Imhoff & Company v. McArthur
| Decision Date | 06 December 1898 |
| Citation | 48 S.W. 456,146 Mo. 371 |
| Parties | Imhoff & Company, Appellant, v. McArthur et al |
| Court | Missouri Supreme Court |
Appeal from Scotland Circuit Court. -- Hon. Benjamin E. Turner Judge.
Reversed and remanded (with directions).
Smoot Mudd & Wagner and Frederick Shepherd for appellant.
(1) A conveyance which is void, as in fraud of creditors, because fraudulent in part upon a false and pretended debt, will not be sustained to the extent of the adequate and honest consideration paid by the grantee. Baldwin v. Short, 125 N.Y. 553. Where a part of the debt secured is fraudulent the whole mortgage is void. Boland v. Ross, 120 Mo. 208; State ex rel. v. Hope, 102 Mo. 410; Clark v. Lee, 44 N.W. 260; Wait on Fraud. Conv., sec. 228; Wallach v. Wylie, 28 Kan. 138. (2) This is the prevailing doctrine and under it George McArthur can not claim even that part of the indebtedness which was honestly due him, if any there was. Baldwin v. Short, 125 N.Y. 553; Kendall v. McDonald, 15 Mo. 420; Lehman v. Grenhart, 7 So. Rep. 299. (3) A conveyance by an insolvent, wherein a part of the consideration is fictitious, is a concealment of his property from his creditors and is fraudulent and void as to them. Ferris v. McQueen, 94 Mich. 367; Hansen v. Bean, 51 Minn. 546; Lycoming Rubber Co. v. King, 57 N.W. 864; Bldg. & Loan Ass'n v. Barber, 30 A. 865; Finke & Nasse v. Pike, 50 Mo.App. 564; Simon v. Ash, 20 S.W. 719; Seger v. Thomas, 18 S.W. 33; Showman v. Lee, 86 Mich. 556; Valle v. Hyland, 61 Hun. 625; Baldwin v. Short, 125 N.Y. 553; Brasher v. Jemison, 75 Tex. 139. (4) The question of intent, in a case of alleged fraudulent conveyance of property, is one of fact for the jury to determine and not for the court. Hedman v. Anderson, 6 Neb. 392; Dana v. Scott, 22 Neb. 154. (5) Upon the undisputed facts the judgment should have been for plaintiff. It had secured its lien and had the right to maintain this proceeding. Sec. 571, R. S. 1889. The right is given to remove cloud on title. Brownly v. Golden, 27 Mo.App. 160. (6) The act of the father and son in securing to the son $ 3,500, when he only owed $ 2,000, with no explanation, was fraudulent as a matter of law. Ball v. O'Neel, 64 Mo.App. 388; Cole v. Yancey, 62 Mo.App. 234. (7) The promise of a partner after dissolution will not revive a debt barred by limitation. VanKurken v. Parmlee, 2 N.Y. 523; Huckly v. Patrick, 3 Johns, 536; Mayberry v. Willoughby, 2 Neb. 368.
R. D. Cramer for respondents.
(1) Upon the trial of this cause plaintiff introduced the defendants as witnesses in its behalf and relied upon their evidence to establish fraudulent intent, and to impeach the conveyance. Plaintiff in so doing made them its witnesses and will not be permitted to impeach their credibility. Chandler v. Freeman, 50 Mo. 239; Claflin v. Dodson, 111 Mo. 195; Dunn v. Dunnaker, 87 Mo. 597; 1 Greenl. Evid. [13 Ed.], sec. 442; Ettlinger v. Kahan, 134 Mo. 492. (2) The fact that property conveyed is largely in excess of the amount due on a debt secured, does not render the conveyance fraudulent, and is not alone sufficient to raise a legal inference of fraud. Bump on Fraud. Conv. [3 Ed.], pp. 44-45. State to use v. Mason, 112 Mo. 374; Ames v. Gilmore, 59 Mo. 549; 8 Am. and Eng. Ency. of Law, 760; 1 Daniel Neg. Inst. [3 Ed.], sec. 777a-779; Lininger v. Herron, 25 N.W. 578; McKinney v. Wade, 43 Mo.App. 152; Goldburn v. Robinson, 80 Mo. 547. (4) If the evidence of the defendants, being the only evidence of the facts in issue, failed to establish fraud, or facts from which fraud might justly be inferred, there was nothing for a jury to act upon, the court was authorized in discharging it. Secs. 2131-2132, R. S. 1889; Snell v. Harrison, 83 Mo. 651; Durkee v. Chambers, 57 Mo. 575; Cox v. Cox, 91 Mo. 71; Keithley v. Keithley, 85 Mo. 217; Bronson v. Wanzer, 86 Mo. 408; Bray v. Thatcher, 28 Mo. 129; Ettlinger v. Kahn, 134 Mo. 498. (5) A note of a firm payable to one of its members is valid in the hands of an indorsee, who may sue upon it in his own name; although the indorser could not sue the firm upon it. 1 Daniels on Negot. Insts., sec. 354; Young v. Chew, 9 Mo.App. 387; Pitcher v. Burrows, 17 Pick. 361; Walker v. Wait, 50 Vt. 668; Hapgood v. Watson, 65 Mo. 510.
This is an equitable proceeding by plaintiff to set aside a conveyance in the nature of a mortgage upon a lot of ground in Memphis, Scotland county, Missouri.
Briefly stated the facts as disclosed by the record are that for many years prior to June, 1886, the McArthurs resided in said city where H. C. McArthur the husband of Aurelia, and father of George J. McArthur, owned the property involved in this litigation. About that time they moved to Lincoln, Nebraska, where the senior McArthur embarked in the drug business. Thereafter he became indebted to plaintiff, a banking company, in about the sum of $ 2,000, for which it recovered judgment in Nebraska before the institution of this suit. At the time of executing the mortgage by H. C. McArthur to George J. McArthur, which was on the fourteenth day of May, 1894, H. C. McArthur was insolvent, and on the sixteenth day of May, 1894, two days thereafter he executed mortgages on his stock of drugs to various parties to secure debts largely in excess of the proceeds arising from the sale of the stock of drugs which was thereafter made under the senior mortgage.
At the time of the execution of the mortgage by H. C. McArthur to his son, George J. McArthur, he claims to have been indebted to him in the sum of $ 2,000 for money borrowed, and for hire as clerk, which was then due, and for the purpose of securing its payment he indorsed and delivered to him a note of $ 1,000, dated March 22, 1888, bearing ten per cent per annum, and executed to him by H. C. McArthur & Son, a firm composed of H. C. McArthur and his son, W. B. McArthur, and another note for $ 1,000, dated March 22, 1887, payable to Mrs. H. C. McArthur and bearing interest at eight per cent per annum from its date. H. C. McArthur and son were also the makers of this note, which by the request of her husband, H. C. McArthur, was also assigned to George B. on the same day that the other note was by Mrs. McArthur.
At the time of the assignment of these notes they were both barred by the statute of limitations of Nebraska where the parties lived, but H. C. McArthur for the purpose of relieving them of this infirmity, on the day after the assignment paid to the holder $ 25, on each one of said notes.
The property embraced in the mortgage is a brick store house and lot in the city of Memphis, worth about $ 3,500. Soon after the notes were assigned to George J. McArthur he assigned them to R. D. Cramer one of the defendants in this suit for collection; suit was at once brought upon them in the circuit court of Scotland county, service of process waived by H. C. McArthur, and on the twentieth day of August, 1894, judgment rendered against him for the amount of the notes and interest to wit, $ 3,158.61, and the mortgaged property ordered sold. This judgment was for something over $ 1,300 more than the debt claimed to be due George J. McArthur by both himself and his father at the time of the assignment of the notes to him, and the execution of the mortgage which was given to secure its payment.
Before the institution of this suit, plaintiff brought suit by attachment on its claim in the circuit court of Scotland county and had the property in question levied upon under the writ of attachment issued in that cause. The attachment was sustained and final judgment rendered against the property, etc.
Plaintiff prosecutes this suit to set aside the mortgage to George J. McArthur, upon the ground that it was executed by H. C. McArthur to defraud, hinder and delay his creditor, and that the mortgagee George J. McArthur was a party to the fraud.
A jury was impaneled, and the trial of the cause proceeded with, but before it was terminated the court discharged the jury, and having heard the evidence rendered judgment for defendants, dismissing plaintiff's bill, and for costs.
Plaintiff appeals.
The principal witness on the part of plaintiff was the defendant Henry C. McArthur and he having testified to the bona fides of the assignment of the notes to his son, and of the execution of mortgage to secure the payment of the $ 2,000 which he claimed to have owed him at that time, the question is, is plaintiff by making him its witness estopped from showing that transaction to have been fraudulent, if it clearly appears from his testimony, and other evidence adduced, that the transaction was for the purpose and...
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