Bangs Milling Co. v. Burns

• Decision Date: 14 November 1899
• Parties: Bangs Milling Company, Appellant, v. Burns et al.; Piggott, Interpleader
• Court: Missouri Supreme Court

53 S.W. 923

152 Mo. 350

Bangs Milling Company, Appellant, v. Burns et al.; Piggott, Interpleader

Supreme Court of Missouri, First Division

November 14, 1899

Appeal from the Clinton Circuit Court. -- Hon. William S. Herndon Judge.

Affirmed.

W. K Amick, F. M. Black and Johnson, Rusk & Stringfellow for appellant.

(1) There are many circumstances which, if taken separately would not be deemed sufficient evidence of fraud, but when taken in their combinations furnish an abundance of evidence to send the case to the jury. All the circumstances must be taken collectively. Wait on Fraud. Conv., sec. 224; State to use v. Mason, 112 Mo. 382. (2) The court erred in excluding the evidence of Stephen J. Burns, relating to the transactions with Sibbald and his wife. It is competent, in order to establish the fraudulent intent of the debtor, to give evidence of other fraudulent sales effected about the same time. Wait on Fraud. Conv., sec. 282; Erfort v. Consalus, 47 Mo. 209; Lincoln v. Claflin, 7 Wall. 132. (3) Whilst a creditor may take property from the debtor in payment of or security for his debt, though he may know that the debtor intends thereby to defraud his other creditors, still he must stop there. If a sale or mortgage be made for the further purpose of securing to the debtor any money or property, the transaction is fraudulent. Alberger v. White, 117 Mo. 363; McVeigh v. Baxter, 82 Mo. 518; Meyberg v. Jacobs, 40 Mo.App. 136; Levy & Co. v. Williams, 79 Ala. 136; Oppenheimer v. Halff, 68 Tex. 409. (4) Though a conveyance may have been made for a valuable consideration, or a mortgage may have been made to secure a valid debt, still it may be and often is fraudulent as to creditors. Nat. Tube Works Co. v. Machine Co., 118 Mo. 375; Dougherty v. Couper, 77 Mo. 529; Sexton v. Anderson, 95 Mo. 379; Craig v. Zimmerman, 87 Mo. 478; State v. Purcell, 131 Mo. 318; Johnson v. Sullivan, 23 Mo. 482; Murray v. Cason, 15 Mo. 379. (5) If a part of the consideration for a conveyance is fraudulent, the entire transaction is vitiated. Nat. Tube Works Co. v. Machine Co., 118 Mo. 376; State ex rel. v. Hope, 102 Mo. 410; Boland v. Ross, 120 Mo. 208; Simon Gregory Dry Goods Co. v. McMahon, 61 Mo.App. 500; Barton v. Sitlington, 128 Mo. 174: (6) While an insolvent debtor has himself a right to prefer one creditor over another, still he can not delegate the right to give a preference to a third person. The exercise of such delegated power by a preferred creditor is a badge of fraud, and is strong evidence of his participation in the fraudulent scheme. Sigers Sons v. Thomas Bros., 107 Mo. 643; Hamill v. England, 57 Mo.App. 106; Meyberg v. Jacobs, 40 Mo.App. 129. (7) The court erred in excluding the evidence of Calvin F. Burnes. The declarations or admissions of the president of a corporation are admissible in evidence against the corporation in cases where he is the official mouthpiece in dealing with the public, and especially where they are made in respect of some business for the corporation, with which the president is charged at the time of making them. 4 Thompson's Com. on Corp., 4656, 4915; Malacek v. Railroad, 57 Mo. 17; Costigan v. Michael Transportation Co., 38 Mo.App. 219; Texas Standard Cotton Oil Co. v. National Cotton Oil Co., 40 S.W. 159; Harnett v. Westcott, 24 J. & S. 213. The president of a bank is not a mere agent but is a vice-principal. Bank v. Armstrong, 76 F. 345; Railroad v. Coleman, 18 Ill. 297.

Brown & Dolman, Vinton Pike and Willard P. Hall for respondent.

(1) Plaintiff can not complain here of fraud by Burns & Company in obtaining the attached property. (a) In the very nature of things one's creditor can not complain because he acquires property. Fenton v. Adler, 24 How. 407. And such is the law still except where it has been changed by statute. (b) The statute on fraudulent conveyances was intended for the protection of creditors to the extent of making void as against them conveyances by their debtors intended to hinder, delay and defraud them in the collection of their debts, but conveyances to debtors are not affected by that statute. (2) If one fraudulently purchases goods from another, intending at the time not to pay for them, the fraudulent purchaser's title to the goods is not void, but is valid, subject only to the right of the defrauded vendor to rescind the sale and reclaim the goods. The purchaser's title is not void till affirmed, but is valid until disaffirmed by the vendor. 1 Bigelow on Fraud., pp. 73, 74; Lapp v. Ryan, 23 Mo.App. 436; Upton v. Englehart, 3 Dill. 496; Mapes v. Burns, 72 Mo.App. 422. (3) Till rescision by the vendor, the purchaser may treat the property as his own in all respects; he may sell it, he may give it away, or he may transfer it in payment of his debts, subject, of course, but subject alone, to the vendor's right to afterwards rescind the sale and to claim the goods, except they shall in the meantime have been transferred to a bona fide purchaser for value and without notice. Walker v. Collins, 50 F. 742; Mapes v. Burns, 72 Mo.App. 422. (4) And all this is true against all general creditors alike without regard to the origin of their indebtedness. The fact that a creditor's debt was created through fraud is wholly immaterial. He has absolutely no more or other interest in his debtor's property than any other creditor. Peters v. Bain, 10 S.Ct. 357. (5) The fact that one participates with another in the fraudulent purchase of goods, with the intent then had, not to pay therefor does not incapacitate him from purchasing the goods from the fraudulent vendee. He has exactly the same right to purchase the goods that any one else with notice of the fraud has. State to use v. Schulein, 45 Mo. 521. (6) Therefore, if Burns & Company, in pursuance of a conspiracy between them and the National Bank of St. Joseph and Ayr Lawn Company, did purchase the attached property, with the intent then had not to pay therefor and to turn the same over to said bank and Ayr Lawn Company on account of the indebtedness owing by Burns & Company to them, and afterwards did turn over said property to them on account of said indebtedness, the transaction was not fraudulent as against the general creditors of Burns & Company. Donald v. Constant, 82 Ind. 212; Goodall v. Stewart, 3 So. Rep. 257; Bach v. Tuch, 26 N.E. 1019; Gray v. St. John, 35 Ill. 222; Walker v. Collins, 50 F. 737; Millington v. Hill, 47 Ark. 309; Bank v. Frank, 37 So. Rep. 400; State to use v. Schulein, 45 Mo. 521; Baurman v. Van Buren, 44 Mich. 499; Stokes v. Burns, 132 Mo. 214; Mapes v. Burns, 72 Mo.App. 421. (7) Payment by the bank of the difference between the amount of the overdraft and the $ 9,000 note at any time prior to levy under attachment to any bona fide creditor of Burns & Company cured the transaction of any impropriety caused by loaning them the amount of said difference and depositing same to their credit. If it be conceded for the purposes of the argument that the placing by the bank on its books to the credit of Burns & Company of that portion of the $ 9,000 loan which was in excess of the overdraft was a wrong against the creditors of Burns & Company of which they could have complained, because said excess was subject to be checked out of the bank by Burns & Company for their own personal use as contra-distinguished from the use of their creditors, still the plaintiff was not at the time of the institution of this action in a position to complain on account of said fact, because at that time said excess had been paid out on checks of Burns & Company to their creditors, and the wrong, if wrong there was, incident thereto, had been cured, and the transaction was purged thereof. Jones on Ch. Mort., sec. 178; 2 Cobby Ch. Mort., sec. 794; Dobyns v. Meyer, 95 Mo. 132; Mahoney v. McWalters, 38 N.Y.S. 256; Murphy v. Briggs, 89 N.Y. 446. (8) There was no fraud against the creditors of Burns & Company in the bank loaning the latter a few hundred dollars more than the overdraft, even if it afterwards paid said excess to them because the amount of the indebtedness existing before said new loan was made greater in amount than the entire value of all the security received by both the bank and the Ayr Lawn Company. (a) If the result of any given transaction, where a debtor seeks to prefer one of his creditors, is the transfer to the creditor of the debtor's property an amount less in value than the amount honestly owing there can, as a matter of law, be no fraud in it. Scarborough v. Hilliard, 28 S.W. 231; Freyble v. Tierman, 13 S.W. 370; Sawyer v. Bradshaw, 17 N.E. 812; Goetter v. Norman, 19 So. Rep. 56; Adkins v. Bynum, 19 So. Rep. 400; Oppenheimer v. Halff, 4 S.W. 562; Marshall v. Hutchinson, 5 B. Mon. 298; Bent v. Bent, 3 N.Y.S. 750; Albee v. Webster 16 N.H. 362; Slater v. Dudley, 18 Pick. 372; Vial v. Mathewson, 34 Hun. 70; Griffin v. Cranston, 1 Bos. 281; s. c., 10 Bos. 1; Brinson v. Edwards, 10 So. Rep. 219; Bank v. Marshall, 23 S.W. 6; Cleveland v. Empire Mills, 25 S.W. 1055; Phillips v. Shwellokolf, 29 S.W. 645; Bank v. Steere, 43 N.E. 187; Smith v. Riggs, 56 Ia. 488; Sommerville v. Horton, 26 Am. Dec. 242; Covanhoven v. Hart, 21 Pa. St. 495; Henderson v. Perryman, 22 So. Rep. 24; Dallman v. Renshaw, 26 Mo. 88; Stokes v. Burns, 132 Mo. 214. (b) There can, under the statute, be no fraud without a dishonest intent, but fraud does not consist in mere intention, but in intention carried out by hurtful action. Bump on Fraud. Conv. (3 Ed.), p. 19; Bunn v. Ahl, 29 Pa. St. 387; Williams v. Davis, 69 Pa. St. 21; Rice v. Perry, 61 Me. 145; Carter v. Coleman, 4 So. Rep. 151; Adkins v. Bynum, 19 So. Rep. 400; Hoyt v. Godfrey, 88 N.Y. 669.

OPINION

ROBINSON, J.

During the middle and latter part of February, 1892, the plaintiff in this case, together with...