Bentrup v. Johnson

• Decision Date: 05 March 1929
• Citation: 14 S.W.2d 537,223 Mo.App. 299
• Parties: GUSTAVUS F. BENTRUP, TRUSTEE IN BANKRUPTCY OF GOLDEN EAGLE RESTAURANT COMPANY, A CORPORATION, APPELLANT, v. ALBERT E. JOHNSON AND SEARS LEHMANN, RESPONDENTS. [*]
• Court: Missouri Court of Appeals

14 S.W.2d 537

223 Mo.App. 299

GUSTAVUS F. BENTRUP, TRUSTEE IN BANKRUPTCY OF GOLDEN EAGLE RESTAURANT COMPANY, A CORPORATION, APPELLANT, v. ALBERT E. JOHNSON AND SEARS LEHMANN, RESPONDENTS. ^[*]

Court of Appeals of Missouri, St. Louis

March 5, 1929

Appeal from the Circuit Court of the City of St. Louis.--Hon. Robert W. Hall, Judge.

Judgment reversed and remanded. (with directions).

Stern & Burnett for appellant.

(1) To constitute a departure, the amended petition attacked must be compared with the original petition, and not with intervening amended ones, and the third amended petition in this case is identical with the original petition. Purdy v Pfaff, 104 Mo.App. 331; Steele v. Brazier, 139 Mo.App. 319. (2) Even if the third amended petition were a departure, the defendants by answering and going to trial on that petition have waived their right to complain of a departure. Boyd v. St. Louis Brewing Ass'n, 5 S.W.2d 46 (Sup. Ct.); State ex rel. Lunsford v Landon, 304 Mo. 654, 265 S.W. 529; Liese v Meyer, 143 Mo. 547. (3) The petition states a cause of action in equity in the nature of a bill of interpleader, and hence defendants were not entitled to a trial by jury. 33 Corpus Juris 420; Lindsay v. Hotchkiss, 193 S.W. 902, 195 Mo.App. 563; Borchers v. Barckers, 143 Mo.App. 72, second appeal of last above case reported in 158 Mo.App. 267. (4) The unrecorded agreement of June 29, 1921, from bankrupt Golden Eagle Restaurant Company to defendant Johnson, creating a lien on the property in controversy, is fraudulent and void as to plaintiff, the trustee in bankruptcy of that company. (a) Said agreement, in form a bill of sale, is in legal effect a chattel mortgage. Cummings v. Badger Lumber Co., 130 Mo.App. 557; Albert v. Van Frank, 87 Mo.App. 511; Puryear-Meyer Grocer Co. v. Cardwell Bank, 4 S.W.2d 489. (b) An unrecorded chattel mortgage is fraudulent and void as against creditors whose claims arise subsequent to the execution of the mortgage, even though the mortgagor thereafter takes open and notorious possession. R. S. 1919, section 2256; Williams v. Kirk, 68 Mo.App. 457; Keet & Roundtree v. Brown, 73 Mo.App. 245; Harrison v. South Carthage Mining Company, 95 Mo.App. 80; Hardin v. Bank, 177 Mo.App. 44; Pew v. Price, 251 Mo. 614. (c) As to unrecorded liens on the property of a bankrupt, a trustee in bankruptcy has the same rights as each or any creditor of the bankrupt had prior to bankruptcy. Section 67-a, Bankruptcy Act of 1898; Stewart v. Asbury, 199 Mo.App. 123, 201 S.W. 949; In re Bothe, 173 F. 597; Standard Computing Scale Co. v. Adam, 287 F. 347. (5) The fact that plaintiff has himself become a bankrupt since the institution of this suit does not affect his right as trustee in bankruptcy of the Golden Eagle Restaurant Company to maintain this action. Guarantee Bond & Mortgage Co. v. Hilding, 290 F. 22; 3 Remington on Bankruptcy (3 Ed.), sec. 1204. (6) The evidence that should the plaintiff trustee prevail, the proceeds derived from this suit would be consumed in the expense of administration of the bankruptcy proceedings, is immaterial. Riggs v. Price, 277 Mo. 333, 210 S.W. 420. (7) This being a suit in equity, and the facts being admitted, the cause should be reversed with instructions to enter judgment for plaintiff. Lademan v. Lamb Construction Company, 297 S.W. 184; City of Rockport ex rel. Lynch v. McMichael, 288 S.W. 785; Scott v. Cowen, 195 S.W. 732, 274 Mo. 398; Burris v. Shrewsbury Park Land & Imp. Co., 55 Mo.App. 381.

Lehmann & Lehmann for respondent.

(1) There was ample consideration for the contract between plaintiff, Johnson and Lehmann, and said contract has been performed by Johnson and Lehmann. By said contract plaintiff agreed to sue Johnson to establish rights of parties to the property involved. The express language of the contract concretely bars Bentrup from bringing an interpleader suit against Lehmann and Johnson, or a suit in the nature of an interpleader suit, or a suit in the nature of a suit in the nature of an interpleader suit. (2) The suit called for by the contract was a simple suit against Johnson. It could well have been in conversion. If Bentrup was entitled to the property when Johnson refused to give it up, Johnson then and there converted it. If Bentrup was entitled to the property, every day Johnson held it Johnson was guilty of conversion. "A wrongful assumption of a right to control or dispose of property constitutes a conversion." This is elementary. Allen v. McMonagle, 77 Mo. 478; Walsh v. Sichler, 20 Mo.App. 374; McLachlin v. Barker, 64 Mo.App. 511. The contract would be no defense to such a suit, because, in the contract, Johnson expressly agreed it was to be brought. The contract merely fixed the amount of damages and secured to plaintiff their collection if he was successful. This suit, or one with like purpose, could be brought in either State or Federal court. "Plenary suits against adverse claimants can also be brought in district courts of the United States in attempting to set aside any transfer that a creditor might have set aside had there been no bankruptcy." Section 2187, page 266, 5 Remington. "This jurisdiction is regardless of the amount involved." Same, section 2185. "Nor is diversity of citizenship necessary." Same, section 2186. Under section 70-e of the Bankruptcy Act: "The trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided and may recover the property so transferred or its value from the person to whom it was transferred unless he was a bona-fide holder for value prior to the date of adjudication. Such property may be recovered or its value collected from whomsoever may have received it, except a bona-fide holder.

"For the purpose of such recovery any court of bankruptcy and any State court which would have had jurisdiction if bankruptcy had not intervened shall have concurrent jurisdiction." 5 Remington (1923 Ed.), page 265, section 2184. (3) This proceeding is in the State court and a suit as called for by the contract is a lawsuit triable by jury. Defendant from the beginning to the end of the proceedings at every proper time demanded a trial by jury. To this they were entitled under the Missouri Constitution. Article II, section 28, Constitution of Missouri. (4) The unrecorded bill of sale mentioned in the evidence, even if there was no change in possession, was good as between the parties and at most constructively fraudulent and voidable as to creditors only. Even as to creditors it is good if they had actual notice thereof. Revised Statutes 1919, secs. 2282 and 2284; McIntosh v. Smiley, 32 Mo.App. 125; Peters v. Featherstun, 61 Mo.App. 466; Thomas Mfg. Co. v. Huff, 62 Mo.App. 124. The statute is of no avail to a creditor having actual knowledge of the sale. Dieckman v. Young, 87 Mo.App. 530. Temporary possession by the buyer may be sufficient notice to the creditors. Reynolds v. Beck, 108 Mo.App. 188. (5) (a) The trustee in bankruptcy, as representative of the creditors, has the creditors' rights. Appellants point 3. (b) Respondents' corollary to the above proposition is that the trustee has no rights per se, but only creditors rights. (c) Respondents' corollary (2) to the above proposition is that the creditors, having no rights, the trustee can have no rights through them. It being conceded the creditors could not benefit one cent by avoiding the bill of sale they have no right so to do. "De minimus non curat lex." State ex rel. Imel v. Ashton, 243 Mo. 174. (6) Appellant's point 6 is as follows: "The evidence that should the plaintiff trustee prevail, the proceeds derived from this suit would be consumed in the expense of administration of the bankruptcy proceedings is immaterial." Riggs v. Price, 277 Mo. 333, 210 S.W. 420. Riggs v. Price holds no such thing or anything like such a thing and appellant should strike this point from his brief. In this same brief he himself states: "We have searched in vain for decided cases in which the materiality of such evidence has been discussed." We have not been as vain in our search. The question was decided by the trial judges in this case and is supported by the authorities in our point 5 and by common sense. The Imel case and Southeys Poem case are squarely in point. The Bankruptcy Act was not passed for the sole purpose of giving fees to the trustee in bankruptcy and his cohorts, but to protect the creditors and the bankrupt. (7) Appellant's cases in point 3 are not in point. There is an express contract in this case to which Lehmann was a party and an interested party as attorney for the Boatmen's Bank that he was not to pay the money into court, but to hold it as security while Bentrup sued Johnson. In Lindsay v. Hotchkiss, appellant's main case, for example, the contract called for the depositing of the fund in court. Lindsay v. Hotchkiss, 193 S.W. 903.

BECKER, J. Nipper, J., concurs. Haid, P. J., not sitting.

OPINION

BECKER, J.

This action arose out of a dispute between plaintiff and the defendant Johnson, each of whom claimed ownership of certain chattels which, under a written stipulation between plaintiff and said defendant, were sold and the resulting proceeds of such sale placed in the hands of defendant Lehmann to await the determination of said disputed question of ownership. Plaintiff's third amended petition out of which this appeal arises, is a bill in equity in the nature of a bill of interpleader. After a hearing a decree and judgment was entered dismissing plaintiff's petition, and in due course plaintiff appeals.

Plaintiff filed his original petition as a bill in equity but the trial judge, in an equity division of one of the circuit courts of the city of St. Louis, ruled that if plaintiff had a cause of action it was at law. T...