Knoop v. Kelsey

• Decision Date: 30 June 1890
• Parties: KNOOP v. KELSEY et al.
• Court: Missouri Supreme Court

14 S.W. 110

102 Mo. 291

KNOOP v. KELSEY et al.

Supreme Court of Missouri.

June 30, 1890.

FRAUDULENT CONVEYANCE — ESTOPPEL.

A judgment creditor who sells an equity of redemption, under execution, admits the validity of the mortgage, and is estopped from thereafter bringing a bill to set it aside as fraudulent, and subject the land to the balance of his debt.

Error to circuit court, Cole county; E. L. EDWARDS, Judge.

Cosgrove & Johnson and Smith, Silver & Brown, for plaintiffs in error. B. R. Richardson, Edwards & Davison, and Draffen & Williams, for defendant in error.

BLACK, J.

This is a suit in equity brought by C. H. Knoop against J. B. Kelsey, Charles T. Kelsey, Charles D. Nixon, and Green Huffman. There was a decree for the plaintiff. It is insisted that the second amended petition, upon which the cause was tried, fails to state any cause of action, and this question runs through the whole case, so that it must be determined at the outset. The facts stated are these: That on the 20th July, 1882, the defendant J. B. Kelsey was a banker at Versailles, in Morgan county, in this state; that he held himself out to be solvent when in fact he was insolvent; that he owned 400 acres of land in that county, and on the 22d July, 1882, made a deed of trust thereon to secure his note dated the 1st August, 1882, for $3,000, payable to the defendant Charles T. Kelsey in five years after date, and that defendant Nixon is the trustee in the deed of trust; that on the 5th August, 1882, plaintiff deposited with J. B. Kelsey $2,782, and at that time the deed of trust had not been recorded; that J. B. Kelsey failed on the 22d of said month, and his bank was closed by attachments; that the deed of trust to Nixon was made for the sole purpose of defrauding the creditors of J. B. Kelsey; that plaintiff obtained a judgment against J. B. Kelsey at the April term, 1883, for $1,703, being balance then due upon the deposit, and upon which judgment execution was issued. The amended petition then goes on to say "Plaintiff further states that at the October term, 1883, of the Morgan county circuit court, the interest of J. B. Kelsey (being his equity of redemption in said real estate) was sold by the sheriff of Morgan county on several executions issued on several judgments against J. B. Kelsey, including plaintiff's execution; that the sheriff, in his ad vertised notice of sale, gave special notice that he would sell the land subject to all prior liens and incumbrances, and did also give the same notice to the bidders and by-standers at the sale, and that defendant Green Huffman, who had been J. B. Kelsey's tenant and friend, became, for the nominal sum of $285, the purchaser of J. B. Kelsey's equity of redemption, subject to the deed of trust aforesaid, and with full knowledge of the same, it being then on record, and presumed by plaintiff and Huffman and all others to be a good and valid instrument and incumbrance; that said Huffman immediately entered into the possession of said land, and has ever since remained in possession as owner of J. B. Kelsey's equity of redemption therein; that the fact of the said deed of trust having been executed and recorded as aforesaid prevented said lands from selling at the sheriff's sale for as large a sum of money as they otherwise would have done, and plaintiff was thereby prevented from realizing the amount of his said judgment out of said lands." The prayer is that the deed of trust be declared null and void, and that the titles of Nixon and Charles T. Kelsey, as the pretended trustee and beneficiary, be divested out of them, and that the land be subjected to plaintiff's judgment as the prior lien thereon, and that, if said judgment be not paid and satisfied in such time as the court should direct, the land be sold by the sheriff to satisfy said judgment and costs, and for general relief. The answer of Charles T. Kelsey and Nixon is a general denial. Huffman, in his separate answer, says he purchased the land at a sale on various executions, one of which was in favor of the plaintiff; that he purchased the land subject to prior liens and incumbrances, and is ready to discharge such mortgages and liens as may be found due. The court by its decree declared the deed of trust fraudulent as against the plaintiff, and substituted the plaintiff to "the rights of the holder of the note" to the extent of plaintiff's judgment, and then ordered a...