Blake v. Meadows

• Decision Date: 27 November 1909
• Citation: 123 S.W. 868
• Parties: BLAKE v. MEADOWS.
• Court: Missouri Supreme Court

123 S.W. 868

BLAKE v. MEADOWS.

Supreme Court of Missouri, Division No. 1.

November 27, 1909.

Rehearing Denied December 23, 1909.

1. FRAUDULENT CONVEYANCES (§ 49) — CONVEYANCE BY HUSBAND TO WIFE — RESULTING TRUST — PERFORMANCE.

Where a husband who was without financial ability, after the death of his father-in-law, took charge of money belonging to his wife and mother-in-law, and with this purchased certain land in controversy, taking the deed in his own name without their consent, and after the mother-in-law's death promised to convey the property to the wife, such conveyance, though made when he was insolvent, was but the performance of a resulting trust which he was bound in equity to perform, and was not fraudulent as to his creditors.

2. BANKRUPTCY (§ 155) — RIGHTS OF TRUSTEE.

While a trustee in bankruptcy takes title to the bankrupt's property, including that transferred in fraud of creditors contrary to the bankruptcy act, he takes it subject to outstanding equities, not lost by estoppel or fraud, to which the title was subject in the hands of the bankrupt.

3. HUSBAND AND WIFE (§ 62) — MARRIED WOMEN — ESTOPPEL IN PAIS.

The fact that a married woman is authorized by statute to contract with reference to her separate property does not subject her to the complete application of the doctrine of estoppel in pais.

4. HUSBAND AND WIFE (§ 129) — ESTOPPEL OF WIFE — HUSBAND'S CREDITORS.

Where a wife did nothing by word or deed to induce her husband's creditors to believe that her husband was the owner of certain land which he wrongfully purchased in his own name with money belonging to her and to her mother, to whose interest she succeeded as heir, her failure to take immediate steps to enforce her husband's promise to reconvey the land to her, or to notify his creditors that he held the land in trust for her, did not estop her to claim that a conveyance thereof to her, executed by him while insolvent, was not in fraud of his creditors, but was only a performance of the resulting trust.

5. FRAUDULENT CONVEYANCES (§ 225) — CREDITORS — RIGHT TO PLEAD FRAUD.

Creditors, with knowledge that the consideration for a husband's purchase of certain lands, belonged to the wife and her mother, and that the title standing in the husband's name was either a fraud on the wife, who had succeeded to her mother's interest, or a gift to the husband, could not claim that they were defrauded by a subsequent conveyance of the land by the husband, while insolvent, to the wife.

6. FRAUDULENT CONVEYANCES (§ 286) — ADMISSIBILITY — COMMERCIAL REPORTS.

In a suit by a bankrupt's trustee to set aside a conveyance by husband to wife as a fraud on the husband's creditors, reports of commercial agencies not based on information derived either from the husband or the wife, indicating in a vague way that the husband was the owner of certain unlocated real estate, were inadmissible to show that the creditors seeing the reports extended credit on the faith of the husband's ownership of the land in controversy.

Appeal from Circuit Court, Clay County; J. W. Alexander, Judge.

Action by Daniel F. Blake, as trustee in bankruptcy of Thomas J. Meadows, against Susie L. Meadows. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

Wash Adams and Frank P. Divilbiss, for appellant. James M. Sandusky, Lavelock & Kirkpatrick, and Karnes, New & Krauthoff, for respondent.

LAMM, P. J.

Thomas J. Meadows, merchant in the village of Lawson, Ray county, Mo., doing business under the name and style of Meadows & Co., on May 10, 1905, was adjudged a bankrupt by the District Court of the United States for the Western Division of the Western District of Missouri, On due steps taken, Daniel F. Blake was appointed trustee of the bankrupt estate and took upon himself the burden of administering the trust. Presently said Blake lodged his bill in equity in the Clay circuit court, charging (among other things) that Meadows in March, 1898, by a deed duly executed by the then owners, became seised in fee of the S. W. ¼ and the S. ½ of the N. W. ¼, section 35, township 54, range 30, in Clay county; that he took possession under his deed, and thenceforth represented himself, with the knowledge and consent of defendant, as the owner; that subsequently he became indebted to divers persons in sundry sums, proved and allowed against his estate in bankruptcy; that in February, 1905, intending thereby to hinder and defraud his creditors, he, by a deed put of record, conveyed said farm to his wife, the defendant Susie L., said deed reciting a consideration of $8,000; that the deed was without any consideration in fact, but on the pretended consideration that Susie L. had paid the purchase price at the time of the conveyance to Thomas J. in 1898, and that the conveyance to her was an execution of a pretended trust arising on such payment of the original purchase money; that such pretended consideration should not avail as legal or valid, because Susie L. at the time had no intention of claiming the land as her own or claiming any indebtedness due her by Thomas J. by reason of her furnishing such purchase money; that if she furnished the purchase money it it was not paid upon a purchase of the land in her own behalf or for her use and benefit, but in order to have the land conveyed to Thomas J. as his own, and to enable him to obtain and have credit in carrying on business; further, that such pretended consideration should not prevail as a valid or legal one, for the reason that the title was allowed to remain in Thomas J. of record from April, 1898, to the 9th day of February, 1905, with the knowledge and acquiescence of defendant, during which time Thomas J., with her consent, held possession of the land, controlled and dealt with it as his own, held himself out as the owner, and was recognized as the owner while engaged in business as a merchant which required him to incur liability and to obtain and have credit on the faith of his financial ability to discharge his obligations as they matured; that defendant well knew all this; that Thomas J. was thereby enabled to and did obtain credit upon the faith and belief of his ownership of said lands, and that the claims and demands allowed against his estate in bankruptcy were contracted and credit therefor extended on the faith and belief he was such owner; that the conveyance to Susie L. left him without sufficient assets to pay such debts, and the effect of it was to render him insolvent; and that, the premises considered, the deed is fraudulent and void as to such creditors, and void as to the plaintiff as trustee in bankruptcy. Wherefore, etc.

After sundry intermediate steps and incidents, not material here, issue was joined by answer charging among other things that defendant's maiden name was Cummins; that she was the only child of Madison B. and Emma J. Cummins; that Madison B. died in February, 1898, Thomas J. Meadows becoming his administrator; that on the 6th of April, 1898, defendant and her said mother, acting through Thomas J. as their agent, purchased the land in controversy; that all of the purchase money (except $2,500) was on deposit in the Commercial Bank of Lawson in the names of defendant and her said mother, respectively, came from the estate of Madison B., and had been paid over to them by Thomas J. as administrator; that the purchase price of the land (except said $2,500) was paid by checks drawn by said Thomas J. against the said accounts of defendant and her mother, said checks being signed respectively by the names of defendant and her mother by said Thomas J.; that said $2,500 was borrowed for defendant and her mother from one J. H. Roney, and was subsequently paid out of moneys belonging to defendant and her mother, derived from their separate estates; that defendant and her mother were wholly unfamiliar with legal blanks, documents, forms of conveyances, of the manner of executing deeds or mortgages, and business generally; that, without the knowledge or consent of defendant or her mother, said Thomas J. took title to the land in his own name, and that defendant's mother died in December, 1900, intestate, without knowledge of the fact that Thomas J., in violation of his trust, had taken title in his own name, she at all times supposing that title to be in herself and Susie L. her only heir; that this defendant did not learn for a long time that the title had been taken in the name of Thomas J., and, as soon as she found it out, demanded of him that he put the title in her name and that of her mother, where it belonged; that frequently before and after her mother's death she requested that the deed be corrected and the title placed in the names of the rightful owners; that Thomas J. at all times expressed a willingness and promised to comply with such request, but failed to do so until he executed a deed to defendant in February, 1905; that Thomas J. paid none of the consideration for the purchase of the land; that the conveyance to defendant in February, 1905, was only doing what in law, equity, and good conscience he ought to do, for that he held the title in trust for defendant and her mother, and, after her mother's death, for this defendant alone; that said conveyance was and is no fraud upon the creditors of Thomas J., nor was it made for the purpose of hindering, delaying, or defrauding anyone, but, to the contrary, was made solely for the purpose of executing the trust resulting as aforesaid; that Thomas J. did not engage in a business necessary for him to incur debts with the knowledge or consent of defendant or her mother, nor hold out to the world their consent or acknowledge the land as his property, nor was he extended credit upon the faith of such ownership; that defendant had good cause to believe and did believe that Thomas J. was free from debt and in a prosperous financial condition, and that defendant at no time knew or had reason to...