Balz v. Nelson
| Decision Date | 18 February 1903 |
| Citation | 72 S.W. 527,171 Mo. 682 |
| Parties | BALZ et al. v. NELSON et al., Appellants |
| Court | Missouri Supreme Court |
Transferred from St. Louis Court of Appeals.
Modified and affirmed.
S. T G. Smith for appellant.
(1) Husband and wife can contract together the same as individuals. Seay v. Hesse, 123 Mo. 463. (2) A debt due a wife from a husband stands on as good a footing as a debt due any other person, and she may be given a preference over other creditors. Bank v. Winn, 132 Mo. 80; Hart v. Leete, 104 Mo. 337; Seay v. Hesse, 123 Mo. 450; Scott v. Klein, 61 N.W. (W. Va.) 918; McQuown v. Law, 18 Ill.App. 34; Fergusan v Spear, 65 Maine 279; Rockford Shoe Co. v. Martin, 75 Iowa 112. (3) In the examination of questions of fraud, courts will look into all the circumstances, and while express and positive proof is not required, yet mere suspicion leading to no certain results will not be deemed sufficient to establish fraud. Ridge v. Greenwell, 53 Mo.App. 479; Waddingham v. Loper, 44 Mo. 136. (4) The right of one creditor of an insolvent debtor to secure a preference over others is not affected by the fraudulent intent of the debtor, or by knowledge thereof on his part, if there was no actual participation therein. Woolen Mills v. Wilson, 87 Mo.App. 145; Riley v. Vaughn, 116 Mo. 176. (5) The court indicated the theory on which he tried the case when he remarked: "There was no legal liability to pay the debt; it was merely a moral obligation; the statute of limitations would run against it; there was no legal liability on which she could maintain any recovery." (6) The statute of limitations does not run against a married woman. Besides, the transaction was executed and question of statute of limitations could not arise. Sutton v. Casselig, 77 Mo. 406; Waite on Creditors' Bills, 523. (7) Creditors have nothing to do with the homestead, for it is beyond their reach either at law or in equity. There can be no fraudulent conveyance of a homestead. Rose v. Smith, 167 Mo. 86; Bank v. Guthrey, 127 Mo. 195; Hart v. Leete, 104 Mo. 337. (8) The evidence showing the conveyance was made to secure the wife, if any decree of sale was to have been entered it should have been that all the property except the homestead should have been sold and the proceeds applied, first, to the payment of the money due the wife and interest thereon, the balance to the judgment of the plaintiff. Bank v. Winn, 132 Mo. 91; Gleitz v. Schuster, 168 Mo. 305. A return of nulla bona is necessary before a creditor's bill will lie. Merry v. Freeman, 44 Mo. 521; Humphrey v. Atlanta Mill Co., 98 Mo. 542.
C. S. Broadhead and Percey Werner for respondents.
(1) The conveyances to Decker and Mrs. Nelson were, admittedly, made by Nelson and his wife with the intent to hinder and delay these plaintiffs, and, even though they had been made for a valuable and adequate consideration, are still void as to plaintiffs, because of the intent with which they were made. Cason v. Murray, 15 Mo. 378; Johnson v. Sullivan, 23 Mo. 474; Knox v. Hunt, 18 Mo. 180; sec. 3398, R. S. 1899; Lackland v. Smith, 5 Mo.App. 153. (2) A participation by the wife in a fraudulent attempt on the part of her husband to conceal or cover up his property, for the purpose of putting it beyond the reach of other creditors, though an honest or valid debt is thereby secured or paid, will render the whole transaction fraudulent as to both. Bank v. Winn, 132 Mo. 88; Riley v. Vaughan, 116 Mo. 176; Sexton v. Anderson, 95 Mo. 379; Farwell v. Myer, 67 Mo.App. 566. (3) A voluntary conveyance by one of all his property, thereby rendering himself insolvent, intending afterwards to contract debts, which he does contract, is fraudulent and void as to such subsequent creditor, although there was no existing indebtedness of the grantor at the time of making the conveyance, and so much the more so where it is done to protect his property from an existing liability. Snyder v. Free, 114 Mo. 376; Hoffman v. Nolte, 127 Mo. 120; sec. 3398, R. S. 1899, p. 847; Hurley v. Taylor, 78 Mo. 238; Fisher v. Lewis, 69 Mo. 629. (4) When conveyance by insolvent debtor is claimed to be made in payment of an antecedent debt, the burden is on the parties thereto as against a creditor attacking for fraud to prove bona fides. Wood v. Peebles, 25 So. 723; American Net & Twine Co. v. Mays, 33 S.E. 523, 57 N.Y.S. 724; Walsh v. Ketchum, 84 Mo. 430; Bucks v. Moore, 36 Mo.App. 536. (5) Issue of execution and return of nulla bona may be dispensed with when it is shown that the debtor is insolvent. Merry v. Freeman, 44 Mo. 518; Turner v. Adams, 46 Mo. 95; Iron Co. v. McDonald, 61 Mo.App. 569. (6) Gross inadequacy of price is one of the badges of fraud in a sale and becomes controlling when coupled with other circumstances to show fraud. Card v. Lackland, 49 Mo. 451; Briant v. Jackson, 99 Mo. 585.
This is a bill in equity to declare fraudulent and void and to cancel two deeds to certain real estate in the city of St. Louis, one from Nels Nelson and Sophie, his wife, to her sister, Emma Decker, and the other from Emma Decker to Sophie Nelson, and thereby to divest the title to said real estate out of Sophie Nelson and leave it in Nels Nelson, as it was before said deeds were made, and to have the land sold to satisfy a judgment in favor of the plaintiffs and against Nels Nelson. The circuit court entered a decree as prayed, and the defendants appealed to the St. Louis Court of Appeals. That court transferred the case to this court, on the ground that title to real estate was involved and hence this court alone had appellate jurisdiction. [Balz v. Nelson, 86 Mo.App. 374.]
The case made is this: In 1884 Sophie Nelson was the wife of William Kleddick. He died and she received two thousand dollars life insurance. She then married Nelson, and in 1885 she loaned him $ 1,000. About two years thereafter she sold some real estate she owned before her marriage to Nelson, and received therefor $ 1,350, and this with the remaining $ 1,000 insurance money, she also loaned Nelson. They both say he verbally agreed to pay her eight per cent interest, but he never did so. They both further say there was no note or other evidence given for the money borrowed, and no time specified when he should repay her. But they say he "promised if he got into any trouble he would protect her." She made no demand on him for the interest, nor for the loan, nor for security or protection, until after the cyclone which struck St. Louis on May 27, 1896, and which damaged his property to the extent of about $ 3,500, and he paid no attention to that demand, and she did not then further insist. About four months after that time he was building a house, and through his negligence the plaintiff's child was killed. On January 16, 1897, the plaintiffs began suit against him for five thousand dollars damage for the death of their child. Three days after this suit was begun and after the summons had been served and after she knew of the suit, he and his wife conveyed three parcels of land that stood in his name on the records to her sister, Emma Decker, and she conveyed the same to Mrs. Nelson. The consideration expressed in these deeds was nominal. Their deed to Emma Decker was immediately recorded, but her deed to Mrs. Nelson was not recorded until November 19, 1897. In the meantime on September 1, 1897, and before the judgment in favor of the plaintiffs was rendered and before the deed from Emma Decker to Mrs. Nelson was put upon record, Emma Decker made a quitclaim deed to Nels Nelson for a portion of one of the tracts or parcels of land, and he sold it to an innocent third person for $ 4,100. Both Nels Nelson and Sophie Nelson testified that he had no other property than that covered by the deed to Emma Decker, and he admitted that for six years prior to the date of the trial of this cause, which was on May 15, 1899, he had done no work. Emma Decker acted in the matter simply to oblige her sister and brother-in-law. She paid nothing and received nothing for the land. The Nelsons say the conveyances were made in pursuance to his promise that "if he got into trouble, he would protect her," made at the time she loaned him the money. Thereafter, on January 4, 1899, the plaintiffs recovered judgment against him for $ 600, and it remained unsatisfied. The plaintiffs claim that the conveyances were fraudulent and void and intended to hinder, delay and defraud them as creditors of Nels Nelson, and that while an insolvent has a right to prefer any of his creditors, still a conveyance that was intended to hinder, delay and defraud creditors is void even if made to one who is a bona fide creditor, if the creditor knew the conveyance was intended to defraud the grantor's creditors and if the creditor participated in the fraud, and that even conceding that the $ 3,350 in money was a loan and not a gift from Sophia to Nels Nelson, still the deeds in question here were intended to defraud his creditors and not as a preference to Mrs. Nelson. The trial court found the deeds to be fraudulent, and entered a decree for the plaintiffs, and the defendants appealed.
The primary question in this case is whether this court has jurisdiction.
It is a bill in equity to declare fraudulent and void the deeds of Nels and Sophie Nelson to Emma Decker, and from Emma Decker to Sophie Nelson, and for an order of sale of the real estate to satisfy the plaintiffs' judgment. Those deeds are muniments of title. They constitute the public record which declares to the world that the title is in Sophie Nelson. Without them, the title would in fact and according to the record be in Nels Nelson. The judgment to be rendered, if the plaintiffs succeed, will therefore strike down and cut out root and...
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