Harrison v. Harrison
| Decision Date | 18 October 1960 |
| Docket Number | No. 30618,30618 |
| Citation | 339 S.W.2d 509 |
| Parties | Edith E. HARRISON, Plaintiff-Respondent, v. Louise E. HARRISON, Interpleader-Appellant, John E. Harrison, Defendant, 3738 Corporation, a Corporation, and William C. Ferguson Company, a Corporation, Garnishees. |
| Court | Missouri Court of Appeals |
Sherman Landau, St. Louis, for interpleader-appellant.
Robert C. Brinkman, St. Louis, for plaintiff-respondent.
DOERNER, Commissioner.
This case involves two garnishments in aid of execution, which were consolidated and tried together. The contest below was between Edith E. Harrison, the judgment creditor, and Louise E. Harrison, the interpleader, and resulted in a judgment in favor of Edith, from which Louise has appealed.
The action had its genesis in a judgment and decree of divorce which was granted to Edith from John E. Harrison on March 4, 1953. By that decree Edith was awarded the custody of their then 14 year old son, Robert, $100 per month for his support and maintenance, and the same amount as alimony, both sums being payable semimonthly. John was then employed as secretary and treasurer, as well as office manager, of Presstite Engineering Company and exactly one month later, on April 4, 1953, he married Louise, the interpleader herein, who had worked for the same concern for six years as a switchboard operator and receptionist, under John's supervision.
The evidence shows that John paid Edith the amounts due her for alimony and child support until February 1, 1956, when he defaulted in his payments for the months of February, March and April. However, following the issuance of an execution on March 16, 1956 and the service of the writ on Presstite Engineering Company, John paid Edith, sometime before May 1, 1956, the $600 then due her. Thereafter John made no further payments, so that on February 26, 1958, the date the instant execution was issued, John owed Edith such installments for the period from May 1, 1956 through February 15, 1958, which, at $200 per month, totaled $4,400. Writs of garnishment in aid of execution were served on the William C. Ferguson Company and the 3738 Corporation (to which the name of Presstite Engineering Company had been changed) on March 4, 1958 and March 10, 1958, respectively. Following the filing of amended interrogatories, the answers of the garnishees thereto, and the replies of Edith to the answers, Louise interpleaded, claiming to be the owner of the property involved. Edith answered, denying that Louise was the owner. As made by their pleadings, the basic issue between Edith, the judgment creditor, and Louise, the interpleader, was whether the shares of stock John had owned in the garnishee corporations were transferred to Louise in good faith and for a valuable consideration, as Louise claimed; or whether such transfers were made for the purpose and with the intent of hindering, delaying or defrauding Edith in the collection of her judgment, as she claimed.
In brief, the substance of the evidence on behalf of Louise was that John had transferred the stocks to her in accordance with a pre-marital agreement made between them; while the essence of Edith's evidence was that John had demanded that Edith agree to a reduction of the judgment for child support and alimony; had threatened that he would move to Florida if she refused to agree; and that his subsequent removal to Florida, and the transfers of the stocks in question to Louise, were part of an over-all design and scheme to dispose of substantially all of his property so as to evade the collection of Edith's judgment.
On June 2, 1959, the lower court rendered its findings of fact, in which it found that Edith was a judgment creditor, of which John and Louise were aware; that the various transfers of the stock in the garnishee companies, and the increment thereof, were made by John and Louise for the purpose of defrauding, hindering and delaying Edith in the collection of her judgment; that all or substantially all of John's other assets had been transferred to the joint names of John and Louise, and had been removed to Florida, for the same purpose; and that at the time of trial there was due Edith from John the sum of $6,800 on the judgment, together with interest thereon of $621.25, or a total of $7,421.25. By its decree the court sustained the petition of Edith, ordered the garnishee corporations to pay into the registry of the court the money held by them; directed them to deliver to the sheriff the certificates for the stock; and ordered that the sheriff sell the same at public sale.
Edith testified that John made the demand for the reduction of the child support and alimony payments, and his threat to move to Florida, in March of 1955. On May 27, 1955, shortly after her refusal, John caused 1815 shares of the common stock of the then named Presstite Engineering Company, and 1650 shares of the common stock of William C. Ferguson Company, to be transferred from his name to himself and Louise, as tenants by the entirety. Subsequently, on January 3, 1956, John sold 815 shares of the Presstite stock to that company, for $30 per share, or a total of $24,450. Shortly thereafter, on January 17, 1956, Presstite declared a 200% stock dividend, as a result of which John and Louise received 2,000 additional shares, making 3,000 in all. By a purchase agreement effective March 31, 1956, the American-Marietta Company bought substantially all of the assets of Presstite, paying therefor 90,000 shares of American-Marietta stock. Since the operations previously carried on by the Presstite Company were to be continued by American-Marietta under the name of Presstite Division, the name of the Presstite Company was changed to that of 3738 Corporation, and as part of its liquidation its stockholders surrendered their certificates of stock and received in lieu thereof receipt and distribution certificates, entitling them to an aliquot part of the assets of the company upon distribution thereof. There having been 300,000 shares of stock previously outstanding, the receipt and distribution certificate issued on April 5, 1956, to John and Louise as tenants by the entirety represented a 3,000/300,000 interest. On April 17, 1956, John surrendered that receipt and distribution certificate to the company and caused a new certificate to be issued in the name of Louise alone.
As to the stock in the William C. Ferguson Company, it stood in the name of John and Louise as tenants by the entirety from May 27, 1955, until April 17, 1956, when John caused the stock to be transferred to the name of Louise alone.
The undisputed evidence showed that at the time the first transfers were made to the names of John and Louise, as tenants by the entirety, on May 27, 1955, John was employed by the Presstite Company at a substantial remuneration; had about $6,400 on deposit in two bank accounts; owned some life insurance and several thousands of dollars of government bonds; and also owned a residence, subject to a deed of trust, the title to which he had had recorded in the name of his sister and her husband when he purchased the property in 1951. Louise testified that John then had no financial obligations other than for current living expenses, to Edith on her judgment, and on the deed of trust. Louise's first point on appeal is that the pertinent transfers were those of May 27, 1955, and that the validity of her ownership must be judged in the light of John's financial condition at that time; that John was then in a sound financial condition; and that therefore the transfers could not have been made with the intent to hinder, delay or defraud Edith in the collection of her judgment.
We cannot agree with that line of argument. Under our statute, Section 428.020 RSMo 1949, V.A.M.S., every conveyance made with the intent to hinder, delay or defraud creditors is declared to be clearly and utterly void as to such creditors. While the insolvency resulting from a conveyance may be material evidence of fraud, the intent with which the conveyance is made, and not the resulting insolvency, is the determining factor. And, as was said in Graff v. Continental Auto Insurance Underwriters, Springfield, Illinois, 225 Mo.App. 85, 35 S.W.2d 926, 931:
'* * * the authorities hold that if the intent underlying the transaction was to do that which is forbidden by statute, then it is fraudulent and void as to creditors, whether the debtor be solvent at the time or not.'
Furthermore, this is not a case involving a single conveyance by a debtor of only a part of his property. What we are here called upon to consider is an action where the judgment creditor charged that the several transfers of stock which constitute the subject of this proceeding were part and parcel of a comprehensive scheme by the debtor to dispose of all or substantially all of his assets, by a series of conveyances, with the intent to hinder, delay and defraud his creditor in the collection of her judgment. It is settled law that a voluntary conveyance by a debtor of all or substantially all of his property is presumptively fraudulent and void as to existing creditors. Conrad v. Diehl, 344 Mo. 811, 129 S.W.2d 870; Godchaux Sugars v. Quinn, Mo., 95 S.W.2d 82; Scharff v. McGaugh, 205 Mo. 344, 103 S.W. 550. Whether the debtor seeks to accomplish his proscribed purpose by a single conveyance, or by a series of conveyances, is immaterial. In that connection, see Allison v. Mildred, Mo., 307 S.W.2d 447. If John's transfers on May 27, 1955, were but the first step in a comprehensive plan to divest himself of all or substantially all of his assets, including the stock here involved, so as to defeat Edith's collection of her judgment, the mere fact that John may have temporarily retained other assets after the first conveyance would not be determinative of the validity of the initial transfers.
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