Sexton v. Anderson

• Decision Date: 04 June 1888
• Citation: 8 S.W. 564,95 Mo. 373
• Parties: SEXTON v. ANDERSON et al.
• Court: Missouri Supreme Court

8 S.W. 564

95 Mo. 373

SEXTON v. ANDERSON et al.

Supreme Court of Missouri.

June 4, 1888.

1. FRAUDULENT CONVEYANCES — SATISFACTION OF BONA FIDE DEBT — NOTICE OF FRAUDULENT INTENT.

Knowledge by a preferred creditor that a transfer of property to him by an insolvent firm was made with the intent on their part to delay, hinder, or defraud other creditors does not amount to a participation in the intended fraud, when the transfer was accepted in good faith by the creditor solely for the purpose of saving a bona fide debt.

2. SAME — EVIDENCE — AGREEMENT BY GRANTEE TO PAY GRANTOR'S DEBTS.

Where a bill of sale of goods and fixtures made by an insolvent firm to a creditor, absolute in form, is accompanied by an agreement, signed by such creditor at the same time as the bill of sale, by which the creditor engages to pay certain specified indebtedness of the firm, they are different parts of one and the same transaction, and must be construed together, and parol evidence is admissible to show that the consideration for the goods was the discharge of existing debts of the firm by such creditor.

3. PARTNERSHIP — PAYMENT OF FIRM DEBT TO INDIVIDUAL PARTNER — CONSENT OF PARTNERS.

By the joint act of all the partners, partnership property may be applied to the payment of a debt of an individual member of the firm, if it be done in good faith, and not for fraudulent purposes.¹

Appeal from circuit court, Boone county; G. H. BURCKHARTT, Judge.

Bill of interpleader, by Elisha Sexton against James M. Anderson and James W. Anderson and Middleton S. Bush, to recover funds realized by a sheriff's sale of goods, chattels, and fixtures attached by defendants Anderson in a suit against William J. and Thomas D. Sexton and J. W. Kanatzar, copartners as Sexton Bros. & Co. Bush was made a party defendant because he was a party to a bill of sale, under which plaintiff claimed, and refused to join in the bill. Judgment for plaintiff. Defendants appealed.

E. Smith, with Turner & Sebastian, and Boyle, Adams & McKeighan, for appellants. Shannon C. Douglass, for respondent.

BLACK, J.

James M. and James W. Anderson brought suit by attachment against William J. and Thomas D. Sexton and James W. Kanatzar, partners doing business under the name of Sexton Bros. & Co. The writ was levied upon a stock of merchandise on the 22d December, 1883. Other creditors attached about the same time, and the property was sold by order of the court. Elisha Sexton interpleaded, claiming the property, and the proceeds arising from the sale thereof, amounting to $4,532, by virtue of a sale to him and M. S. Bush. Issues were made on this interplea, in which the attaching creditors take the ground that the sale to Elisha Sexton and Bush was fraudulent as to them. The court, sitting as a jury, found the issues for the interpleader. The evidence discloses these facts: On the 18th December, 1883, Sexton, Bush & Co. made an instrument in writing, in the form of a warranty deed, whereby they sold their entire stock of merchandise and store fixtures to Elisha Sexton and M. S. Bush for the recited consideration of $6,855. At the same time, and as a part of the same transaction, Elisha Sexton signed another writing which recites the sale, and in consideration thereof he and Bush agree to pay certain debts of Sexton Bros. & Co.; one being a debt of $2,000 to Elisha Sexton, another a debt of $1,330 to Bush, with other described debts. By the terms of this contract, they covenant to pay these debts, and to release Sexton Bros. & Co. from the payment of any of them. It winds up with the following stipulations: "It is further understood and agreed by the parties aforesaid that if the parties of the second part fail to make the amount necessary out of the goods and chattels and fixtures herein bargained and sold to the said parties of the second part, to pay the foregoing indebtedness mentioned, that the said parties of the second part are not to be held liable further than the proceeds of the sale of the said goods and chattels and fixtures, and that the said parties of the second part shall be paid a just and reasonable compensation for services and expenses for selling said goods and chattels and fixtures." The bill of sale was acknowledged, and was recorded on the 22d December, 1883, just anterior to the levy of the attachment by Anderson & Co. The other document was withheld by the parties thereto, and not made known until it appeared in evidence on the trial of this cause. An issue was made on the trial as to whether Elisha Sexton and Bush had possession of the goods at the date of the attachment, but that issue was found for the interpleader on favorable instructions for the attaching creditors. It is shown that Elisha Sexton and Bush took possession of the property on the 18th December, and sold from the stock until the 22d. Bush then brought an attachment suit, and hence does not join in the interplea. The evidence for the interpleader is that the debts mentioned in the agreement were bona fide, — his own being for money loaned the firm; that Sexton Bros. & Co. became embarrassed, were pressed by other creditors, applied to him for another loan, but he refused, and demanded security for what he had loaned thereon; and that he took the bill of sale and property, under these circumstances, to secure his and the other specified debts. Other evidence tends to show that Sexton Bros. & Co. made gross misrepresentations to their unsecured creditors as to their financial condition, and that they intended by the transaction in question to secure their relatives, and cared little or nothing for other creditors.

1. Generally, a sale of property, with the intent on the part of the seller to thereby hinder, delay, or defraud his creditors, and knowledge of such intent on the part of the purchaser, renders the sale void, though the purchaser pay a valuable consideration for the property, because the purchase of the property under such circumstances amounts to a participation in the intended fraud. Dougherty v. Cooper, 77 Mo. 529; Frederick v. Allgaier, 88 Mo. 601. But a debtor, though unable to pay all of his creditors, may pay one or more, to the exclusion of others, either in money or the transfer of property, and the favored creditor or creditors may accept such preference. If the preferred creditor, in such cases, acts in good faith, and takes the money or property for the sole purpose of saving a bona fide debt, mere knowledge that the debtor intended to hinder, delay, or defraud his creditors does not render the transaction void as against the creditor taking the preference; for simple knowledge under such circumstances, it is held, does not amount to a participation in the intended fraud. Shelley v. Boothe, 73 Mo. 74; Albert v. Bessel, 88 Mo. 150; Frederick v. Allgaier, supra. In the present case the court was asked, but refused, to declare the law to be that knowledge, notice, or information on the part of Elisha Sexton that Sexton Bros. & Co. intended, by the deed in evidence, to hinder, delay, or defraud their creditors, rendered the sale of the stock of goods fraudulent as to the attaching creditors. The position of the attaching creditors is that this transaction must be treated as a purchase for a fresh consideration, not the taking of property in payment of an existing debt. Although the deed does not on its face show that the consideration for the goods was the discharge of existing debts, still the fact could be shown by parol evidence, as evidence aside of the deed or bill of sale. But, in determining the character of this...