273 Mo. 231 | Mo. | 1918
Lead Opinion
The petition in this ease was lost from the files, hut it is agreed that its allegations duly set forth facts, charging that Lucile Wade fraudulently disposed of certain land lying in Pettis County, Missouri, and. described in the petition, to her husband, Harvey E. Wade, by means of a deed first made by the Wades to Roy Underwood, who afterwards conveyed the property to defendant Harvey E. Wade, who after-wards conveyed the same to Foster, who incumbered the same with a fraudulent mortgage for four thousand dollars, securing a note for that sum to defendant Wade, in which said mortgage or deed of trust George Barnett, Jr., was trustee. The petition also charged that plaintiffs were judgment creditors of defendant Lucile Wade; that after said fraudulent conveyance, the sheriff of Pettis County aforesaid levied upon said real estate and sold the same to plaintiffs under an execution. The petition prayed that all the title to said real estate in defendants be divested ffrom them and invested in plaintiffs; and also prayed for a decree to quiet title against the claims of defendants.
The answer contains a general denial, except in respect to those matters admitted to be true. It admits the conveyances described in the petition, denies they were fraudulent, and alleges other defenses which will be considered hereafter.
The answer charges that the sale under execution to plaintiffs was fraudulent; that the Pettis land was worth $4500 and plaintiffs only paid $100 for same; that said execution sale was void, etc. They ask to have the sheriff’s deed to plaintiffs set aside and can-celled, and that defendant H. E. Wade be decreed the owner of said land, etc.
The reply is a general denial of the new matter in the answer.
The trial court found that Mrs. Wade was the owner in fee of the real estate in controversy, subject to an equity lien for the full amount of plaintiffs’ judgment and costs. ^
“Every conveyance ... of any estate or - interest in lands . . . made or contrived with the intent to hinder, delay or. defraud creditors of their lawful actions, damages; forfeitures, 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.
Section 2886, Revised Statutes 1909, provides that:
“This article shall not extend to any estate or interest in any lands . . . which shall be upon valuable consideration, and bona-fide and lawfully conveyed; nor shall it be construed to avoid any deed, as against any subsequent bona-fide purchaser from the grantee for valuable consideration, and without any notice of fraud. ’ ’
In construing the provisions of above statute, in the leading ease of Burgert v. Borchert, 59 Mo. l. c. 83-4,
“While it is undoubtedly true as a general legal proposition that ‘fraud is not to be presumed, but must be proved by the party alleging it,’ yet it is equally true, that fraud is seldom capable of direct proof, but for the most part has to be established by a number and variety of circumstances, which, although apparently trivial and unimportant, when considered singly, afford, when combined together, the most irrefragable and convincing proof of a fraudulent design.”
Since the enactment of Section 8304, Revised Statutes 1909, known as the Married Woman’s Act of 1889, husband and wife have had the legal right to deal with each other in buying and selling land, as though she were a feme sole, where the conveyance is made in good faith and without fraud. But, as we recently announced, in the case of Barrett v. Foote, 187 S. W. l. c. 70:
“In dealings between father and son, as between husband and wife, where the rights of creditors are involved, their acts should be closely scrutinized. [Bank v. Fry, 216 Mo. l. c. 45, 115 S. W. 439; Cole v. Cole, 231 Mo. 236, 132 S. W. 734; Ice & Cold Storage Co. v. Kuhlmann, 238 Mo. l. c. 697, 698, 142 S. W. 253.] ”
In regard to the question of the debtor’s solvency, in considering cases of this character, we stated the law clearly in Eddy v. Baldwin, 32 Mo. l. c. 374, as follows:
“The law is practical and looks to the attainment of practical results; and a solvency which it cannot employ in the payment of the debt of an unwilling debtor, is certainly not distinguishable by any valuable difference from insolvency. The term solvency in its application to eases like this, implies as well the present ability of the debtor to pay out of his estate all of his debts, as also such attitude of his property as that it may be reached and subjected by process of law, without his consent, to the payment of such debts.”
The plaintiffs were owners of Lots 43 and 44 of Oldham’s Addition to Kansas City, Missouri; and on January 28, 1905, sold to Mrs. Wade the above lots for $600, and took her note for said amount, due on or before two years from said date. Her husband was then absent from the State. No mortgage or deed of trust was taken to secure said note, nor was any vendor’s lien reserved. The lots were conveyed to Mrs. Wade by deed, dated January 28, 1905. On June 14, 1905, Wade and wife conveyed said lots to Mrs. Randall, and the latter, on the same day, conveyed' the same to Mr. Wade. Mrs. Randall paid no consideration for the lots, but was simply the conduit for transferring the title from Mrs. Wade to her husband.
Mr. Wade testified that he returned from South America about the 13th or 14th of February, 1905; that his wfife told him about having bought the lots; that he brought with him $800 in currency, which was placed in the bureau drawer; that he owed his wife $800 for money formerly borrowed from her. He says that shortly after his return home, Pascal W. Oldham came to his house to collect the $600 for the lots, and that his. wife took $600 of the money in the bureau drawer to pay Oldham. She was afterwards sued upon the above note and a personal judgment rendered against her on March 10, 1909; for $748.20.
The land referred to is the real estate now in controversy.
The writ of summons in the above suit was dated July 16, 1907. We are satisfied from the testimony that both Mr. and Mrs. Wade, when the suit was brought against her in Jackson County, Missouri, on July 16, 1907, knew before she attempted to sell the land in controversy to her husband on July 20, 1907, that Mrs. Wade was being sued on the $600 note. After the above suit was brought, Wade was joined as a co-defendant and a vendor’s lien sought against said lots. He claimed to be an innocent purchaser of said lots, for value, and without notice that his wife was indebted to plaintiffs for same. The trial court sustained his contention, the cause was dismissed as to him, and a personal judgment rendered against his wife, as aforesaid. The question as to whether Mr. Wade was an innocent purchaser for value of the land in controversy, was not an issue in the Jackson County litigation.
Let us return to the 20th of July, 1907, when Mr. Wade claims to have purchased from his wife the land involved herein, and ascertain how matters then stood.
H. E. Wade was not only the husband of Lucile Wade, but the latter largely depended upon him for advice in regard to business matters. She testified upon this subject, as follows:
“I don’t know whether I could very intelligently explain to the court about my sale of these two Kansas City lots to Mr. Wade, and also this Pettis County land and about what I received in exchange for them, or not. I know so little about it, and I left those things principally to him, to Mr. Wade, and I have always kinda relied on his judgment in everything.” (Italics ours.)
It was admitted at the trial, that D. W. Hainline— the father of Mrs. Wade — was the owner of the land in controversy, and that he died on the 8th day of May, 1907. The property of Hainline- was partitioned and the land in litigation here became the property of Mrs. Wade. Both Wade and his wife, as soon as plaintiffs sued, moved promptly, and within four days, to place her interest in said land, in the name of some other person, to avoid the payment of a prospective judgment, should one be rendered against her.
The Wades both claim that the husband owed the wife $800 for borrowed money. The husband testified, that: “A fair market value of this land at the time 1 bought it was five thousand dollars.” That is to say, he owed his wife $800 and got land from her of the market value of $5000, making the total value of the assets of the wife,-before the sale to the husband, $5800. Her interest in the land could be levied on and sold under execution. She and her husband by the deal aforesaid, attempted to render her legally insolvent, so that none of her property could be subjected to plain-. tiffs’ demands. Both the Wades claim that the husband was to pay $1200 in cash and the $2700 note, making $3900, for the lots, worth $600, and the land in controversy, worth $5000. In other words, they attempted to place her $5600 worth of real estate beyond the reach of her creditors, and to pay her in personal
The. defendants failed to produce the $4000 note which Wade claimed to have taken from Foster in 1910. They failed, to produce the $2700 note, although notified to have the same at the trial. They produced no checks, showing when any part of the $1200, or the $2700 note were paid, if at all. The husband testified on this subject, as follows:
J‘Q. How would you pay her this money? (Speaking of his wife) A. I would .give her a cheek for a certain amount of money for a certain amount, twenty-five dollars or fifty dollars at a time. I never paid her the twelve hundred dollars at one time; it was paid in twenty-five, fifty or a hundred dollars, in installments, as she wanted it; when she wanted it and I had it; and I would take credit on the note.”
He said he could not tell what proportion of the $1200 he paid in cash, and what proportion in checks.
Mrs. Wade testified that out of the $2700 she paid a debt of $1100, but refused to give the name of the person to whom she claims to have paid- the money. Mrs. Wade further testified as follows:
“The twelve hundred dollars that he gave me, he did not give it all to me personally in cash or checks. He sent part of it when he was away from home He would keep up part of the household expenses. I expect it is three years, maybe, before Mr. Wade completed the payment of that twelve hundred dollars after he commenced making monthly payments.”
The testimony of the Wades is contradictory, indefinite and uncertain. The overwhelming evidence in the record convicts them of clean cut fraud. We are of the opinion that Foster is a mere figure-head in this litigation, and came into the transactions long after the plaintiffs had acquired and recorded their deed from the sheriff, for the land in question. Plaintiffs’
Without the slighest hesitation we have reached the conclusion, that as to plaintiffs, who are and were judgment creditors of defendant Lucile Wade, the conveyance from the latter and husband on July 20, 1907, to Roy Underwood, for the land in question; and the deed from Roy Underwood, to Harvey E. Wade, dated July 20, 1907, purporting to convey said land; and the deed from Wade and wife to Foster, dated July 2, 1910, conveying said real estate, as well as the deed of trust, executed by defendant Foster, to defendant Barnett, executed on the 2nd day of July, 19Í0, are each and all utterly void and of no effect.
At the instance of defendants, Pascal M. Oldham testified as follows:
‘.‘Mrs. Wade told me, when she gave me the note, she would get some money from her father’s' estate. She told me her father was still alive, and she would have an interest in his estate, and that she expected to pay me out of that. I did not know anything about what the estate was.”
Defendants have signally failed to show that Old-ham, when he indorsed the $2700 note to Mrs. Wade, had any notice, or information, that Wade was transferring to her said note, as part payment for her in
In the reply brief of defendants, it is said: “We concede that an abstract of lévy by the sheriff of Pettis County, Missouri, was filed for record in the recorder’s office in Pettis County, prior to the sheriff’s sale and sheriff’s deed.”
This was through oversight omitted from the abstract. Both the deeds, executed to plaintiffs, for the land in controversy, under said execution sale, affirmatively recite all the necessary facts, in respect to the levy, as well as all other matters, and were read in evidence without objection.
Under the former rulings of this court, the above contention is not well founded. [Simmons v. Affolter and Cowan, 254 Mo. l. c. 173-4; Bray v. Marshall, 75 Mo. l. c. 329; Buchanan v. Tracy, 45 Mo. l. c. 438-9.]
This contention is likewise without merit.
On the other hand, the plaintiffs claim they are entitled to the land in controversy, because the proceedings which they inaugurated, in uncovering the fraud of defendants, and asking to have them divested of the title to said land and the same vested in the plaintiffs, are in full accord with the former rules of procedure in this State.
The statutes heretofore quoted in respect to fraudulent conveyances have been in existence in this State for more than seventy years. During that period, commencing with 1856, numerous cases have come to this court, in which the judgment creditor pursued the same course as did the plaintiffs in this action. That is too say, he obtained his judgment, sued out execution, levied on the debtor’s property, sold the same, bought it in for a small sum, and then brought suit in equity to set aside the fraudulent conveyances, and to divest the fraudulent grantee of the title, etc. While this method of procedure was sometimes criticised by this court as being harsh and unfair to the debtor, its legality has been recognized up to the most recent utterances of this court, and yet the Legislature permitted the above statutes, thus construed, to remain in full force and effect during all that period, without undertaking to modify the same or to regulate the proceedings there
In 1872, in the case of Bobb v. Woodward, supra, Judge Bliss, in discussing the questions under consideration, on pages 101-2, said:
“There is little doubt that the interest of both debtors and creditors would be better subserved if, in all these resulting trusts, the creditor were required to ascertain by judicial decision the actual interest of the debtor in the property, before offering it for sale. The charge of fraud presupposes a doubt whether any such trust exists; and if the property is sold before the doubt is solved, it necessarily follows that the purchase is subject to all the uncertainty of a gambling adventure. All our observation shows that such interest are bid off at a nominal sum, and while the debt- or is stripped, the creditor receives nothing. Yet, as the law exists, the creditor may at once proceed to sell the debtor’s interest, leaving it to the purchaser to ascertain as he may what that interest is; or he may first, by a proceeding in equity, ascertain the existence or extent of the interest, and sell it when so ascertained. That the latter is the better course is no reason, however, why the former may not be pursued. ’ ’
In 1885, Judge Black, in Lionberger v. Baker, 88 Mo. l. c. 455-6, said:
“Where a debtor conveys his land in fraud of creditors, the creditor may institute his suit to set aside the*250 fraudulent deed and subject the land to the payment of the debt by thus first ascertaining the interest of the debtor therein, or he may sell the land under execution before the ascertainment of the debtor’s interest, and then set aside the fraudulent deed. The purchaser at the execution sale will occupy the same position as if he were the creditor. It is to be regretted that the former course is not more frequently pursued, and thereby avoid the sacrifice of' property and speculation attending such execution sales, of which this case is no exception; but the right of the creditor to pursue either course is well established in this State. [Bobb v. Woodward, 50 Mo. 95; Ryland v. Callison, 54 Mo. 513; Zoll v. Soper, 75 Mo. 460.]”
In Welch v. Mann, 193 Mo. l. c. 326, where it was not necessary to a decision of the case, it was said the judgment creditor had the legal right to pursue the course which plaintiffs did here. The author of the opinion, however, ventured to recommend the modern practice, under which, the creditor should first go into a court of equity and establish the fraud before levying upon and selling the fraudulent grantor’s property. This opinion was promulgated in 1905, and still - the Legislature saw fit to let the statute remain as it is.
In Spindle v. Hyde, 247 Mo. l. c. 52-3, Judge Lamm again criticised the course pursued by plaintiffs here, but in express terms recognised their right to maintain this hind of an action.
In the recent case of Barrett v. Foote, 187 S. W. l. c. 71, where plaintiff resorted to equity first, we said:
“The plaintiff did not levy upon and buy in said land, as he could have done, but is pursuing the course, commended by this court, of having the land in the hands of the son subjected to the payment of his demand. ’ ’
Since 1856, up to the present time, we have recognized the right of a judgment creditor to proceed as plaintiffs have done in this case, with a single exception.
After thus stating the law, he proceeded, upon pages 361-2, as follows:
“Thus far we have had but little trouble in reaching conclusions, but the contemplation of the results to flow from a decree granting plaintiff all the relief he seeks gives us pause. The plaintiff bought the land at a public sale for $50, but we do not lose sight of the fact that, if he fails in this case, he loses all his debt, which now amounts to about $2500. He is entitled to some relief, but what? is the question. If we order'the circuit court to set aside the fraudulent deeds, vest the title to the property in plaintiff and order an account taken of the rents and profits of the land since 1884, now seven years, plaintiff would probably get more than twenty times his debt, costs and expenses of this litigation. While the bill in this case seeks to set aside deeds and vest the title in plaintiff, we have come to the conclusion that we are not bound to grant relief in the exact form in which it is sought, but that we can fix conditions upon which we grant relief conformable to-the facts alleged and proved.”
The judgment, as modified, reads as follows:
“On plaintiff’s motion, the judgment in this case is modified so as to direct the circuit court to take an account of the amount due plaintiff on his judgment, together with the costs of the original suit and this suit, including the costs of the sheriff’s sale, to plaintiff, and also the amount of expenses to which plaintiff has been put in this case, including a reasonable attorney’s fee and fees for printing the record, abstract and brief for this court, and for necessary time lost and traveling expenses in preparing for and attending the trial,*252 declare the total sum thus found a lien on the real estate in dispute, and order its sale for the payment of the same. All concur.”
When it is remembered, that the creditor frequently has but little left, after paying his counsel and other expenses, where he seeks to charge the property of the fraudulent grantor with the payment of his debt, the above judgment seems plausible, if the court had the legal right to enter it, as it made the creditor whole, but the same division of this court, in the later ease of Garrett v. Wagner, 125 Mo. l. c. 463-4, speaking through Judge Sherwood, in terms, overruled the above case, and so far as we are advised, no other court, except the one from which this appeal was taken, has attempted to follow the above ruling in Woodard v. Mastín, supra.
Upon a full consideration of this question, we are of the opinion that the course pursued by plaintiffs in this case is justified under our statute and the former rulings of this court. Unless the sheriff’s deed to plaintiffs for the land in controversy should be set aside and cancelled upon some equitable ground not yet stated, the plaintiffs are entitled to a decree divesting defendants of the title to said land, vesting the same in plaintiffs, and declaring the latter to be the legal owners thereof.
Judge Leonard, in Rankin v. Harper, 23 Mo. l. c. 586-7, said: “It ill-becomes the parties to the fraud, after they have been detected and foiled in their attempt, to complain of the sacrifice of property incident to such sales. These sacrifices are perhaps fully compensated for by their practical teachings, that, after all, ‘honesty is the best policy.’ ”
In Rinehart v. Long, 95 Mo. l. c. 401, Judge Black, in discussing this question in a case fraud was sbown, and notice given at the salé that the debtor had no title to the property, said: “Inadequacy of consideration is no defense to this action, under such circumstances.”
The case of Bradshaw v. Halpin, 180 Mo. l. c. 672, was a proceeding similar to the one at bar. The debt- or was found guilty of fraud. His property, worth $1250, was sold under execution, and the purchaser bought the same for $50. The latter sued in equity to set aside the fraudulent conveyances. Defendants insisted that the bill should be dismissed because of the inadequacy of the consideration.
In the case before us, the Wades acquired plaintiffs’ two lots without paying for them. They have been endeavoring to defeat plaintiffs in the collection of their judgment ever since its rendition. They are in no position, after the fraud attempted to be perpetrated
VII. Upon a full consideration of the whole case, we are of the opinion, that plaintiffs should be decreed to be the owners of the land in controversy.
Concurrence Opinion
I concur in the result at which my brother Commissioner has arrived in the foregoing opinion. I do not, however, understand it to hold that in cases in which the judgment creditor has become the purchaser of lands alleged to have been fraudulently conveyed by his debtor, and seeks in a court of equity a decree on that ground in aid of his legal title under the statute relating to fraudulent conveyances, the court may not impose such conditions as are fair and equitable in the particular case and fully accomplish the object of the Legislature.
PER CURIAM. — The foregoing opinion of Railey, C., is adopted as the opinion of the Court in Banc.