Byrd v. Hall

• Decision Date: 07 September 1915
• Docket Number: 4323.
• Citation: 227 F. 537
• Parties: BYRD v. HALL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

227 F. 537

BYRD v. HALL et al.

No. 4323.

United States Court of Appeals, Eighth Circuit.

September 7, 1915

Rehearing Denied December 18, 1915.

Wilson Cramer, of Jackson, Mo., and R. B. Oliver, Sr., of Cape Girardeau, Mo., for plaintiff in error.

John T McKay, of Kennett, Mo., and Charles W. Bates, of St. Louis Mo., for defendants in error.

Before SANBORN and HOOK, Circuit Judges, and AMIDON, District Judge.

AMIDON District Judge.

For convenience of reference we will again briefly state the long story that underlies this case. In May, 1871, William Sugg 'lawyer, merchant, and navigation contractor,' was the owner of 20,000 acres of swamp land in Dunklin county, Mo. He was also largely indebted to creditors for goods sold and delivered. Suits were pending upon these debts, and a term of court at which they would pass into judgment was to convene May 29th of that year. On the 27th of May William Sugg executed and delivered a deed of the above-described lands to his brother, Wiley P. Sugg. The Supreme Court of Missouri (St. Francis Mill Co. v. Sugg, 206 Mo. 148, 104 S.W. 45) has found that this deed was executed for the purpose of hindering, delaying, and defrauding creditors, and that both parties to it were willful participants in the fraud. The creditors recovered judgments at the May term of court, which were docketed and became liens upon the lands covered by the deed. William Sugg died before the creditors discovered the property thus fraudulently conveyed. In April, 1875, however, they brought suit against Wiley Sugg to have the fraudulent conveyance canceled as an obstruction to the collection of their judgments. Before this suit came to trial Wiley Sugg died, and the case the collection of their judgments. was revived against his administrator and heirs. August 20, 1880, a decree was entered, declaring the conveyance to be 'fraudulent and void, and that the same be set aside and for naught held as to the plaintiffs herein as creditors of said William S. Sugg,' except about 2,000 acres of the lands, 'which are, by agreement of the parties herein, excepted and excluded, and said deed is not set aside' as to said 2,000 acres.

A motion for new trial was filed, but was left dormant until January, 1895. The Supreme Court of Missouri, having before it in the case above referred to a much fuller record of the transaction than is now before us, explained the reason why this motion was allowed to lie dormant, in the following language (206 Mo. 148, 104 S.W. 51):

'The trial was had, and the court indicated a judgment for plaintiffs; thereupon this motion for new trial was filed, no doubt accompanied with threats of an appeal. Then it was, in our judgment, that the agreement between counsel to exempt the 2,000 acres occurred, and then came the decree which was written up and entered. This will account for the fact that the motion was permitted to lie dormant so long. * * * We feel satisfied that the agreement was reached after the motion was filed, and the announced judgment of Judge Owen was modified into the decree as entered.'

This explanation is consistent with the language of the decree and the conduct of the parties. It shows that the decree was the result of a compromise. The heirs of Wiley P. Sugg have enjoyed the fruits of that compromise. Both under the statute of Missouri against fraudulent conveyances and upon doctrines of equitable estoppel they ought, therefore, to be barred from questioning the application of the remainder of the lands to the satisfaction of the claims of creditors in whose favor that decree was entered. At that time the lands were of little value. In 1895 the value of the lands had greatly increased, and in the meantime the heirs had reached an age when they were interested in their own affairs. The motion was therefore revived and brought on for hearing. It is not necessary for us now to state the repeated trials of the case in the courts of Missouri, and the frequent appeals that were taken. It is sufficient that in July, 1907, the Supreme Court of that state, upon a full examination of the testimony, affirmed the decree. Mill Co. v. Sugg, 206 Mo. 148, 104 S.W. 45.

After the decree of August 20, 1880, was entered, the administrator of William Sugg's estate, at the instance of the judgment creditors, filed a petition in the probate court of Dunklin county, setting forth the recovery of their judgments, the entry of the decree, and the insolvency of the estate, and asking that an order be made for the sale of the lands in question, and that the proceeds, after paying expenses, be applied upon their judgments. The probate court, acting upon this petition, took the regular steps required by law for the sale of the lands. The sale was had, and a deed executed. The defendants here derive their title under that sale. The plaintiffs claim as heirs of Wiley Sugg, either directly or by subsequent conveyance.

For 37 years the plaintiffs here conducted the litigation as defendants which resulted in the final decision against them in the Supreme Court of Missouri above referred to. St. Francis Mill Co. v. Sugg, 206 Mo. 148, 104 S.W. 45. That case was decided in 1907. In 1910 the litigation was given a new lease of life by the present action of ejectment, brought by the defeated parties in the other suit to recover possession of one section of the land. The case has been in this court once before. Byrd v. Hall et al., 196 F. 762, 117 C.C.A. 568. On that review we reversed a judgment in favor of the defendants and sent the case back for a new trial. This second trial likewise resulted in a judgment in favor of the defendants, and the plaintiffs bring error.

We will take up the errors complained of in the order in which they are presented by counsel. They assert, first, that the trial court failed to give effect to the law of the case as declared in our former opinion; and, second, that the decision is wrong as matter of law, independently of our opinion.

Upon the first trial the defendants in their answer alleged that the lands were sold under the order of the probate court, on petition of the administrator, and for the purpose of paying all debts proven against the estate. It contained no averments showing that the sale was had at the instance of the judgment creditors who had obtained the decree of August 20, 1880, and for the sole purpose of paying their judgments. In support of the answer no evidence was offered, except the deed, which recited a sale of the lands for the payment of debts against the estate generally. After our reversal, the answer was amended so as to set forth the proceedings in the probate court fully. It alleged that the sale was on the petition of the judgment creditors and solely for the payment of their judgments. The first question now for consideration is whether these new allegations, and the evidence offered to support them, made such a case as would support the decision of the trial court, notwithstanding our former decision. We think it does. Our former decision is based upon the decisions of the Supreme Court of Missouri. We held that the transfer from William Sugg to his brother Wiley was valid as between the parties, their heirs, and personal representatives, and that the probate court of Dunklin county had no jurisdiction on the petition of the administrator to attack the conveyance or to sell the property to pay the general debts of William Sugg. Those were the issues that were then before us, and all language used in the opinion must be confined to them. We are now to decide whether, after the creditors had obtained a decree declaring the transfer to be void as against them, they could then apply to the probate court, in which their judgments had been allowed as claims, and ask the aid of that court to have the lands sold in payment of their judgments. That question was not passed upon when the case was here before.

A correct determination of the question now presented requires an examination of the statutes of Missouri and the decisions of its highest court.

Section 5170 of the Revised Statutes of Missouri of 1889 provides as follows:

'Every conveyance * * * of any estate or interest in lands * * * made or contrived with the intent to hinder, delay or defraud creditors * * * shall be from henceforth deemed and taken, as against said creditors * * * to be clearly and utterly void.'

Under this statute the conveyance from William to Wiley Sugg, as against his creditors, was a nullity. As to such creditors the title to the land, both legal and equitable, remained in the fraudulent grantor, precisely the same as if the conveyance had never been executed. They had all the rights and were entitled to all the remedies which would have been theirs if the conveyance had not been made. Bump, in his work on Fraudulent Conveyances, at sections 468 and 469, says:

'The theory of the law is that the fraudulent transfer is void as against creditors. For the purpose of enabling them to enforce their rights the title is deemed to remain in the debtor as though the transfer had never been made, and they may levy on the property and sell it as his property. If the creditors obtain judgments against the debtor after the transfer, they acquire liens upon his property wherever the same are given by law, according to the dates of their respective judgments in the same manner precisely as if no transfer had been made, for the transfer is a nullity as against them, and the legal as well as the equitable title remains in the debtor for the purpose of satisfying his debts.'

Freeman, in his work on Executions, at section 136, speaking of the title obtained at an execution sale of property fraudulently conveyed, says:

'The title transferred by such sale is not a

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