Farmers & Traders Bank v. Kendrick

• Decision Date: 30 July 1937
• Citation: 108 S.W.2d 62,341 Mo. 571
• Parties: The Farmers & Traders Bank, a Banking Corporation, Appellant, v. Martha Kendrick and John Barron
• Court: Missouri Supreme Court

108 S.W.2d 62

341 Mo. 571

The Farmers & Traders Bank, a Banking Corporation, Appellant, v. Martha Kendrick and John Barron

Supreme Court of Missouri

July 30, 1937

Appeal from Saline Circuit Court; Hon. Charles Lyons Judge.

Reversed and remanded (with directions).

J B. Gallagher, Roy D. Williams and W. W. Carpenter Jr., for appellant.

(1) An order of the probate court denying administration is a judgment entitled to the same weight as a judgment of any other court of record and is not open to collateral attack. Todd v. Security Ins. Co., 221 S.W. 808, 203 Mo.App. 474. (2) When a debtor is dead, and an administration of his estate has been denied by the probate court by reason of lack of assets, a creditor may proceed to set aside a fraudulent conveyance in order to make a showing of the existence of other or further property to justify the probate court in granting an administration. Meters v. Brockman, 11 Mo.App. 600; Davidson v. Dockery, 179 Mo. 687; Hume v. Wright, 274 S.W. 741; American Trust Co. v. Kaufman, 135 A. 210; Battle v. Reid, 68 Ala. 72; Dunn v. Murt, 4 Mackey, 289; Armstrong v. Craft, 71 Tenn. 191; Quarl v. Abbett, 1 N.E. 481. (3) When one of the parties to an alleged contract is dead the survivor is not permitted under our statute to testify as to the terms of said alleged agreement. Sec. 1723, R. S. 1929; Roethemeier v. Veith, 69 S.W.2d 934. (4) The testimony of a witness relating to statements made by a party since deceased is not admissible over the objection that the same is hearsay. Jackson v. Curtiss-Wright Airplane Co., 68 S.W.2d 715; McCune v. Daniels, 251 S.W. 458. (5) In the absence of an express agreement to the contrary, the right of property to the earnings of a husband and wife who are living together and mutually employed in providing support for themselves and their children, belongs to the husband. Plummer v. Trost, 81 Mo. 429; Browning v. Bailey, 261 S.W. 351; Tomax & Stanley Bank v. Peacher, 30 S.W.2d 44; Detroit & Security Trust Co. v. Gitre, 235 N.W. 885; Sorensen v. Sorensen, 179 N.W. 256. (6) A voluntary conveyance that renders the grantor insolvent is fraudulent and void as to existing creditors. Friedel v. Bailey, 44 S.W.2d 9; Munford v. Sheldon, 9 S.W.2d 907. (7) The holder of a renewal note is entitled to the same rights and remedies as if he were proceeding on this original note. Lynes v. Holt-Taylor Merc. Co., 268 S.W. 702.

Embry & Embry for Martha Kendrick.

(1) The statutes provide for the refusal of letters of administration on estates of deceased persons. The statutes also provide for setting aside order refusing letters on an estate. Such refusal is set aside on motion of creditors. No verbal motion was made and no written motion was filed, in this case, to set aside the order refusing letters of administration on the estate of R. L. Kendrick, deceased. Sec. 2, R. S. 1929. Orders refusing letters of administration are provided for as a matter of convenience. Such orders are made in ex parte proceedings and are not binding on anyone. They are made without injury to anyone. Parsons v. Harvey, 281 Mo. 413. It is imperative that the plaintiff, appellant, should have filed its application to set aside the order refusing letters of administration on R. L. Kendrick's estate, and that it should have exhausted its remedy at law, before proceeding in equity. Woolfolk v. Kemper, 31 Mo.App. 424; Lazonby v. Smithey, 151 Mo.App. 285; Jackman v. Robinson, 64 Mo. 289; Farmers Co-op. Co. v. Bank of Leeton, 4 S.W.2d 1070. (2) The plaintiff, appellant, in this case, was not an attaching creditor; neither was it a judgment creditor. Therefore, the plaintiff cannot maintain this action. Wait on Fraudulent Conveyances (3 Ed.), sec. 73; Daggs v. McDermott, 34 S.W.2d 46; Davidson v. Dockery, 179 Mo. 687; Crim v. Walker, 79 Mo. 335; Hume v. Wright, 274 S.W. 741; Ready v. Smith, 170 Mo. 163; Coleman v. Haigy, 252 Mo. 102; Brown v. McKown, 265 Mo. 320; Commercial State Bank v. Antrum, 191 Mo.App. 251. (3) In making the deed to Barron, defendant, respondent, Martha Kendrick, and her husband, acted together, not as adverse parties. In receiving the deed from Barron, Martha Kendrick and her husband acted together, and not adversely. She was not disqualified as a witness under the statutes. Sec. 1723, R. S. 1929; Meador v. Ward, 303 Mo. 176; Lomax & Stanley Bank v. Peacher, 30 S.W.2d 44. The accounts of sales of poultry, offered in evidence, were competent under the statutes. These accounts fixed the amounts received for produce. Secs. 1723, 1724, R. S. 1929. Even if some parts of defendant Martha Kendrick's testimony were incompetent, the same may be disregarded and the court will look to the other evidence in support of defendant's case. Broyles v. Achor, 78 S.W.2d 464; Katz v. Dreyfoos, 26 S.W.2d 1002. (4) Defendant, respondent, Martha Kendrick, had the right to own and claim her separate property. The ownership of the poultry and produce is undisputed. It belonged to defendant Martha Kendrick. Sec. 3003, R. S. 1929; Bartlett v. Umfried, 94 Mo. 535; Frank v. Curtis, 58 Mo.App. 349. (5) Defendant, respondent, Martha Kendrick, could contract with her husband with the same freedom as she could contract with any other individual -- with the same freedom as a femme sole. Rice Co. v. Sally, 176 Mo. 107; O'Day v. Meadows, 194 Mo. 588; Bower v. Daniel, 198 Mo. 320; Jones v. Hogan, 135 Mo.App. 347; Sec. 2992, R. S. 1929. (6) The deceased, R. L. Kendrick, did not violate any principle of good morals or equity in protecting his wife for any debt he owed her. McMunnigal v. Aylor, 204 Mo. 19; Cole v. Cole, 231 Mo. 236. (7) This is a suit in equity. In equity cases, the appellate courts will defer to the findings of the chancellor. McKinney v. Hutson, 81 S.W.2d 951.

OPINION

Douglas, J.

This is an action to set aside the deed of R. L. Kendrick and wife dated April 12, 1932, conveying to John Barron 240 acres of land in Cooper County and to set aside the deed of John Barron of the same date conveying the same land to R. L. Kendrick and Martha Kendrick, his wife. In other words, Barron was the conduit through which title was transferred by the husband to the husband and wife as tenants by the entirety. Barron filed no answer. The case was tried as though Martha Kendrick was the sole defendant and we shall refer to her as such. On the death of the husband on June 14, 1933, his widow, the defendant, became vested with title to the land. On the affidavit of the widow that her husband left property of the value of only $ 550 the probate court entered an order refusing letters of administration on his estate.

R. L. Kendrick, the husband, while the owner of the land, borrowed sums of money from plaintiff evidenced by his promissory notes dated December 30, 1929, and May 10, 1930, for $ 1233 and $ 550 respectively, which notes were renewed from time to time. He also obtained a loan from the Citizens Bank of Clarksburg, evidenced by his promissory note dated July 14, 1931, for $ 525 which note was assigned to plaintiff.

Plaintiff exhibited its claim based on the notes of Kendrick to the probate court which refused to take any action because of its order previously entered. Thereupon, this suit was filed. The chancellor dismissed plaintiff's bill and plaintiff appealed.

Respondent contends and the chancellor decreed that the appellant cannot maintain this action because it had not reduced its claim on said notes to judgment nor is an attaching creditor and has not thereby exhausted its remedy at law.

The general rule of law is that a simple creditor cannot maintain a suit in equity to set aside a conveyance of a debtor as fraudulent until his demand has been reduced to judgment. [Daggs v. McDermott, 327 Mo. 73, 34 S.W.2d 46, and cases cited therein.] However, we have recognized that there are exceptions to this general rule as where the defendant is wholly insolvent and therefore it would be useless to proceed at law. [Hume v. Wright (Mo.), 274 S.W. 741; Davidson v. Dockery, 179 Mo. 687, 78 S.W. 624.] This exception apparently springs from the doctrine that equity never requires a vain act to be done and therefore when it appears that to sue at law would be impossible or unavailing it will not be required. [State ex rel. Taaffe v. Goggin, 191 Mo. 482, 90 S.W. 379.] The remedy at law must be adequate and by this is meant that it must be clear, complete and as practical and efficient to the ends of justice and its proper administration as a remedy in equity. [Hanson v. Neal, 215 Mo. 256, 114 S.W. 1073.]

There is another and well-recognized exception to the general rule that a general creditor of a decedent without first having obtained a judgment at law, either against the debtor in his lifetime or against his estate as a demand, may proceed to set aside in equity a fraudulent conveyance. [103 A. L. R. 555, note.] Particularly is this true where the correctness of the claim is admitted or is not denied. [Kennedy v. Creswell, 101 U.S. 641; D. A. Tompkins Co. v. Catawba Mills, 82 F. 780; Cohen & Co. v. Morris & Co., 70 Ga. 313; Goldman Commission Co. et al. v. Williams et al., 211 F. 530.] In Nieters v. Brockman, 11 Mo.App. 600, without stating the facts of the case, the court said that a creditor need not reduce his claim to judgment before proceeding in equity to subject real estate fraudulently conveyed to the payment of his demand where there is no dispute as to the claim and where the debtor died notoriously insolvent; and that in such a case the creditor is not bound to cause letters of administration to be taken out before proceeding in equity to have the fraudulent deed set aside.

The execution of the notes in question is admitted in defendant's answer. After a general denial the answer sets up an affirmative...