Bank of New Cambria v. Briggs

• Decision Date: 12 February 1951
• Docket Number: No. 41965,41965
• Citation: 361 Mo. 723,236 S.W.2d 289
• Parties: BANK OF NEW CAMBRIA v. BRIGGS et al.
• Court: Missouri Supreme Court

Page 289

236 S.W.2d 289

361 Mo. 723

BANK OF NEW CAMBRIA v. BRIGGS et al.

No. 41965.

Supreme Court of Missouri.

Feb. 12, 1951.

Errol Joyce, Brookfield, Jayne & Jayne, Kirksville, Attorneys for appellants.

James Glenn, Macon, Attorney for Respondent

VAN OSDOL, Commissioner.

Action by a judgment creditor, plaintiff, to set aside and cancel two allegedly fraudulent conveyances by which conveyances, through a straw party, a tract of 114.97 acres of described land in Linn County was conveyed by defendant Lawrence T. Briggs, judgment debtor, to himself and his wife, defendant Irene Briggs. The trial court found the issues for plaintiff, and rendered a judgment and decree cancelling the conveyances and determining the property (a homestead being recognized in defendant husband) to be subject to the lien of plaintiff's judgment. Defendants have appealed.

Defendants-appellants by answer had alleged that the conveyances involved whereby defendants, the husband and wife, acquired the joint title were made pursuant to agreements long existing between such defendants, by which agreements defendant husband was obligated to vest title in the husband and wife jointly because defendant wife had furnished more than eighty per centum of the money necessary to pay off liens against the land; that, when the land was acquired, it was agreed, contemplated and intended that the title should be vested in defendants, husband and wife, although by mistake of the scrivener the deeds were written naming only Lawrence T. Briggs as grantee; and that subsequently it was understood and agreed between them that, notwithstanding such deed to the husband only, the property was jointly owned by the husband and wife, and title should be transferred to them jointly by conveyances to be executed at some convenient time.

Defendant husband, Lawrence T. Briggs, bought the described land (and an additional forty acres subsequently sold) from the heirs of his father in 1936. Defendant husband paid the other heirs for the property (then valued at $2200, including the value of his interest as an heir), having borrowed $900 from two sisters and a brother, and $1000 from one Hughes. All of the conveyances from the heirs were to defendant husband as sole grantee. The Hughes note, dated March 3, 1936, was secured by a deed of trust on the described land. The Hughes note was paid in 1938, and the deed of trust released. There was evidence tending to show the Hughes note was paid by check given by defendant wife drawn upon her personal account with the Bucklin State Bank; and evidence introduced tends to further show the husband's indebtedness, aggregating $900, to the husband's sisters and brother was paid by defendant wife by checks drawn upon her personal account. Defendants testified that the source of the wife's funds, out of which these debts were paid, was her inheritance distributed from her father's estate.

Long after the acquisition of the land, defendant Lawrence T. Briggs became indebted to the plaintiff-respondent, Bank of New Cambria, the indebtedness being evidenced by various unsecured notes in aggregate principal $2425. In early 1948 the officers of plaintiff Bank were vainly insisting that defendant husband secure his indebtedness by a deed of trust upon the described land; and, on April 27, 1948, by letter, plaintiff Bank declined a request to make a further advance of credit. The conveyances involved in the instant action were dated April 28, 1948. The recited consideration was one dollar and 'exchange of deeds.' Admittedly, the conveyances rendered defendant Lawrence T. Briggs insolvent. Plaintiff instituted an action upon the unsecured notes and recovered judgment, November 8, 1948, in the Circuit Court of Linn County. An execution was returned nulla bona, and the plaintiff Bank instituted the instant action. Further facts will be stated in the course of this opinion.

In the instant case, an equitable action, the appellate court determines the cause de novo, weighing the evidence introduced upon the factual issues; but the appellate court will usually defer to the findings of the trial chancellor where there is conflicting verbal testimony involving the judging of the credibility of the witnesses who appeared before him. Cobble v. Garrison, Mo.Sup., 219 S.W.2d 393.

Plaintiff Bank had the burden of proof of fraud. Oetting v. Green, 350 Mo. 457, 166 S.W.2d 548; Castorina v. Herrmann, 340 Mo. 1026, 104 S.W.2d 297. But fraud, like any other fact, may be established by circumstantial evidence. There are circumstances which have come to be recognized as indicia or badges of fraud, one of which circumstances alone may not prove fraud, but may warrant an inference of fraud, especially where there is a concurrence of several indicia of fraud. Conrad v. Diehl, 344 Mo. 811, 129 S.W.2d 870; Russell v. Franks, 343 Mo. 159, 120 S.W.2d 37; Castorina v. Herrmann, supra; Brennecke v. Riemann, Mo.Sup., 102 S.W.2d 874, 109 A.L.R. 1214; Toomay v. Graham, Mo.App., 151 S.W.2d 119. The facts or circumstances recognized as indicia of fraud are numerous. Pertinent to the instant case, it may be said the fact that a transfer or conveyance disposes of all of a debtor's property is material on the question of intent. Toomay v. Graham, supra. And it is recognized that the confidential or close relationship of the parties; transactions without the usual course of doing business; transfers anticipating the enforcement of creditors' claims; and incorrect statements relating to the consideration for transfers are circumstances to be considered. Castorina v. Herrmann, supra. It is the rule in this State that transactions between husband and wife to the prejudice of the husband's creditors are looked upon with suspicion. Their good faith must be so clearly shown that there can be no reasonable doubt of the honesty of the questioned transactions. Oetting v. Green, supra; Conrad v. Diehl, supra; Friedel v. Bailey, 329 Mo. 22, 44 S.W.2d 9; Balz v. Nelson, 171 Mo. 682, 72 S.W. 527.

It was neither alleged nor contended that defendant wife and husband sustained a creditor and debtor relation. Defendants' answer alleged the questioned conveyances were executed pursuant to an agreement (existing at the time the described land was acquired) that the title should be vested in the husband and wife, and, because of a mistake of a scrivener, title was vested in the husband individually. Nevertheless, the evidence shows the defendants, husband and wife, knew, at the time the Hughes note was paid in 1938, that the title was vested in the husband only; and there was no transfer of the title to the husband and wife jointly until in 1948.

It was admitted by an officer of plaintiff Bank that defendant husband, in 1947, had asked the Bank's officer to prepare deeds vesting the title in the husband and wife jointly, but, due to some cause not fully explained in the record, the conveyances were not executed. Defendant husband testified that he had told the Bank's officer 'that the farm was in my name but my wife had paid for the farm and that we wanted a deed made to both of us.' The Bank's officer testified defendant husband 'did not tell me that his wife's money was in it.' At that time and thereafter until in early 1948, defendant was being extended further credit on the basis of his signed financial statements, including the statement that the title to the described land was vested in him 'individually.' The last of the financial statements was of January 26, 1948.

Plaintiff wife, upon at least two occasions, had been present at the Bank's offices and within the hearing of her husband's discussions with the Bank's officers relating to the...