Howard v. Scott
| Decision Date | 01 March 1910 |
| Docket Number | Two Cases,14,203 and 14,204; Cross-Appeals and Cases Consolidated |
| Parties | F. P. HOWARD, Respondent (and Appellant), v. ADAM SCOTT and R. A. MOONEYHAM, Appellants (and Respondents) |
| Court | Missouri Supreme Court |
Appeal from Jasper Circuit Court. -- Hon. Hugh Dabbs, Judge.
Affirmed as to Scott and Mooneyham, appellants; reversed and remanded (with directions) as to appellant Howard.
Mooneyham & McCawley, E. O. Brown and H. W. Currey for appellants Scott and Mooneyham.
(1) A petition attacking a judgment as having been procured by fraud should point out in what particulars the alleged fraud was committed, or the specific acts wherein fraud in the procurement of such judgment is alleged to exist. Unless the petition does so state, no cause of action for setting aside the judgment is stated. Nagel v. Railroad, 167 Mo 89. The allegations of fraud in the procurement of the judgment sought to be set aside in the present case, as having been obtained by fraud, are not of such character as to justify the court in setting aside the judgment. Martin v. Castle, 193 Mo. 183; Burnham v Boyd, 167 Mo. 185; Nichols v. Stephens, 123 Mo 96; McGridley v. Newton, 75 Mo. 115; Smith v. Simms, 77 Mo. 269. (2) There was no fraud in Scott's failing to advise the court of his bankruptcy, nor in omitting from his schedule of assets any mention of his right of action to set aside the trustee's sale. Culson v. Ferree, 82 S.W. 1000. The entire record is barren of any testimony tending to show that Scott was guilty of any word, act or deed calculated to defraud Howard. On the contrary, Scott stands with clean hands, four-square to every wind of legal criticism that can legitimately blow, and altogether rectus in curia. So that the judgment in the case of Scott v. Howard cannot be successfully assailed on account of fraud in its procurement. The evidence introduced did not warrant the finding of the court below that fraud had been practiced by Scott in procuring the judgment setting aside the trustee's sale and partitioning the real estate in controversy. According to Howard's own showing Scott acted throughout in the open, adopting the usual and customary methods, without resorting to any sharp practice or underhanded methods whatever. The plaintiff's bill, therefore, should be dismissed. This being a proceeding in equity the evidence is reviewable by this court as upon a first impression. Goodin v. Goodin, 172 Mo. 48. The special finding of facts by the trial court is, therefore, not binding on this court. Sec. 695, R. S. 1899, relating to special finding of facts, was not intended to cover, and does not have any effect on, the power or duty of appellate courts in equity cases. Shaffer v. Detie, 191 Mo. 377. (3) In this class of cases the plaintiff must in his petition state facts showing that he occupies a status entitling him to assail the judgment; that he himself is an existing creditor, or that he occupies a representative capacity which gives him the right, in behalf of other creditors to sue. Sawyer v. Harrison, 43 Minn. 297; Cunningham v. Williams, 42 Ark. 170; Uhre v. Melum, 17 Ill.App. 182; Brayley v. Buyrnes, 20 Minn. 435; Burton v. Platin, 53 F. 901. Although Scott's right of action to set aside the trustee's sale under the Hayden deed of trust may have passed to his assignee in bankruptcy, and the former had no right to further prosecute his suit against Howard (which we deny), yet this was a matter of defense, and if Howard desired the court to act upon this fact, it was his duty to set it up by answer in the case of Scott v. Howard. Scott's discharge in bankruptcy took Howard out of the category of creditors. The latter, therefore, has no standing to maintain this suit. Imhoff v. Whittle, 81 S.W. 814; Wood v. Baker, 60 Hun 337. After the bankrupt's discharge whatever is left in the trustee's hands becomes the property of the bankrupt by operation of law without any formal retransfer, and the bankrupt is the proper party to sue for whatever is left in the trustee's hands at the time of his discharge. Parry v. Carnes, 86 Mo. 652. It is uniformly held that where the trustee does not assert his right in the premises the bankrupt may proceed with the action. Thatcher v. Rockwell, 105 U.S. 467; Connor v. Southern Ex. Co., 42 Ga. 37; Lansey v. Foss, 88 Me. 215; Reed v. Paul, 131 Mass. 129; Tolle v. Rowe, 15 N.H. 394. Even though Scott's naked right to bring a suit in equity to set aside the trustee's sale under the Hayden deed of trust was of such a character that it passed to his trustee in bankruptcy (which we deny), the trustee having failed to assert any claim thereto before his discharge, the right in question remained the property of Scott, and he alone is the proper party to sue therefor in his own name. Connor v. Exchange Co., 42 Ga. 37; Sessions v. Romadka, 145 U.S. 29; Brandenburg on Bankruptcy, p. 782; Beal v. Dushane, 24 A. 284; Glenny v. Langdon, 98 U.S. 20; Taylor v. Irwin, 20 F. 615. (4) Scott's right to bring an action in equity to set aside the trustee's sale under the Hayden deed of trust, on the ground of fraud, was neither assignable nor subject to sale on execution, and, therefore, did not pass to his trustee in bankruptcy. Jones v. Babcock, 15 Mo.App. 149; Harrison v. Craven, 188 Mo. 590; Whitney v. Kelley, 49 Cal. 146; Gruber v. Baker, 23 P. 858; Sanborn v. Doe, 92 Cal. 152; Annis v. Butterfield, 58 A. 898; In re LeClaire, 124 F. 654; Berustin, 131 F. 831. The trustee's sale being voidable, and not void, the right to avoid is not an assignable chose in action. (5) Apart from every other consideration, plaintiff, under the undisputed facts developed at the trial, is not entitled to the aid of a court in equity, to invalidate the judgment in question. Plaintiff's conduct in seeking to defraud Scott of his interest in the land, through a pretended trustee's sale, precludes him from seeking redress in a court of conscience. Every turn of the wheel in Howard's manipulation of this matter bears the impress and earmarks of ill-disguised and unmistakable fraud. Steckman v. Harber, 55 Mo.App. 71. Moreover, Howard, having assumed and agreed to pay one-half of the mortgage indebtedness, became the principal debtor as to the portion so assumed, so that the payment to Hayden operated to extinguish the mortgage indebtedness. Again, the money paid by plaintiff in taking up the Hayden notes was a voluntary payment pure and simple, made before the maturity of the notes and not at the request or instance of the holder thereof, nor was such payment necessary to protect plaintiff's interests in the mortgaged property; hence, there can be no lien for such payment. It would be intolerable to allow one person without authority to pay the debt of another and charge the amount so paid to the party for whom the payment was made. Smith v. Stephens, 164 Mo. 415; Allen, Admr., v. Collins, 41 Mo. 302; Bunn v. Lindsay, 95 Mo. 250; Nelson v. Brown, 140 Mo. 580.
Thomas & Hackney for respondent Howard.
(1) The petition filed by the plaintiff in this action contains all the elements of, and may be regarded as, a petition for review under the statute. Secs. 777-780, R. S. 1899; Badgley v. Sligo Furnace Co., 120 Mo. 248. (2) But treating this purely as a proceeding in equity to annul and vacate the fraudulent decree and partition proceeding in the case instituted by Scott against Howard, the facts disclosed in evidence fully warrant the cancellation and vacating of this fraudulent decree and proceeding by a court of equity, on the ground of fraud in procuring the judgment, for these reasons: First. Scott had been adjudged a bankrupt in a voluntary proceeding in bankruptcy, which bankruptcy proceeding was pending at the time of the filing of his petition against Howard. The trustee in bankruptcy, therefore, became the owner of whatever interest Scott might have in the property, and notwithstanding this fact Scott fraudulently concealed from the circuit court in which he filed his fraudulent petition the fact of his bankruptcy proceeding, and fraudulently concealed from said court the rights of the trustee in bankruptcy to the property if the trustee's sale was invalid. Had this fact been disclosed to the court, it would have refused to entertain Scott's petition and would have dismissed the case. Second. Scott knew that Howard was in the peaceable possession of the real estate claiming to own the whole; that Howard lived at Decatur, Illinois; and he fraudulently concealed from Howard the fact that he, Scott, was making any claim to the land, and caused this proceeding to be had without actual notice to Howard. Third. Scott deliberately committed perjury on the hearing of his fraudulent petition before the circuit court, in testifying that he had paid Howard the full one-half of the Hayden mortgage, when he knew that he had not made such payment. Fourth. The presentation to the court of this fraudulent claim to the property by Scott, and the commission of perjury by him to obtain the fraudulent decree, took place in the absence of Howard when he had no opportunity to cross-examine the witnesses nor to reveal to the court the truth, showing the falsity of Scott's claim and the falsity of his testimony. A court of equity has ample power to cancel and vacate as fraudulent a judgment or decree obtained under such circumstances. Wonderly v. Lafayette Co., 150 Mo. 635; Fitzpatrick v. Stephens, 114 Mo. 497; Irvine v. Leyh, 102 Mo. 200; Mayberry v. McClurg, 51 Mo. 256; Miles v. Jones, 28 Mo. 87. Wherever a fraudulent cause of action is stated in the petition and perjury is committed on the trial of this fraudulent claim, in a case where the defendant has no actual notice of the pendency of this action and has no opportunity to reveal...
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