127 Mo. 215 | Mo. | 1895
Lead Opinion
This is a proceeding in chancery to divest the title of a certain two story brick store building in Eredericktown, Madison county, out of William L. Cohen and vest the same in William A. Hargadine. Since the commencement of the suit and judgment in the circuit court, Mr. Hargadine has died, and his executors, the respondents have been duly substituted in
For many years prior to 1879, Philip Cohen had been a dry goods merchant in Fredericktown, and in that year failed. He was indebted to various wholesale houses in St. Louis. An effort was made by him to obtain an extension and a compromise of his indebtedness, but it proved ineffectual, and certain of his creditors began 'Suit at once and obtained service while he was yet in the city of St. Louis. From this circumstance they have been denominated in this record his unfriendly creditors. The others, who were disposed to grant some concessions, also began suit at once in Madison county, where he lived, and it would appear that he purposely permitted these last to obtain their judgments before the unfriendly creditors could get theirs in the city. The friendly creditors at once levied upon and seized Philip Cohen’s stock of goods and his store building, the real estate involved in this suit. In due time all the property, both real and personal, was sold and was bought in by Crow, Hargadine & Company, in trust for themselves and the other friendly judgment creditors, acting with them.
After this purchase was made, Crow, Hargadine & Company, through their trusted agent, Mr. Swain, and the other creditors through Mr. Fischer, acting by and with the advice of Messrs. Nalle and Edwards, the local counsel at Fredericktown, who had obtained the judgments and represented the friendly creditors in the whole transaction, sold the stock of goods to Mrs. Emma C. Cohen, the wife of Philip Cohen, and took her note for $2,000 therefor, secured by a deed of trust on a farm of hers in "Wayne county she had inherited from her father. Mr. Swain testified that Nalle and Edwards made the arrangement for the sale to Mrs. Cohen, and fixed up the papers, took her note and the
After this store was reopened and the business resumed in the name of Mrs. Cohen, W. L. Cohen testified that he let them, Philip and his wife, have about $4,000 to restock the store.
In the meantime, the so-called “unfriendly” creditors were proceding with their actions, and in due course of law obtained their judgments and at once proceeded to levy executions on Mrs. Cohen’s stock of goods, claiming it was her husband’s, and was simply covered up to avoid the debts.
At this juncture Philip Cohen took the sheriff of Madison county to Chester, Illinois, where his half brother, William L. Cohen, resided. He sought the aid of William L. Cohen to make a bond, but William declined to go on the bond but said he would come to Missouri and investigate. He testifies that when he reached Eredericktownin April, 1880, he first ascertained the condition of affairs, and employed Mr. B. B. Cahoon, a member of the local bar, and advised with him about buying the judgments of the unfriendly creditors, under which the stock of goods had been seized. He then went to St. Louis and bought the judgments. Mr. Cahoon represented him in seeing that they were properly assigned to him.
The testimony of Messrs. Jones and Metcalf, the counsel who represented the unfriendly creditors in St.
Having bought the goods, he opened the store and ran it from that time until the commencement of this suit in 1889 in the name of William L. Cohen. He testifies he employed Philip, his brother, to run the business for him. He sáys, “I told him I would allow him to take a living out of the business, and if it afterward paid, I would give him a salary.”
The evidence tends to establish very clearly that William Cohen continued to reside in Illinois; that he dealt largely in horses and mules, and owned several valuable farms in Illinois and Missouri; that he was a man of good financial standing, worth at least $40,000; that he entrusted the mercantile business in Frederick-town to Philip; that while the business was done in the name of William L. Cohen, Philip was the resident manager. He deposited the cash in St. Louis with Meyberg & Rothschilds in the name of William L. Cohen and drew it out by drafts signed “William L. Cohen, per Philip.” Mr. Hargadine was advised as
On the thirty-first day of August, 1881, Crow, Hargadine & Company addressed the following communication to William L. Cohen:
“August 31, 1881.
11 William L. Cohen, Esq., Chester, HI.
“Deab Sib: — Those creditors of your brother, Philip Cohen, who are interested in the store and other property held for them in the name of our Mr. Hargadine, are very desirous of having the matter closed up in some way that they may realize something from it, and have determined that, unless some other arrangement can be made, they will pay off whatever lien Judge Schulte may have on the property and take possession and dispose of it. Prior to taking this action, they make this proposition: If you or your brother will pay them fifteen hundred (1,500) dollars, Mr. Hargadine will make a quitclaim deed conveying the property to whoever you may name. This property is well worth $4,000, and probably more. Judge Schulte’s claim, as he states it, is something less than $2,000. So you would be saving at least over $500 by making this settlement.
“Your favorable consideration of this proposition and an early answer are desired, and are important, as the creditors in interest will proceed in the other direction without delay if this or some other satisfactory arrangement is not concluded.
“Yours very truly,
“Cbow, Haegadine & Co.
“Per Swain.”
“Messrs. Grow, Hargadine & Go., St. Louis, Mo.
“Gentlemen-. — Yours of August 31 at hand. I am very busy now and can’t leave home at present; will give the matter my attention as soon as possible; will write to my brother, and will be in St. Louis this fall and try and arrange matters.
“Yours, etc.,
“Wm. L. Cohen.
“Hope this will be satisfactory to you, etc.
“Cohen.”
On the twelfth of September following, Philip Cohen went to St. Louis, as did William L. Cohen. Philip went to see Mr. Hargadine, and, after talking the matter over, Mr. Hargadine signed and gave him the following agreement:
“CONTRACT OE SALE TO W. L. COHEN, SEPT. 12.
“The undersigned, as trustee for Crow, Hargadine & Co., owns a certain store in the town of Eredericktown, Mo., now occupied by W. L. Cohen, formerly belonging to Philip Cohen and bought of him at sheriff’s sale, agrees and hereby obligates himself to make a quitclaim deed to W. L. Cohen on the following terms: $500 in cash, the receipt of which is hereby acknowledged; $500 the last day of January, 1882, and $500 on the first day of March, 1882, deed to be made and delivered to W. L. Cohen when the final payment is made.
“Wm. A. Hargadine.”
On Eebruary 27, W. L. Cohen remitted the last payment to Crow, Hargadine & Co., with request to make the deed to him and transfer insurance to him; and thereupon the following letter was sent him:
“Wm. L. Cohen, Esq., Fredericlctown, Mo.
“Dear Sir: — We enclose receipt for $500 remitted in your favor of the 28th inst., also our Mr. Hargadine’s quitclaim deed, conveying to you the storehouse
“Crow, Hargadine & Co.
“Per Swain.”
Enclosed was the quitclaim deed in common form to the property in question from William A. Hargadine and wife to William L. Cohen of Chester, Illinois; consideration, $1,500; and duly recorded in Madison county, Missouri.
Mr. Hargadine testified in his own behalf, and, in answer to the question how he came to make this proposition to Wm. L. Cohen, said: “I can only answer that by saying that the creditors here all wanted to get rid of it and it was understood that William L. 'Cohen %oas helping his brother Philip, and we addressed him the letter there. By the way, I believe William L. Cohen was then running the business, or Philip was running it under his name, in this store building; that is what I understand.” He was asked if he had known at that time that Philip was buying the property under cover of W. L. Cohen to cheat and defraud his creditors and use it for his own benefit to carry on a mercantile business in William’s name, if he would have made the deed, and he answered: “7 would not have made the deed to anybody, unless 1 thought I was getting aproper price for the property. I didn’t know that Philip was doing anything more than what he ought to do, and considered when I went into that agreement to sell that property for $1,500 that'I was getting its value, including, of course, the liens that were on it.”
In regard to the title acquired by the firm under the sheriff’s deed, he testified that his directions were to have the storehouse and lot conveyed to him; that was the universal practice; that this property was always carried as firm property on the books of Crow,
“Q. You don’t claim to have any facts upon which to predicate you opinion as to the fraudulent conduct of Philip Cohen, other than as you stated a while ago, viz., That he had agreed to pay,’ he hadn’t paid, and acted the rascal in making appointments to pay and not coming to see you, and so forth! A. UI have no specific facts. I only have the general lay of the land, which is already correct. I told you I had no specific information, only on.general principles.
“Q. You don’t claim yourself to be cognizant of any facts! A. None at all.”
There was much said about fraud in the acquisition of the goods by Mrs. Emma Cohen, but when Philip Cohen was on the witness stand and being examined in regard to that transaction, the record recites: liIt is here admitted by W. N. Nalle, one of the attorneys for plaintiffs, that Mrs. Cohen was put into possession of the goods bought by her from Swain, and that the transaction toas bona fide.”
Other facts will be noted, if necessary, in the further discussion of the case.
The suit is brought to set aside a deed executed by the plaintiff to the defendant William L. Cohen on the .ground that it was obtained as the result of a fraudulent conspiracy between Philip and William Cohen to hinder and delay the creditors of Philip and that the grantor therein, Mr. Hargadine, was entirely ignorant of said fraudulent purpose in obtaining said deed and the uses to which it has since been put.
The answer of both defendants fully and specifically denies all fraud and conspiracy on their part, and •all ignorance on the part of Mr. Hargadine of the purposes for which the property was purchased, but, on the ■contrary, avers that William A. Hargadine intended •and understood to convey, and did convey, to William L. Cohen the full and absolute fee in the real estate in ■suit with full knowledge of all the facts and circumstances surrounding said sale, and that William Cohen bought and paid $1,500 therefor, subject to a mortgage ■of $2,300 thereon.
It will thus be seen that, to recover in this case, plaintiffs must establish two things: First, that the ■consideration of the deed herein impeached was fraudulently paid out of Philip Cohen’s money; and, second, that Mr. Hargadine was ignorant of that fact and did not consent to it, at the time he made the conveyance.
The accepted construction of our statute against fraudulent conveyances is that the deed is not a nullity. It is valid as between the parties and can only be avoided by creditors and subsequent purchasers.
Consequently, it has been generally held, both in England and the various states in this Union, that if a deed is made which a creditor may avoid if he sees
Neither will it be sufficient to show that William Cohen bought this property intending that his insolvent brother should have the benefit of it. One has aright to purchase the property of another and hold it for his benefit, or permit him to enjoy the benefit of it. Gutzweiler v. Lackman, 28 Mo. 434; Clark v. Cox, 118-Mo. 652.
This property was once subjected to all the demands of the law, and Crow, Hargadine & Company became its owners. Their title was undisputed. Philip had made no fraudulent transfer of it, as is often the-case in insolvency. The only lien upon it was one of long standing to secure Judge Schulte against a contingent liability, and this was of record, and plaintiffs had' counsel of recognized ability residing in the same town with this mortgagee, and they were free to inquire and-ascertain the amount of the balance due thereon. Having become the owners of this store property, plaintiffs*’ testator and his copartners held it for two years. Neither William Cohen nor Philip Cohen had expressed any desire to purchase it. The record is absolutely barren of any evidence that they had made even the-slightest effort to regain it, nor had they, by word or insinuation, depreciated its value, nor had they made any statement to plaintiffs of the amount unpaid on Schulte’s deed of trust. There is not a suggestion in-this whole record that Mr. Hargadine was ignorant of any fact that would have enabled him to form a correct-opinion of the value of this property, beyond the contention that Philip did not owe the amount of $2,000-to Judge Schulte. But the information as to that was accessible to him, and, even if not, how can it be charged as a fraud on the part of either William or Philip.
Judges and law writers have vainly endeavored to find a sufficiently comprehensive definition for fraud, but usually when applied to the acquisition of property it means a deception practiced upon another whereby he is induced to part with his property or surrender' some right therein; and the suppression of the truth, when good conscience requires one to speak, is as reprehensible as the statement of that which is false. If there can be found in this voluminous record a single misrepresentation of a fact by either Philip or William Cohen that induced Mr. Hargadine to make them this offer of sale, it would greatly aid plaintiffs’ case, but I have not been able to find any such. If there is any fact in regard to the situation of this property, its condition, its suitability as a storehouse, the town in which it was located, or the condition of the title thereto, that was not known to Mr. Hargadine and his attorneys and agents, it nowhere appears in this record.
Stress is made in the argument on the purchase of the goods by Mrs. Cohen, but it must be evident, that, whatever turpitude, if any, there was in that transaction, can not be used against William Cohen. There-is not a word of evidence connecting him in the most remote degree with that transaction until it was entirely completed and she in possession with the full knowledge of plaintiffs, and it was conceded and admitted by Judge Nalle .that her purchase was bona ficle, and surely the stipulation of honorable counsel of record can not be gainsaid in this court. But, moreover, Mr. Swain’s testimony shows that every step in that trade was taken with the full knowledge and assistance of plaintiffs’ counsel and agents; that they received every dollar of the consideration they demanded for those goods, and it does not lie in their mouths, after thus appropriating the fruits of that transaction, to stigmatize it as a fraud, whatever other-creditors might do.
So that Mr. Hargadine knew of the sale to Mrs. Cohen, and he collected the full amount of her note» He knew he was the owner of the house in which Philip was doing business, and he knew that the busi
Thus in Thompson v. Thompson, 82 Pa. St. 378, the plaintiff had loaned a husband some money with which to purchase a piece of land and had advised the purchase and was present when the deed was made to the wife and subscribed as a witness thereto; he was afterward held estopped from charging the deed was fraudulent as to him and the purchaser under his judgment against the husband for the loan.
In French v. Mehan, 56 Pa. St. 286, Mehan being indebted to Dickerson purchased of him (Dickerson), a tract of land and caused it to be conveyed to Mehan and wife, creating an estate by entirety. Afterward, Dickerson obtained judgment against Mehan and sold
In Sharpe v. Davis, 76 Ind. 17, the deed was made to the daughter of an embarrassed debtor, by the wish of his judgment creditor. Subsequently the land was purchased by the judgment creditor and a sheriff’s deed executed to his assignee. Judge Elliott says: “Nancy Davis suggested and directed that the conveyance should be made to Lottie Davis. It was made by Nancy’s son in obedience to her wish. She is, therefore, not in a situation to denounce, as fraudulent, that which she herself procured to be done.” See, also, Pell v. Tredwell, 5 Wend. 661, loc. cit. 698 and 699.
In Lemay v. Bibeau, 2 Minn. 291, the court says: “There can be no doubt but that a conveyance of real estate in due form, even if made with the intent to
In the case at bar, Mr. Hargadine received $1,500* as the consideration of his deed, he has retained it all these years, and he can not now, after inducing William L. Cohen to change his relation to this property and pay off the balance on the Schulte mortgage, repudiate his own deed as fraudulent.
This exact question was discussed by the High Court of Chancery of England in Olliver v. King, 8 De G. M. & G. 110. The suit was brought by the executors of John King to set aside a deed of gift made by James King to his sons, John Richard and Morris King, and subject the property to a bond executed by James King to John King. It appears that James King at all times had great confidence in his brother John, and, being ill in 1842, consulted John about his affairs, the result being the execution of the deed impeached in that suit. Lord Justice Turner, in declaring the judgment, said: “The deed was suggested by John, was prepared according to the instructions given by John, John himself procured the execution of it by James, and- by John Richard .and Morris, the sons of James. The whole transaction appears to have been carried through, in fact, by the acts and concurrence of John. At all events, the deed
If the brother in that case was bound by his silence- and procuring the execution of the deed, although a. creditor to a large sum, a fortiori must Mr. Hargadine- and his associates be held bound, not only by his suggestions, but, by his own deed, made on his own terms, to have released this specific piece of property from the-claims of himself and the creditors for whom he was a. trustee; Scholey v. Worcester, 6 Thomp. & C. (N. Y. Supreme Ct.) 574.
In view of the charge of fraudulent conspiracy, this-letter of Mr. Hargadine’s is a most significant fact in this case. Mr. Hargadine testifies that when he wrote-that letter he understood that William L. Cohen was helping his brother and this letter, read in the. light of' this declaration and fairly construed, means that these-creditors propose to give William another opportunity of helping his brother. They understood, and the-record abundantly establishes the fact, that William
Now this proposition is made to either William or Philip. The offer is to “you or your brother,” and the deed is to be made to whomsoever the purchaser may select, be it William or Philip. Can it be argued for a moment that if William Cohen paid his own money for this lot and took the deed to himself it was still ta remain a security for the unpaid balance of Philip’s debts to Mr. Hargadine? Such a proposition would be so clearly inequitable that we opine no lawer would seriously assert it. It would be equivalent to asserting that a mortgagee might foreclose his mortgage on the whole mortgaged premises for the first installment and resell the same property in the hands of the purchaser for a subsequently accruing payment, a proposition repudiated by this court as early as 1842 in Buford v. Smith, 7 Mo. 489, and frequently repeated since that time. Mitchell v. Ladew, 36 Mo. 526.
This proposition meant simply that the friendly creditors were willing to release all their rights in this
It must be kept in mind that the question here is not one between Philip and any other creditor, but it is one between the owners of this property who are at the same time judgment creditors and a brother of the judgment debtor. Can it be supposed for a moment that when Mr. Hargadine was reminding William Cohen that Schulte’s mortgage alone stood in the way, that he was secretly meditating the enforcement of the unpaid balance of his judgment against Philip as soon as that mortgage was satisfied? We think such a contention would be a reflection upon the memory of a man who occupied such a commanding position in the great city of St. Louis. We prefer to think and hold that it was an offer in equity to release any and all liens and claims to this lot for $1,500, and if Philip himself could raise the money this particular property might be conveyed to his brother discharged of all •claims by these creditors.
The principal evidence tending to establish fraud in the case was the relationship existing after William had purchased the stock of goods. It is asserted that he took too many precautions to secure himself; but, when it is considered that plaintiffs’ own attorneys had •drawn the bill of sale by which Mrs. Cohen obtained the goods, and that, notwithstanding that, the goods had all been seized and he had been compelled to purchase the unfriendly judgments to save what he had
Again it is argued that it is suspicious that he gave-his brother too much latitude in managing the business ; but, if we are right in finding that he owned the store, we can not see how it injured any creditor, even if he gave Philip more than his services were worth. The lot of a debtor will be hard indeed, if it ever comes to pass that, if, after all his goods are sequestered by his friendly creditors, to say nothing of the unfriendly, not even his brother is allowed to> employ him, and afford him a means to support. his wife and children. If there was any substantial evidence that Philip had property of any considerable value covered up, or that William had none, a very different case would be presented. From the evidence, it seems that Philip had added to the stock and made the business prosperous since it began in William’s name. The evidence is that William being a stock trader and farmer came-over four or five times a year and visited the store and examined into its condition with Philip, as he was compelled to rely largely upon Philip, which he testifies he did, because he had never wronged him.
But the discussion as to the stock of goods is only-incidental to the transfer of the storehouse. That it, was entirely competent for William Cohen to buy this lot and place his deed of record, and even permit his
As this transaction is attacked because fraudulent under our statute of fraudulent conveyances, we have not •deemed it necessary to enter at length into the discussion of any actual fraud upon Mr. Hargadine whereby he was overreached in the trade. He very candidly says he got what he considered it reasonably worth, and, any way, there is absolutely no reason for disturbing the trade on any such ground. There was no misrepresentation either as to value, situation, or incumbrances, and the facts were well known to Mr. Harga•dine. The sole excuse for setting aside the deed is that fhe consideration was paid by Philip, and as Mr. Hargadine agreed that Philip might furnish the consideration and he would make a deed to William, he and those for whom he is trustee are absolutely estopped by Ms deed from saying the transaction was fraudulent. Quinlan v. Keiser, 66 Mo. 603. The judgment is reversed with ■directions to the circuit court to dismiss the bill. Judges Sherwood and Burgess concur in reversing the judgment, but express their views in their own way in opinions herewith filed.
Concurrence Opinion
(concurring). — While Hargadine would doubtless be estopped from setting aside the deed from him to W. A. Cohen, upon the ground that it was fraudulent as to the creditors of Philip Cohen for the reason that he was a party thereto, no such question is raised
The issues were made upon the theory that, even if the deed referred to had been obtained by fraud from Hargadine by the defendants Cohen, before Hargadine should be permitted to have the same set aside, he should refund to William Cohen the amount of the purchase money received for the property described in that deed, and, as he did not'offer to do this, that under no circumstances was he entitled to have the deed set aside, for the reason that “he who seeks equity must first do equity,” and that it would be inequitable to permit Hargadine to retain the purchase money received by him for a deed to the property and at the same time ask that the deed be set aside because fraudulent as against plaintiffs as creditors. To this I agree and think the judgment ought to be reversed because no such offer was made in the petition or otherwise.
Counsel for defendants, in their brief, concede that, because of the fact that a creditor has once bought the land of his debtor at sheriff’s sale, and resold it to him, the creditor does not, by reason thereof, exempt the property from further liability for any balance of the judgment remaining unpaid. With reference to this question they say: “Any creditor who received part of the purchase money or all of it, that came from W. L. Cohen, that might have been furnished or was afterward paid to W. L. Cohen by Philip Cohen, might have had such property sold on execution to satisfy the balance of his judgment, and he might at such sale
Upon this question, howe'ver, I express no opinion.
Nor do I upon the question passed upon by my associate, Gantt,-J., in which he holds that the property in controversy, after having once been sold at sheriff’s sale under judgment in favor of Hargadine, was thereby released from, and could not be again sold for, any balance remaining due upon said judgment, because no such question was raised either in the pleadings or by counsel upon either side, and I prefer to withhold my ^opinion upon that point until such question is properly presented for the consideration of this court.
Concurrence Opinion
(concurring). — I have no doubt of the correctness of the position taken by Gantt, P. J., that Hargadine should be estopped from asserting title to the land after the making of the agreement and deed and payment of the consideration as suggested by .himself. Unless this is what he meant, the transaction between William Oohen and himself was an idle form and a useless ceremony.
And I hold, further, that, even if Philip Oohen furnished the funds for the purchase of the property and the obtaining of the deed from Hargadine, that fact would not change the result; for Hargadine could not gainsay it. But, notwithstanding this, the only way to take advantage of this dormant estoppel is to plead it, as estoppels in pais are valueless, unless pleaded, as shown by Burgess, J.
These remarks, however, would not apply to what is known as the “outside creditors;” for they have not “tied a knot with their tongues that they could not untie with their teeth,” as has Hargadine.
• As it is agreed by my associates that the judgment must be reversed and the cause remanded, ample opportunity will be afforded the contestants to fairly develop all the issues in the cause before it returns again to this court.
Rehearing
ON MOTION nor rehearing.
Upon a motion for rehearing, we have reconsidered the grounds of our former opinions, and see no reason for changing our conclusions, that, on the pleadings and evidence as they now stand, plaintiff can not recover. We are all agreed that the judment should be reversed, Judge Burgess on the ground that, prior to, or at the time of, the commencement of the action, Mr. Hargadine made no offer to refund the money he had received for his deed which he sought to set aside as fraudulent, and Judges Sherwood and Gantt, in addition to this ground, for the further reason that Mr. Hargadine and those creditors for whom he was trustee were estopped by their own conduct from assailing the deed made by Mr. Hargadine as fraudulent, whether a tender was made or not. Eor these reasons, it is apparent no good purpose would be subserved by remanding the cause, and it is accordingly simply reversed.