Gruner v. Scholz

• Decision Date: 20 February 1900
• Citation: 55 S.W. 441,154 Mo. 415
• Parties: GRUNER v. SCHOLZ et al.
• Court: Missouri Supreme Court

55 S.W. 441

154 Mo. 415

GRUNER v. SCHOLZ et al.

Supreme Court of Missouri, Division No. 2.

February 20, 1900.

FRAUDULENT CONVEYANCES — TRANSACTIONS BETWEEN HUSBAND AND WIFE.

A husband, having failed in business, transferred an equity in his homestead to his brother for $800, who afterwards gave it to the former's wife in return for past favors. Two years later, the husband, being out of employment, friends of his wife agreed to indorse her note if she would purchase a drug store for $1,200, and have the husband run it. The wife at the time owned the equity in the homestead and some property in another state, which she afterwards sold for $2,400. After the drug store had paid for itself, the husband, with some assistance from his wife, started in another business, in which he made enough to support the family, the wife still conducting the drug business. Three years afterwards she purchased the property in suit for $3,400 cash. Held, that the transactions were not fraudulent as against the husband's creditors.

Appeal from St. Louis circuit court; Selden P. Spencer, Judge.

Suit by Gustavus A. Gruner against Philip Scholz and another. Judgment for defendants, and plaintiff appeals. Affirmed.

Kehr & Tittmann, for appellant. Rassieur & Rassieur, for respondents.

GANTT, P. J.

This is a suit in equity by a judgment creditor to set aside an alleged fraudulent conveyance to the wife of the judgment debtor of certain real estate in the city of St. Louis, described as lot No. 31, in city block 2432, having a front of 50 feet on west line of Twentieth street, by a depth westwardly of 117 feet 6 inches, bounded on the south by Ferry street, and on the east by Twentieth street. In 1883, Philip Scholz was conducting a planing mill, and the debt for which the judgment was rendered grew out of that business. Philip Scholz failed, and on August 16, 1883, made a voluntary assignment for the benefit of his creditors, reserving his homestead on Eleventh and Ferry streets, which was mortgaged at that time for $4,200. In November, 1883, Philip Scholz offered to sell the homestead, subject to the liens thereon for $800, to his brother Paul Scholz, who resided at Corning, Mo. His brother agreed to take it, as indicated by the following letter: "Corning, Mo., October 28th, 1883. Dear Brother Phil: Your offer to sell your house to me received, and, while I am not desirous of having property in St. Louis, to help you out I will take it, and pay you the $800.00 you ask. But the deed of trust you write being past due, you got to send to me a written agreement of the Ins. Co. that they will wait another year from time of Sept. 21, 1883. The other 3,000 I will be able to take up when due. Now inclosed find draft and exchange, five pieces, aggregating $800.00. They are all made to bearer, so you will have no trouble collecting them. Of course you will execute me at once a warranty deed of all your claim, and only subjected to the two deeds of trust mentioned, 1,200 and 3,000; also pay taxes for 1883 out of the $800.00, and I will send you that money at once. Hoping that this money will give you a start in some new business, I am, your Bro., Paul." The husband gave $500 of this money to his wife for the support of herself and children, and with the remainder thereafter went to Evansville, Ind., to seek employment, and he there obtained employment in a planing mill. Subsequently Paul Scholz voluntarily deeded the property to Mrs. Scholz. His letter to her, inclosing the deed, is as follows: "Corning, Mo., December 16th, 1883. My Dear Sister Belle: Since taking the deed in exchange for the money sent, my conscience has been troubling me some. Think I owe you for many favors you done me in days past, but, as it is against my principle to pay old debts, I return the deed to you, and ask you to accept it as your Christmas gift. Write you only a short letter. My holiday trade is booming. Am therefore taking Sunday to write these few lines. My business will keep me quite busy, so I don't know if I will get a chance to write to Phil. Whenever you write to him remember me to him, and kiss my little nephew and nieces. Wishing you all a happy Christmas, and a merry and prosperous New Year, I remain, your Bro., Paul. P. S.: Love from Helen." Mrs. Scholz and her children joined her husband in Evansville, but the mill company for which Philip was working failed in 1885, and he returned to St. Louis, seeking employment. Philip Scholz, prior to his venture in the planing mill, had been a druggist. Soon after his return to St. Louis he met two old friends in the person of Julius Vogt and Justice Nacke, who had known his wife's father, Dr. Carrington, for many years. They suggested to him to return to his old business as an apothecary, but he told them he had no money to invest in a drug store; whereupon they offered to help his family. They told him that Brockman, who had a drug store, was desirous of selling, and his business could be bought for $1,200. Justice Nacke said to him: "You can't go in business for yourself, but, if we can help you or your family they would indorse for his wife to the amount of $1,000, if Philip would give the business his attention." Mrs. Scholz was still in Evansville, and Philip submitted the proposition to her. At that time the title to the homestead, subject to the mortgages, was in her, and she still owned a piece of real estate in Philadelphia. In answer to his letter, Mrs. Scholz wrote her husband she hated to give her note; she did not want to hazard her property; but she finally acquiesced, and sent her husband $200 in cash, and executed her note for $1,000, which Nacke, Vogt, and Wellhausen and her husband indorsed, and with the funds thus raised the drug store was purchased for her by her husband. Nacke insisted that, if they did that for his wife, defendant Scholz should manage the drug store for her, and he did so for two years. The business paid for itself in about 18 months, and then Philip Scholz conceived the idea of studying medicine, and thereupon W. H. Koetter was employed as her pharmacist, and her husband began to attend the medical lectures, his wife furnishing him money to pay his fees, and he graduated two years later, and she furnished his office, and gave him instruments and fixtures, to the amount of $800. In the meantime the homestead property was leased by Mrs. Scholz, and later on (1886) she sold her Philadelphia property for $2,400. With this sum, and her rentals and receipts from her store, she built another building on the homestead property, at a cost of $3,200, and paid off the mortgages thereon. The new building yielded a rental of $36 per month, and her family resided in the old homestead building. After defendant Philip Scholz began the practice of medicine he was enabled to support his family, thus leaving the drug business free of that burden, and it seems to have been very lucrative. He testified that he gave his wife $1,600 for the support of the family from March, 1889, to March, 1890, and from March, 1890, to March, 1894, from $1,500 to $2,000 annually, and repaid her the $800 which she had loaned him to buy his fixtures and instruments. In 1892, Mrs. Scholz bought the property at Ferry and Twentieth streets for $3,400, paying cash for it. The foregoing statement forms the basis of the discussion of counsel in their briefs and arguments.

On the part of plaintiff, it is earnestly insisted that it discloses a scheme and a device by defendant Philip Scholz, with the consent and assistance of his wife, to make a permanent provision for his own use, and to hold it free from his creditors, and that, therefore, the drug store, and all the other property acquired therefrom, should be subjected to the claim of his creditors; whereas, the defendant Mrs. Scholz insists that the drug store was purchased with her own money, and with the proceeds of her own note, which she was enabled to make because old friends of her father were desirous of aiding her, and that the evidence is clear that they would not indorse for her husband, but stated they only did it for her, to enable her to take care of her family. The circuit court found for the wife, and we think the evidence sustains its decree. While courts are astute...