McKnight-Keaton Grocery Co. v. Hudson & Carte

• Decision Date: 21 February 1910
• Court: Missouri Court of Appeals
• Parties: McKNIGHT-KEATON GROCERY CO. v. HUDSON & CARTE (HUDSON, Interpleader).

126 S.W. 511

147 Mo. App. 31

McKNIGHT-KEATON GROCERY CO. v. HUDSON & CARTE (HUDSON, Interpleader).

St. Louis Court of Appeals. Missouri.

February 21, 1910.

1. APPEAL AND ERROR (§ 1068) — REVIEW — HARMLESS ERROR — INSTRUCTIONS.

In proceedings questioning the validity of a sale of a stock of goods on the ground of fraud as to creditors, where the evidence as to fraud is conflicting and would support a finding either way, an erroneous instruction cannot be held harmless on the ground that the verdict was for the right party.

2. FRAUDULENT CONVEYANCES (§ 301) — REMEDIES OF CREDITORS AND PURCHASERS — SUFFICIENCY OF EVIDENCE.

Evidence held insufficient to show that, in the purchase of a stock of goods, the purchaser was seeking only to secure a debt due himself, without seeking to assist the seller, whom he knew to be insolvent, to hinder or delay other creditors.

3. FRAUDULENT CONVEYANCES (§ 879) — RIGHTS OF CREDITORS SECURING DEBT.

A creditor may properly purchase a stock of goods worth $1,600 from his insolvent debtor to secure his own debt of $460, paying the balance to the debtor, if his motive is only to secure his own debt, and not to hinder other creditors.

4. FRAUDULENT CONVEYANCES (§ 87) — RIGHTS OF CREDITORS — SECURING DEBT.

Where a creditor acquires a grossly excessive amount of property in proportion to his demand, knowing of the wrongful intent of the debtor to hinder other creditors, the transaction is void as to other creditors, though the creditor who obtained the preference pays full value for the excess of property.

Appeal from Circuit Court, Pemiscot County; Henry C. Riley, Judge.

Action by the McKnight-Keaton Grocery Company against Lee Hudson and Emery Carte, partners, and S. J. Hudson, as interpleader. From a judgment for interpleader, plaintiff appeals. Reversed.

Ward & Collins, for appellant. Duncan & Bragg, for respondents.

GOODE, J.

This case was here on a prior appeal from another judgment in favor of interpleader (116 Mo. App. 551, 92 S. W. 1130), which was reversed for an erroneous instruction, and we regret to be compelled to reverse it again. The interpleader, S. J. Hudson, purchased a stock of goods, store accounts, one horse, and three head of cattle belonging to Lee Hudson and Emery Carte, doing business under the firm name of Hudson & Carte. Shortly after the purchase by S. J. Hudson, and on August 28, 1903, plaintiff, McKnight-Keaton Grocery Company, attached the merchandise on an affidavit that the firm had fraudulently conveyed and assigned their property so as to hinder and delay creditors. The goods levied on by the sheriff were sold by order of the court and bid in by the agent of the plaintiff for $150. S. J. Hudson filed an interplea in the attachment suit, claiming the goods by virtue of his purchase, which he alleged was made in good faith, and that the defendants in the attachment action had no interest in them when the writ was levied. This appeal was prosecuted from the judgment given in his favor on a trial of the issues tendered by the interplea. To render our decision clear, more of the facts not developed on the former appeal must be recited. Interpleader bought the goods, accounts, and live stock on August 6, 1903, for $1,600 and the assumption by him of some small bills the firm owed, and immediately took possession; the purchase price being paid by deducting from the total amount $400 which the firm owed interpleader for borrowed money, and $61 the firm or Lee Hudson owed him, paying Lee Hudson $539 in money and Carte $600 in money. The horse was valued at $100, the cattle at about $50, and the book accounts and stock of merchandise each at half the balance of the total price paid ($1,600). Interpleader testified he lent the firm $400 three weeks before the purchase and an account of $61 due him had been collected by the firm or his brother, thus making the $461 due him, and which was deducted from the price he was to pay. In the deal the accounts acquired by interpleader were valued at 90 cents on the dollar, though they ranged in amount from $1 to $30, and were against many persons, mostly employés in sawmills thereabouts, some of whom were unknown to interpleader. The merchandise, though it was not fresh stock, was valued at 100 cents on the dollar. It looks like the firm was in failing circumstances, as its indebtedness to plaintiff, interpleader, and others amounted to $800 or more, which was about the value of the merchandise on hand according to the evidence most favorable to interpleader, while that for plaintiff showed the stock was a remnant worth $250 or $300. Testimony for interpleader is that a careful invoice of the stock was taken before the purchase was made, whereas for plaintiff the testimony tends to prove no invoice was taken, but the goods were bought by interpleader after a brief negotiation of 10 minutes and in...