Bank of Pike Cnty. v. Murray

• Decision Date: 31 October 1885
• Citation: 88 Mo. 191
• Parties: BANK OF PIKE COUNTY, Appellant, v. MURRAY et al.
• Court: Missouri Supreme Court

88 Mo. 191

BANK OF PIKE COUNTY, Appellant,

v.MURRAY et al.

Supreme Court of Missouri.

October Term, 1885.

Appeal from Hannibal Court of Common Pleas.--HON. THEODORE BRACE, Judge.

AFFIRMED.

W. H. Biggs and D. H. McIntyre for appellant.

(1) The evidence clearly establishes the fact that Murray, in conveying his large estate to Luce, acted fraudulently, and with intent to hinder, delay, or defraud his creditors. The decree of the court is against the preponderance of evidence on this issue. In chancery cases this court will review the testimony upon which the decree is based and reverse or modify the judgment, if it is manifest that the judgment should have been otherwise. Judy v. Farmers & Traders Bank, 81 Mo. 404. (2) Law and justice recognize the equitable and equal interest of all ordinary creditors in the property of the debtor. When one creditor takes the property of an insolvent debtor in payment of his debts, it must appear that the fair market price of the property was allowed, and it must also appear that the grantee acted bona fide, that is, without notice of the fraudulent intention [if any] of the grantor to hinder or delay his other creditors. But actual knowledge by the grantee is not necessary. Facts and circumstances sufficient to put a prudent man on inquiry are sufficient. Bump on Fraud. Con. (2 Ed.) 200, and cases cited. It is not necessary that the design of the grantee be to defraud the creditors of the grantor. If he has notice at the time of the transfer of the fraudulent intentions of the grantor, this makes him a mala fide purchaser. Edgell v. Lowell, 4 Vt. 405; Fuller v. Sears, 5 Vt. 527. Luce was Murray's father-in-law, their business relations were of the most intimate character, and under such circumstances it should require but little testimony to prove that Murray's intentions were known to Luce. Carter v. Illies, 22 Tex. 479. Murray was Luce's agent, and transacted all his business. If Murray's intentions in conveying his property to Luce were fraudulent, then Luce cannot shield or protect himself against the demands of Marray's creditors upon the grounds that he was not aware of his intentions. If Murray acted for both, then his fraudulent purposes or intentions vitiated or tainted the transactions between the two. Bump on Fraud. Con. (2 Ed.) 203; White v. Graves, 7 J. J. Marsh. 523; Wiley v. Knight, 27 Ala. 336; Pope v. Pope, 40 Miss. 516; Bobb v. Woodward, 50 Mo. 95; Clark v. Fuller, 39 Conn. 238. (3) The decree finds an absolute assignment of the VanHorn notes to Luce. This finding is clearly against the evidence. Murray said the notes were assigned as collateral to secure Luce in what he owed him. If the notes were held by Luce as collateral, then his purchase of block thirteen in October, 1878, enured to Murray's use, because at the time of the sale Murray owed Luce nothing, Luce held the property as trustee for Murray, and the appellant, as a judgment creditor of Murray, had a right to have the property in the hands of Luce subjected to the payment of its judgment. (4) Appellant's objection to the reading of the depositions of James Alexander, B. F. Miller and John T. Rule, should have been sustained; the question was the value of the mill at the time of the transfer, to-wit: in November, 1876, and not as to its value in 1881. (5) What Murray testified to in his deposition in 1874, in reference to the judgment of P. F. Lonergan against Wm. M. VanHorn and himself, was competent. It was VanHorn's debt and Murray was security. If the judgment could have been collected by Luce from VanHorn's estate, then there was no necessity for, or good reason why Murray should convey to Luce his individual property in payment of the judgment. The testimony has a tendency to throw some light on the character of the transactions between Murray and Luce--that is, whether bona fide or otherwise.

Smith & Krauthoff and W. P. Harrison for respondents.

(1) The amended petition should have been stricken out, as it was an entire change of the original cause of action. Lumpkin v. Collier, 69 Mo. 170; Fields v. Maloney, 78 Mo. 172; Parker v. Rodes, 79 Mo. 88. All facts stated in an amended pleading must exist at the bringing of the suit. 4 Wait's Prac., 467; McCaslan v. Latimer, 17 S. C. 123; Hornfager v. Hornfager, 6 How. Pr. 13; Drought v. Curtiss, 8 How. Pr. 56; Stafford v. Howlett, 1 Paige, 200; 3 Roberts, 621; 15 Cal. 308. (2) A debtor has the right to prefer one creditor over another. Sibly v. Hood, 3 Mo. 290; Chouteau v. Sherman, 11 Mo. 385; Murray v. Cason, 15 Mo. 378; Kuykendall v. McDonald, 15 Mo. 416; Dougherty v. Cooper, 77 Mo. 528; Bump on Fraud. Convey. (3 Ed.) 183-4, et seq. (3) That Luce was Murray's father-in-law does not affect the question if the indebtedness to the former was bona fide. (4) The fact that Murray expected Luce, and the latter had expressed a purpose to settle the property paid on the former's wife, or that the preference would enure to the benefit of his wife, or of his family, does not make the transfer fraudulent. Young v. Stallings, 5 B. Mon. 309; Crueton v. Doby, 10 Rich. Eq. 414; Bump on Fraud. Convey. (3 Ed.) 190. (5) The creditors of Murray have no right to complain of what Luce did with the property conveyed to him. It was his own and he had the right to make any disposition of it he pleased. Young v. Dumas, 39 Ala. 60; Winch v. James, 68 Pa. St. 297; Bump on Fraud. Convey. 193. (6) Nor is it material to inquire what Murray's secret motives were in preferring Luce. Crawford v. Austin, 34 Md. 49; Young v. Dumas, 39 Ala. 60; Winch v. James, 68 Pa. St. 297. (7) Although this is an equity case, yet unless the findings of the trial court are clearly wrong, they will not be disturbed. Chapman v. McElrath, 77 Mo. 38; Hendricks v. Wood, 79 Mo. 590; Judy v. Bank, 81 Mo. 404; Bushong v. Taylor, 82 Mo. 660.

HENRY, C. J.

By this action, plaintiff seeks to subject to the payment of a judgment in its favor against Murray, a parcel of ground in the city of Louisiana, the legal title to which is held by Luce, who purchased it at a sale by a trustee to whom it had been conveyed by one Van Horn to secure a debt of eighteen thousand dollars, owing by him to Murray, evidenced by promissory notes, which it is alleged were by Murray assigned to Luce in fraud of his creditors. On a hearing of the cause the bill was dismissed, and plaintiff has prosecuted this appeal. The judgment in favor of plaintiff against Murray was rendered in December, 1876, for $4,744.95, and was the balance of an indebtedness of about fifteen thousand dollars of the firm of Whitney, Lonergan & Co., of which Murray was a member. The assignment of the Van Horn notes by Murray to Luce was made ten days before that judgment was rendered, and the sale of the block was made under the deed of trust in October, 1878, and...