C. Bewes, Inc. v. Buster

• Decision Date: 30 July 1937
• Parties: C. Bewes, Inc., v. Jesse Buster, Empire Garage Company, and Sun Investment Company, Appellants
• Court: Missouri Supreme Court

108 S.W.2d 66

341 Mo. 578

C. Bewes, Inc., v. Jesse Buster, Empire Garage Company, and Sun Investment Company, Appellants

Supreme Court of Missouri

July 30, 1937

Appeal from Jackson Circuit Court; Hon. Darius A. Brown Judge.

Order sustaining the motion for a new trial affirmed and cause remanded with directions to dismiss as to defendant sun Investment company and to proceed to trial against the other two defendants.

Harris & Koontz for appellants.

(1) C Bewes, Inc., had no valid claim against the Empire Garage Company. (2) Cancellation of the sublease was not a fraudulent conveyance. Baker v. Drake, 41 So. 845. (3) Buster was not insolvent at the time of the cancellation. (a) Insolvency must be determined as of the time of the conveyance. Bushman v. Bushman, 311 Mo. 564, 279 S.W. 126; McCluer v. White, 93 S.W.2d 699. (b) A debt afterwards paid is not to be considered in determining insolvency. Klaber v. Booth, 49 S.W.2d 182. (4) Equity will not assume jurisdiction. (a) The plaintiff was not a judgment creditor. Brown v. McKown, 176 S.W 1043; Daggs v. McDermott, 34 S.W.2d 46; Gilson v. Carroll, 97 S.W.2d 146; Davidson v. Dockery, 179 Mo. 687, 78 S.W. 625. (b) It would improperly deprive Buster of a right to trial by jury. Cates v. Allen, 149 U.S. 457. (5) The cause of action against Buster was improperly joined with other attempted causes of action. (6) No cause of action has been established against the Sun Investment Company.

Cyrus Crane, Henry W. Fox, R. Arch Smith for respondent Lathrop, Crane, Reynolds, Sawyer & Mersereau of counsel.

(1) Empire, as sublessee of an insolvent lessee, is liable for rent to plaintiff. Glassner v. Fredericks, 73 Mo.App. 425; Kemp v. San Antonio Co., 118 Mo.App. 134; Bushman v. Bushman, 311 Mo. 551, 279 S.W. 122; Tiffany, Landlord & Tenant, p. 1136, sec. 181; R. S. 1929, sec. 2603. (a) Empire is liable, as assignee, for the rent. Hicks v. Martin, 25 Mo.App. 359; St. Joseph, etc., Ry. Co., v. Ry. Co., 135 Mo. 173, 36 S.W. 602; Smith v. Brinker, 17 Mo. 148; Fontaine v. Schulenburg Co., 109 Mo. 55, 18 S.W. 1147; 16 R. C. L. 851, sec. 352. (2) There is proper joinder of parties and issues in this cause. (a) The three defendants are proper parties in this action. R. S. 1929, sec. 701; Johnson v. United Rys. Co., 247 Mo. 326, 152 S.W. 362, 274 Mo. 326, 152 S.W. 374; Johnson v. United Rys. Co., 281 Mo. 90, 219 S.W. 38; Williams v. Jones, 23 Mo.App. 132; Holley v. Iron Mountain Co., 332 Mo. 1243, 62 S.W.2d 740; Burke v. Universal Granite Quarries Co., 193 N.W. 517; Gormley v. Wilson, 168 S.E. 568. (b) The joinder of legal and equitable causes is proper. R. S. 1929, secs. 765, 1324; Lomax & Stanley Bank v. Peacher, 30 S.W.2d 44; Cape County Savs. Bank v. Wilson, 225 Mo.App. 14, 34 S.W.2d 981; Edwards v. Rosenheim, 74 Mo.App. 621; Davidson v. Dockery, 179 Mo. 687, 78 S.W. 624; First Natl. Bank v. McDonough, 168 P. 635. (3) The cancellation of the subleases and the transfer of empire's assets to Sun were fraudulent and may be set aside in equity. (a) Equity has jurisdiction. George v. Williamson, 26 Mo. 190; Potter v. Adams, 125 Mo. 118, 28 S.W. 490; Zall v. Soper, 75 Mo. 460; Gill v. Newhouse, 178 S.W. 495; 27 C. J., p. 701, sec. 537, p. 716, sec. 562. (b) The cancellation of the subleases was without consideration and fraudulent. Friedel v. Bailey, 329 Mo. 22, 44 S.W.2d 9; George v. Surkamp, 336 Mo. 1, 76 S.W.2d 368; Klauber v. Schloss, 198 Mo. 502, 95 S.W. 930. (c) The transfer of Empire's assets to Sun was without consideration and fraudulent. Holley v. Iron Mountain Co., 332 Mo. 1243, 62 S.W.2d 740; Johnson v. United Rys. Co., 247 Mo. 326, 152 S.W. 362, 274 Mo. 326, 152 S.W. 374; Johnson v. United Rys. Co., 281 Mo. 90, 219 S.W. 38; George v. Surkamp, 336 Mo. 1, 76 S.W.2d 368; Friedel v. Bailey, 329 Mo. 22, 44 S.W.2d 9. (4) The defendants' contention that Buster is entitled to a jury trial is frivolous and comes too late. Knapp v. Publishers, 29 S.W. 885; Schwartzman v. London & Lancashire Fire Ins. Co., 318 Mo. 1089, 2 S.W.2d 593; Munford v. Sheldon, 320 Mo. 1077, 9 S.W.2d 907; Supreme Lodge, K. P. v. Dalzell, 205 Mo.App. 207, 223 S.W. 786; Cape County Savs. Bank v. Wilson, 225 Mo.App. 14, 34 S.W.2d 981; McDermott v. Claas, 104 Mo. 14, 15 S.W. 995; St. Louis v. Buselaki, 336 Mo. 693, 80 S.W.2d 853; Spotts v. Spotts, 331 Mo. 917, 55 S.W.2d 977. (5) The evidence warrants the relief prayed for by plaintiff against defendants. Hendrix v. Goldman, 92 S.W.2d 733; Howard v. Zweigart, 197 S.W. 46. (6) Plaintiff is entitled to new trial or judgment on the record. Krug v. Bremer, 316 Mo. 891, 292 S.W. 702; Lastofka v. Lastofka, 99 S.W.2d 46; Howard v. Zweigart, 197 S.W. 46; Hendrix v. Goldman, 92 S.W.2d 733.

Hyde, C. Ferguson and Bradley, CC., concur.

OPINION

HYDE

This is an action in equity to set aside fraudulent conveyances, in order to reach assets for the purpose of collecting a debt of $ 7000 with six per cent interest from January 1, 1933, for which a judgment is prayed. We have jurisdiction "because the amount of the debt sued for, principal and interest, computed to the date of judgment, had (plaintiff) been entitled to judgment, would be, according to the allegations of his petition, in excess of $ 7,500." [Huttig v. Brennan, 328 Mo. 471, 41 S.W.2d 1054, and cases cited.] The trial court found for defendants and entered judgment dismissing plaintiff's bill. Thereafter, at a subsequent term, the court sustained plaintiff's motion for a new trial which had been timely filed. Defendants have appealed from the order granting plaintiff a new trial.

The court failed to state in its order any ground for its action. However, the grounds stated in the motion for a new trial were not based on any specific erroneous rulings during the trial, but in various ways stated the claim that the court found for the wrong party. One of these grounds was that "the finding and decree of the court is against the weight of the evidence." In this situation, the order should be affirmed if there was sufficient substantial evidence to sustain a finding in favor of the party to whom the new trial was granted. [Riche v. City of St. Joseph, 326 Mo. 691, 32 S.W.2d 578; Castorina v. Herrmann, 340 Mo. 1026, 104 S.W.2d 297, and cases cited.] Defendants do not contend otherwise, but say: "It is our position that the court's action at the conclusion of the trial in rendering judgment for the defendants, was the only result warranted by the evidence." Thus the only question is whether there was sufficient substantial evidence to show that plaintiff was entitled to any part of the relief sought.

Plaintiff had a claim against defendant Buster for rent due under two leases and a written modification thereof. In 1924, plaintiff had purchased a 99-year leasehold from the Jewell Realty Company, hereinafter referred to as Jewell, covering property on Oak Street in Kansas City. Jewell entered into a 30-year lease contract with Buster on September 19, 1922, by which it agreed to erect a two-story garage on Oak Street, for which Buster agreed to pay a rental of $ 13,000 per year for the first seven years, $ 14,000 per year for the next seven years and $ 15,000 per year for the remaining sixteen years. Buster deposited $ 12,000, which was to be held for payment of the last rental installments and upon which he was to be allowed six per cent interest until that rent became due. Thereafter an agreement was made to add a third story to the garage. Negotiations for this were begun with Jewell but the work had apparently not been commenced when plaintiff bought the property from Jewell because, on May 15, 1924, a lease was made between plaintiff and Buster which provided for the third floor to be added. The original Jewell lease had been assigned to plaintiff, and the new third floor lease, which was to terminate at the same time the original Jewell lease was, required Buster to pay an additional rental of $ 2700 per year for five years and thereafter $ 3000 per year additional for the remainder of the term. Buster deposited an additional $ 3000, making his total deposit $ 15,000, all of which was to be held to be applied on the payment of the last year's rent. Buster also indorsed on the original Jewell lease his agreement to pay to plaintiff the rent therein provided.

In January, 1923, which was before the original building was completed and before plaintiff became the owner of the property, Buster organized the Empire Garage Company hereinafter referred to as Empire. He became, and still was up to the time of the trial, president and general manager of this company, and as such he received a salary of $ 500 per month. His ownership in the company varied between twenty-five per cent and thirty-three and one-third per cent of its stock. On January 9, 1923, he made a lease of the original two-story garage to Empire. This lease was to terminate at the same time as the Jewell lease and provided for payment of rent by Empire to Buster in exactly the same amounts as Buster had agreed in his lease to pay to Jewell. A deposit of $ 15,000 was made by Empire which it was agreed should be applied to the payment of the last year's rent and Empire was to be allowed six per cent interest on this deposit. On May 22, 1924, after Buster had made the lease with plaintiff, for a third floor to be added to the building, he made a lease of this third floor to Empire for the same term as the other leases but required Empire to pay $ 2880 per year for the first five years and $ 3180 per year for the remainder of the term, but required no additional deposit by Empire. After completion, the garage was occupied by Empire, which paid all required rentals in full up to September 1, 1931. The rent was usually paid by an Empire check signed by Buster as president...