Hardcastle v. Fisher

• Citation: 24 Mo. 70
• Parties: HARDCASTLE et al., Plaintiffs in Error, v. FISHER et al., GARNISHEES OF MUDGETT & JAMES, Defendants in Error.
• Decision Date: 31 October 1856
• Court: United States State Supreme Court of Missouri

24 Mo. 70

HARDCASTLE et al., Plaintiffs in Error,

v.FISHER et al., GARNISHEES OF MUDGETT & JAMES, Defendants in Error.

Supreme Court of Missouri.

October Term, 1856.

1. The omission of an assignee, in the case of a voluntary assignment for the benefit of creditors, under the act concerning voluntary assignments (R. C. 1845, p. 127), to file an inventory, give security, or to discharge any other duty imposed by said act, cannot destroy the rights of the creditors under the assignment.

2. Although it may be attempted by an assignment for the benefit of creditors to secure one or more fictitious and fraudulent claims, neither the assignee nor the other creditors being cognizant of the fraud, this will not render the assignment ineffectual in favor of such other creditors; the assignment will in such case be held void as against the fraudulent claimant, and good in favor of the honest creditors.

3. The effect of impeaching such a claim by reason of fraud is, that the share of the fund, that would otherwise be appropriated to its payment, sinks into the residue for the benefit of those creditors who are entitled to the residue by the terms of the deed of assignment; an attaching creditor, who summons the trustees as garnishees, cannot be allowed to stand in the place of the excluded claimant and take his share of the fund.

Error to St. Louis Court of Common Pleas.

On the 1st of October, 1853, plaintiffs commenced a suit by attachment against Mudgett & James, averring in their affidavit, as grounds for the attachment, that the defendants had fraudulently conveyed and assigned their property and effects so as to hinder and delay their creditors. In the month of October, 1853, the respondents were summoned as garnishees of said Mudgett & James. At the return term of the writ Mudgett & James filed a plea in abatement to the affidavit for the attachment, and afterwards, in February, 1856, on a trial before a jury, the issue made by the plea in abatement was found for the plaintiffs. On the 1st of March, 1856, the plaintiffs, by leave of court, filed amended allegations and interrogatories against the defendants, as garnishees of Mudgett & James, in substance as follows: That Mudgett & James were partners, doing business as dry goods merchants in the city of St. Louis, from January, 1850, until 27th September, 1853; that they had contracted partnership debts for goods, wares and merchandise, to the amount of $60,000, up to 29th September, 1853; that they then had, in tangible stock and property, about $40,000 in value; that Mudgett & James, designing to cheat and defraud certain of their creditors, made a deed of trust, dated 27th September, 1853, and thereby conveyed all their said tangible property and their notes and accounts to defendants in this case, Hickman and Fisher. The allegations set out at length the said deed to the defendants. This deed, dated 27th September, 1853, acknowledged and duly recorded on the next day, was made by Mudgett & James to the defendants as parties of the second part, and Morris L. Holland & Co., William Mudgett, Jr., of Rochester, Mrs. Elizabeth C. Chadwick, the plaintiffs, and many other persons as parties of the third part, in consideration of the debts and trusts therein named, and ten dollars paid to Mudgett & James by defendants. It conveyed, transferred and sold to the defendants all the goods of Mudgett & James, the fixtures in the storeroom, their unexpired lease, all evidences of debt, accounts, etc., and insurance stock, in trust, to pay the debts therein named and expenses of the trust, in the order and according to the classification mentioned. The trustees were required to take immediate possession of everything conveyed, and were authorized to dispose of the merchandise in the usual manner, by sale, at retail or otherwise, as might seem to them best for the interest of the beneficiaries. Whatever remained undisposed of on the 15th of March, 1854, the trustees were required (unless in their opinion it was proper to do so sooner) to advertise for thirty days, and sell at auction, on these terms: for all sales under fifty dollars, cash, and for sums over that amount a credit of sixty days, secured by negotiable notes, with approved indorsers. The deed was also signed by Hickman and Fisher. The plaintiffs, in their allegations, further alleged that upon the execution of said deed, a formal delivery of the possession of the goods in the store of Mudgett & James was made to the garnishees, and the garnishees immediately employed Mudgett & James to act as their clerks and agents to take an account of stock, and to sell off the goods, wares and merchandise conveyed by said deed; that Mudgett & James, being so employed, proceeded to sell said merchandise at their old stand for about four and a half months, for cash and upon credit, the proceeds of which sales were regularly paid to said Hickman and Fisher; that Hickman and Fisher knew nothing of the fraudulent design of Mudgett & James, and that they have no other right, title, claim or property...