to his general reputation for veracity, has no tendency to show that the witness is incapable of speaking the truth. Such evidence has to be weighed in connection with surrounding circumstances, for the purpose of determining to what extent the witness should be credited. So weighing it, we conclude that part of the facts related by the witness are probably true, while part of his evidence is probably a fabrication.

The mere fact of the close relationship or family connection of-parties to a similar transaction is of itself insufficient to avoid it for fraud; nor will inadequacy of consideration do it, unless it is very gross. But the two together certainly furnish sufficient evidence of fraud to call upon the party claiming under the transaction to make a very full and clear showing of its good faith, which was not done in the case at bar. The record is hardly in a shape to enable us to make a decree. The defendant may upon a retrial furnish satisfactory evidence to the court of the consideration he has paid for the mortgages, by book entries and vouchers. He has neither done so, nor has he furnished any satisfactory reason for the omission. The defendant may also by the testimony of Meyer, whose absence from the trial is wholly unaccounted for, furnish a full and satisfactory explanation of how these mortgages came to be executed, without any previous consultation with him, on the spur of the moment, so to speak.

On the record before us we do not feel warranted either to affirm the decree, or to reverse it and make a decree of our own. We therefore reverse the decree and remand the cause for a further hearing according to the views herein above indicated. So ordered.

All the judges concur.