Baker v. Harvey

• Decision Date: 24 March 1896
• Citation: 34 S.W. 853,133 Mo. 653
• Parties: Baker, Appellant, v. Harvey et al
• Court: Missouri Supreme Court

34 S.W. 853

133 Mo. 653

Baker, Appellant, v. Harvey et al

Supreme Court of Missouri, First Division

March 24, 1896

Appeal from Saline Circuit Court. -- Hon. Richard Field, Judge.

Affirmed.

Leslie Orear and Alf. F. Rector for appellant.

(1) The conveyance from J. G. L. Harvey to his brother was in fraud of the grantor's creditors, and its necessary effect was to hinder and delay them in the collection of their debts then about to ripen into executions. The grantee states that the object and purpose of the conveyance was to reduce the debtor's property into money so as to prevent it from being sacrificed by the legal process, viz., the executions then about to be issued. (2) It would make no difference as to the legal effect of the instrument whether a surplus was anticipated by the parties or not. The transfer is equally void whether such a surplus be anticipated or not. It is sufficient if it is deemed by the parties to be a transfer in any way advantageous to the grantor. VanNest v. Yoe, 1 Sandf Ch. 4; Ward v. Trotter, 3 Mon. (Ky.) 1; Vernon v. Morton 8 Dana, 247; Bank v. Nunies, 80 Ky. 334; Bigelow v. Stringer, 40 Mo. 195; Phelps v Curts, 80 Ill. 109; Gardner v. Bank, 95 Ill. 298; McPherson v. McPherson, 21 S. Car. 261. (3) Practically the leaving of the $ 15,000 of the purchase money in the hands of T. R. E. Harvey with directions to pay his creditors, "so far as they were then known," was an assignment of that fund for that purpose with the expectation of realizing a considerable surplus for the assignor and at best was an evasion of the assignment law of this state. T. R. E. Harvey undertook to carry out such design by paying the Rumley debt and charging it against his brother J. G. L. Harvey, in the account introduced in evidence, in addition to the $ 15,000. (4) T. R. E. Harvey states that the debts were in the neighborhood of $ 15,000. He refrains from stating whether more or less, presumably less. Hadden v. Spader, 20 Johns. 553; Dunphy v. Klensmith, 11 Wall. 610; Mann v. Appel, 31 F. 378. (5) The fraudulent purpose of the grantor is sufficiently shown by the fact that the grantee testified that he was in an insolvent condition at the time of the making of the conveyance and that his creditors were pushing him; that they had come from Chicago and Indiana; that he made the conveyance of all his property to a near relative; that he remained in possession of a portion of it without rent charge, and that after he removed from it he received the rent from it; that the grantee actually paid the grantor rent for the same premises as his tenant; and after that, directed the real estate agent to turn over the rents to the grantor, that the parties refrained from conversations or agreement as to details of the arrangement and management. (6) A fraudulent agreement may be inferred from, "doing something and saying nothing." The physical facts are to outweigh the unexpressed intentions of the parties, where the manner of dealing with the property conveyed shows the purpose for which the conveyance was in fact made. Babcock v. Eckler, 24 N.Y. 623; Frank v. Renter, 116 Mo. 517; Stanton v. Boschert, 104 Mo. 393.

T. H. Harvey and Davis & Duggins for respondents.

(1) There was no fraud in the conveyance from J. G. L. Harvey to his brother. It was made for an honest purpose, viz., to raise money to pay the debts of the grantor. There was no trust, secret or otherwise. The grantor was in debt, his property was about to be sold under deed of trust and the evidence shows that if sold in that way it would have been sacrificed. Conveyances under such circumstances and for such a purpose are upheld in this state. Robinson v. Dryden, 118 Mo. 534; Nichols v. Ellis, 98 Mo. 344; Shotwell v. McElhinney, 101 Mo. 677. (2) The fact that the grantor was in debt, that his property was about to be sold under deed of trust, that he had been sued by unsecured creditors and that the conveyance was made for the purpose of preventing a sacrifice of the property at a forced sale, did not render the deed fraudulent, if the sale was made in good faith for the purpose of raising money to pay the debts of the grantor. Dougherty v. Cooper, 77 Mo. 28; Murray v. Cason, 15 Mo. 379. (3) The evidence does not support appellant's contention that the $ 15,000 of the purchase money was left in the hands of T. R. E. Harvey with directions to pay J. G. L. Harvey's creditors "so far as they are known." (4) Plaintiff's only witness, T. R. E. Harvey, testified that the conveyance was made in good faith for a valuable consideration, and that he knew nothing of the existence of the debt due Wm. Deering & Company. Appellant can not be heard to impeach the testimony of his own witness. Chandler v. Fleeman, 50 Mo. 239. (5) The insolvency of the grantor and the relationship between the parties to the conveyance charged to have been made in fraud of the grantor's creditors are not sufficient in themselves to establish fraud. There must be proof of fraud; it can not be presumed. If the facts shown are consistent with an honest purpose and fair dealing, honesty in the transaction should be inferred. Siegel v. Quigley, 119 Mo. 76; Robinson v. Dryden, 118 Mo. 534; Garesche v. McDonald, 103 Mo. 10; Ames v. Gilmore, 59 Mo. 537; Rumbolds v. Parr, 51 Mo. 592; Nichols v. Ellis, 98 Mo. 344.

OPINION

Macfarlane, J.

This is a suit in the nature of a creditor's bill to set aside, as fraudulent, a conveyance by defendant J. G. L. Harvey to his brother T. R. E. Harvey and a deed from the latter to the wife of the former. The petition charges in substance, and the evidence shows conclusively, these facts:

In September, 1884, the said defendant J. G. L. Harvey became indebted to Deering & Company in the sum of $ 732.50, evidenced by two promissory notes. For a balance on these notes judgment was rendered against him November 22, 1886, for $ 353.67. A sale of lot 100 in the city of Marshall, was made under execution upon this judgment on November 12, 1891, and plaintiff was the purchaser for $ 10.50, to whom the sheriff made and delivered a deed.

In December, 1884, said defendant was, and prior thereto had been, engaged in a mercantile business in Marshall. He owned said lot 100 and occupied it as a residence. He also owned a valuable farm in the county of Saline. The cash market value of the aggregate property at the time, which was one of depression in real estate values, was about $ 10,000, though thought to be intrinsically of greater value. The farm was incumbered by a deed of trust amounting to $ 4,000 and some unpaid interest. Defendant failed in his business and became wholly insolvent. He owed including the deed of trust near or quite $ 15,000.

His brother, T. R. L. Harvey, was a man of considerable means who lived on a farm in said county. Defendant called upon his brother for assistance. Fruitless efforts were made by the two to borrow money with which to pay the creditors. A sale of the land under the deed of trust was threatened. Suits also had been commenced or were threatened.

This being the condition of affairs on the thirty-first of December, 1884, defendant made to his brother a deed conveying to him all his real estate including said lot. The consideration expressed in the deed was $ 15,000. At the same time and as the real consideration, the grantee assumed the payment of the deed of trust, and also unsecured debts of defendant, the whole amounting to about $ 15,000. The particular debts assumed were specified and listed. The brother by borrowing money on his own land was able to pay and did pay all the debts assumed. The debt of Deering & Company was not one of them. After the parties supposed all the assumed debts had been paid the balance of the $ 15,000 purchase price amounting to between $ 300 and $ 400 was paid to defendant. The brother afterward paid on a disputed debt, by way of compromise, the sum of $ 600. Defendant with his family, soon after conveying the property to his brother, moved to Kansas City, where he continues to reside.

From the time of the conveyance the said T. R. E. Harvey rented lot 100 and paid the net rents to his brother up to May 18, 1890, when he conveyed the same, in consideration of $ 1, to the wife of his brother, who is also defendant in this suit. Between these periods the said T. R. E. Harvey gave or paid said defendant sums aggregating between $ 500 and $ 600.

The grantee T. R. E. Harvey was the only witness examined. He testified that the purchase was absolute. There was no agreement or understanding that the grantor should retain any right or interest in the land or to the proceeds of sales above the purchase price. He bought the land for the purpose of aiding his brother in the payment of his debts and to prevent a sacrifice of the property which would result from a forced sale at that time. The price paid was more than the market value of the property. In payment he assumed the payment of certain specified debts amounting to about $ 15,000. These debts he paid. The Deering & Company debt was not one of them. After paying these debts a balance of between $ 300 and $ 400 was paid to his brother. He kept an account of the receipts and expenditures in managing and disposing of the property, not for the benefit of his brother, or with a view of accounting to him for the net proceeds, but for his own satisfaction in order that he might know the financial results of the transaction.

While there was no understanding with his brother it was his intention, after he had reimbursed himself, to do something for him. Carrying out this intention he made the conveyance of lot 100 to his brother's wife. He gave his brother a statement of the account he had kept because he thought it would be some satisfaction for him to know how...