Hargadine v. Henderson

• Decision Date: 04 March 1889
• Parties: Hargadine et al., Appellants, v. Henderson et al
• Court: Missouri Supreme Court

11 S.W. 218

97 Mo. 375

Hargadine et al., Appellants, v. Henderson et al

Supreme Court of Missouri

March 4, 1889

Appeal from Howard Circuit Court. -- Hon. G. H. Burckhartt, Judge.

Affirmed.

Walker & Johnston and R. C. Caples for appellants.

(1) In this conveyance, there is no condition of defeasance, but by it Henderson absolutely appropriated all of his property except his exemptions, to the payment of the debts named, and delivered the immediate possession to Harrison, to sell and raise a fund with which to pay said debts. "It does not purport to be a security for a debt, with power to sell if the debt be not paid when due. It conveys the property absolutely to trustees, to be sold for the payment of debts named and preferred in it. It is clearly a partial assignment for the benefit of creditors, and not a mortgage security. Such instruments have always been treated as assignments." State v. Benoist, 37 Mo. 500. "An assignment is more than a security for the payment of debts; it is an absolute appropriation of property to their payment. * * * The distinction is, that an assignment 'is a conveyance to a trustee for the purpose of raising funds to pay a debt, while a deed of trust in the nature of a mortgage is a conveyance in trust for the purpose of securing a debt subject to a condition of defeasance.'" Crow v. Beardsley, 68 Mo. 435; Burrill on Assignments (5 Ed.) p. 12, sec. 6; Hoffman v Mackall, 5 Ohio St. 124; Woodruff v. Robb, 19 Ohio 212; 2 Pomeroy's Eq. Jur. p. 543, sec. 995; Jones on Chat. Mort. secs. 8, 17, 34; Smith v. Thurman, 29 Mo.App. 186; Mills v. Williams, 31 Mo.App. 447. (2) Under the provisions of R. S. 1879, sec. 354, there can be no preference, but the assignment inures to the benefit of all creditors whether named or not. Crow v. Beardsley, 68 Mo. 435; Ring v. Ring, 12 Mo.App. 88; Douglass v. Cissna, 17 Mo.App. 44; Sampson v Shaw, 19 Mo.App. 274; Jeffries v. Bleckmann, 86 Mo. 350; Rapier v. Gulf City Co., 64 Ala. 330; Lehman v. Mfg. Co., 64 Ala. 567; Ebersale v. Adams, 73 Ky. 83; Cecil v. Sowards, 73 Ky. 96; Roberts v. Phillips, 74 Ky. 11. (3) Although the conveyance in controversy may have been made without any reference to the assignment law, yet it will be enforced in accordance with the provisions of that law. State to use v. Benoist, 37 Mo. 500; Douglass v. Cissna, 17 Mo.App. 44; Fant v. Elsbury, 68 Tex. 1; Crow v. Beardsley, 68 Mo. 435; Mills v. Williams, 31 Mo.App. 447.

Thos. Shackleford and Draffen & Williams for respondents.

(1) A debtor may prefer one creditor to another, and insolvency does not deprive him of that right. He may sell, mortgage or pledge the whole, or any part of his property, for the benefit of one or more of his creditors to the exclusion of all others, and if the transfer is bona fide, it will be sustained. Daugherty v. Cooper, 77 Mo. 528; Singer v. Goldenburg, 17 Mo.App. 549; Ames v. Gilman, 59 Mo. 537. (2) The debtor is only deprived of this right, when he undertakes to avail himself of the provisions of the statute in reference to assignments. Preferences are prohibited only where the party executes "an assignment for the benefit of creditors." Gilbert v. McCorkle, 8 Western Rep. 911; Gummersell v. Hanbloom, 19 Mo.App. 274; Rollins v. Van Baalen, 56 Mich. 610; Lampson v. Arnold, 19 Iowa 479; Farwell v. Howard, 26 Iowa 381. (3) The statute of this state in regard to assignments is founded upon an entirely different basis from a bankrupt law. Gummersell v. Hanbloom, 19 Mo.App. 274. (4) The instrument in controversy is not an assignment. "An assignment divests the assignor of any interest, legal or equitable, in the assigned property, and he can re-acquire title to it only through such means as may be requisite to an original acquisition of title." On the other hand, "when it appears that the leading purpose of the instrument is to give security to the creditor or creditors, the debtor making it will be deemed to have the right, at any time before the property is sold, to avoid it by paying the debt or debts secured. In such case, even when a mortgage is held to pass the legal title to the thing mortgaged, a condition of defeasance will be implied, if it be not expressed. When such condition is expressed or may be implied, the in strument must be held to be a mortgage, or in the nature of a mortgage." Waterman v. Silverberg, 2 S.W. 578; State ex rel. v. Cooper, 79 Mo. 464; Scott v. McDaniel, 3 S.W. 291; Smith v. Thurman, 29 Mo.App. 186; Lampson v. Arnold, 19 Iowa 479; Van Patten v. Thompson, 34 N.W. 763. (5) The grantor, in the instrument in controversy, might have redeemed the property at any time before sale, by the payment of the debts mentioned therein. The instrument upon its face, purports to be given for the purpose of "securing the debts, and of protecting and saving harmless" certain sureties of the grantor. In such cases a condition of defeasance will be implied if not expressed. Waterman v. Silverberg, 2 S.W. 578; Shradski v. Albright, 93 Mo. 42; Smith v. Beatie, 31 N.Y. 542; Stonebraker v. Ford, 81 Mo. 532; Dunham v. Whitehead, 21 N.Y. 131; Gage v. Cheesebro, 49 Wis. 486. (6) The conveyance not only purports to be given for the purpose of securing the existing debts mentioned therein, but also, to provide an indemnity to the grantor's sureties against future loss; and in addition, makes provisions for future advances by the bank. An assignment is a present, absolute transfer to raise money to pay existing debts. Gage v. Cheesebro, 49 Wis. 486-90; Crow v. Beardsley, 68 Mo. 435. (7) This instrument does not come within the evils sought to be remedied by the prohibition against preferences contained in the assignment law. Preferences are allowed, when any other kind of conveyance except an assignment is used. The reason for this distinction is, because, where an assignment is resorted to, the property is withdrawn entirely from the reach of other creditors until the trusts thereby created are carried out. Here a lien only was created upon the property. McCorkle v. Gilbert, 8 West. Rep. 911. (8) The true test by which to determine whether the conveyance in the case at bar is an assignment for the benefit of creditors, or a mere security, is found in answer to the question, whether upon a bill to redeem the grantor would be permitted to do so. If, by paying the debts, and discharging the other conditions of the instrument, before sale, he would have been entitled to redeem, and no reconveyance would have been required to revest the title in him, the instrument must be a mere security. The fact that the trustee was authorized to take possession of and sell the property does not determine its character. The same provision was in the instruments considered in the following cases which were declared mortgages, or deeds of trust in the nature of a mortgage: Waterman v. Silverberg, 2 S.W. 578; State ex rel. v. Cooper, 79 Mo. 464; Scott v. McDaniel, 3 S.W. 291; Smith v. Thurman, 29 Mo.App. 186; Gage v. Chesebro, 49 Wis. 486.

Brace J. Barclay, J., not sitting.

OPINION

Brace, J.

On the seventeenth day of September, 1885, the plaintiffs (on behalf of themselves and the other creditors of the defendant John F. Henderson) filed in the Howard county circuit court a petition, stating that on the twenty-second day of June, 1885, the defendant John F. Henderson had duly executed and acknowledged the following conveyance, to-wit:

"Know all men by these presents, that whereas, I, John F. Henderson of Howard county, in the state of Missouri, am justly indebted to the Glasgow Savings Bank, a corporation incorporated by the laws of the state of Missouri, in the following sums and evidenced by the following notes: First note dated October 13, 1883, due four months after date for three thousand dollars, with interest from maturity at the rate of ten per cent. per annum, credited July 23, 1884, with one hundred and thirty 83-100 dollars; second note, dated August 1, 1883 due four months after date, for four thousand dollars, with interest from maturity, at rate of ten per cent. per annum, credited December 4, 1883, with interest paid to April 7, 1884, May 18, 1885, thirty dollars, June 9, 1885, four hundred dollars; third note dated December 4, 1883, due three months after date, for five hundred dollars, with interest from maturity at eight per cent. per annum, credited December 9, 1884, twenty-five dollars, February 3, 1885, forty-five dollars, May 26, 1885, one hundred and forty dollars; fourth note, dated October 3, 1884, due one day after date, for three hundred and forty-eight 85-100 dollars, with interest from date, at the rate of ten per cent. per annum, credited February 12, 1885, by one hundred and sixty and 40-100 dollars; fifth note, dated October 4, 1884, due one day after date, for fifteen hundred dollars, with interest from date at the rate of ten per cent. per annum, which note is also executed by William White and Joseph S. Henderson, as security. And whereas, also, A. Frank & Sons obtained a judgment against said Henderson, at June term, 1885, of Howard county circuit court, for five hundred and seventy-two 80-100 dollars, being debt and costs, interest at six per cent.; and also Walter H. Teumy & Company obtained judgment at the same term, for debt and costs, seven hundred and fourteen 86-100 dollars; and also John B. Farwell & Company obtained judgment at the same term, for one hundred and sixty-eight 55-100 dollars, debt and costs; and Thomas E. Birch and George B. Harrison executed a delivery bond to the sheriff of Howard county as surety for said Henderson to secure the payment of said judgment on which execution had been issued. Now, therefore, the said John F. Henderson is desirous of securing said debts, and of protecting and saving harmless his securities...