161 Mo. 625 | Mo. | 1901
This is a suit in equity, instituted on October 14, 1895, to set aside a deed to 320 acres of land in Johnson county, executed on November 3, 1886, by defendant Wherry and wife, to S. S. Chappell and J. R. Chappell, and the defendant Beedy, and the conveyance by S. S. Chappell and J. R. Chappell, on December 18, 1889, to Beedy, of their interest therein, and vest title to the same in plaintiff, on the ground that such deeds were obtained as the fraudulent conspiracy between Wherry, Beedy and the two Chappells, to hinder and delay the creditors of the former.
The trial resulted in the dismissal of the plaintiff’s bill, and plaintiff appealed.
The great mass of evidence set out in appellant’s abstract of the record, represents the testimony of a large number of witnesses, some of whom were examined and cross-examined twice or more, and page after page bears lightly, or not at all, upon the material issues involved. To review this testimony exhaustively would require time, labor and patience happily not necessary to the proper disposition of this case. The facts necessary to a correct understanding of the questions involved in this appeal, may be stated as follows: In November 1886, and for some time prior thereto, defendant Beedy was engaged in the banking and lumber business, at Windsor, Missouri, and the two Chappells and Wherry were in the stock business, residing several miles from town. Shortly before the first conveyance by Wherry and wife in November, 1886, Beedy,
Beedy and the two Chappells then gave the bank their note for the sum of $2,500 and secured the same by a deed of trust on the land in controversy, took up the Wherry notes, and surrendered the $320 note. At the request of Beedy, a chattel mortgage was also given by S. S. Chappell on 181 head of cattle owned by him, to secure the bank’s note. The evidence shows that Beedy was worth at this time over $100,-000, and being the only really solvent man on the note, his name made the bank perfectly secure without the Chappells, but in order to protect himself for having signed the note to the bank with the Chappells which took up the Wherry notes, he required the Chappells to sign the deed of trust to their interest in the farm, and S. S. Chappell to give the chattel mortgage upon the cattle. After the conveyance in question Wherry remained in possession of the farm until 1892, agreeing to pay therefor at the rate of $500 a year, and to keep up the repairs. The rent was collected by Beedy from Wherry, and applied in payment of interest on the incumbrances, and the note for $2,500 made in paying Wherry’s indebtedness to the bank. In July, 1888, Beedy paid the McEadden note and mortgage, amounting at that time, principal and interest, to the sum of $2,387.75, having previously paid one year’s in
About the same time, S. S. Chappell drew a draft on Beedy for $1,106.85, in payment of the judgment in favor of the Johnson County Savings Bank, and took an assignment of such judgment to himself, his brother and Beedy. Prior to this, however, and on the next day after the first conveyance, Wherry gave Beedy a chattel mortgage on certain personal property, consisting of horses, mules, cattle, sheep and farm implements, to secure the payment of a note for $1,506 given for borrowed money, and a lumber account. When first applied to for this security, Wherry declined to give a mortgage, unless Beedy would lend him three or four hundred dollars more money. This, Beedy, after some hesitation and protest, finally concluded to do, in order to obtain the desired security, and the chattel mortgage was executed accordingly. By an agreement between Beedy and Wherry the latter was to sell the sheep and stock, and apply the proceeds in extinguishment of the mortgage indebtedness. In pursuance of this agreement, Wherry sold the sheep, and a part of the stock, and applied the proceeds arising therefrom, in part payment of this note, thereby reducing the same to $100. In December, following, Wherry gave another chattel mortgage on the personal property remaining unsold to secure a note for the latter amount. The property covered by the second mortgage was afterwards sold, and the proceeds applied in extinguishment of the indebtedness thereby secured.
The evidence further shows that Beedy received the stipulated rents from Wherry, and applied the same as above «dated. The taxes on the farm in controversy, which run all the way from $38 to $66 a year, were paid regularly every year by Beedy.
The note for $2,500 executed by Beedy and the two Chap
The plaintiff claims title under a sheriff’s sale under execution issued upon a judgment against Wherry.
The record shows that for nearly nine years before the commencement of this suit, the plaintiff says that he knew that the deeds in question were fraudulent, and never took any steps to assert his rights. In the meantime, however, the construction of a railroad near this farm greatly enhanced its value.
The validity of the transfer of the farm in question is assailed on the ground that Wherry’s intention in conveying the same was fraudulent, and that Beedy took such conveyance with knowledge of Wherry’s fraudulent intent.
The plaintiff contends that defendant Beedy occupies the position of an ordinary purchaser from an insolvent vendor, and therefore his knowledge of Wherry’s purpose renders the sale voidable at the instance of his other creditors, even though he did not participate in that purpose. On the other hand, counsel for defendant maintain that the transaction was a preference, and not voidable at the instance of other creditors of Wherry, notwithstanding the fraudulent intent of Wherry and defendant’s knowledge of such intent, provided he did not participate in such fraudulent purpose, and that with respect to the deeds in question, he stands in the position of a preferred creditor.
We do not intend to follow counsel through the great multitude of eases which they have cited and discussed, as we have not followed them through the intricate detail of the testimony commented upon. The reasons stated in a few well-considered cases will answer our purpose.
It may be regarded as entirely settled in "this State, that a debtor may prefer one creditor over another, by direct payment or transfer of property, providing the property is taken in satisfaction or assumption of a just demand, and not as a mere screen to secure the property to himself.
This doctrine is clearly expressed in Sexton v. Anderson, 95 Mo. 373, where the distinction is drawn between a mere purchaser and a preference. In pointing out the distinction this court said: “Generally, a sale of property with the intent on the part of the seller to thereby hinder, delay or defraud his creditors, and knowledge of such intent on the part of the
This doctrine again finds utterance in Albert v. Besel, 88 Mo. 152, where the interpleaders had assumed certain indebtedness of the defendant. In course of the opinion in that case it is said: “The evidence in general tends to show that the interpleaders paid for the goods the fair value, and that they purchased the same for the sole purpose of protecting themselves, because of their suretyship for Besel on the debts assumed. They had a perfect right to buy the goods for that purpose, though the purchase might operate to hinder and delay the other creditors in the collection of their demands, and though to their knowledge Besel intended the sale should have that effect, provided they did not participate in- the fraudulent purpose of Besel.”
The case at bar does not fall within the doctrine applicable to a mere purchaser from an insolvent vendor, where, under the authorities, the purchaser’s knowledge of the fraudulent intent on the part of the vendor makes the sale voidable at the instance of other creditors oi the vendor, even though he did
In the former class of cases, the favored creditor is not only not required to consult the interest of the other creditors of the insolvent, fraudulent debtor, in accepting and taking property from him, but in looking after his own interest may utterly disregard them.
The effect of any preference sousrht means of necessity that some other less fortunate creditor is to be hindered and delayed in the collection of his debt, and upon what principle the knowledge of that fact by the preferred creditors, or the further knowledge on his part that the debtor intended that the transaction should have that effect, should operate to avoid the transaction, it is difficult to conceive. Where the right of preference, as in this State, is recognized, we can not see how it is possible for one creditor, who gets nothing more from the debtor than sufficient to pay off, discharge, or settle his just claim, to commit a fraud against the rights of other creditors, or how he can be said to have participated with the debtor in the commission of a fraud. The authorities cited by counsel for plaintiff, in support of their contention, are not deemed applicable or controlling, where the transfer, as in this case, was a preference as distinguished from a mere purchase, and for this reason we have not commented on them.
In this connection, it is also insisted by appellant that it devolved upon Beedy to show the good faith of the trans
Nor is the rule in this respect in anywise to be altered, by reason of the fact that, in the transaction assailed, one of the parties to it is shown to have undertaken to commit a fraud against the right of the plaintiff. The fact that Wherry has fraudulently intended in this conveyance of his property to defendant, to hinder and defraud his other creditors, among whom was the plaintiff, does not operate to change the rule of evidence or to relieve the plaintiff from making good the allegations of fraud against the defendant in connection with that transaction, or shift the burden upon the shoulders of defendant to show his honesty so far as concerns himself.
It is true, cases may be found holding that in the case of a more purchaser from a fraudulent grantor, where the fraudulent purpose of the grantor is shown, it then becomes incumbent upon the purchaser to show payment of the consideration, and the good faith of the transaction. Yet we apprehend that such a case does not arise in the state of facts here presented, and for that reason those cases are not applicable.
Again, Wherry’s statements and admissions subsequent to the conveyance, in reference to the ownership of the farm, etc., were clearly incompetent, unless made in furtherance of
Since, again, the uncontradicted evidence shows that at the time the conveyance was made, the land in controversy was only worth $6,500, and that an indebtedness in excess of the value of the land was paid by Beedy, it is not perceived why the failure to state in the deed the exact amount thus paid and assumed, as contended by appellant, can affect the fairness or good faith of the transaction. The mere fact that the consideration expressed in the deed is $6,150, instead of the exact amount of the debts paid and assumed is, under the circumstances of this case, wholly immaterial, as the debts paid and assumed by Beedy exceeded the highest value placed upon the farm, by any of the witnesses testifying in the case. It would seem, therefore, that the recited consideration in no wise effected the validity of the transfer. The explanation of this transaction, so far as consideration is concerned, is perfectly consistent with honesty and fair dealing.
It is also contended, that the assessment lists of 1889 and 1891 show that Wherry was the real owner of the farm. G. G. Valentine, the former assessor, testified that these lists were in the handwriting of Bowen, his deputy assessor, and Wherry testified that the assessment lists were handed to him by the deputy already filled out, and he just signed them without knowing that the farm was embraced therein, and we think the court below was justified in finding that Wherry signed the assessment lists under a misapprehension, as explained by him, especially as the uncontradicted evidence shows that Beedy paid the taxes for this and subsequent years.
It is next contended that there were fraud and collusion between Wherry and Beedy in withholding the deed from record. Bank v. Doran, 109 Mo. 40, and Bank v. Buck, 123 Mo. 141, are a type of the cases relied on by counsel in support of this contention. While the deed was executed on No
The .rule announced in Bank v. Doran, supra, and kindred cases to the same effect, cited by the plaintiff, is inapplicable here. The facts of the case at bar clearly distinguish it from those cases. In those cases, it was held that an agreement by a mortgagee to withhold his mortgage from record, is a fraud upon subsequent creditors. In the Buck case, there was an express agreement that the mortgage, which was in the form of an absolute deed, should not be filed for record, and that the existence thereof should be concealed, whereby the mortgagors were enabled to obtain credit from the plaintiff in that case for a large sum of money. But no such facts appear in this record. These cases came under review in Bank v. Rohrer, 138 Mo. 369, when it was held that the mere withholding of a deed from record, was not evidence of fraud. The court said: “It has always been held in this State, that the title of a bona fide purchaser or mortgagee under a deed or mortgage not recorded, is good against creditors at large, and is also good against sales under judgments and executions, if the deed or mortgage is duly recorded before such sales.” There is no evidence in this record which shows knowledge on the part of Beedy that Wherry was obtaining credit on the faith of his ownership of the farm, or that the plaintiff in fact gave to him any credit whatever after the execution of his deed to Beedy and the Chappells. It is too clear for further dis
The court below, with the testifying personality of the witnesses before it, had better opportunities for arriving at a correct conclusion upon the evidence • than we have, and found nothing in the case to militate against the good faith of Reedy, or from which his participation in the fraudulent purpose of Wherry can be inferred. And we are disposed to adopt that finding, especially as such finding is entirely justified by the evidence.
Even though Beedy’s fraudulent participation in the transfer was in some manner sustained by the evidence, the plaintiff was guilty of such laches in asserting his rights as to preclude a recovery. This suit was not begun until October 1895, nearly nine years after the execution of the deed in question, during which time the plaintiff lived in the vicinity and knew that Beedy was claiming to own the farm under such deed, which he claims to have known all the time was a fraud, and never took any steps to assert his rights, until the construction of a railroad near this land enhanced its value to $10,000. This conduct on the part of the plaintiff, in connection with other facts and circumstances shown by the record, effectually preclude him from any relief in a court of equity. "Where as in this case, a party has slept upon his rights for the period of nine years, with knowledge of the fraudulent character of the deed sought to be invalidated, and allowed the opposite party to expend his money, or waits until the lands have greatly increased in value, either from such expenditure or otherwise, a court of equity might properly refuse to interfere, although the statute of limitations has not run. [Kelly v. Hurt, 74 Mo. 565; Bliss v. Prichard, 67 Mo. 187; Moreman v. Talbott, 55
Eor the foregoing considerations the judgment of the circuit court will be affirmed.