First Nat. Bank v. Vogt

• Decision Date: 15 March 1939
• Docket Number: 35273
• Parties: First National Bank, Appellant, v. Nellie Vogt
• Court: Missouri Supreme Court

126 S.W.2d 199

344 Mo. 284

First National Bank, Appellant, v. Nellie Vogt

No. 35273

Supreme Court of Missouri

March 15, 1939

Appeal from Barry Circuit Court; Hon. E. E. Smith, Judge.

Reversed and remanded.

D S. Mayhew for appellant.

Recognized "badges of fraud" include fictitious consideration false statements as to consideration, transactions different from usual course of doing business, transfer of all a debtor's property, insolvency, confidential relationship of parties, and transfers in anticipation of suit or execution, and, though none of such things alone proves fraud, they warrant inference of fraud, especially where there is a concurrence of a number of them. Hendrix v Goldman, 92 S.W.2d 733; 27 C. J. 483, secs. 153-156; 13 R. C. L. 476, secs. 10-22; Matz v. Miami Club Restaurant, 108 S.W.2d 975. When a creditor by fraud will attempt to defeat the claims of other creditors there is no hardship in postponing his demand, although a just one, to those which he is endeavoring to defeat. Voelpel v. Wuensche, 74 S.W.2d 20; First Natl. Bank v. Fry, 216 Mo. 24, 115 S.W. 439; First Natl. Bank v. Trimble, 315 Mo. 966, 287 S.W. 432; Munford v. Sheldon, 320 Mo. 1077, 9 S.W.2d 907; Lomax & Stanley Bank v. Peacher, 30 S.W.2d 44; Friedel v. Baily, 329 Mo. 22, 44 S.W.2d 9. When persons participate in a fraudulent conveyance with intent to defraud a creditor by defeating collection of his debt, equity will leave such parties exactly where they placed themselves. 12 R. C. L. 610, sec. 120; Voelpel v. Wuensche, 74 S.W. 20. With due deference to the chancellor, the Supreme Court will try equity cause de novo and reach its own conclusion on appeal. Aden v. Dalton, 107 S.W.2d 1070. Equity case is considered de novo on appeal and reviewing court is authorized to weigh evidence. Batson v. Peters, 89 S.W.2d 46. Purpose of cross-examination is to test correctness of witness's story and is nature of attack on its truth and accuracy. Lolordo v. Lacy, 88 S.W.2d 353. Litigant who examines adversary can thereafter introduce evidence to show that adversary's testimony was not truthful. Also litigant who examines adversary is only bound by that part of adversary's testimony which litigant offers and vouches for as the truth. Lolordo v. Lacy, 88 S.W.2d 358; Smith v. Ohio Millers' Mut. Fire Ins. Co., 320 Mo. 146, 6 S.W.2d 928. If a creditor takes from a known insolvent debtor all his property, and in excess of his claim and give the debtor his note payable in one year after date, the transaction is fraudulent, for it hinders and delays the other creditors. Deere v. Sullivan, 158 Mo. 440; Segers Sons v. Thomas Bros., 107 Mo. 635; Simon Gregory & Co. v. Simcox, 75 Mo.App. 147. The rule has also been announced, that if the creditor knows of the debtor's insolvency, and takes more than enough to reasonably pay or secure his debt, and pays cash for the excess, the transaction is fraudulent in law, and the purchaser is a participant in the fraud. McVeigh v. Baxter, 82 Mo. 518; Mumford v. Sheldon, 9 S.W.2d 910. The conveyance by a father to a son or daughter, during the pendency of a suit in payment of a vague and uncertain claim for services rendered years before, is a circumstance to be considered as to the good faith of the conveyance. Mason v. Perkins, 180 Mo. 702, 79 S.W. 633; Matz v. Miama Club Restaurant, 108 S.W.2d 975. A fraudulent grantor is not necessary defendant in an action by a creditor against a fraudulent grantee, to set aside a conveyance. Merry v. Fremon, 44 Mo. 518; Schneider v. Patton, 175 Mo. 726, 75 S.W. 155. Where a person, while indebted, by conveyances, strips himself of the last vestige of property, his intent to hinder, delay or defraud his creditors is hereby shown. Bank of Hayti v. McElvain, 280 Mo. 505, 219 S.W. 75.

Emory C. Medlin and Royal Elles for respondent.

(1) A father who owed a daughter an undisputed debt, evidenced by a promissory note, is entitled to convey property to her in discharge of that debt without being subject to charge by other debtors that such conveyance was fraudulent. Hume v. Wright, 274 S.W. 744; Bank v. Lillibridge, 262 S.W. 436; Baker v. Hardy, 133 Mo. 653; Gust v. Hoppe, 201 Mo. 293; Schroeder v. Bobbitt, 108 Mo. 289; Wall v. Beedy, 161 Mo. 625; Meyer Brothers v. White, 165 Mo. 136. (2) Conveyance of homestead cannot be fraudulent as against creditors. May v. Gibler, 4 S.W.2d 722; Farmers Bank of Higginsville v. Handly, 320 Mo. 787; Moore v. Wilkerson, 169 Mo. 334; Spratt v. Early, 169 Mo. 351; Balz v. Nelson, 171 Mo. 682; Stam v. Smith, 183 Mo. 464. (3) A debtor has a right to prefer one creditor over another. Bank v. Lillibridge, 262 S.W. 436; Bursty v. Fennewald, 2 S.W.2d 824. (4) The appellate court defers largely to trial court's findings on conflicting testimony in an equity case. Vinning v. Ramage, 3 S.W.2d 712; Young v. Levine, 31 S.W.2d 978; Snow v. Funck, 41 S.W.2d 2; Norton v. Norton, 43 S.W.2d 1024; Carter v. Burus, 61 S.W.2d 944; Wright v. Logan, 25 S.W.2d 799.

OPINION

Leedy, J.

The plaintiff, as a creditor of W. A. Weisman, whose claim has been reduced to judgment since the institution of this suit, brought this action, the object of which is to set aside a warranty deed by said Weisman, and his wife, Lavonia, to their daughter, the defendant, Nellie Vogt, and to subject the real estate conveyed thereby to the lien of said judgment (subject to the right of homestead in said Weisman), on the alleged ground that the deed was voluntary and without consideration, and made for the purpose of hindering, delaying and defrauding the creditors of said Weisman, and particularly the plaintiff. Upon a trial, the chancellor found the issues for the defendant, and entered a decree by which it was adjudged that said deed "is valid and subsisting and conveyed good title to Nellie Vogt."

Weisman and his wife lived on a farm in Barry County until in October, 1932, when they acquired title to the two improved lots in Monett, here in question, and moved thereto, and thereafter occupied the same as their home. The conveyance thereof to their daughter was dated June 22, 1933, but the deed was not recorded until October 7 of that year. Weisman and his wife were indebted to the plaintiff bank on their several promissory notes, introduced in evidence, a part of which indebtedness extended back as far as 1926, and, by renewals, had been extended from time to time. So that on the date in question they owed plaintiff something in excess of $ 500. Defendant was acquainted with that fact, she having witnessed the signatures to some of the notes, as well as a financial statement made by her father to the bank sometime in February, 1932.

Something more than twenty years before the trial -- the exact time does not appear -- defendant and her husband, who were then living in the State of Oregon, separated, and she and her two infant daughters returned to her father's home in Barry County, where a third child, a daughter, was thereafter born. She and the children continued to live at the Weisman home for many years, where the children grew to womanhood. The record is by no means clear as to who defrayed the expenses of their living -- whether defendant or her father. But during that time, defendant was employed in a garment factory at Monett for a period of five years, and later at such a factory in the neighboring town of Neosho for three years. She testified that her earnings, while so employed, averaged $ 60 or $ 70 per month; that while in Neosho, she paid $ 20 a month for board and room, and sent the rest home "to be applied." In 1930, by a property settlement with her estranged husband, she received the sum of $ 500, and an additional sum of $ 100 out of some property in Barry County in which her husband had an interest. These sums appear to have been paid to her in installments.

The defense was that during the years following her return from Oregon, and while living with her parents, she had made loans to her father aggregating the sum of $ 1,550, and that some six months before her father traded for the lots in controversy, to evidence his said indebtedness to her, he made and executed his promissory note for the sum just mentioned; that the deed in question was made to her in payment of said indebtedness, as represented by said note, together with the additional sum of $ 500, which she agreed to pay, and for which she gave him her unsecured note, and thereafter paid in part. Credits aggregating $ 410 were endorsed on the note which the defendant claimed as follows: $ 162 for money she advanced to pay the principal and interest on the mortgage given by Weisman and his wife when they acquired the property in question from one Boehm, which mortgage was given to secure the payment of taxes due on the Weisman farm which was traded to Boehm; $ 208 for funeral expenses for her mother (she having died since the institution of this suit) which the defendant testified she paid; two items of $ 20 each representing expenses in connection with the place, the exact nature of which do not clearly appear.

It is conceded the deed stripped Weisman of every vestige of property he owned. The defendant testifying in that behalf said: "My father is still living in the same property he deeded to me. He has no other property of any kind or character whatsoever." On behalf of the plaintiff the three or four witnesses on the question ...