Gaff v. Stern

• Decision Date: 18 April 1882
• Parties: THOMAS GAFF ET AL., Appellants, v. MEYER STERN ET AL., Respondents.
• Court: Missouri Court of Appeals

12 Mo.App. 115

THOMAS GAFF ET AL., Appellants,

v.MEYER STERN ET AL., Respondents.

St. Louis Court of Appeals, Missouri.

Apr. 18, 1882.

1. A conveyance made in good faith for the purpose of paying one creditor, is not bad because its natural effect is to hinder and delay other creditors.

2. If no trust is attempted to be created to the use of the assignor in any surplus, it is immaterial that his intention was to delay other creditors.

3. A fraudulent purpose of the assignor, as to some creditors, known to the assignee for whose benefit the conveyance is made, renders the conveyance bad.

4. The title of a purchaser is defeated by his participation in the fraudulent intent of the debtor grantor.

5. A judgment will not be reversed because ambiguous declarations of law were given, where the case is tried by the court without a jury.

6. The parties should ask such declarations of law as may enable the appellate court to determine upon what theory of the law the trial court's findings of fact were made.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Affirmed.

S. HERMANN and GIDEON D. BANTZ, for the appellants: Though a purchaser pay full value, yet if he have knowledge, or means of knowledge, of the fact that the vendor intends to defraud creditors, he is not a purchaser in good faith, and the sale is void against creditors.-- The State to use v. Estel, 6 Mo. App. 9; The State to use v. Nauert, 2 Mo. App. 295; Burgert v. Borchert, 59 Mo. 80; Baker v. Bliss, 39 N. Y. 74; Bump's Fr. Conv. (1st ed.) 231-233; Little v. Eddy, 14 Mo. 160; Knox v. Hunt, 18 Mo. 180; Johnson v. Sullivan, 23 Mo. 480. Relationship between grantor and grantee is a circumstance throwing suspicion on the transaction.-- Leavett v. La Force, 71 Mo. 356; Kaine v. Weigly, 22 Pa. St. 183. The fact of insolvency alone, if known to the purchaser, may be sufficient to put him upon inquiry.-- The State v. Merritt, 70 Mo. 284.

J. M. & C. H. KRUM and WALTER B. DOUGLASS, for the respondents: A payment to one creditor is not void because the debtor intended thereby to hinder others.-- Ames v. Gilmore, 59 Mo. 537.

BAKEWELL, J., delivered the opinion of the court.

Plaintiffs sued Solomon Stern and John Albert, wholesale liquor dealers in St. Louis, by attachment, on the ground of conveyance and assignment of their property with intent to hinder, delay, or defraud their creditors. Mayer Stern and Isaac Stern, of the firm of M. Stern & Company, were in this proceeding summoned as garnishees. The plaintiffs denied the answer of the garnishees; and set up that Stern and Albert had been engaged, since January 15, 1879, in a systematic plan to swindle their creditors, and that the garnishees were confederated with them in the perpetration of the fraud; that in pursuance of this plot, on March 5, 1879, Stern and Albert assigned to the garnishees accounts and bills against customers, to the aggregate amount of $10,000, on which the garnishees collected $2,600. The garnishees traverse this denial. They deny all fraudulent combination with the original defendants. They admit the assignment to them of certain claims; but say that these claims were assigned to them by Stern and Albert for moneys lent by them to the firm, and to secure them against certain liabilities which they had incurred for the firm.

The cause was tried by the court, a jury being waived; and there was a finding and judgment for the garnishees.

The garnishees are brothers of Solomon Stern, one of the defendants in the attachment. The witnesses examined were the defendants in the attachment, the two book-keepers of the firm, and Mayer Stern, one of the firm of garnishees. The testimony is contradictory. The statements of the witnesses are of such a character that it is manifest there was false swearing in the case. Albert, a witness for plaintiff, claims to have been defrauded by Solomon Stern, his former partner, and is manifestly not friendly to him. It is not for us to weigh the evidence. There was testimony from which the trier of the fact might have found a conspiracy to defraud creditors to which Mayer Stern was a party, and the main features of which were suggested by him. But if Mayer Stern is to be believed, there was no such conspiracy to his knowledge, and the trier of the fact had a right to believe Mayer Stern and reject the contradictory statements of Albert.

There was testimony tending to show that, in the spring of 1879, Stern and Albert were engaged together in the wholesale liquor business in St. Louis. Solomon Stern then owed several thousand dollars to Mayer Stern & Co., for moneys borrowed of them, and which had gone into the business of Stern & Albert, as he says. Mayer Stern & Co. were also sureties in bank for Stern & Albert for a large amount. Stern & Albert, knowing themselves to be hopelessly insolvent, bought liquors to a large amount, not expecting to be able to pay for them. A day or two before their failure, Stern & Albert raised about $4,000 in bank on warehouse-receipts, and with the proceeds paid notes of theirs, held by Mayer Stern & Co., to the amount of $1,500, and a note of $2,500 on which Mayer Stern & Co. were indorsers for their accommodation. Stern & Albert failed on March 8th. They owed about $26,000, and had on hand about $1,000 of liquors.

Four days before their failure, they assigned to Mayer Stern & Co., book accounts of the face value of $10,000, and bills receivable of the face value of $950, on which Mayer Stern & Co. subsequently collected about $3,100, which is less than the debt of Stern to them. The assignment states that Solomon Stern is indebted to various persons: To M. Stern & Co., $4,843; to H. Stern & Co., $1,010; to Emil Wench, $484; to Jacob Schoen, $265. That the firm of Stern & Albert is liable for these demands, and has, through an arrangement of M. Stern & Co. with the Fourth National Bank, procured discounts there, and will be unable to pay the notes; and that, in consideration that M. Stern & Co. assume the indebtedness of Stern & Albert to the creditors named and to the bank, and agree to hold Stern & Albert harmless therefrom, and release all claim that they have against the firm, the assignment is made. At the time of the failure, the books of Stern & Albert disappeared, and were found, after some months, in the office of a lawyer. Appellants claim that the evidence shows that Mayer Stern was engaged in the attempt to conceal these books; respondents contend that no such inference can fairly be drawn from the testimony. Appellants claim that there is an admission that the accounts to Mayer Stern & Co. were for goods sold by Stern & Albert in the month of March, 1879, the month of their failure. There seems to be such an admission as to one account. But even that is not clear. We see no such admission as to the remainder of the accounts.

An instruction was asked by the plaintiffs, and refused by the court, to the effect that if Stern & Albert made the assignment in question with the intent of hindering, delaying, or defrauding the creditors of Stern & Albert, other than the said garnishees, and that the garnishees knew this at the time, the finding ought to be for plaintiffs.

This instruction was properly refused. A conveyance, made in good faith, for the purpose of paying one or more creditors, though its natural effect, and, therefore, the intention of the parties making it, be to hinder and delay other creditors of the assignor, is not void on that account. The State to use v. Laurie, 1 Mo. App. 371.

A second instruction to the same effect, but on the hypothesis that plaintiffs had enough ground for suspicion to put them on their guard as to the intent of the assignors, was properly refused for the same reason.

A third instruction, embodying the same erroneous proposition, was also refused.

The fourth instruction refused, is to the effect that, if the garnishees had reasonable cause...