Bascom v. Rainwater

• Decision Date: 23 April 1888
• Citation: 30 Mo.App. 483
• Parties: JOHN E. BASCOM, Assignee and Interpleader, Respondent, v. CHARLES C. RAINWATER et al., Appellants.
• Court: Kansas Court of Appeals

30 Mo.App. 483

JOHN E. BASCOM, Assignee and Interpleader, Respondent, v. CHARLES C. RAINWATER et al., Appellants.

Court of Appeals of Missouri, Kansas City.

April 23, 1888

APPEAL from Lafayette Circuit Court, HON. RICHARD FIELD, Judge.

Affirmed.

Statement of case by the court.

The respondents began suit by attachment against Christian W Grau, in which certain goods, wares, and merchandise and other property, were attached as the property of said Grau. The plaintiff, claiming to be the assignee of said Grau under a deed of assignment, interpleaded, claiming the property so seized as such assignee. The instrument under which the plaintiff claims title is as follows: " Know all men by these presents, that the undersigned, C. W. Grau, of Corder Lafayette county, Missouri, in consideration of the sum of two thousand ($2,000) dollars to him paid by Sam A. May agent, of St. Louis, Missouri, sell, assign, set over and transfer unto the said Sam A. May, agent, his executors administrators, and assigns, the following described goods, wares, merchandise, groceries, dry goods, etc., to-wit, being the general stock of merchandise now being and situated in a certain frame building in the town of Corder, Lafayette county, Missouri, and known as Grau's store and occupied by said Grau in carrying on a general country store, together with all furniture, fixtures, safe, etc., and all and singular the stock of whatsoever kind located as above mentioned and described. Upon condition that if he pay to said Sam A. May, agent, his executors, administrators, and assigns, two thousand dollars, as indicated by his four promissory notes, being dated November 3, '86, November 12, '86, November 18, '86, and November 19, '86, respectively, each for five hundred dollars, due and payable thirty days after date, with interest at eight per cent. from date, then this conveyance shall be void, otherwise to remain in full force and effect, and in case default be made in the payment of the debt above mentioned or any part thereof, or of the interest due thereon, on any day when the same ought to be paid, then the whole sum shall, at the election of the said Sam A. May, agent, become immediately due and payable. One of said notes now being due and payable, and realizing my utter inability to pay same, I hereby convey and assign to said May, agent, as aforesaid, all the property, goods, wares, etc., herein mentioned and described, and surrender immediate possession to said May, agent, as aforesaid, the said ____, or ____ legal representative, may take the said property or any part thereof into possession.

Upon taking possession of said property or any part thereof, either in case of default or as above provided, the said Sam A. May, agent, or his legal representatives may proceed to sell the same, or any part thereof, at public auction, to the highest bidder for cash, or at private sale if the interests and rights of interested parties is thereby subserved, in the town of Corder, state of Missouri, having first given ____ days public notice of the time, terms, and place of sale and property to be sold, by ______.

I fully exonerate and hold Sam A. May, agent, legal representatives and assigns, harmless for any claim for trespass on account of entering said or any premises where said personal property may be, or taking and causing to be taken, the property herein mentioned. I further agree to protect said Sam A. May, agent, or assigns from any landlord's claim while engaged in the disposal of said goods.

After said debt and interest, together with all necessary costs, charges, and expenses incurred by said Sam A. May, agent, or assigns, have been paid and satisfied in full out of the proceeds of such sale, he or they shall pay over the surplus if any to creditors of said Grau, pro rata, or their legal representatives.

In witness whereof, I have hereunto set my hand and seal, this third day of December, 1886."

May, the grantee named in said deed, claiming that the instrument was a chattel mortgage and not a deed of assignment, refused to qualify as assignee under the statute. Thereupon, on petition of certain creditors of Grau, the circuit court appointed the interpleader Bascom assignee, who qualified as such. May, the beneficiary under the deed, had in the meantime taken possession of the property under the deed.

Prior to the order of the circut court removing May and appointing Bascom as assignee, the appellants herein instituted suit by attachment, and seized the goods thereunder, which have since been sold by the sheriff under orders of the circuit court, who now holds the proceeds subject to this litigation.

Under the instructions given by the court, declaring, in effect, the instrument in question to be a deed of assignment, the jury found the issues for the interpleader. To reverse the judgment entered thereon the attaching creditors prosecute this appeal.

E. F. KEYTON and G. M. SEBREE, with J. D. SHEWALTER, for the appellants.

I. The instrument was a conveyance in trust for the purpose of securing a debt, subject to a condition of defeasance; and, therefore, was a chattel mortgage, and not an assignment, Crow v. Beardsley, 68 Mo. 435; Burrill on Assignments [5 Ed.] sec. 312; Sampson v. Shaw, 19 Mo.App. 274. The distinguishing features are that a mortgage is a security for a debt, while an assignment is an absolute appropriation of the property.

II. An assignment made with intent to hinder, delay, or defraud creditors is void, provided the grantee, or assignee, or the beneficiary, is aware of such fraudulent intent and coö perates therein. There is no analogy between such conveyance and the case where some of the debts are merely fictitious, in which latter case the conveyance is inoperative only in so far as relates to such fictitious debts. Crow v. Beardsley, 68 Mo. 435; State to use v. Benoist, 37 Mo. 500, 515, 516; Burrows v. Allen, 7 Mo. 424; Goodwin v. Kerr, 80 Mo. 276; Bump on Fraud. Con. [3 Ed.] 359. And in Adler v. Lange, 21 Mo.App. 516, it is expressly held that fraud of the parties vitiates an assignment. " These facts might have been properly submitted under appropriate instructions, as some evidence tending to show that the assignment was fraudulent in its inception." Burrill on Assignments, sec. 338, p. 530.

III. Any conveyance made with the intent to hinder or delay or defraud, or so as to hinder, etc., is void. It is the intent of the parties to the conveyance, not the legal effect of the instrument that avoids the same. If executed bona fide, it is valid, though its effect is to hinder or delay and vice versa. Hence the court's holding (as insisted by respondent) that, as the legal effect of a deed of assignment was to put all creditors on an equal footing, the instrument was valid, though executed with a fraudulent intent, is erroneous. Burgert v. Borchert, 59 Mo. 80.

IV. The instrument, if an assignment, and not a mortgage, was void on its face and should have been so held. An assignment clothing the assignee with discretionary powers and the power of sale, as herein, renders the assignment void on the suit of an attaching creditor. Bank v. Hughes, 10 Mo.App. 7, 14; 52 Md. 211; 74 Ala. 598; 12 Wis. 391; 2 Black (U. S.) 532.

V. Subsequent acts of the parties are competent, not as invalidating the instrument, if valid in its inception, but for the purpose of showing the intent with which it was executed. Adler v. Lange, 21 Mo.App. 516.

VI. The original assignee or mortgagee, being in court, the failure of respondent to call him and explain the charge of fraud raised by the pleadings is most unfavorably construed against him.

WALLACE & CHILES, for the respondent.

I. There was no error in the court below, in admitting in evidence the said instrument of writing executed by Christian W. Grau, to Sam A. May, dated December 3, 1886, and recorded December 4, 1886, conveying said goods, wares, and merchandise for the benefit of his creditors. Such instrument of writing, with the order of court appointing interpleader as assignee thereunder, constitute the title of interpleader to such goods and personal property. And such deed was properly admitted in evidence; it was a link in interpleader's title, its effect to be passed upon by the court, by instructions, or in its decisions. Rev. Stat. 1879, chap. 5, sec. 354, as amended by act of March 7, 1885; Session Acts 1885, p. 30.

II. There was no error in the court below in giving the declarations of law numbered one, two, and four, on the part of the interpleader. They were warranted by the evidence and are a correct and just exposition of the law in this case. Rev. Stat. 1879, chap. 5, sec. 354, supra; Douglas v. Cissna, 17 Mo.App. 43; Gates v. Lebeaume, 19 Mo. 17. Debts due to the creditors of a debtor " constitute a valuable consideration," for a deed of assignment. And " the obligation of the trustee to perform the trust," under the deed, " is a sufficient consideration for him." And so, " the fact that the assignee was a creditor, as appears on the face of the assignment."

III. There was no error in refusing the instructions asked for by plaintiff in attachment. There was no evidence to authorize the court in giving such declarations of law in this case. Even if May sought, with the concurrence of Grau, to get a preference for his debt in the deed over other creditors (as Rainwater, Boogher & Company are seeking to get by attachment in this case), such preference, being void in law would not invalidate the assignment as to the other creditors. The other beneficiaries and creditors would have to be guilty of fraud, in order to avoid the deed as to them. Brashear v. West, 7 Pet. [U. S.] 608. " Creditors have an equitable claim on all the property of their debtor; and it...