Culp v. Mulvane

• Decision Date: 10 January 1903
• Docket Number: 12,881
• Parties: B. F. CULP v. JOAB MULVANE, as Administrator, etc., et al
• Court: Kansas Supreme Court

71 P. 273

66 Kan. 143

B. F. CULP v. JOAB MULVANE, as Administrator, etc., et al

No. 12,881

Supreme Court of Kansas

January 10, 1903

Decided January, 1903.

Error from Reno district court; M. P. SIMPSON, judge.

STATEMENT.

ON October 5, 1898, the plaintiff in error, as plaintiff below filed his petition in the district court of Reno county Kansas, alleging that there was due him from the estate of R R. Price, deceased, the sum of $ 12,887; that said claim had been duly presented to the probate court of Reno county, and, on the 17th day of June, 1897, allowed; that the said claim drew interest at the rate of ten per cent. per annum, and that no part thereof had ever been paid. The plaintiff alleged further that the deceased R. R. Price in his lifetime owned $ 160,000 of the stock of the Kansas Salt Company, a Kansas corporation doing business in the city of Hutchinson, and also owned an equal amount of the first-mortgage bonds of said company; that a short time before his death, being in failing circumstances, he fraudulently transferred the said stock and bonds to the defendants, Joab Mulvane and John R. Mulvane, with the unlawful intention of hindering, delaying and defrauding his creditors, and particularly the plaintiff in this case; that the transfer was made without consideration, and with the intent on the part of said R. R. Price to defraud his creditors, and that the defendants, Joab Mulvane and John R. Mulvane, received the stock and bonds without consideration, knowing that the property was of the actual cash value of $ 160,000 or more, and knowing that R. R. Price was transferring the same to them with the intent to hinder, delay and defraud his creditors, and to prevent them from collecting the amount due them; that soon after said unlawful transfer of said stock and bonds R. R. Price died intestate; that afterward his widow, Margaret D. Price, acting with the said defendants, Joab Mulvane and John R. Mulvane, with the intent of completing and carrying out the unlawful transfer, permitted Joab Mulvane to be appointed administrator of the estate of R. R. Price, deceased; that the officers and agents of the salt company had, since the illegal transfer of the stock and bonds, aided, abetted and assisted the Mulvanes to sell and transfer the same and to conceal the facts with reference to their ownership and their unlawful transfers, and were aiding, assisting and abetting the Mulvanes to conceal the property belonging to the Price estate; that Joab Mulvane, as administrator, wholly failed, neglected and refused to report the stock and bonds as a part of the estate of R. R. Price, deceased; that the stock and bonds were practically all of the property of the estate of R. R. Price, and that the report of the administrator as made to the probate court showed that the estate of Price was wholly insolvent, notwithstanding the fact that there were claims of creditors against the estate in excess of $ 120,000; that the plaintiff had no adequate remedy by the usual process of law; that with the exception of the said stocks and bonds the Price estate was wholly insolvent; that the plaintiff brought the suit for the benefit of all of the creditors of the estate who wished to take advantage of the same and bear their share of the necessary expense. All of the creditors of the Price estate were made parties defendant. The petition concluded with a prayer that the transfer of the stocks and bonds of the Mulvanes be declared illegal and void, and that they be decreed to deliver the same to the sheriff of Reno county, to be by him sold as upon execution, and the proceeds applied to the payment of the claims of the creditors of Price.

Thereafter, on January 13, 1900, and before the defendants had answered, the plaintiff filed a supplemental petition, and, in substance, charged that, since the filing of the petition the Mulvanes, being the principal stockholders of the Kansas Salt Company and its officers, managers and directors, caused it to suspend business and transfer all of its property to the Hutchinson Kansas Salt Company; that they had refused to permit the plaintiff to examine the books of the Kansas Salt Company; that they had appropriated the proceeds realized from the sale of the property of the company to their own use, with the intention and purpose of preventing the plaintiff from causing the stocks and bonds described in his original petition to be subjected to the payment of his debts and the debts of the other creditors; that in this conversion the Mulvanes had acted jointly, and by reason of it were jointly indebted to the estate of Price for the use and benefit of the creditors of the estate in the sum of $ 160,000, that being the value of the stocks and bonds at the time the same were fraudulently conveyed to them; and that the Mulvanes were jointly indebted to the plaintiff in the full amount due to him from the Price estate as set forth in the original petition. This supplemental petition concluded with a prayer that, in addition to the relief prayed for in his original petition, plaintiff have judgment against the Mulvanes for the full sum due to him as demanded in the original petition.

Answering this petition and supplemental petition, the Mulvanes denied generally, and pleaded the statute of limitations and other matters in abatement.

The issues coming on to be heard, the plaintiff demanded a jury to try the same as a matter of right, the defendants objecting thereto on the ground that the issues were only of equitable cognizance. Thereupon a jury was called for the purpose, as the judge at the time announced, of making "advisory findings."

A large quantity of evidence, making a record of over 300 pages, was introduced pro and con upon the issues raised by the pleadings, much of it tending to prove the plaintiff's allegations of fraud and much of it tending to disprove it. The jury, acting under the instructions of the court, made answer to over 100 special questions, which, as they came from the hands of the jury, found the issues almost entirely for the plaintiff and in accord with his theory. These findings would unquestionably have entitled him to the relief which he sought. Both parties filed motions to change these findings, the plaintiff upon a few immaterial matters, and the defendants upon material and vital ones. The court sustained the motion of the defendants and changed the findings of fact returned by the jury so that they found nothing of actual fraud in the conduct of either Price or of the Mulvanes, and found that the Mulvanes purchased for a full and sufficient consideration the stocks and bonds from Price.

It seems that Price had been a man of large means; that he had engaged in the salt business in Hutchinson, and in various other schemes of large importance; that he had, early in 1894, sold to one Hutchinson the stocks and bonds in question; that the stock was transferred by the delivery of the certificates and transfer of the same upon the books of the company; that subsequently Price repurchased from Hutchinson most of these stocks and bonds, taking from him an assignment in blank of the certificates of stock. In October of that year, Price sold to J. R. Mulvane this stock and these bonds for what the court found to be a bona fide and sufficient consideration. The certificate bearing the indorsement of Hutchinson in blank was passed to Mulvane as an evidence of the purchase. Soon thereafter Price suddenly died, and the Mulvanes had the stock transferred to them upon the books of the company after Price's death, the same having theretofore, since the transfer by Price to Hutchinson, stood in the name of Hutchinson on the stock-books of the company. It seems from the evidence that this transfer by Price to the Mulvanes was known among their business associates at the time, though, in view of the findings of the court acquitting both Price and the Mulvanes of all fraud in connection therewith, this fact may be unimportant.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. CREDITOR'S BILL--Triable to the Court--Findings by Jury Advisory Only. An action by a creditor of a deceased person against those whom he claims to have fraudulently converted, and to be fraudulently concealing, property belonging to the deceased, praying discovery thereof, in the interest of the plaintiff and all others of deceased's creditors who might choose to come into the action and avail themselves of such recovery, is an action in the nature of a creditor's bill, and, as such, triable to the judge and not to a jury, as a matter of right. Where the issues in such case have been submitted to a jury for the purpose of making advisory findings, it is not error for the court to refuse to be governed by such findings, but he may change them and make such new ones as, under the evidence, he thinks proper. Such findings of fact made by the court will not be disturbed by this court, unless manifestly against the weight of the evidence.

2. CORPORATIONS--Transfer of Stock by Delivery. Under the statutes of this state the stock of a private corporation is subject to a valid transfer as between the grantor and grantee by a delivery of the certificate of such stock indorsed in blank, with...