Hard v. Foster

• Decision Date: 10 June 1889
• Citation: 98 Mo. 297,11 S.W. 760
• Parties: HARD et al. v. FOSTER et al. CHASE et al. v. SAME. SAME v. FOSTER et al.
• Court: Missouri Supreme Court

11 S.W. 760

98 Mo. 297

HARD et al. v. FOSTER et al.

CHASE et al. v. SAME.

SAME v. FOSTER et al.

Supreme Court of Missouri.

June 10, 1889.

FRAUDULENT CONVEYANCES — JUDGMENT BY CONFESSION.

1. A judgment for bona fide debts confessed by an insolvent, with the intention of defrauding other creditors, the judgment creditor knowing nothing of the fraud, is valid, under the Missouri Statutes, which allow preferences where the preferred creditors are not guilty of fraud, and the judgment and lien of an execution thereunder must stand as against subsequent attaching creditors, unless the judgment is defective, or is fraudulent, or the levy has become so by reason of the proceedings of the creditor thereunder.

2. The guilty knowledge and fraud of the debtor cannot be imputed to the creditor, who consents to confession of judgment in his favor, nor does such consent create the relation of principal and agent between the parties.

3. A confessed judgment is not void, as against subsequent liens, for the reason that the statement on which the judgment was confessed, and which contains all that is required by Rev. St.Mo. § 3697, shows a discrepancy of $400 in an item charged, where the discrepancy is the result of a clerical error in one of the depositions.

4. It is also immaterial that the statement fails to show a special agreement to pay an item of interest charged, where the charge is fair and just, and in accordance with the general course of business in similar transactions.

5. An objection that the confession, which was for a partnership debt, is void, as including an individual debt of one of the partners, is untenable, where it appears that the creditors were ordered to make a payment, and charge it to the account of the firm; that the firm treated the item as properly charged to them; that the individual partner alone really constituted the firm; and that remittances were made to the creditors to cover that particular transaction; also where there is no evidence of the insolvency of the judgment debtors at the date of the transaction.

6. The statement on which a judgment was confessed alleged that the debtor borrowed a certain

sum from the creditor, which he promised to pay, with interest, on demand; also the purpose for which he borrowed the money. Rev. St. Mo. 1879, § 2723, fixes the rate of interest, when none is agreed on, at 6 per cent. Held, that the judgment, which included interest, was not void, on the ground that no interest was due according to the statement.

7. The Missouri statute requiring a statement on which a judgment is confessed to state concisely the facts out of which the indebtedness arose, and to show that the sum confessed is justly due, a statement that the interest has been paid up to a given date, except a certain sum, according to an accounting of a given date, at which date a given sum as principal and interest was found to be due, and since said date a further given sum has accrued as interest, making the total sum for which the debtor confesses judgment, is sufficient.

8. In a suit by attaching creditors to set aside as fraudulent the liens created by confessed judgments, and to subject the property to their judgments in attachment, they cannot contend that the confession of judgment, and a subsequent assignment for benefit of creditors by the judgment debtor, constituted but one transaction, and that, therefore, the preference sought to be given to the judgment confessed must be held void, as such position necessitates the contention that the confessed judgment is part of the general assignment, in which they and the judgment creditors would be included.

Appeal from St. Louis circuit court; AMOS M. THAYER, Judge.

Hough, Overall & Judson, Fisher & Rowell, and Jas. O. Broadhead, for appellants. Frank K. Ryan and Chester H. Krum, for respondents.

BRACE, J.

These three cases are submitted on one record. At the April term, 1885, of the circuit court of St. Louis, and on the morning of the 20th of said month, defendants Ralph R. Foster and James R. Ryan, partners doing business under the firm name of R. R. Foster & Co., at St. Louis, confessed judgment in favor of their co-defendants Henry C. Ward and Charles G. Foster, partners doing business under the firm name of Ward & Foster, in New York, for the sum of $15,440.92, and in favor of the Bank of Commerce for the sum of $5,000, and the said defendant Ralph R. Foster confessed judgment in favor of his said co-defendant Charles G. Foster for the sum of $5,882.41. Executions were immediately issued on these judgments, and levied, — the one in favor of Ward & Foster, at 10:55 A. M., on all the teas and cigars on the first floor, and all the cigars on the second floor, of 309 North Second street, as the property of R. R. Foster & Co.; the one in favor of the bank, at 11:15 A. M., on all the teas on the second, third, and fourth floors of No. 311 North Second street, as the property of the said R. R. Foster & Co.; and the one in favor of Charles G. Foster at 12:10 P. M., on a lot of cattle, horses, hogs, etc., as the property of the said Ralph R. Foster. At 10:30 A. M., a few minutes before these levies were made, a deed and mortgage were filed in the office of the recorder from Ralph R. Foster, conveying his real estate to his brother William M. Foster, and a mortgage on all his household property; the consideration in the deed being $1,500, and the note in the mortgage being for the same amount. At 12:33 P. M., a few minutes after the last of the levies were made, there was filed in the office of the recorder a general deed of assignment from said R. R. Foster & Co. to R. D. Lancaster, of all their property subject to existing liens, for the benefit of their creditors. At the time these judgments were confessed and levies and transfers made Foster & Co. and R. R. Foster were insolvent, and they covered the whole of their property. On the 23d of April, 1885, plaintiffs, Hard & Rand sued out a writ of attachment in an action against R. R. Foster & Co., in which judgment was afterwards rendered for $9,061.43, and on same day caused the same to be levied upon the property held by the sheriff under the execution in favor of Ward & Foster against R. R. Foster & Co. On the same day plaintiffs Chase & Weir sued out a writ of attachment in an action against R. R. Foster & Co., in which judgment was afterwards rendered for $11,619.58, and on the same day caused the same to be levied upon the same property theretofore levied upon under the execution in favor of Ward & Foster, and the attachment in favor of Hard & Rand, and also upon the property theretofore levied upon under the execution in favor of the bank, and on the 11th of May ensuing upon all the property upon which the execution on the judgment of Charles G. Foster against R. R. Foster had been levied, as the individual property of said R. R. Foster. Hard & Rand, after the levy of their attachment on the 23d of April, and on the same day, filed their petition in this present suit. On the 26th of April some of the property on which the Ward & Foster execution, and some on which the bank execution, had been levied, was relplevied by other parties from the sheriff. On the 25th of May, Chase & Weir filed the petition in their present two suits, now under consideration on this record, in connection with that of Hard & Foster, and in which, as attaching creditors under section 448, Rev. St. 1879, they each seek to set aside the lien of the levy under the execution on the confessed judgments aforesaid, in favor of Ward & Foster and Charles G. Foster, who, with the sheriff, Henry F. Harrington, R. R. Foster & Co., and R. R. Foster, are made parties defendants. On the 25th of July the individual property of R. R. Foster, levied upon by virtue of the execution on judgment confessed in favor of Charles G. Foster, was sold by the sheriff for the net sum of $6,270.94, and on the 27th of July the property of R. R. Foster & Co., levied upon by virtue of the execution on the judgment confessed in favor of Ward & Foster, was sold by the sheriff for the net sum of $21,664.19; and these amounts are in the hands of the sheriff, awaiting the decision of these cases.

Section 448, supra, provides "that any attaching creditor may maintain an action for the purpose of setting aside any fraudulent conveyance, assignment, charge, lien, or incumbrance of or upon any property attached in any action instituted by him." The parties in these actions confine their attack to the two judgments confessed in favor of Ward & Foster and Charles G. Foster. The property conveyed in the deed and mortgage was not attached by them, and the judgment confessed in favor of the Bank of Commerce and the assignment to Lancaster are not attacked, and neither the bank nor the assignee are made parties.

A careful consideration of all the evidence in the case leads to the following conclusion of facts: That on the 1st of January, 1885, the concern of R. R. Foster & Co. was insolvent, and that their condition was known to the members of the firm. That while Ryan was nominally a member of the firm he had no real interest in the concern, and was in fact a mere employé, upon a salary, of Foster, who owned the whole concern. That about that time they conceived and commenced carrying out a scheme to defraud their creditors, by buying on credit large amounts of goods, and selling them for cash at reduced prices. That they worked the scheme assiduously, successfully, and continuously from that time during the months of January, February, and March, and until about the 8th of April, when Foster mailed to his brother, the defendant Charles G. Foster, a member of the firm of Ward & Foster, commission merchants in New York city, the following letter: "St. Louis, April 8th, 1885. Dear Charles: Everything in the way of business seems to be going wrong, and, as we have lots of big payments before long, I am afraid we won't pull through. I...