Dickey v. Thompson

• Decision Date: 07 June 1929
• Docket Number: 27300
• Citation: 18 S.W.2d 388,323 Mo. 107
• Parties: Charles W. Dickey, Trustee in Bankruptcy, v. W. C. Thompson et al., Appellants
• Court: Missouri Supreme Court

18 S.W.2d 388

323 Mo. 107

Charles W. Dickey, Trustee in Bankruptcy, v. W. C. Thompson et al., Appellants

No. 27300

Supreme Court of Missouri

June 7, 1929

Appeal from Christian Circuit Court; Hon. Fred Stewart Judge.

Reversed and remanded.

G. Purd Hayes, Tom R. Moore and Moore & Moore for appellants.

(1) In the absence of proof that any claims have been established against the bankrupt estate, the trustee is not entitled to maintain a suit to set aside an alleged fraudulent conveyance for the purpose of obtaining funds with which to pay claims. Crary v. Kurtz, 132 Iowa 135, 105 N.W. 590, 109 N.W 452; Leavingood v. McGee, 40 Ore. 233, 91 P. 453; McKey v. Smith, 99 N.E. 695. (2) To avoid a preference, at the instance of a trustee in bankruptcy, the instrument creating the same must have been given within four months prior to the filing of the petition in bankruptcy, and if executed more than four months before such filing, and not recorded until within such four months' period, if valid under the state law, where executed, same is not voidable as a transfer or as a preference. 7 C. J. 158, sec. 257, note 5; Mayes v. Palmer, 208 F. 97; Newman v. Dry Goods Co., 174 Mo.App. 528; Pew v. Price, 251 Mo 614. (3) The trustee takes title to property fraudulently conveyed, and the trustee may avoid a conveyance the creditors might have avoided. In re Downing, 201 F. 93. But where property is not subject to execution, by creditors, then the trustee has no greater right than a creditor, in conveyances by bankrupt, unless made within the four month period. Webb v. Shoe Co., 56 S.E. 581; Nelson v. Pub. Co., 178 F. 136. (4) Property held by husband and wife as tenants by the entirety is not subject to execution against the husband or wife, and can only be levied upon where the judgment is against husband and wife jointly, if at all or under any condition, as such estate can only be terminated by the joint acts of husband and wife, such as a sale and conveyance by both. Frost v. Frost, 200 Mo. 474; McGee v. Henry, 144 Tenn. 548, 234 S.W. 509. Where real estate is held by husband and wife as tenants by the entirety the interest of neither spouse is liable for the debts of the other. Ashbaugh v. Ashbaugh, 273 Mo. 253, 201 S.W. 72. See also on this question: 273 Mo. 159, 201 S.W. 67, and Mahan v. Ruher, 240 S.W. 164.

Page, Barrett & Barrett and Lon S. Haymes for respondent.

(1) A trustee in bankruptcy may maintain a suit to set aside fraudulent transfers without proving that any specific claims of creditors have been allowed by the referee. Gering v. Leyda, 186 F. 110; Nieters v. Brockman, 11 Mo.App. 599; Riggs v. Price, 277 Mo. 333, 210 S.W. 420; Booth v. Bates (Ala.), 117 So. 209; Lester v. Barclay (Ala.), 105 So. 808; Clements v. Eggleston (Ala.), 114 So. 2. Proof of adjudication of bankruptcy and the admission of the bankrupt's schedules is sufficient, especially when the bankrupts admit that the creditors listed in their schedules were in existence at the time of the transfers. Peacock v. Fairbairn (Ida.), 264 P. 231. (2) A trustee in bankruptcy may set aside any fraudulent conveyance that a creditor could under the state law, regardless of whether the transfer was within four months of bankruptcy. Riggs v. Price, 277 Mo. 333, 210 S.W. 420; May v. Bibler (Mo.), 4 S.W.2d 769; Stellwagen v. Clum, 245 U.S. 614, 62 L.Ed. 511; Baldwin v. Kingston, 247 F. 163; In re McMullen, 101 F. 413; Bush v. Expert Storage Co., 163 F. 918. (3) Every conveyance made to hinder, delay or defraud creditors is void, and may be set aside by creditors whether they are prior or subsequent to the conveyance. Sec. 2276, R. S. 1919; Bohannon v. Combs, 79 Mo. 305; Gust v. Hoppe, 201 Mo. 293; Snell v. Harrison, 104 Mo. 158; Klauber v. Schlass, 198 Mo. 502; State ex rel. v. Trimble, 287 S.W. 432; Reynolds v. Faust, 179 Mo. 21. (a) A conveyance made without consideration is void as to existing creditors without more. Hurley v. Taylor, 78 Mo. 238. (b) Before a conveyance discharges a debt of a grantee there must be an understanding on the part of the grantee that such conveyance shall discharge the grantee's debt, 27 C. J. 536; Crecelius v. Bierman, 72 Mo.App. 355. (c) When the consideration for a conveyance to a child is inadequate the conveyance is presumptively fraudulent. 27 C. J. 569; Mason v. Perkins, 180 Mo. 702; Bishop v. Bishop, 228 S.W. 1065. (d) If part of the consideration for a conveyance is fraudulent or fictitious, as to creditors, the entire transaction will be vitiated. Tube Works v. Machine Co., 118 Mo. 365; State ex rel. Robertson v. Hope, 102 Mo. 410; Roland v. Ross, 120 Mo. 208; White v. Meiderhoff (Mo. App.), 281 S.W. 98; Jones v. National Bank, 13 F.2d 98. (4) It is true that where husband and wife hold land by the entirety it cannot be sold to satisfy a judgment against one of them. Also, when one of two tenants by the entirety go into bankruptcy the estate by the entirety does not pass to the trustee in bankruptcy. But an estate by the entirety is subject to execution on a judgment against husband and wife for the same obligation. 30 C. J. 573, 1052, sec. 820; Martin v. Lewis, 187 N.C. 473, 122 S.E. 180, 35 A. L. R. 144; Sanford v. Bertran, 204 Mich. 244, 169 N.W. 880; Frey v. McGraw, 127 Md. 23; L. R. A. 1916D, 113; Johnson v. Leavitt (N. C.), 125 S.E. 490; National Bank v. Finley, 180 Ind. 470, 103 N.E. 110. A deed given by tenants by the entirety may be set aside if it is in fraud of creditors of one of the grantees. Finch v. Cecil, 170 N.C. 114, 86 S.E. 991. After and adjudication in bankruptcy, no creditor can reduce his claim to a judgment, and the allowance of claims operates as a judgment. Riggs v. Price, 277 Mo. 333, 210 S.W. 420; Carr v. Barnes, 138 Mo.App. 264, 120 S.W. 705; Salt & Lumber Co. v. Hammond, 217 F. 559; 7 C. J. 322.

Lindsay, C. Seddon and Ellison, CC., concur.

OPINION

LINDSAY

This suit was brought to cancel two deeds of conveyance of real estate alleged to have been executed for the purpose of defrauding the creditors of John T. Rhodes and Clora H. Rhodes, who are husband and wife. The plaintiff is trustee of the estate in bankruptcy of John T. Rhodes and also trustee of the estate of Clora H. Rhodes. John T. Rhodes and Clora H. Rhodes were severally adjudged bankrupts upon their petitions in voluntary bankruptcy, separately filed. The adjudications in bankruptcy were had on October 17, 1924. The deeds sought to be cancelled by the trustee were executed more than four months prior to the filing of the petitions in bankruptcy. The petition herein alleges that on or about the 28th day of March, 1924, John T. Rhodes and Clora H. Rhodes were the owners in fee simple of eighty acres of land in Christian County -- the northwest quarter of the northeast quarter and the northeast quarter of the northeast quarter of Section 31, Township 27, Range 22; and that on said date, and while hopelessly insolvent and greatly indebted, and with the purpose of hindering, delaying and defrauding their creditors, they pretended to sell and convey the tract of land described, to the defendant W. C. Thompson, by warranty deed, for the recited and pretended consideration of $ 2,000; that thereafter, about the -- day of April, 1924, said W. C. Thompson attempted to convey said real estate to defendant C. C. Rhodes, minor son of John T. Rhodes and Clora H. Rhodes, and executed a deed to C. C. Rhodes, which was not delivered or recorded, and is held by John T. Rhodes. The petition charges that there was no consideration whatever paid for the execution of the deeds mentioned; that W. C. Thompson and C. C. Rhodes knew that John T. Rhodes and Clora H. Rhodes were insolvent and greatly indebted, and participated in the intent and purpose of defrauding the creditors of John T. Rhodes and Clora H. Rhodes.

The evidence shows that John T. Rhodes and Clora H. Rhodes on the 28th day of March, 1924, executed a warranty deed to defendant W. C. Thompson for the recited consideration of $ 2,000. This deed was not acknowledged by them at that time, but was delivered to said Thompson, who kept it for a few days and returned it to the grantors. Afterward, this deed was acknowledged by the grantors and filed for record on the 16th day of October, 1924. The deed executed by Thompson to defendant C. C. Rhodes some eight or ten days after the execution of the deed to Thompson, was acknowledged by Thompson, but was never filed for record. The respective schedules filed by John T. Rhodes and Clora H. Rhodes in the bankruptcy proceedings, were introduced in evidence, showing various creditors holders of claims existing long prior to the dates of the deeds mentioned, and continuing to the time of the adjudication in bankruptcy. These claims consist mainly of notes signed by John T. Rhodes as maker, and by Clora H. Rhodes as surety, in the aggregate, in excess of $ 1600.

The schedule of John T. Rhodes shows him as having no property other than household goods and wearing apparel valued at $ 25. The schedule of Clora H. Rhodes shows the only property owned by her was wearing apparel valued at $ 25 and a life estate, valued at $ 300, in forty acres of land. The trial court entered a decree annulling the deeds mentioned, and barring defendants Thompson and C. C. Rhodes from setting up any claim to the land mentioned by virtue of said deeds, and decreed plaintiff as trustee to be the owner thereof.

As their first point, counsel for appellants say there is neither allegation nor proof that any claims were allowed against the estates of John T. Rhodes and Clora H. Rhodes, and that in the absence of proof that claims had been established against the estates of the bankrupts, the trustee is not entitled to maintain his suit and set aside the alleged fraudulent conveyances, for the...