Kellogg v. Clyne

• Decision Date: 20 February 1893
• Docket Number: 158.
• Citation: 54 F. 696
• Parties: KELLOGG et al. v. CLYNE, Intervener.
• Court: U.S. Court of Appeals — Eighth Circuit

54 F. 696

KELLOGG et al. v. CLYNE, Intervener.

No. 158.

United States Court of Appeals, Eighth Circuit.

February 20, 1893

Statement by THAYER, District Judge:

This was an intervention by Louis C. Clyne in an attachment suit brought by Charles P. Kellogg & Co. against his brother John Clyne, whereby the intervener sought to recover from the firm of Charles P. Kellogg & Co. the proceeds of certain merchandise which that firm had caused to be attached and sold as the property of John Clyne. The intervener based his claim to the proceeds of the goods upon a mortgage in his favor which had been executed by John Clyne on January 3, 1891, some three weeks prior to the commencement of the attachment suit. The firm of Charles P. Kellogg & Co. alleged that the mortgage under which the intervener claimed was contrived by and between John and Louis C. Clyne for the purpose of hindering and delaying the creditors of the former in the collection of their just debts. There was a trial of this issue before a jury, which resulted in a verdict in favor of the intervener and against the attaching creditors, in the sum of $3,265.50. To establish the charge of fraud, Charles P. Kellogg & Co. offered testimony which established, or tended to establish the following facts:

For about three years prior to January 3, 1891, John Clyne resided at Friend, Neb., and was engaged in business at that place as a merchant. Prior thereto he had resided for three or four years at Stafford, Kan., and had acquired considerable real property in and about Stafford. Before taking up his abode in Kansas, Clyne had resided for several years at Maple Park, Ill., and had also been engaged in business at that place as a merchant. While thus engaged in business in Maple Park, Louis C. Clyne was in the service of his brother John as a clerk, from 1879 until April 15, 1884. On the last-mentioned date, John and Louis C. Clyne became partners in the mercantile business at Maple Park under the name of L. C. Clyne & Co., and immediately thereafter John removed to Kansas, leaving Louis in full charge of the business at Maple Park. That firm amounted to $3,000, of which sum Louis contributed $1,500, being the amount that John was then indebted to him for services theretofore rendered. The firm of L. C. Clyne & Co. continued in existence until January, 1888, when John withdrew, and the business was thereafter conducted by Louis on his own account. The net profits of the business transacted by L. C Clyne & Co. for the whole period from April, 1884, to January, 1888, amounted to $12,527. The business at Maple Park was transacted in a building hereafter termed the 'Maple Park Property,' the title whereof stood in the name of John Clyne, so far as the record showed, from 1876, when he acquired it, until February 22, 1889. For the use of such building and premises the firm of L. C. Clyne & Co., during its existence, and subsequently Louis C. Clyne, paid rent to John Clyne until January 7, 1890, at the rate of $240 per year. On the 22d of February, 1889, a deed was placed on record, bearing date September 1, 1876, whereby John Clyne conveyed the Maple Park property to Joseph Clyne, another brother of John, who resided at Stafford, Kan., for an expressed consideration of $3,000. There was considerable testimony offered which tended to show, and from which a jury might infer, that the conveyance to Joseph Clyne of the Maple Park property was made with a view of preventing the collection of a note which had been signed by John Clyne, and on which suit was brought against him by attachment, by a certain bank, on the 7th of February, 1889, in Kane county, Ill. On the 22d of September, 1890, Joseph Clyne conveyed the Maple Park property to Louis C. Clyne, by a quitclaim deed, for the expressed consideration of $3,000. Joseph and Louis Clyne were both called as witnesses. Louis did not venture to give any explanation of the purchase of the Maple Park property in September, 1890, but Joseph claimed that it was a bona fide sale, for which he had received notes made by Louis to the amount of $3,000.

The testimony further tended to show that John Clyne was largely indebted in the fall of 1890; that in November of that year he conveyed all of his real estate situated in and about Stafford, Kan., to Ed. H. Landes, without any consideration moving from said Landes, and that on January 12, 1891, Landes conveyed the same property to Joseph Clyne for an expressed consideration of $3,600 but without any actual consideration and that Landes was a mere conduit through whom the title to that property was conveyed by John to his brother Joseph. On the 3d of January, 1891, John Clyne executed two mortgages on his stock in trade situated at Friend, Neb.,-- one in favor of a bank located at that place, for the sum of $803.23, and the other in favor of his brother Louis, (which was charged to be fraudulent,) to secure a note for $3,265 which was dated January 3, 1891, and was payable one day after date, with interest at the rate of 10 per cent. per annum. Within one week thereafter he also executed six other mortgages on the same stock of goods to secure debts due to other parties, but these mortgages were made subject to the lien in favor of the bank and his brother Louis. The entire stock was eventually sold in behalf of the attaching creditors and mortgagees for about $4,500. Outside of the stock of goods thus mortgaged, and the real estate conveyed to Landes, it did not appear that John Clyne had any other property. The intervener claimed that the mortgage in his favor for $3,265 was given to secure money which he had previously loaned to his brother John, and had advanced to pay certain notes which the latter owed. It also appeared in evidence that on February 10, 1890, Louis C. Clyne had made a statement to a commercial agency showing that his net assets were then $12,843; that on February 11, 1891, he had made another statement, showing his net assets to be $21,500. It further appeared that the average profits of the intervener's business did not exceed $3,500 per year, and that the increase in his means between February, 1890, and February, 1891, was about equal to the sum of his average annual profits, and the value of the property which he was charged to have received in the mean time from his brother John, without consideration. The intervener made no effort to explain how it happened that his assets had increased to such extent during the year 1890.

C. S. Montgomery, for plaintiffs in error.

Robert Ryan, for defendant in error.

Before CALDWELL and SANBORN, Circuit...