Stahlhuth v. Nagle

• Decision Date: 30 June 1910
• Citation: 129 S.W. 687,229 Mo. 570
• Parties: SAMUEL G. STAHLHUTH, Appellant, v. PIERRE NAGLE et al
• Court: Missouri Supreme Court

129 S.W. 687

229 Mo. 570

SAMUEL G. STAHLHUTH, Appellant, v. PIERRE NAGLE et al

Supreme Court of Missouri, Second Division

June 30, 1910

Appeal from St. Louis City Circuit Court. -- Hon. Moses N. Sale Judge.

Affirmed.

McCorkle & Webster for appellant.

(1) In equity cases the judgment of the trial court will be accorded all proper consideration, but as the ultimate responsibility for the judgment rests on the appellate court, when the case is appealed, that court is not bound by the findings of fact by the trial court, but will review the evidence and render such judgment as good conscience dictates. Hoeller v Haffner, 155 Mo. 589; Bank v. Fry, 115 S.W 439; Guinan v. Jarrott, 183 Mo. 204. (2) Where a person makes a voluntary conveyance of land, or some interest therein, to another, without consideration or for inadequate consideration, with the fraudulent intent to defraud, hinder or delay his creditors, the law raises a resulting trust in favor of his creditors, and they may set aside such conveyance by a suit in equity. White v. McPheeters, 75 Mo. 286; Stanton v. Boschert, 104 Mo. 393; Ryland v. Callison, 54 Mo. 513; Grentry v. Robinson, 55 Mo. 260. (3) Where anyone is indebted to another, he has a legal right to prefer him over his other creditors, even though such preference may have the effect of hindering and delaying the claims of other creditors; but if in such a case it further appears from all the circumstances attending the transaction that the preferred creditor is not acting from an honest purpose to secure the payment of his own debt, but from a desire to aid the debtor in defeating other creditors, or in covering up his property, or in giving him a secret interest therein, or in locking it up for the debtor's own use and benefit, he will not be protected, and the conveyance to him as a pretended preference will be fraudulent as to the other creditors of his vendor. Huffmann v. Nixon, 152 Mo. 303; Marble Co. v. Achuff, 83 Mo.App. 42; Klauber v. Schloss, 198 Mo. 502; Martin v. Estes, 132 Mo. 402; Riley v. Vaughan, 116 Mo. 169; Buckingham v. Tyler, 74 Mich. 101; Shelley v. Boothe, 73 Mo. 74. (4) The relationship of the parties, the indebted condition of Pierre, the unsatisfactory evidence of consideration, other similar deals indicating fraud participated in by Richard Nagle, the indifference of Richard to, and his ignorance of, this deed of trust, form such a combination of suspicious circumstances as shifts to defendants the burden of making a very full and clear showing of good faith and honest purpose. Farwell v. Meyer, 67 Mo.App. 574; Boldt v. Bank, 59 Neb. 283; Mitchell v. Eure, 126 N.C. 77; Moore v. Gainer, 53 W.Va. 403; Pruyn v. Young, 51 La. Ann. 320; Marcus v. Leake, 94 N.W. 100. (5) Placing a deed in the hands of a third person is not a good delivery unless the grantor parts with his dominion over it. Ells v. Railroad, 40 Mo.App. 185; Johnson v. Farley, 45 N.H. 505; Porter v. Woodhouse, 59 Conn. 568; Alsop v. Swathel, 7 Conn. 500; Mudd v. Dillon, 166 Mo. 110; Hammerslough v. Cheatham, 84 Mo. 13; Henry v. Henry, 65 Mo. 689; Vanstone v. Goodwin, 42 Mo.App. 39. (6) The same rule applies where the grantor keeps it in his own possession or under his own control. Weber v. Christen, 121 Ill. 91; McGraw v. McGraw, 79 Me. 257; Steven v. Castel, 63 Mich. 111; Metcalfe v. Brandon, 60 Miss. 685. (7) Richard, by taking no note, or security, or any step to assert his rights for nine years, and thus permitting persons to extend credit to Pierre upon faith that he was solvent and able to pay, is now estopped to come in and assert his debt and receive a preference, to the exclusion of those whose claims have been based on his apparent solvent condition and good standing. Riley v. Vaughan, 116 Mo. 169.

E. C. Slevin for respondents.

(1) A debtor in failing circumstances or insolvent may bona fide prefer one creditor to another. Wood v. Porter, 179 Mo. 56; Martin v. Estes, 132 Mo. 402. And, in the absence of fraud, the preference may be given to a creditor who is a kinsman as well as to a stranger. Kincaid v. Irvine, 140 Mo. 615; Mansur Co. v. Ritchie, 143 Mo. 587; Donk Bros. v. Stephens, 74 Mo.App. 39. I concede, however, that a preference given to a kinsman should be scrutinized more carefully than when given to a stranger. (2) The burden of proof is upon the plaintiff and there remains. Haydon v. Grocery Co., 88 Mo.App. 241; Wall v. Beedy, 161 Mo. 625; State ex rel. v. Cryts, 87 Mo.App. 440; Mansur Co. v. Ritchie, 143 Mo. 587. The rule as stated by appellant might be conceded, if the conveyance were merely voluntary, or a purchase. Wall v. Beedy, 161 Mo. 625. (3) Whatever may be the intention of a debtor in preferring a creditor, if there exist a bona fide indebtedness the preference will be upheld. Shelley v. Boothe, 73 Mo. 74; Bonney v. Taylor, 90 Mo. 63; Alberger v. White, 117 Mo. 347; Crothers v. Busch, 153 Mo. 606; Wall v. Beedy, 161 Mo. 625; Haydon v. Grocery Co., 88 Mo.App. 241. (4) The delivery of a deed to a third party with directions to deliver it to the one for whom it is intended, constitutes a good delivery. Peters v. Berkemeier, 184 Mo. 393; Coulson v. Coulson, 180 Mo. 709; In re Soulard's Estate, 141 Mo. 642; Appleman v. Appleman, 140 Mo. 309; Kuh v. Garvin, 125 Mo. 547.

OPINION

FOX, J.

Plaintiff claims title to a certain lot and part of lot in the city of St. Louis, and by this suit seeks to have set aside and for naught held a certain alleged false and fraudulent deed of trust executed by defendant Pierre Nagle on said property, the same constituting a cloud on plaintiff's title.

In his petition plaintiff states that he is owner of lot 21, and five feet off the east part of lot 20, and three feet nine and one-half inches off the west part of lot 22, in city block 1024, in the city of St. Louis, the same being occupied by house numbered 3030 Morgan street, in said city; that said property was acquired by him at sheriff's sale, on June 14, 1905, under a judgment for debt against said Pierre Nagle. "That heretofore, to-wit, from March 1st to March 20, 1903, the defendant Pierre Nagle, who was then owner of the property aforesaid, was heavily indebted to divers and sundry persons in the city of St. Louis and elsewhere. That at said time the said Pierre Nagle, fearing lest said property should be seized upon by his creditors to satisfy their claims, did then and there collude and conspire with the defendants Richard Nagle, and J. Pirtle and said Felix E. Gunn, trustee, to aid and assist him to hinder, delay and defraud his said creditors, and to secrete his interest in the property aforesaid, and to prevent same being sequestrated and applied to the payment of said claims of said creditors, did enter into a fraudulent scheme and device, the general plan and purpose of which was that the said Pierre Nagle should execute a false and fraudulent note for a fictitious and wholly non-existent indebtedness, ostensibly due to his brother, Richard Nagle, and should pretend to secure the same by a false and fraudulent deed of trust for a large amount, so as to make the equity of said Pierre Nagle appear small, insignificant and practically valueless; that to still further mystify and conceal the false and fraudulent nature of the transaction, said Pierre Nagle, acting upon the advice of one Brennan, did make out the notes to the defendant, J. Pirtle, with the understanding that they were to be indorsed by him and turned over to the defendant, Pierre Nagle, or whomsoever he might designate."

The further allegations of the petition are, in substance: That the defendants fully executed said fraudulent scheme and device, and that said Pierre Nagle, on March 19, 1903, made a note for $ 1700, payable three years after date, and interest notes, and executed and delivered to said Felix E. Gunn, as trustee, his certain deed of trust of even date therewith, for the ostensible purpose of securing said notes, which deed was placed of record, but that said notes and deed of trust were wholly fictitious and colorable, fraudulent and invalid, and that no consideration was given therefor; that plaintiff is advised and believes that said notes and deed of trust are held by the defendant Richard Nagle without any right thereto or interest therein, and that neither of the defendants, nor any holder under them, has any right or interest in the property aforesaid by reason thereof; that said deed of trust creates a cloud on plaintiff's title, which ought to be removed therefrom; that said Pierre Nagle is insolvent, and that plaintiff is advised and believes, and alleges the fact to be, that said Richard Nagle is insolvent, and that the other defendants have no beneficial interest in said property or in said notes or deed of trust; that there is a genuine deed of trust on said property which matures one day prior to the maturity of the fraudulent deed of trust aforesaid; that plaintiff has no adequate remedy at law and is in danger of losing his said property if equity does not intervene, and that he is likely to suffer irreparable harm and injury.

Plaintiff prays "that the aforesaid deed of trust be set aside and for naught held, and that defendants be decreed to deliver up the same for cancellation, together with the notes described therein, and that the defendants, Pierre Nagle and Richard Nagle, be decreed and adjudged to pay to plaintiff any and all damages that may accrue to him by reason of their false and fraudulent clouding and encumbering his title, and for such other and further relief as to equity appertains, and which the court shall deem fit and proper."

The facts developed by the evidence are as follows:

Defendants Pierre and Richard Nagle are brothers, living together in St Louis at the time of the...