General American Life Ins. Co. v. Leavenworth

• Citation: 149 S.W.2d 360,347 Mo. 876
• Decision Date: 03 April 1941
• Docket Number: 36872
• Parties: General American Life Insurance Company, a Corporation, Appellant, v. George Leavenworth, Katherine P. Leavenworth, his wife, and Mattie Leavenworth
• Court: Missouri Supreme Court

149 S.W.2d 360

347 Mo. 876

General American Life Insurance Company, a Corporation, Appellant, v. George Leavenworth, Katherine P. Leavenworth, his wife, and Mattie Leavenworth

No. 36872

Supreme Court of Missouri

April 3, 1941

Appeal from St. Charles Circuit Court; Hon. Edgar B Woolfolk, Judge.

Reversed and petition dismissed.

Stephen A. Boggiano, William Waye, Jr., Taylor R. Young and Richard A. Austin for appellant;

Allen May of counsel.

(1) Badges of fraud warrant an inference of fraud, especially when there is a concurrence of a number of them, and when a conveyance is shown to be voluntary, the presumption of fraud must be rebutted by defendants. Godchaux Sugars, Inc., v Quinn, 95 S.W.2d 82; Oldham v. Wright, 85 S.W.2d 483, 377 Mo. 170; Russell v. Franks, 120 S.W.2d 37; May v. Gibler, 4 S.W.2d 769; Hendrix v. Goldman, 92 S.W.2d 733; Connecticut Mut. Ins. Co. v. Smith, 117 Mo. 261, 22 S.W. 623; Castorina v. Herrmann, 104 S.W.2d 297, 340 Mo. 1026; Wrigley v. Wrigley, 132 S.W.2d 989. (2) When a conveyance is made among relatives in consideration of an alleged antecedent debt, the burden is upon the grantee to show good faith in the transaction. First Natl. Bank of Monett v. Vogt, 126 S.W.2d 199. (3) When a conveyance is voluntary, the grantor must plead and prove his solvency. Conrad v. Diehl, 129 S.W.2d 870; Friedel v. Bailey, 44 S.W.2d 9; Lemp Brewing Co. v. Correnty, 177 S.W. 612; Godchaux Sugars, Inc., v. Quinn, 95 S.W.2d 82; Oldham v. Wright, 85 S.W.2d 483, 377 Mo. 170; McCluer v. White, 93 S.W.2d 696. (4) A transfer for an excessive consideration will invalidate the whole transaction and postpone the claim of the grantee. Munford v. Sheldon, 9 S.W.2d 907; New England Natl. Bank v. Montgomery, 192 S.W. 941; Oldham v. Wright, 85 S.W.2d 483, 377 Mo. 170; Lomax & Stanley Bank v. Peacher, 30 S.W.2d 44; Bishop v. Bishop, 228 S.W. 1065. (5) The claim of a grantee, who participates in the scheme to defraud creditors will be postponed, although the claim be a just one. Voelpel v. Wuensche, 74 S.W.2d 14; Farmer's Bank of Higginsville v. Handly, 9 S.W.2d 880; Barber v. Nunn, 205 S.W. 14; Bishop v. Bishop, 228 S.W. 1065; Emlet v. Gillis, 63 S.W.2d 12. (6) A trust for the benefit of the grantor is void as to his creditors. Secs. 3116, 3117, R. S. 1929; Ebert v. Meyer, 9 S.W.2d 1066; Monument Co. v. Jordan, 295 S.W. 768, 316 Mo. 1134. (7) A secret trust is void as to other creditors and there is no hardship in postponing grantee's claim. Munford v. Sheldon, 9 S.W.2d 907; Citizens Bank of Pleasant Hill v. Robinson, 117 S.W. 263; Hunter v. Anthony, 236 S.W. 412; First Natl. Bank of Joplin v. Woelz, 193 S.W. 614; Conrad v. Diehl, 129 S.W.2d 870. (8) Property allowed to remain in the possession of grantor by agreement with his grantee is subject to the claims of creditors who extend credit to the grantor. Sugar Mfg. Co. v. Stephens, 68 S.W. 903, 169 Mo. 4; Chemical Bank of Sweet Springs v. Rhodes, 22 S.W. 1055, 224 Mo.App. 217; State ex rel. Hayden v. Smith, 31 Mo. 566; Clinton County Trust Co. v. Metzger's Executors, 271 S.W. 1008, 219 Mo.App. 365; Ellis v. Thompson, 264 S.W. 804. (9) A transaction fraudulent in its inception cannot subsequently be purged of fraud. Gentry v. Field, 45 S.W. 286, 143 Mo. 399; Lawrence v. Barker, 82 Mo.App. 125.

Creech & Creech for respondents.

(1) Equity suits are considered in appeal as a hearing anew in the appellate courts. Punch v. Hipolite Co., 100 S.W.2d 878, 340 Mo. 53; Lastofka v. Lastofka, 99 S.W.2d 46, 339 Mo. 770; State ex rel. Brigance v. Smith, 135 S.W.2d 355; Noell et ux. v. Remmert, 30 S.W.2d 1009, 326 Mo. 148; Snow v. Funck, 41 S.W.2d 2; Farmers & Merchants Bank of Festus v. Funk, 92 S.W.2d 587, 338 Mo. 508. (2) A general creditor cannot maintain a suit in equity in nature of a creditors bill to set aside a conveyance as in fraud of creditors unless he has first exhausted his remedies at law. 27 C. J., p. 726; Buckley v. Maupin, 125 S.W.2d 820; Merry v. Fremon, 44 Mo. 518; Coleman v. Hagey, 158 S.W. 829, 252 Mo. 102; State ex rel. Brigance v. Smith, 135 S.W.2d 355. (3) Defendants had a right in their answer in the suit brought by the Missouri State Life Insurance Company on note to plead as a defense their cause of action against the plaintiff to recover damages for the fraud of plaintiff in the sale of the lands of the defendants George Leavenworth and Katherine P. Leavenworth for damages growing out of fraud of the plaintiff. The original suit brought by the plaintiff Missouri State Life Insurance Company on note should have continued in the name of the plaintiff even though the plaintiff made an assignment of its cause of action. Secs. 777, 904, R. S. 1929; Fricke v. Wefuetterer Battery & Supplies Co., 220 Mo.App. 623; Jegglin v. Randolph, 7 S.W.2d 441, 222 Mo.App. 738; Fulton v. Fisher, 143 S.W. 438, 239 Mo. 116. (4) The court had no right to permit the plaintiff Missouri State Life Insurance Company to amend its petition on the note suit when such amendment does change substantially the claim or defense of the cause of action. Sec. 819, R. S. 1929; Courtney v. Sheehy, 38 Mo.App. 290; Meyer v. Oregon Interurban Ry. Co., 271 S.W. 865, 219 Mo.App. 360. (5) A demurrer in the form of a plea in abatement which was pending to the note suit was the proper pleading to raise the issue of a misjoiner of parties. Sec. 770, R. S. 1929; Horstkotte v. Menier, 50 Mo. 158; Dunn v. Hannibal & St. J. Railroad Co., 68 Mo. 268; State ex rel. Kansas City L. & P. Co. v. Trimble, 262 S.W. 358. (6) Where plaintiff fails to state a cause of action as in the instant case, the same may be raised in the inception of the trial of the cause or in the appellate court. Davis v. Jacksonville, 126 Mo. 69; McQuitty v. Wilhite, 218 Mo. 586; Turner v. Hunter, 225 Mo. 84; Buckley v. Maupin, 125 S.W.2d 820; State ex rel. Brigance v. Smith, 135 S.W.2d 355. (7) The petition in the instant case fails to state that plaintiff was a judgment or attaching creditor. It therefore wholly fails to state a cause of action. Bank v. Ankrum, 191 Mo.App. 251, 177 S.W. 788; Cantwell v. Columbia Lead Co., 199 Mo. 42, 97 S.W. 167.

OPINION

Tipton, P. J.

This is a suit in equity, in the nature of a creditor's bill, to set aside certain alleged fraudulent conveyances of land, situated in St. Charles County, Missouri, and to subject the land to the payment of an alleged indebtedness of the original grantors to the appellant herein. The trial court entered a judgment in the sum of $ 34,231.01, and the further sum of $ 2,500 for appellant's attorney fees against the respondents George and Katherine P. Leavenworth for the balance due on an unsecured note executed by them. It also found in favor of respondent Mattie Leavenworth for the reason that the conveyance of the land to her was for a valuable consideration and not in fraud of creditors of the grantors.

Does the petition in this case state a cause of action?

The failure of the petition to state a cause of action is jurisdictional and may be raised at any stage of the proceedings, even for the first time in this court. [McQuitty v. Wilhite, 218 Mo. 586, 117 S.W. 730, 131 Am. St. Rep. 561; Turner v. Hunter, 225 Mo. 71, 123 S.W. 1097; United Cemeteries Co. v. Strother, 342 Mo. 1155, 119 S.W.2d 762.]

The essential facts alleged in the petition are that the appellant now is the owner of a note executed by the respondents George Leavenworth and Katherine P. Leavenworth and that there is an unpaid balance of $ 24,083.74 and interest due on this note; that there is now pending in the Circuit Court of St. Charles County a suit on this note, case No. 147, in which George Leavenworth and Katherine P. Leavenworth are defendants; that at the time that suit was commenced, these defendants were nonresidents of the State of Missouri, and their interest in certain described real estate was attached; that these defendants entered their appearance and the attachment was duly dissolved; that between the dates of September 2, 1932, and September 29, 1932, the respondents entered into a wrongful conspiracy to cheat and defraud the appellant by fraudulently and wrongfully, and for the purpose of hindering and delaying and defrauding the creditors of the respondents, George Leavenworth and Katherine P. Leavenworth caused a warranty deed to be executed conveying the land described in the attachment to respondent Mattie Leavenworth; that the deed was wholly without consideration and was executed in furtherance of the aforesaid conspiracy; that the respondent George Leavenworth had been adjudicated a bankrupt and the debt herein sued on was listed in the schedule in the bankruptcy proceeding, but an agreement was entered into between the bankrupt and the holder of the note that the discharge in bankruptcy would not be pleaded in any proceedings that might thereafter be brought to enforce the payment thereof; that the respondents George Leavenworth and Katherine P. Leavenworth were insolvent; and that appellant further brought this suit in aid of suit No. 147, heretofore filed by it. Briefly, the...