Johnson v. Murphy

• Citation: 79 S.W. 909,180 Mo. 597
• Parties: JOHNSON et al., Appellants, v. SUSAN MURPHY et al
• Decision Date: 17 March 1904
• Court: Missouri Supreme Court

79 S.W. 909

180 Mo. 597

JOHNSON et al., Appellants, v. SUSAN MURPHY et al

Supreme Court of Missouri, First Division

March 17, 1904

Appeal from Daviess Circuit Court. -- Hon. Frank Sheetz, Special Judge.

Affirmed.

Peery & Lyons, Hugh C. Smith and O. G. Bain & Son for appellants.

(1) The plaintiffs, Mrs. Johnson and Mrs. Roberts, are to be considered creditors of the deceased David Murphy, who was a surety on the bond of the trustee of their estate, from the date of the bond, even though the breach of the bond may not have occurred until long after its execution. Wait on Fraud. Conv. & Cred. Bills (3 Ed.), secs. 90, 91; Krueger v Vorhauer, 164 Mo. 156; 14 Am. and Eng. Enc. Law (2 Ed.) p. 253. A surety is a creditor, and entitled to protection against fraudulent and voluntary conveyances from the time when his contingent liability was assumed, although he has no technical right of action until he has paid the debt. Reel v. Livingston, 34 Fla. 377; 8 Am. and Eng. Enc. Law (2 Ed.), p. 244 and note 1; Cramer v. Redford, 17 N.J.Eq. 367; Trezevant v. Terrell, 96 Tenn. 528; Thompson v. Thompson, 19 Me. 244; Stone v Myers, 9 Minn. 303; Choteau v. Jones, 11 Ill. 300 (50 Am. Dec. 460); Hagerman v. Buchanan, 14 Am. St. Rep. 744. A person liable on a contingent obligation is a debtor, so as to permit the other party to object to a fraudulent conveyance, even though no breach has occurred, or the liability has not become fixed. Bibb v. Freeman, 59 Ala. 612; Thompson v. Thompson, 19 Me. 244; Fearn v. Ward, 65 Ala. 33; Wright v. Nipple, 92 Ind. 310. A conveyance of real estate by the surety on a guardian's bond may be set aside as fraudulent though there was no breach of the conditions of the bond at the time the conveyance was made. Bowen v. State, 121 Ind. 235. (2) If the effect of the conveyance is to render the grantor unable to pay debts thereafter contracted, then the law presumes the intent to defraud subsequent creditors, and the statute is satisfied. Snyder v. Free, 114 Mo. 360. A false recital of the consideration in a deed from husband to wife is a badge of fraud. Benne v. Schnecko, 100 Mo. 250; Wait, Fraud. Conv. (3 Ed.), sec. 228. (3) If the conveyance had, in terms, provided that David Murphy should have and retain the use of and beneficial interest in the property, it would have been void upon its face, as a conveyance to his use. R. S. 1899, sec. 3397. If the proof is such that it may reasonably be inferred that such was the secret understanding of the parties, then the conveyance is equally void as if it had been written in the instrument. Bank v. Powers, 134 Mo. 446; Roberts v. Barnes, 127 Mo. 405; Donovan v. Dunning, 69 Mo. 436; Benne v. Schnecko, 100 Mo. 250; Bump on Fraud. Conv. (3 Ed.), 214; Snyder v. Free, 114 Mo. 360. Where a debtor conveys land to another without consideration, with the understanding that the ownership remains in the grantor, the land is subject to sale for the grantor's debts, whether or not the conveyance was made with fraudulent intent. Green v. Veder, 57 S.W. 522; Curtis v. Leavitt, 15 N.Y. 122; Bump on Fraud. Conv. (4 Ed.), sec. 191. Where a conveyance is merely colorable, and a secret trust exists for the benefit of the grantor, it is void, not only against prior, but against subsequent creditors also, for the fraud in such a case is a continuing one. 14 Am. and Eng. Enc. Law (2 Ed.), p. 268; State to use v. Jacob, 2 Mo.App. 183; Stouton v. Boschert, 104 Mo. 393; note to 4 L. R. A. p. 353. And this is so regardless of the actual good faith of the parties thereto. Curtis v. Leavitt, 15 N.Y. 9; Mfg. Co. v. Steele & Walker, 36 Mo.App. 504. The later rulings of our Supreme Court seem to incline to the view that such a transaction should be opened up at the instance of subsequent as well as prior creditors. Lander v. Ziehr, 150 Mo. 403; 14 Am. and Eng. Enc. Law (2 Ed.), p. 267. (4) The acts of the parties subsequent to the conveyance, with reference to the payment of taxes, insurance, retention of possession by the deceased, and subsequent division of the land, in accordance with the terms of the will, were all admissible in evidence for the purpose of showing the original and continued purpose and intent in putting and keeping the title to the land in Mrs. Murphy. "Subsequent acts of the parties are to be considered in determining the motive and intent of the original transaction." Waite, Fraud. Conv., sec. 227; State ex rel. v. Bank, 80 Mo. 632; Bump on Fraud. Conv. (4 Ed.), sec. 298; Bump on Fraud. Conv. (3 Ed.), sec. 590. The declarations and admissions of the deceased at the time and subsequent to the conveyance of the land were admissible in evidence against his heirs and devisees and their grantees in this case for several reasons: (a) All of his acts and declarations at the time of the transfer are of course admissible as part of the res gestae. 14 Am. and Eng. Enc. Law (2 Ed.), p. 495; Gamble v. Johnson, 9 Mo. 597; Holmes Organ Co. v. Petit, 34 Mo.App. 536; Snyder v. Free, 114 Mo. 371. (b) The acts and declarations of a debtor charged with the execution of a conveyance in fraud of creditors, made in the absence of the grantee, are admissible to prove the fraudulent purpose of the debtor. Holmes v. Braidwood, 82 Mo. 610; Gillett on Indirect and Collateral Evidence, sec. 288; 14 Am. and Eng. Enc. Law (2 Ed.), pp. 494, 495; Waite on Fraud. Conv., secs. 276 to 280; Sloan v. Coburn (Neb.), 4 L. R. A. 470. (c) The evidence in this case was amply sufficient to raise a presumption that the deceased remained in possession and control of the land conveyed, after the conveyance, and, in such case, all of his acts and declarations while so in possession, or control of the property alleged to have been voluntarily or fraudulently conveyed, are admissible in evidence against the alleged fraudulent grantee. Boyd v. Jones, 60 Mo. 454; Bump on Fraud. Conv. (1 Ed.), pp. 548, 549, 550; Waite on Fraud. Conv. (3 Ed.), secs. 277, 278, 279; 14 Am. and Eng. Enc. Law (2 Ed.), pp. 494, 495, 496, 497; Lander v. Ziehr, 150 Mo. 409. (d) But again, wherever a conspiracy is shown, between the debtor and his grantees to cover up the property and conceal it from creditors, all of the acts and declarations of the grantor are admissible as long as such scheme is in operation or existence. In the case at bar, the language of the will of the deceased indicates that he had a contingent or secret interest in some property which he was disposing of. The conduct of these defendants in joining together to divide up this land in accordance with the terms of the will, after the death of the deceased, and in fraud of the rights of the creditors whose claims had been probated against his estate, make them parties to the illegal transaction to such an extent as authorizes all of his acts and declarations, made at any time, to be given in evidence against them. Cordes v. Soraszer, 8 Mo.App. 61; Clark v. Cox, 118 Mo. 652; Weineich v. Porter, 47 Mo. 293; State ex rel. v. Durant, 53 Mo.App. 493; Williams v. Cashbeer, 53 Mo.App. 644. But while the declarations of the deceased are admissible in evidence against his heirs and estate, they are not admissible in their favor. Perry v. Roberts, 17 Mo. 36; Nelson v. Nelson, 90 Mo. 460. (5) Although the court might find (we, however, respectfully insist that there is no evidence to warrant it), that Susan Murphy might have given some money to David Murphy, yet even if this were done after the Married Women's Act, and within the statute of limitations, this would not be a sufficient consideration to support the conveyance from David Murphy to his wife, no express promise of repayment having been shown. Snyder v. Free, 114 Mo. 371; Waite on Fraud. Conv., secs. 209, 210.

Hall & Hall and A. H. Burkholder for respondents.

(1) As to subsequent creditors, the conveyances were not fraudulent unless made with intent to hinder, delay or defraud them, which fact must be proved. Leahr v. Murphy, 45 Mo.App. 524; Payne v. Stanton, 59 Mo. 160; Hurley v. Taylor, 78 Mo. 238; Bank v. Overall, 16 Mo.App. 510, 90 Mo. 410; Frank v. Caruthers, 108 Mo. 574; Lander v. Ziehr, 150 Mo. 413; Snyder v. Free, 114 Mo. 375; Loy v. Rorick, 71 S.W. 842; Krueger v. Vorhauer, 164 Mo. 163. For a voluntary conveyance to be fraudulent as to subsequent creditors it must be made with a view to contracting subsequent debts or engaging in some hazardous business. Gro. Co. v. Smith, 74 Mo.App. 423. (2) The property in controversy to the extent of the statutory amount, was the homestead of David Murphy and his wife, and had been since 1865, and to that extent was exempt from attachment and execution as to all creditors at the time of the conveyances, existing and subsequent, and no "fraud upon creditors can be perpetrated by any disposition the debtor may see proper to make of his homestead. It is beyond their reach, both at law and equity, and there can be no fraudulent disposition of such property." Chance v. Jennings, 159 Mo. 560; Bank v. Guthrey, 127 Mo. 193; Bartels v. Kinnenger, 144 Mo. 374; Grimes v. Portman, 99 Mo. 234; Kendall v. Powers, 96 Mo. 142; Davis v. Laird, 88 Mo. 436; Hart v. Leete, 104 Mo. 337. (3) The lands in controversy having been purchased by the husband in part with the wife's separate money and means, and the deed therefor having been taken by the husband in his own name, he held such title in trust for the wife in proportion to the amount of the wife's separate money used in paying for the lands. Jones v. Elkins, 143 Mo. 651; Rodgers v. Bank, 69 Mo. 560; McGuire v. Allen, 108 Mo. 403; Broughton v. Brand, 94 Mo. 169; Seay v. Hesse, 123 Mo. 450; Rice v. Shipley, 159 Mo. 399. Where land or other property is purchased by a husband with the proceeds of his wife's separate estate, it is in equity her separate estate, unless...