Hudson v. French
| Decision Date | 01 May 1922 |
| Citation | 241 S.W. 443,211 Mo.App. 175 |
| Parties | FRED S. HUDSON et al., Respondents, v. D. A. FRENCH, et al., Appellants |
| Court | Kansas Court of Appeals |
Appeal from the Circuit Court of Clay County.--Hon. Ralph Hughes Judge.
AFFIRMED.
J. D Allen and Thos. Hackney for respondent.
Schmitz & Marshall and Paul D. Kitt for appellant.
This is a suit in equity to determine the right to certain funds on deposit with the People's Trust Company of Chillicothe, Livingston County, Missouri. The fund in litigation is a part of the proceeds arising from the sale of a farm, the legal title to which was in Frank E. Riley, David A. French and Samuel W. Beazell, which said title was acquired in a trade.
On December 6, 1906, the said Riley, French and Beazell were owners of all the capital stock of the Chillicothe Publishing Company of Chillicothe Mo., a corporation having a capital stock of $ 20,000, divided into 200 shares of the par value of $ 100 each, and each of the three individuals above mentioned owned 66 2/3 shares of the said capital stock.
This corporation owned and published the Chillicothe Tribune, a newspaper, the publication of which had been begun some years previously by one Ben Beazell, son of Samuel W. Beazell, and son-in-law of defendant David A. French. The newspaper proved to be a losing venture and Ben Beazell induced his father his father-in-law and Frank E. Riley to sign notes for $ 4500, as his sureties. Being unable to pay the notes, Ben Beazell turned over all of the capital stock in the corporation to his sureties who ran the paper as such corporation, accumulating additional indebtedness, until December 6, 1906, at which time they contracted to sell the capital stock of said corporation to one Adeline T. Patterson.
By the terms of the sale of the 200 shares, Mrs. Patterson conveyed to Riley, French and S.W. Beazell something over 200 acres of land in Livingston County. They agreed to pay to her $ 1600 cash and assume a $ 5000 mortgage on the land, and she agreed to take the capital stock in the corporation at an agreed valuation of $ 9000. Pursuant to this agreement, Mrs. Patterson, on December 11, 1906, conveyed by warranty deed to the said Riley, French and Beazell all her right, title and interest in and to said land.
It is in evidence that Riley, French and Beazell disposed of their stock in the corporation because the newspaper was a losing venture and that they took the farm with a view to holding it until an acceptable purchaser therefor could be found. The land was in cultivation and all the time it was owned by Riley, French and Beazell, it was occupied by a tenant and was leased each year until it was sold in August, 1919. All such leases, up to and including the year 1911, were signed by the three individuals as owners and lessors. Only two leases, as shown in evidence, were signed otherwise, viz., one in 1915, and one in 1919. These were signed by D. A. French & Co.
On August 5, 1919, the said Riley, French and S.W. Beazell executed a contract to sell the farm to C. F. Harrison for the sum of $ 29,120, acknowledging the receipt of $ 3120 cash and providing for the payment of $ 16,000, on or before March 1, 1920, the purchaser to assume the payment of a $ 10,000 trust deed which previously had been placed on the land by Riley, French and Beazell. A warranty deed was accordingly executed by the vendors in their individual capacities, conveying the land to Harrison. A year or two previous to this sale, a man from Breckenridge, Mo., had contracted for the purchase of the land, but defaulted in his payments and paid $ 450 cash to be released from his contract. The testimony shows this money was divided equally among the three individual owners.
Riley collected the rents for the farm from the time of its purchase until 1911, and deposited the money in his own name in the First National Bank of Chillicothe. About that time Riley moved to Meadville, Mo., and thereafter the rents were collected by French, and, from July, 1911, a part of the rent was deposited by him in the First National Bank to the credit of D. A. French & Co., and checks were drawn against said account in that name.
Part of the rents, however, were placed by French in the People's Trust Company, in the name of D. A. French, F. E. Riley and S.W. Beazell. The testimony further tends to show that debts contracted at any time before or after the purchase of the farm until its sale to Harrison were contracted in the name of F. E. Riley, D. A. French and S.W. Beazell; that all notes, original and renewals, were signed by F. E. Riley, D. A. French and S.W. Beazell; that practically all of the indebtedness was in existence prior to the time the parties purchased the farm. It is also in evidence that one new debt was created after the purchase of the farm, and that was to the wife of S.W. Beazell, for money loaned, and that the original note and each renewal thereof was signed by Riley, French and Beazell individually. The $ 16,000 cash was paid by the purchaser of the lands to W. H. Ellett and the People's Trust Company, trustees of the vendors, to be held by them for said vendors in like interest, owned by each in the real estate prior to the said sale, to-wit, one-third each.
On September 1, 1919, F. E. Riley, in writing and for valuable consideration, assigned a part of his interest in said fund to Fred S. Hudson, amounting to $ 4625. On February 27, 1920, the purchaser of the land paid the said sum of $ 16,000 into the hands of defendants Ellett and the People's Trust Company, trustees. Thereupon, Hudson and Riley demanded of Ellett and the People's Trust Company the payment to them of the one-third part of said fund, which said payment was refused. Hudson and Riley joined in this suit as parties plaintiff against the People's Trust Company, W. H. Ellett, D. A. French and S.W. Beazell. The suit was filed March 1, 1920.
The petition alleges facts practically as set out above. The separate answer of defendant Ellett is a general denial. The separate answer of the People's Trust Company is, first, a general denial and as further answer admits that it received the $ 16,000, as alleged in the petition; states that it has paid out of said fund to S.W. Beazell and D. A. French $ 5,299 each, and is holding $ 5,299 of said fund. The answer further charges that the plaintiffs on the one hand and the defendants Beazell and French, on the other, are each claiming the said sum of $ 5,299; that it claims no interest in said controversy, other than to see that said sum is paid and distributed to the person or persons rightfully entitled thereto, and asks to be permitted to deposit same in the hands of the court pending this suit and that defendants Beazell and French be required to interplead for said fund.
Thereupon the parties agreed, and it was by the court ordered, that defendant People's Trust Company and W. H. Ellett pay the said sum, less $ 25 attorney's fee, into the hands of the clerk of said court, and that they thereby stand discharged from further liability relative thereto, and that said fund be by the clerk deposited in some bank in Livingston County, Missouri; plaintiffs to file their interplea for said fund on or before August 1, 1920, each interpleader to plead to the interplea of the other interpleader, on or before the first day of the next term of the court.
Accordingly plaintiffs filed their interplea and defendants, French and Beazell demurred thereto and also filed their interplea. Counsel for defendants then filed application of the partnership of D. A. French & Co., composed of D. A. French, S.W. Beazell and F. E. Riley, to be made party to this proceeding and to be permitted to interplead for the fund in controversy, which said application was granted, without thereby determining the question of whether such partnership existed. Such interplea accordingly was filed.
The reply of plaintiffs was a general denial. Plaintiffs thereupon filed an affidavit denying such partnership, and plaintiff Hudson filed an amended reply in which he avers that he had no knowledge of the alleged partnership, nor of the claim of said defendants that the land mentioned in the interplea was copartnership property that he had no notice of the claim of said defendants of any partnership debts; that he was a purchaser of the interest of F. E. Riley in good faith and without notice, and for a valuable consideration, and denies that there...
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