Kehoe v. Taylor

• Decision Date: 02 July 1888
• Citation: 31 Mo.App. 588
• Parties: LIBBIE KEHOE, Respondent, v. EDWARD G. TAYLOR et al., Appellants.
• Court: Kansas Court of Appeals

31 Mo.App. 588

LIBBIE KEHOE, Respondent, v. EDWARD G. TAYLOR et al., Appellants.

Court of Appeals of Missouri, Kansas City.

July 2, 1888

APPEAL from Clay Circuit Court, HON. THOMAS E. TURNEY, Special Judge.

Affirmed.

Motion for rehearing denied.

Statement of case by the court.

This is a suit in equity by a creditor against an assignee of an insolvent estate. The petition, substantially, alleges, that on _______ day of January, 1882, one Rufus Suits being insolvent made an assignment to the defendant Taylor for the benefit of creditors. Taylor duly qualified and entered upon the duties of his office. It charges that at the time aforesaid, Taylor and his co-defendant Scott were engaged as partners in the practice of law; that they were acting as the counsel and attorneys of said Suits, and so continued to act throughout the administration of the estate, with the understanding between them that they were to share as partners in all fees to be charged against said Suits, and in the fees of the assignee; that at the time of said assignment Suits was owing the plaintiff a debt, evidenced by a note for the sum of $736.75; also was indebted to his wife Elizabeth Suits, in the sum of twenty-one hundred and fifty dollars, evidenced by a note, and to his daughter Carrie Suits in the sum of five hundred dollars, evidenced by a note, with a credit thereon of four hundred dollars. The petition then charges that the said creditors authorized said Suits to have their claims allowed by the assignee; that the assignee did allow said claims, but fraudulently and wrongfully made the allowance in the name of his partner Scott, for the purpose of enabling said Scott to collect the dividends arising thereon, and applying the same to the use of the assignee and said Scott; that said claims were so allowed without any authority whatever from the said creditors, and without their knowledge or consent; that they supposed until long thereafter that the claims were allowed in their own names. It is further charged that the assignee had declared two dividends on said allowance, one for thirty per cent. and the other for seven per cent. of the principal sums, as shown by the term reports of the assignee; that plaintiff does not know whether said dividends have been paid over to said Scott, but if they have been it was fraudulently done, etc., to enable said assignee to obtain credit therefor in his settlement with the court. The claims of said Elizabeth and Carrie Suits were assigned to plaintiff for the purpose of enabling her to join all of said claims in one action. The petition prays for an accounting by defendants and for judgment for the amount of said dividends.

The answer tendered the general issue.

Plaintiff's evidence tended to sustain the allegations of the petition so far as the facts are concerned respecting the assignment, and the indebtedness of said Suits, and the allowance by Taylor of the said claims in the name of Scott. There was sufficient evidence to justify Suits in presenting for the claimants their demands for allowance; but there was no evidence before the assignee, or the trial court, to justify the inference that the parties authorized the allowances to be made in the name of Scott. Nor did they in fact ascertain that the claims had been so allowed until long thereafter. The notes held by the creditors were never presented to the assignee but in fact remained all the time in their possession. The evidence further showed that Scott and Taylor were partners as charged, and that they were counsel for the assignor, and were to share equally in the fees arising therefrom as well as in the fees of the assignee. The appraised value of the assets inventoried by the assignee amounted to $10,472.84. Taylor took charge of the stock of goods, and proceeded to sell privately until he had realized about $5,011.84. He then, at the instance of Suits, sold the remainder in a lump to one Saltsman, a relative of Suits, for the sum of sixty-four hundred dollars, and he collected on accounts $721.24. As shown by the last term reports made to the court by Taylor, there was in his hands at the time this action was brought a balance of $2,057.07, after paying out all dividends.

The evidence on the part of the defendant Taylor tended to show that it was the expectation that Suits would soon make a compromise with his creditors in the east, and obtain control of the goods. To this end the sale was made to Saltsman which was merely colorable, for the benefit of Mrs. Suits. Scott then went east to see said creditors, and succeeded in effecting a settlement with them. The money with which he made these adjustments was furnished him by Mrs. Suits, to the amount of four thousand dollars; and the balance was furnished by Taylor out of the monies in his hands as assignee. Taylor testified that Scott took the assignment of the claims so compromised by him in his (Scott's) name, and then had them allowed by Taylor against the estate in the name of Scott; that this was done to protect the assignee and Scott for the money so advanced by the assignee, and for their fees. Taylor gives as a reason for allowing the claims of plaintiff, Mrs. Suits and Carrie, in the name of Scott, that he understood from Suits that it was to be done in that way, as Suits was to pay these debts when he got control of the property, as he regarded them as debts of honor. He took from Scott receipts for the dividends on all the claims so allowed in Scott's name, though in fact no money passed. He accounts for the balance of money in his hands, as shown by his last term report, by crediting it with the amount of Scott's expenses in effecting the compromise with the eastern creditors, $209.50, and five hundred dollars, fee charged Suits for effecting said compromise, etc. The assignee also claimed a fee of one thousand dollars for his services.

The evidence also showed that one Henry Smith was a creditor of said estate, whose claim was allowed by Taylor. Taylor claimed that Suits was to settle this claim of Smith after he got the goods back. This Suits denied, and refused to so do. Thereupon Taylor induced Smith to bring an action by attachment against the goods so bought in by Saltsman, in which Mrs. Suits interpleaded, and the issues therein were determined in her favor. Thereupon Taylor had to pay to Smith his dividend out of the monies in his hands. And as he had given an indemnifying bond to the sheriff in making said levy, he became bound for the costs therein, which he paid. So he claims that after paying ont these sums he in fact had left in his hands no money belonging to the estate; and that any dividend he may be required to pay over to these claimants would come out of his own pocket.

There was other evidence bearing upon the conduct of Scott in this matter, and the manner of managing this estate; but the foregoing are the important facts. Scott did not testify in the case.

The court made decree as follows: The court finds that the plaintiff Libbie Kehoe, was the owner of the notes as described as hers in the petition, and that the fact was known to the defendant, the assignee, at the time the notes were allowed in the name of the defendant Scott. That the allowance was made in the name of Scott without authority from plaintiff, without her knowledge, and without negligence on her part. That the allowance was so made through the culpable negligence of the assignee and in violation of his duties as such. It is, therefore, ordered that the assignee pay to the plaintiff the dividends of thirty and seven per cent. on said allowances, with interest at the rate of six per cent. per annum from the institution of this suit, and if any receipts for said dividends, or any part of them, have been given by the defendant Scott, the same are declared void and cancelled. That the allowance on the notes be transferred by the defendant Scott to the plaintiff. The court finds that Elizabeth Suits is the owner of the allowances made on notes alleged in the petition to be hers. That she knew of and acquiesced in the use by the assignee of the money actually received by him as assignee in the settlement of the debts owing by her husband in New York and Chicago, and is not entitled to any relief against the assignee. That Carrie Suits is the owner of the allowance of one hundred dollars. That the plaintiff, as the trustee of an express trust, was authorized to sue for the claims of Elizabeth and Carrie Suits, and the defendant Scott is ordered to transfer to her the allowance herein found to belong to them, the said Elizabeth and Carrie Suits.

T. S. B. SLAUGHTER and WASH ADAMS, for the appellants.

I. When fraud is alleged it must be clearly and distinctly proved as alleged. Bump's Kerr on Fraud and Mistake, 382; Schields v. Hickey, 26 Mo.App. 194; Muenks v. Bunch, 90 Mo. 500; Priest v. Way, 87 Mo. 16; Lexox v. Harrison, 88 Mo. 491; Scheppelman v. Feurth, 87 Mo. 351.

II. The assignee can only allow such claims as are presented to him at the proper time and place. He acts in that regard in a judicial capacity, and his decisions are final unless appealed from. Rev. Stat., 1879, secs. 373, 376; Building Association v. Zoll, 83 Mo. 95; Eppright v Kauffman's Adm'r, 90 Mo. 25. If the proof shows a state of facts inconsistent with the charge of fraud, the findings should be for defendants. Priest v. Way, 87 Mo. 16. Plaintiff is only entitled to relief upon the facts proved when those facts are based upon the petition. Muenks v. Bunch, 90 Mo. 500; Dunn v. White, Adm'r, 63 Mo. 181. To warrant a recovery on the charge of fraud there must be a concurrence of both fraud and injury. Lenox v. Harrison, 88 Mo. 491; Dormitzer v. Greves, 3 Mo.App. 593. If Suits was plaintiff's agent, and authorized her...