Conrad v. Diehl

• Citation: 129 S.W.2d 870,344 Mo. 811
• Decision Date: 14 June 1939
• Docket Number: 35619
• Parties: John J. Conrad v. Adele Diehl, George W. Diehl and Alice C. Diehl, Appellants
• Court: Missouri Supreme Court

129 S.W.2d 870

344 Mo. 811

John J. Conrad v. Adele Diehl, George W. Diehl and Alice C. Diehl, Appellants

No. 35619

Supreme Court of Missouri

June 14, 1939

Appeal from St. Francois Circuit Court; Hon. Taylor Smith Judge.

Affirmed.

R E. Kleinschmidt for appellants.

(1) Land purchased by the husband with the funds of the wife is in equity, her property even though he takes the title in his own name. Alkire Grocer Co. v. Ballenger, 137 Mo. 369; Seay v. Hesse, 123 Mo. 450; Blake v. Meadows, 225 Mo. 1; First Natl. Bank v. Link, 275 S.W. 936; Leidner Undertaking Co. v. Vogel, 251 S.W. 431; Green v. Wilks, 109 S.W.2d 859. (2) A "straw man," in the parlance of real estate dealers, is a mere conduit or medium for convenience in holding and passing title. Van Raalte v. Epstein, 202 Mo. 187. (3) Fraud is never presumed nor deduced from mere suspicion, but must be proved, and the burden of proving that a conveyance was fraudulent rests upon him who alleges the fraud. Moberly v. Watson, 102 S.W.2d 886; Twedell v. Treasure, 44 S.W.2d 216; Brueckle v. Pechan, 21 S.W.2d 907; Gockel v. Gockel, 66 S.W.2d 870; Gittings v. Jeffords, 239 S.W. 88. (4) Equity case is heard de novo on appeal and Supreme Court passes on the weight of the evidence. And the rule that due deference will be given to the findings of the trial chancellor applies mainly where the evidence was chiefly oral and not, as here, where much of the evidence consisted of documentary evidence. Shaw v. Butler, 78 S.W.2d 421; Reaves v. Pierce, 26 S.W.2d 616. (a) Supreme Court, in equity cases, has a distinct advantage over trial court in that it can view all the evidence in perspective from the printed record, especially in a case like this, where much of the evidence was documentary and not oral. Smith v. Lore, 29 S.W.2d 96.

Schubel & Schubel and Edgar & Matthes for respondent.

(1) A deed made for the purpose of hindering, delaying or defrauding creditors is void, either as to prior or subsequent creditors, and should be set aside. Sec. 3117, R. S. 1929. (2) A voluntary conveyance is fraudulent as to existing creditors, regardless of intent, if conveyance leaves debtor without means to pay debts. Godchaux Sugars, Inc., v. Guinn, 95 S.W.2d 82; Friedel v. Bailey, 44 S.W.2d 9; May v. Gibler, 4 S.W.2d 771; Citizens Bank of Hayti v. McElvain, 219 S.W. 75; Lionberger v. Baker, 88 Mo. 453. (3) The conduct of a sale or transfer not in the usual course of business, or in an unusual way is a badge of fraud, and should be viewed with a scrutinizing eye, and the transactions involved herein, under which the premises were first conveyed to respondent Adele Diehl, then to defendant Wm. G. A. Dietzer, and finally to respondent Alice C. Diehl, for no valid reason, are very unusual and clearly are badges of fraud. 27 C. J. p. 489, sec. 140; Bennie v. Seknecke, 100 Mo. 256; Baldwin v. Whitecomb, 71 Mo. 651; Snell v. Harrison, 104 Mo. 158; Barber v. Nunn, 205 S.W. 14; Hendrix v. Goldman, 92 S.W.2d 736. (a) In any case where real estate transactions are made through straw parties, the use of such parties is a badge of fraud and such transactions should be viewed with suspicion. Ryan v. Stubblefield, 100 S.W.2d 444; Houtz v. Hellman, 228 Mo. 655; Hendrix v. Goldman, 92 S.W.2d 736. (b) An incorrect statement of the consideration for deed or conveyance is badge of fraud. 27 C. J. 484, 485, sec. 135; Hendrix v. Goldman, 92 S.W.2d 736. (c) The failure of defendant William G. A. Dietzer to appear and defend his actions, and failure on part of said defendant to even file an answer, is unusual circumstance and a badge of fraud. 27 C. J. 494, sec. 148; Ryan v. Stubblefield, 100 S.W.2d 446. (d) Transactions between parties where a confidential relationship existed as exists among the defendants in this case, should be scrutinized closely and such a relationship is usually an indicia or badge of fraud. Hendrix v. Goldman, 92 S.W.2d 733. (e) Transfers in anticipation of a suit should be viewed and scrutinized closely and is a recognized indicia or badge of fraud. Hendrix v. Goldman, 92 S.W.2d 733; Castorina v. Herrmann, 104 S.W.2d 302. (f) The withholding of a conveyance from records is a recognized indicia or badge of fraud. Castorina v. Hermann, 104 S.W.2d 297. (4) In all equity actions, including those to set aside a deed on any ground, the Supreme Court gives due deference to the finding of the chancellor. Peoples Bank v. Jones, 93 S.W.2d 907; Franklin v. Moss, 101 S.W.2d 715; Hale v. Weinstein, 102 S.W.2d 652; Natl. Union Co. v. Vermillion, 19 S.W.2d 781. (a) Appellate courts will always uphold the judgment of the chancellor if the judgment can be sustained on any theories supported by evidence. Smalley v. Queen City Bank, 94 S.W.2d 959. (b) In any equity suit to set aside fraudulent conveyances, it is for the chancellor to decide credibility of conflicting oral testimony and to draw reasonable inferences therefrom. Brewes, Inc., v. Buster, 108 S.W.2d 66; Castorina v. Herrmann, 104 S.W.2d 297; Hendrix v. Goldman, 92 S.W.2d 733.

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

OPINION

DALTON

This is a proceeding in equity. By it the plaintiff seeks (1) to set aside several conveyances purporting to transfer title to certain real estate in Jefferson County to Alice C. Diehl; (2) to have George W. Diehl declared to be the owner thereof; and (3) to have said real estate subjected to the lien of plaintiff's judgments against George W. Diehl. The cause was instituted in Jefferson County, but on change of venue went to the Circuit Court of St. Francois County, where the relief prayed for was granted. Defendants have appealed.

The question for determination is who purchased and owns the real estate in question. The prior owner of the property was one Podhorsky. The conveyances involved are (1) a deed from Podhorsky and wife to Adele Diehl, a daughter of George W. Diehl; (2) a deed from Adele Diehl to William G. A. Dietzer, an alleged fictitious person; and (3) a conveyance from William G. A. Dietzer to Alice C. Diehl, wife of George W. Diehl. Mrs. Diehl was not a party to the original suit which was against Diehl, his daughter, and Dietzer. When the conveyance to Alice C. Diehl was recorded subsequent to the institution of the present suit, an amended petition was filed, and she was made a party defendant.

Plaintiff, a judgment creditor, contends that George W. Diehl, an otherwise insolvent debtor purchased and owns the real estate, and that the various conveyances were caused to be made by Diehl for the purpose of hindering, delaying and defrauding creditors, including plaintiff.

Defendant, George W. Diehl, handled all of the transactions herein mentioned. Defendants claim that he acted as agent for his wife, Alice C. Diehl, in purchasing the real estate and selling parts of it; that she paid the purchase price and paid her husband a commission for buying and selling the real estate for her; that Alice C. Diehl is the true owner of the property; and that the title was taken and held in the name of Adele Diehl and later, in the name of William G.A. Dietzer, as a matter of convenience; and that these parties are merely straw parties or trustees holding title for Mrs. Diehl and having no interest in the property.

This appeal raises no issues as to the sufficiency of the pleadings. All assignments of error are directed to the sufficiency of the evidence.

Error is assigned on account of (1) the Court's failure to give defendants' instructions in the nature of demurrers to the evidence, as offered at the close of plaintiff's case, and at the close of all the evidence, (2) the Court's failure to dismiss plaintiff's bill, and (3) the Court's action in setting aside the several deeds and declaring title in George W. Diehl. Appellants' position is that there was no evidence that said Diehl owns the property, or furnished any of the purchase money, or had any deeds made to him or that any of the parties intended that title be vested in him. Appellants contend that there was no evidence that Alice C. Diehl, the wife, was guilty of any fraud, "fraudulent intent, conduct or purpose, either active or constructive," and that the wife's property could not be subjected to the payment of her husband's debts. Appellants contend further that even if the efforts of Diehl gave him an interest in the said property, he could legally prefer his wife as a creditor and have the title held for her benefit by a trustee or straw party. With reference to the last contention it is sufficient to say that the joint answer of the three Diehls expressly alleges "that the real estate described in said petition was acquired on or about the 19th day of July, 1933, by Alice C. Diehl, . . . as her individual property and with her own funds; . . . that the record title thereto was placed in the name of defendant Adele Diehl and afterwards in the name of defendant William G. A. Dietzer, a "straw party," as a mere conduit or medium for convenience in holding title." Defendants are bound by their said answer, and the position taken therein. The pleadings raise no issue as to Diehl's wife being a creditor or of any attempt by him to prefer her as such. The issues in a lawsuit are made up by the pleadings and not by anything else. [Kleinlein v. Foskin, 321 Mo. 887, 900, 13 S.W.2d 648, 654.]

At the close of plaintiff's case and again at the close of all of the evidence, the appellants tendered instructions in the nature of demurrers to the evidence, which were refused by the court. Appellants assign error thereon.

The general rule is that error in the giving and refusing of instructions in an equity case is no error at all; for such instructions will not be considered on appeal. "A demurrer to the evidence being akin to a peremptory instruction, or...