Gill v. Ely-Norris Safe Company
| Decision Date | 07 April 1913 |
| Citation | 156 S.W. 811,170 Mo.App. 478 |
| Parties | CHARLES S. GILL, Trustee in Bankruptcy of the CRAMER SAFE COMPANY, Respondent, v. ELY-NORRIS SAFE COMPANY, Appellant |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Jas. H. Slover, Judge.
Affirmed.
House & Manard and W. J. Allen for appellant.
(1) As the sale to defendant was made and possession of the property taken by it prior to the adjudication in bankruptcy, the finding of the court that the bill of sale was fraudulent as to all creditors was erroneous, and its judgment cannot stand. In re Cooperage & Lbr. Co., 180 F. 105; Davis v. Turner, 120 F. 605; Bank v. Bank, 136 U.S. 223; Carriage Co. v. Wells, 99 Mo.App. 641; Thompson v. Massey, 76 Mo.App. 197; Milling Co v. Com. Co. 128 Mo. 473; (2) The authorities are agreed that book entries are not admissible in evidence unless they were made reasonably contemporaneous with the facts to which they relate, by parties having personal knowledge of the facts, and are corroborated by their testimony, if living and accessible, or by proof of their handwriting, if dead, or insane, or beyond reach. Seligman v. Rogers, 113 Mo 657; Chaffee v. United States, 18 Wall. 516, 21 L.Ed. 1908; Maxwell v. Wilkinson, 113 U.S. 658, 28 L.Ed. 1038; Bates v. Preble, 151 U.S. 156, 38 L.Ed 109; Putnam v. United States, 162 U.S. 695, 40 L.Ed. 1121; Re Tully, 22 Blatchf. 217, 20 F. 815; Glenn v. Liggett, 47 F. 480. (3) When one is to be charged for the value of stock the market should be taken if it can be ascertained. This is determined by sales in the market at or about the time. No sales were shown. Morgan v. Wood, 38 Mo.App. 255; O'Connell v. Nicolson, 67 Mo.App. 657; Douglas v. Merceles, 25 N.J.Eq. 147; Dana v. Fielder, 12 N.Y. 40. (4) Fraud, it is true, may be shown by circumstances, but such curcumstances, to prove it, must be shown as excludes every other reasonable hypothesis. Hoeller v. Haffner, 155 Mo. 589; Black v. Epstein, 221 Mo. 286.
A. N. Gossett for respondent.
(1) The bill of sale being held secret for five months, absolute on its face and in fact given as security, is fraudulent in law and in fact. Bankrupt Act, sec. 1, cl. 25; Bankrupt Act, sec. 60, par. a; Bankrupt Act, sec. 67, pars. a and e; Pattison v. Letton, 56 Mo.App. 325. (2) The bill of sale and transactions thereunder between the defendant and the Cramer Safe Company were void under the Bankrupt Act as a preference by an insolvent debtor; and the trustee in bankruptcy has a clear right to maintain this suit and the judgment is indubitably justifiable under such law whether fraudulent in fact or in law. Bankrupt Act, sec. 1, cl. 25; Bankrupt Act, sec. 3, par. b; Bankrupt Act, sec. 60, par. a; Re Sheridan, 98 F. 406; Re Klingman, 101 F. 691; Re Gillett, 104 F. 769; Re Brick Co., 179 F. 525; Landis v. McDonald, 88 Mo.App. 335; Babbitt v. Kelly, 96 Mo.App. 529. Honesty of intent is immaterial. 5 Cyc. 295 and 296.
--This is a suit by the trustee in bankruptcy of the Cramer Safe Company to set aside an alleged bill of sale made by the Cramer Safe Company to defendant, to recover funds of said company appropriated by defendant after the execution of said bill of sale and to obtain the remainder of the Cramer Company's property held by defendant, or its reasonable value, at the trustee's election.
The first answer was a general denial, but later an amended answer was filed admitting the execution of the bill of sale and stating the reasonable value of the property described therein to be not more than $ 1200. The answer further alleged that defendant had paid $ 236.75 to plaintiff by mistake and that plaintiff had collected $ 50 belonging to defendant, and then asked a judgment for $ 286.75. For a further defense the answer set up that at the date of the bill of sale the Cramer Company was indebted to defendant in the sum of $ 3704.52; that between said date and June 24, 1909, said Cramer Company became further indebted to defendant in the sum of $ 1226.48, but that said Cramer Company had paid on the indebtedness accruing prior to January 27, 1909, $ 1016.94, leaving due defendant the sum of $ 3183.44, which the court was asked to decree as a claim against the estate of the bankrupt and to declare it a set-off against any amount found due from defendant on account of any property of the bankrupt received into defendant's possession.
The case was tried and submitted by both sides as one in equity. The chancellor found the bill of sale was fraudulent and void as to creditors of the Cramer Safe Company, that defendant prior to the institution of the suit had received $ 334.95 as proceeds of property belonging to said bankrupt, and had converted to its own use $ 500 in tools and machinery, $ 50 in office furniture and $ 1539 in safes which plaintiff should recover of defendant. The decree, therefore, adjudged the bill of sale fraudulent and void, and rendered a judgment in favor of the trustee for $ 2423.95 and denied the relief prayed for by defendant.
Defendant appeals, and one of its grounds is that the petition and evidence does not entitle plaintiff to equitable relief.
We take this to mean, either that the suit cannot be maintained in equity because plaintiff has an adequate remedy at law, or that the evidence is not sufficient to entitle plaintiff to recover, and not that, for any other reason, plaintiff should have sued at law instead of in equity. The only reason for preserving the distinction between an action at law and one in equity, under our code, is in order that either party may demand and have a jury if the case be one at law. [McKee v. Allen, 204 Mo. 604.] In the case before us the cause was submitted to the court with no demand for a jury, no point was made as to the method of trial, no demurrer to the evidence submitted, no request made for declarations of law, and no point raised in the motions for new trial or in arrest that there was no jury trial. Hence, even if it were purely a law case, a jury was waived. [Barber Paving Company v. O'Brien, 128 Mo.App. 267, 107 S.W. 25.] And if the petition states a cause of action and the evidence is sufficient to sustain a judgment and the latter is within the pleadings, plaintiff must prevail. [Bagley v. Tyler, 43 Mo.App. 195.]
But, as to the point that there is an adequate remedy at law, we are of the opinion that, even if plaintiff has a legal remedy, still this case falls within the concurrent jurisdiction of equity. [Pomeroy on Equity, sec. 139.] The cases cited by defendant on this point are where the primary right to be protected is strictly a legal one and a court of law can do complete justice. In such cases, equity has no concurrent jurisdiction. [Pomeroy on Equity, (3 Ed.), sec. 176.] The case we are considering, however, has as the primary right to be protected, a right in equity, i. e., to have an outright bill of sale declared a mortgage and then cancelled as fraudulent. In addition to this, the various kinds of relief asked both in the petition and in the answer make it properly a suit in equity. Moreover both parties treated the case in the circuit court as one in equity, and neither should permitted to afterwards shift in theory or position on this point. [Roselle v. Beckemeier, 134 Mo. 392.]
To properly understand the points hereinafter considered it is necessary that the facts be first briefly stated.
Defendant, a New Jersey corporation with offices in that State, is a manufacturer of safes. The Cramer Safe Company, located in Kansas City, was engaged in selling new and second-hand bank and other safes and doing repair work on others. Safes sent by defendant to it on consignment remained the property of defendant until sold, though sometimes the Cramer Company would receive the proceeds of a sale and keep the same giving defendant a note therefor. All new safes of other makes and second-hand safes received by the Cramer Company in exchange for safes sold by them were the property of the Cramer Safe Company.
On January 27, 1909, the Cramer Safe Company owed defendant a large sum for which notes had been given. It also owed other creditors and was in financial straits. On the date mentioned it executed to defendant a bill of sale of all its property that it then had, and which it might acquire within one year from that date, including the stock of safes held by it on consignment from the defendant. After the bill of sale was made the Cramer Safe Company kept its store open as usual and continued to do business under its name as before, and no possession of said store was taken by defendant under said bill of sale until June 24, 1909, nearly five months after it was executed. The instrument, although in form an out-and-out bill of sale, was in reality a mortgage, as shown by the evidence and the circumstances under which the defendant took possession.
On July 6, 1909, the other creditors of the Cramer Safe Company filed a petition against it in bankruptcy and on October 24, 1909, it was adjudged a bankrupt and plaintiff herein was appointed trustee, all within four months after defendant had taken possession of the stock under its alleged bill of sale. When defendant took possession it did not deliver up the notes it held against the Cramer Safe Company, but, as stated before, took possession as if the bill of sale were a mortgage, which it was as the evidence clearly showed.
A preliminary proposition submitted inferentially by defendant is that under no view of the evidence could the trial court find that the bill of sale was fraudulent in law or in fact.
The bill of sale was absolute on its face but was in fact a mortgage. It was given on a stock of goods in trade. It remained a secret matter between defendant and the Cramer...
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