Calihan v. Powers

Citation34 S.W. 848,133 Mo. 481
PartiesCALIHAN et al. v. POWERS et al.
Decision Date17 March 1896
CourtMissouri Supreme Court

Appeal from St. Louis circuit court; D. D. Fisher, Judge.

Action by Martin J. Calihan and others against Edmund H. Powers and another, partners as Powers & Hervey, and certain creditors of said firm, to set aside conveyances as fraudulent. Plaintiffs had judgment, and said creditors appeal. Reversed.

This is a bill in equity by Calihan & Cooper Woodman & Howes, Eddy & Webster, Fancher & Co., and the Gardiner & Estes Company, against Powers & Hervey and certain creditors of said firm, to set aside and avoid certain chattel mortgages and assignments of accounts executed by said firm of Powers & Hervey preferring the mortgagees in said chattel mortgages and the assignees of said accounts, and to decree the chattels so mortgaged and said assigned accounts to be a part and parcel of the assigned estate of said Powers & Hervey, and subject to a pro rata distribution among all the creditors of said firm. The suit was returnable to the October term, 1893, of the St. Louis circuit court.

The petition, after stating the indebtedness of Powers & Hervey to each of the plaintiffs, proceeds to aver: "That on the 2d day of August, 1893, and prior thereto, said defendants Powers & Hervey had become financially embarrassed, and unable to meet their obligations as they matured from time to time, and were then and there utterly insolvent. That, being so insolvent, said defendants Powers & Hervey then and there, finding it impossible for them to further continue their business and meet their obligations as they matured, determined to wind up and discontinue their business, and to make a general assignment of their property and assets for the benefit of their creditors, in such a way as to give preference to certain confidential creditors, so that their assets and estate should not be equally divided among their creditors pro rata. That, in pursuance of said determination and scheme on their part to evade the provisions of the statute concerning the equal distribution of their assets pro rata amongst their creditors, they caused instruments of writing to be made and executed of the following tenor and effect, to wit: A chattel mortgage to appellant Joseph Wichert, dated and acknowledged August 2, 1893, which conveyed to him all of the boots and shoes, slippers and foot wear situated in the store room of the mortgagors, at Broadway and St. Charles streets, in the city of St. Louis. A chattel mortgage to appellant the St. Louis National Bank, dated and acknowledged the same day, August 2, 1893, which conveyed to said bank the aforesaid stock of goods, subject to the mortgage to Wichert, and also the fixtures contained in the store. That on the said day, to wit, on the 2d day of August, 1893, defendants Powers & Hervey, for the purpose of evading the provisions of the statute concerning the equal distribution of their assets among their creditors, assigned, by an instrument in writing, which plaintiffs cannot definitely describe, to the defendants Sonnenfeld Millinery Company and Adolph Rosenthal, president of said company, almost the entire amount of their then outstanding accounts, being about the sum of seven thousand dollars. That said accounts included the good and choice and collectible accounts, and that there was left, over and above the accounts so assigned, the nominal amount of $625.75, which plaintiffs charge to be doubtful and of little value. That the assignments of said accounts to said Sonnenfeld Millinery Company and Adolph Rosenthal, its president, was with full knowledge on the part of said company and said Rosenthal of the intent of said Powers & Hervey to dispose of all their assets in fraud of the laws of the state of Missouri relating to general assignments. That it was agreed and determined between all of the defendants, before any of said conveyances, that the scheme should include and call for a deed of assignment to Joseph W. Meyer [also a defendant], who is an employé and stockholder in the Sonnenfeld Millinery Company, but that these unlawful preferences should include all of the available assets of said Powers & Hervey." The petition alleges further: That Powers & Hervey made a deed of assignment to Meyer, for the benefit of their creditors, August 2, 1893, and conveyed the stock of goods and fixtures, subject to the mortgages of Wichert and the bank, and book accounts amounting to $625.76. That the mortgages and the deed of assignment were recorded as follows: To Wichert, at 8:40 a. m.; to the bank, at 8:41 a. m.; to Meyer, at 8:43 a. m. That "said Wichert and the St. Louis National Bank, named as beneficiaries in the above mortgages, and Sonnenfeld Millinery Company and Adolph Rosenthal, assignees of said accounts, at and prior to the date of receiving the same, and securing the preferences therein given out of the estate of defendants Powers & Hervey, then and there contemplated making such deed of assignment so made and executed by them, and that the plain purpose and scheme of said defendants Powers & Hervey was to give preferences to the beneficiaries and grantees named in said mortgages, and to the assignees of said accounts, over their other creditors, and to avoid and evade the effect of the statutes of the state of Missouri concerning voluntary assignments by making said mortgages and assignments of accounts to and for the benefit of the persons securing preferences thereby, and that the execution of said mortgages, assignment of accounts, and deed of assignment were a part and parcel of the scheme hereinbefore set forth, concocted and set forth on the part of defendants Powers & Hervey, by and with the concurrence and connivance of the other defendants herein, for the purpose of giving to said defendants so secured by said mortgages and the assignment of accounts an unjust and undue preference over the remaining creditors of the defendants Powers & Hervey, and of appropriating the bulk of their assets to the payment of said preferred creditors, and of defrauding the other creditors of said defendants Powers & Hervey of their rights in said assets, and of preventing the said assets from going into the hands of said Meyer as assignee for the body of the creditors of Powers & Hervey under the deed of assignment which they then and there contemplated should be made after said preferences had been given, and that said preferred creditors actively and knowingly assisted in the accomplishment of said purpose and intent of giving said preferences as above set forth and stated." The petition prays to have the mortgages and assignments of accounts set aside, and the property sought to be thereby conveyed to be carried into the general estate, under the deed of assignment for the benefit of all of the creditors. The answer of the Sonnenfeld Millinery Company and of Adolph Rosenthal is a general denial. The bank answered that it sought and took its mortgage to secure a valid and bona fide debt, and for no other purpose, and Wichert's answer is to the same effect.

At the trial the respondents read in evidence an assignment of accounts to the appellant the Sonnenfeld Millinery Company to satisfy a claim due from Powers & Hervey in the sum of $2,981.33. The evidence was that the face value of the accounts thus transferred was $3,000. The transfer was made on the 1st day of August, 1893. The respondents also read in evidence an assignment of accounts to the appellant Adolph Rosenthal to satisfy a claim due from Powers & Hervey in the sum of $500. The face value of these accounts was proven to be $517.68. This transfer was made August 1, 1893. By the deposition of William S. Hervey, read as an admission, the respondents proved that the firm of Powers & Hervey owed Wichert about $6,000. Wichert asked the firm to make him a mortgage several days before August 2d, the date of the assignment. It was agreed on August 1st that the firm were to make a mortgage to Wichert to cover his claim, and one to the St. Louis National Bank to cover its debt. By the deposition of Adolph Rosenthal, read as an admission, the respondents proved that he did not know that Powers & Hervey intended to give mortgages to Wichert and to the St. Louis National Bank. The assignment of accounts to Rosenthal and to the Sonnenfeld Millinery Company took place on the 1st day of August. By the evidence of Adolph Rosenthal, called as a witness by respondents, it was proven that the accounts of Powers & Hervey were kept on the books of the Sonnenfeld Millinery Company, were rendered to customers in the name of the millinery company, and were collected by the last-named company. The millinery company had advanced moneys from time to time to Powers & Hervey; the latter stating, as moneys were advanced, "You are secured by our accounts." It was proven that the St. Louis National Bank was not aware of the execution...

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