Citizens Bank of Hayti v. McElvain
| Decision Date | 02 March 1920 |
| Parties | CITIZENS BANK OF HAYTI v. J. M. McELVAIN and A. McELVAIN, Appellants |
| Court | Missouri Supreme Court |
Appeal from Pemiscot Circuit Court. -- Hon. Sterling H. McCarty Judge.
Affirmed.
R. L Ward and S. J. Corbett for appellants.
(1) Plaintiff positively failed to show (a) lack of consideration, (b) that Grace R. Tindle conveyed the property to hinder, delay or defraud her creditors, (c) that defendants had any knowledge of any fraud on the part of Grace R. Tindle or any facts or circumstances from which there could fairly be deducible any of the elements necessary to cancel and set aside the deeds. (2) In a suit to set aside a conveyance on ground of fraud, mere suspicion is not enough. Fraud must be proved as an affirmative fact; and the proof must be of such character as to convince the mind of the chancellor; for it is never presumed, and if the facts all consist as well with honesty as with fraud the transaction must be held honest. Black v. Epstein, 221 Mo. 310; Bank v. Worthington, 145 Mo. 100; Waddingham v. Loker, 44 Mo. 132; Dallan v Renshaw, 26 Mo. 523; Robbinson v. Dryden, 118 Mo. 539; Coleman v. Hagey, 252 Mo. 102. (3) Plaintiff pleaded that Grace R. Tindle conveyed this property to hinder, delay and defraud her creditors, yet not a line of testimony was offered to this effect and no circumstances shown. The whole proof shows that her husband was bankrupt, that she had been sick many months and had a family of four children and was to give birth to a fifth and required the constant attention of a nurse and physician and didn't have any money whatever, and the family was moving to Youngstown, Ohio, where her husband was to occupy a position as bookkepper; and she did not have a dollar for the necessities of the family, herself and children, and the property was mortgaged, so she sold it to get money for the use of herself and family. One cannot conjecture or guess this sale to hinder or defraud creditors from this testimony. Link v. Hathaway, 143 Mo.App. 502; Bates Bank v. Railroad, 98 Mo.App. 330. It is not sufficient to cancel the deed, that a part of the purchase money went to pay a debt of her husband, when he had, in fact, given her all the property. Wellman v. Investment Co., 262 Mo. 285. (4) At best plaintiff only showed that Grace R. Tindle was insolvent; that is, that after making this conveyance she had no property left except what was coming to her from the trustee in property conveyed in trust. It cannot be inferred that the conveyance was fraudulent from the fact that the grantor was insolvent or financially embarrassed when he executed it. Link v. Hathaway, 143 Mo.App. 502; State ex rel. v. Merritt, 70 Mo. 275; Gage v. Mear, 107 Mo.App. 140. (5) Not a line or intimation that defendants knew Grace R. Tindle was conveying this property with fraudulent intent. Henderson v. Henderson, 55 Mo. 534; Wall v. Bundy, 161 Mo. 625; Gust v. Hoppe, 201 Mo. 298; Smotherman v. Clothing Company, 154 Mo.App. 622; Farmers Bank v. Worthington, 145 Mo. 99. (6) A conveyance of land will not be declared fraudulent unless the grantee knew and participated in the fraud. Farmers Bank v. Worthington, 145 Mo. 91; State ex rel. v. Mason, 112 Mo. 374. Mere knowledge of facts or suspicious circumstances which would put an ordinarily prudent man on inquiry is not enough, though such facts may be given in evidence to be considered by the jury. Sammons v. O'Neill, 60 Mo.App. 530; Hern v. Dunn, 79 Mo.App. 322; Kelley v. Prickett, 84 Mo.App. 94.
Von Mayes for respondent.
(1) An attaching creditor may maintain an action to set aside a fraudulent conveyance of the property attached. Mansur v. Jones, 143 Mo. 253; Sec. 2344, R. S. 1909. (2) It is not necessary to make the grantor a party to the suit. Schneider v. Patton, 175 Mo. 684. (3) It is sufficient if the effect of the conveyance is to hinder or delay the creditors of the vendor. State v. O'Neill, 151 Mo. 85; Hewitt v. Price, 99 Mo.App. 666; Sec. 2294, R. S. 1909; 20 Cyc. 461; 2 Moore on Fraudulent Conveyances, p. 572; 2 Pomeroy's Equity Jurisprudence (4 Ed.), sec. 971, p. 2103; Oldham v. Wade, 273 Mo. 231. However, a conveyance made in good faith to pay creditors is valid. First Nat. Bank v. Fry, 216 Mo. 24; Baker v. Harvey, 133 Mo. 653. (4) Where the purchaser has knowledge of facts sufficient to excite his suspicions and put him upon inquiry, he will be presumed to know all the facts which reasonable inquiry would have disclosed. State v. Purcell, 131 Mo. 312; Deere Plow Co. v. Sullivan, 158 Mo. 440; Bank v. Tobacco Co., 155 Mo. 602; Adams v. Gossom, 228 Mo. 583; 20 Cyc. 470, 481. (5) The sale may be void, though the purchaser pays a valuable consideration. Aull v. Gaffin, 234 Mo. 171; Sexton v. Anderson, 95 Mo. 373; Kurtz v. Troll, 86 Mo.App. 649. (6) Where property is sold by a debtor for the purpose of defrauding creditors, a bona-fide purchaser without notice is only protected to the extent of actual payment thereon prior to the attachment. Dry Goods Co. v. Hodges, 175 Mo.App. 493; Arnholt v. Hartwig, 73 Mo. 485; Daugherty v. Cooper, 77 Mo. 528; Young v. Keller, 94 Mo. 581; Kurtz v. Troll, 175 Mo. 506; Stein v. Burnett, 43 Mo.App. 477; Wetmore v. Woods, 63 Mo.App. 270; Bigelow, Fraudulent Conveyances, pp. 568, 600; 2 Pomeroy's Equity Jurisprudence (4 Ed.), sec. 750, p. 1539; 20 Cyc. 643.
The plaintiff, a judgment creditor of Grace R. Tindle, brings this action to have declared fraudulent and void as to plaintiff, three several deeds made by Grace R. Tindle and her husband to the defendants, on the ground that the same were made to hinder, delay and defraud her creditors, including this plaintiff. Upon trial nisi the chancellor so decreed, and defendants have appealed.
The pertinent facts are Grace R. Tindle was indebted to plaintiff upon a note due July 8, 1913, in the sum of $ 2000. September 8, 1913, plaintiff filed suit upon said note; summons was issued September 22, 1913, and served upon September 30, 1913. September 30th, affidavit for an attachment was filed in the case, and writ of attachment was issued and served upon Grace R. Tindle upon that day, and an abstract of the levy under the writ duly filed on the same day. Two days after the filing of the petition by the plaintiff, i. e. September 10, 1913, Grace R. Tindle, joined therein by her husband, executed the three deeds attacked in this case, covering three tracts of land. The aggregate expressed considerations was $ 7500. The defendants herein were the grantees in such deeds. Those deeds were placed of record on September 17th. On December 2, 1913, the circuit court sustained the attachment and gave the bank judgment for the amount of its note and interest. Later the present suit was instituted. In it, by answer, the defendants averred that they purchased in good faith and for value, and denied that such purchase was made by them with the intent to hinder, delay or defraud the creditors of Grace R. Tindle.
The three deeds stripped Grace R. Tindle of every vestige of property which she then owned. Her husband was then in trouble, and was afterward sent to the penitentiary. J. M. McElvain was a friend to the Tindles and lived just across the street from them. He was on Tindle's bonds in the criminal cases arising from a bank failure, and on them all the time. At the date of the conveyances Mrs. Tindle was indebted in a sum aggregating more than $ 10,000, but McElvain says that he had no knowledge of that fact.
The consideration was paid as follows, according to McElvain wired them $ 1500, to Ohio, and later paid her $ 500 more when he visited them at their home in Ohio. She also agreed that McElvain might retain $ 2500 of the purchase price to be applied on a joint note of $ 5000, given by her husband and McElvain to one Mitchell. the evidence. McElvain paid the husband of Mrs. Tindle, for her, $ 1000, at the making of the deeds, or about that time. Two thousand dollars was to be deducted, because of a deed of trust on the property in that sum.
The Tindles left Caruthersville, Missouri, for Youngstown, Ohio, the last day of September, or the day upon which the attachment was served. Going back to the question of the payment of the consideration, if in fact it was paid, the evidence of Mrs. Tindle is that Thus the alleged consideration was made up. The money payments ($ 1000 and $ 500) were paid in actual cash instead of checks. The evidence also discloses that the transaction was carried on by Mr. Tindle for his wife. It further shows that McElvain and the Tindles were close friends and that Tindle and McElvain had dealt in lands together. Further Tindle, whilst in the bank, had loaned money to McElvain. The agreement that $ 2500 was to be applied upon the joint note to Mitchell was made after the trade was closed, according to McElvain, but Mrs. Tindle says that he would not buy the property unless this $ 2500 was so applied, and herein a material conflict.
Mrs. Tindle says that she sold the property because she was sick and had to have money to support herself and four children. Shortly afterwards she gave birth to a child. She says that her husband was in financial troubles and could not help her. Plaintiff was forced to go to the camp of the enemy for its testimony and the facts given here came from Mrs. Tindle and Mr. McElvain. The price of $ 7500 is not shown to have been far from the real value. Only about $ 1200 below, by the best evidence.
As said, the court found the deeds fraudulent and void in so far as they affected the rights of plaintiff. Such are the facts of the record, leaving only details connected with the central facts for the opinion.
I. We can shortly determine the situation of Mrs. Tindle in this...
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