George v. Surkamp

• Decision Date: 16 November 1934
• Docket Number: No. 30752.,30752.
• Citation: 76 S.W.2d 368
• Parties: MARY GEORGE ET AL., Appellants, v. H.B. SURKAMP ET AL.
• Court: Missouri Supreme Court

76 S.W.2d 368

MARY GEORGE ET AL., Appellants, v. H.B. SURKAMP ET AL.

No. 30752.

Supreme Court of Missouri.

Division One, November 16, 1934.

Appeal from Circuit Court of City of St. Louis. — Hon. Robert W. Hall, Judge.

REVERSED AND REMANDED.

Taylor R. Young and P.H. Cullen for appellants.

(1) There can be no question under the law and the evidence that the Leitners — father and son — were parties to a fraudulent conveyance, and that their purpose was to prevent the collection of the judgment obtained by Mrs. George, and that the plaintiff is entitled, as against them, to have the transaction set aside. Black v. Epstein, 221 Mo. 286, 120 S.W. 754; Hodges v. Coleman, 76 Ala. 103; 38 C.J., pp. 55, 56, sec. 93; Childers v. Peckenpaugh, 219 Mo. 448; Johnson v. Mason, 178 Mo. App. 113; Wilson v. Salisbury, 167 Mo. App. 195; Dalton v. Baron, 239 S.W. 101; 27 C.J. 488, 495; Mason v. Perkins, 180 Mo. 702, 79 S.W. 683; McCollum v. Crain, 101 Mo. App. 522, 74 S.W. 650; 27 C.J. 791, sec. 717; Hoffman v. Nolte, 127 Mo. 120, 29 S.W. 1006; Farwell v. Meyer, 67 Mo. App. 566; Fisher v. Lewis, 69 Mo. 629; Lyons v. Murray, 95 Mo. 23; Turner v. Adams, 46 Mo. 95; Loehr v. Murphy, 48 Mo. App. 519. (2) Under the law and the evidence, Dr. Torpy was a party to the fraud and acquired no rights against the plaintiffs. The duty was upon him to show good faith on his part. 38 C.J. 616, sec. 16; 27 C.J. 484, 488; Hodges v. Coleman, 76 Ala. 103; Mason v. Perkins, 180 Mo. 702, 79 S.W. 683; McCollum v. Crain, 101 Mo. App. 522, 74 S.W. 650; St. Louis Brewing Assn. v. Steimke, 68 Mo. App. 52; 27 C.J. 491; Benne v. Schenks, 100 Mo. 250, 13 S.W. 82; Farber v. Nunn, 275 Mo. 565, 205 S.W. 14; 27 C.J. 494; Glenn v. Glenn, 17 Iowa, 498; 27 C.J. 803, sec. 731; Roberts v. Cardwell, 154 Ky. 483, Ann. Cas. 1915C, 515, 157 S.W. 711; Scott v. McMillen, 1 Litt. 302, 13 Am. Dec. 239; Ewalt v. Lillard, 180 Mo. App. 678; Scharff v. McGaugh, 205 Mo. 344, 103 S.W. 550; St. Louis v. O'Neil Lbr. Co., 114 Mo. 74, 21 S.W. 484; Jacobs v. Smith, 89 Mo. 673, 2 S.W. 13; Jackman v. Robinson, 64 Mo. 289; George v. Williamson, 26 Mo. 190, 72 Am. Dec. 203. (3) Where a party to the action has knowledge on a subject and fails or refuses to testify on that subject or conceals testimony, or fails to produce evidence within his control or knowledge, it is presumed that the testimony would have been unfavorable to the party so controlling or having knowledge of such evidence. In re Moll's Estate, 299 S.W. 130; Booher v. Trainer, 157 S.W. 848, 172 Mo. App. 376; Crane v. Ry. Co., 203 S.W. 640, 199 Mo. App. 448; Whitmore v. Express Co., 269 S.W. 654, 219 Mo. App. 294; Natl. Battery Co. v. Standard Accident Ins. Co., 41 S.W. (2d) 599, 226 Mo. App. 351; Tillman v. Carthage, 247 S.W. 992, 297 Mo. 74; Gaugh v. Gaugh, 11 S.W. (2d) 729; Stucks v. Natl. Candy Co., 138 S.W. 352, 158 Mo. App. 342; Shawhan v. Shawhan Distillery Co., 197 S.W. 369, 195 Mo. App. 445; Bryant v. Lazarus, 139 S.W. 558, 235 Mo. 606; Smith v. Ry. Co., 282 S.W. 62; 27 C.J. 803, sec. 733. (4) After the filing of lis pendens, the law presumes that all transferees have notice of the suit. This is an imperative rule of public policy and it does not matter that such transferee may have been a purchaser in good faith and for a valuable consideration. Hence, the intervening defendants could not acquire any interest superior to the plaintiff and intervening plaintiff. Sec. 3155, R.S. 1929; Dodd v. Lee, 57 Mo. App. 167; 38 C.J. 60, sec. 102; Mo. State Life Ins. Co. v. Russ, 214 S.W. 864; 38 C.J. 55, 56; Sec. 3155, R.S. 1929; Bishop v. Paine, 11 Ves. Jr. 194; Wilson v. Robinson, 21 N.M. 422, Ann. Cas. 1918C, 55; Eyster v. Gaff, 91 U.S. 521; Stout v. Lye, 103 U.S. 66; Union Trust Co. v. So. Inland Navigation Co., 130 U.S. 565; Turner v. Edmonston, 210 Mo. 219; Alexander v. Haffner, 323 Mo. 1203; 38 C.J. 30; Lattimer v. Equitable Loan Co., 78 Mo. App. 463; Vandagrift v. Bates County, 128 S.W. 1007, 144 Mo. App. 77; Citizens Bank v. Douglas, 161 S.W. 601, 178 Mo. App. 664; Bartlett v. McCallister, 289 S.W. 814, 316 Mo. 129; Patterson v. Booth, 103 Mo. 402; Chouteau v. Allen, 70 Mo. 290; Yeomans v. Hachman, 198 Mo. 195; Merchants Natl. v. Brisch, 154 Mo. App. 631; McCorkle v. Miller, 64 Mo. App. 153; Ry. Assn. v. Wells, 94 S.E. 227; Masterson v. Turner, 220 S.W. 428; Harrington v. Calflin, 91 Mo. 294; Old Natl. Bank v. Macy, 9 Ann. Cas. 339; Citizens Bank v. Kriegshauser, 244 S.W. 110, 11 A.L.R. 1283; Oldham v. Wade, 273 Mo. 231, 200 S.W. 1053; Maryville Merc. Co. v. Hedgcock, 186 S.W. 55.

Rassieur, Long & Yawitz for Lafayette-South Side Bank & Trust Company.

(1) Lis pendens does not affect negotiable instruments. Under the Negotiable Instrument Law (a) only actual knowledge of the illegality or (b) bad faith can affect the purchaser of negotiable notes. As to the Lafayette-South Side Bank & Trust Company, which loaned $10,000 on the pledge of the $11,000 principal note and two interest notes, secured by deed of trust, there is absolutely no evidence of either actual knowledge or illegality or bad faith, and lis pendens does not apply. Carr v. Lewis Coal Co., 96 Mo. 149; 38 C.J. 13, sec. 16; R.S. 1929, secs. 2684, 2685; Burnham, Munger & Co. v. Smith, 82 Mo. App. 35; Borgess Inv. Co. v. Vette, 142 Mo. 560; Baade v. Cramer, 278 Mo. 516, 213 S.W. 121; Carr v. Lewis Coal Co., 15 Mo. App. 551; Downs v. Horton, 287 Mo. 414, 230 S.W. 103; Town of Enfield v. Jordan, 119 U.S. 680, 30 L. Ed. 523; 17 R.C.L. 1013; State v. Board of Commissioners of Wichita Co., 53 Pac. 526, 59 Kan. 512; Calkins v. First Natl. Bank, 107 N.W. 675, 20 S.D. 466; Kimbrough v. Hornsby, 84 S.W. 613, 113 Tenn. 605; Mansur & Tebbetts Imp. Co. v. Beer, 45 S.W. 972, 19 Tex. Civ. App. 311; Howe v. Hartness, 11 Ohio St. 449; Pittsburgh, C.C. & St. Louis Ry. Co. v. Lynde, 55 Ohio St. 23, 44 N.E. 596; Cass County v. Gillett, 100 U.S. 585, 25 L. Ed. 585; Meyers v. Hazzard, 50 Fed. 155; Winston v. Westerfeldt, 22 Ala. 760, 58 Am. Dec. 278; Carstairs v. Kelly, 16 Ky. L. Rep. 64; Matheny v. Hughes, 57 Tenn. 401; Warren County v. Marcy, 97 U.S. 96, 24 L. Ed. 977; In re Great Western Tel. Co., 5 Biss. 363; Marshall v. Elgin, 8 Fed. 783; Mayberry v. Morris, 62 Ala. 113; Mims v. West, 38 Ga. 18, 95 Am. Dec. 379; Bryan v. Saltenstall, 26 Ky. 672; Madison County Suprs. v. Paxton, 56 Miss. 679; Stone v. Elliott, 11 Ohio St. 252; Kieffer v. Ehler, 18 Penn. 388; Day v. Zimmermann, 68 Pa. 72, 8 Am. St. Rep. 157; Gannon v. Northwestern Natl. Bank, 83 Tex. 274, 18 S.W. 573; Sawyer v. Phaley, 33 Vt. 69; Kellogg v. Faucher, 23 Wis. 21, 99 Am. Dec. 96; Pope v. Beauchamp, 219 S.W. 447, 110 Tex. 271. (2) A deed of trust securing a negotiable instrument partakes of the characteristics of negotiability. Goodfellow v. Stillwell, 72 Mo. 17; Hagerman v. Sutton, 91 Mo. 520; Bank v. Rohrer, 138 Mo. 369; Mayes v. Robinson, 93 Mo. 114; Crawford v. Aultman & Co., 139 Mo. 262; Eggimann v. Hough, 213 Mo. App. 510, 255 S.W. 951; Farmers State Bank v. Miller, 222 Mo. App. 633, 300 S.W. 834. (3) Where a bank director negotiates to the bank a note belonging to him, his knowledge of any illegality connected with the note, is not imputable to the bank; hence, even if it were assumed that Brinkman, prior to the pledge of the instant notes with the Lafayette-South Side Bank & Trust Company, knew of the lis pendens, such knowledge is not imputable to said bank by virtue of his directorship. Johnson v. Shortridge, 93 Mo. 227; Kearney v. Froman, 129 Mo. 427; Third Natl. Bank v. Tinsley, 11 Mo. App. 498. (4) Lis pendens does not operate beyond the boundaries of the State nor on persons or personal property situated in other states, and therefore the sale in Wisconsin of negotiable instruments, situated in Wisconsin, cannot be affected by the lis pendens filed in Missouri. Carr v. Lewis Coal Co., 96 Mo. 149; 38 C.J. 13, secs. 11, 12; Troll v. St. Louis, 257 Mo. 627. (5) In addition, the sale of the notes and deed of trust from Leitner to Dr. Torpy, all consummated in Wisconsin, where the parties were residents and the property was located, was consummated in January, 1926 — some seven months prior to the filing of the lis pendens in Missouri. Lis pendens is not retroactive. The title of Dr. Torpy, if good, inures to the benefit of all subsequent holders, whether with or without knowledge. 8 C.J. 466, sec. 685; McMurray v. McMurray, 258 Mo. 405. (6) Appellants' pleadings having charged this respondent with actual knowledge, fraud and willful participation in a conspiracy to defraud, may not on their failure to make proof, change its theory in this court to constructive knowledge, imputed knowledge and the like. Henry County v. Citizens Bank, 208 Mo. 209; Williams v. Hall, 207 Mo. App. 432, 230 S.W. 126; Munford v. Shelton, 320 Mo. 1077, 9 S.W. (2d) 907; Gary v. Averill, 321 Mo. 840, 12 S.W. (2d) 747. (7) Charges of fraud must be supported by cogent proof, and not merely by suspicion or conjecture; and where the evidence is conflicting, the trial court's decision thereon, based on substantial evidence, should be deferred to by the appellate court. 27 C.J. 548, secs. 248, 253; Walsh v. Walsh, 285 Mo. 181, 226 S.W. 236; Friedel v. Bailey, 329 Mo. 22, 44 S.W. (2d) 9; Blackiston v. Russell, 328 Mo. 1164, 44 S.W. (2d) 22.

STURGIS, C.

The plaintiff Mary George recovered a judgment against defendant Louis Leitner on February 16, 1926, for $7,500 in a personal injury action in the Circuit Court of the City of St. Louis. Being unable to collect such judgment on ordinary execution, she brought the present action in July, 1926, in that court for the purpose of subjecting to the payment of her judgment a promissory note for $11,000 secured by a deed of trust on certain improved real estate in St. Louis which had been and which the plaintiff claims was yet in truth and in fact the property of the judgment defendant. This note and deed of trust, dated July 1, 1925, was executed by Esther Fine in favor of defendant ...