Lampkin v. People's Nat. Bank

• Decision Date: 01 December 1902
• Citation: 71 S.W. 715,98 Mo. App. 239
• Parties: LAMPKIN v. PEOPLE'S NAT. BANK OF WARRENSBURG.
• Court: Missouri Court of Appeals

71 S.W. 715

98 Mo. App. 239

LAMPKIN v. PEOPLE'S NAT. BANK OF WARRENSBURG.

Court of Appeals at Kansas City, Missouri.

December 1, 1902.

BANKRUPTCY — PREFERENCE — FRAUDULENT CONVEYANCE—RECOVERY OF VALUE—FOLLOWING PURCHASE PRICE—ESTOPPEL.

1. In order that a trustee in bankruptcy may avoid a payment made by the bankrupt just prior to his adjudicated bankruptcy, he need only prove that the creditor had reasonable cause to believe that a preference was intended, contrary to the purpose of the bankrupt law.

2. Where a trustee in bankruptcy, on the ground that a sale by the bankrupt just prior to his adjudicated bankruptcy was fraudulent, brings an action against the purchaser for the value of the goods, and receives money in settlement of such claim, he is not thereby precluded

from following the money received by the bankrupt for the goods into the hands of preferred creditors.

Broaddus, J., dissenting.

Appeal from circuit court, Johnson county; W. L. Jarrott, Judge.

Action by Walter L. Lampkin, trustee in bankruptcy, against the People's National Bank of Warrensburg, Mo. From a judgment in favor of defendant, plaintiff appeals. Reversed.

Plaintiff is trustee in bankruptcy in charge of the estate of Daniel McNair and J. Louis McNair, who were partners as retail merchants. They owed the defendant $1,200, and paid that debt, and defendant received the money, at a time when said McNairs were insolvent; and, it is charged, the defendant had reasonable cause to believe that it was intended by McNairs to give it a preference over other creditors, contrary to the intent and purpose of the bankrupt law. Within a few days after this payment was made, the McNairs were adjudged bankrupts by the federal district court for the Western district of Missouri. Plaintiff instituted this action against defendant to recover the sum so paid to it, on the ground that the payment by McNairs and the receipt of the payment by defendant were contrary to the provisions of the bankrupt law. The trial court sustained a demurrer to the evidence, and plaintiff has appealed.

Chas. E. Morrow, Karnes New, and Hall & Krauthoff, for appellant. O. L. Houts, for respondent.

ELLISON, J. (after stating the facts).

In order to avoid the payment to defendant, it is not necessary that its officers should have known, or even believed, that a preference was intended by the McNairs. It is sufficient if they had reasonable cause to believe such preference was intended. Pepperdine v. Bank, 84 Mo. App. 234; Bank v. Cook, 95 U. S. 342, 24 L. Ed. 412; Dutcher v. Wright, 94 U. S. 553, 24 L. Ed. 130; Toof v. Martin, 13 Wall. 40, 20 L. Ed. 481. When that is established, the trustee has a right to the judgment of the court, avoiding the payment, and adjudging that he recover the money paid. Landis v. McDonald, 88 Mo. App. 335. In this case there was evidence having a tendency to support the charge that defendant had reasonable cause to believe a preference was intended, and therefore the trial court must have sustained a demurrer on the ground which we now proceed to consider.

It appears that on the 30th of December, 1899, the McNairs, being merchants, as has already been stated, sold their stock of goods to one Shryack for $1,500, which sum the latter paid to them on that day, and that thereupon the McNairs took $1,200 of said sum and paid to defendant the debt aforesaid, which is the subject of this controversy. It further appears that, in the August following this, plaintiff, with knowledge of all the facts now shown, brought suit against Shryack for the value of the merchandise so purchased by him, on the ground that it was a fraudulent sale for the purpose of defrauding creditors, Shryack participating in the fraud; that afterwards plaintiff compromised and settled said action by accepting $407.50 "in full satisfaction of the entire claim and amount in controversy in said cause," and dismissing the suit. Defendant states in its answer "that, by bringing said action and accepting said money, plaintiff elected to, and did, renounce and avoid said sale, and cannot assert the validity thereof, and recover the purchase price for said goods and fixtures paid therefor by the said Shryack at said sale, and a portion of which was afterwards paid to this defendant, as before stated." The question is, did plaintiff, by bringing said action, and accepting the sum mentioned in satisfaction thereof, preclude himself from maintaining the present action? We think he did not. Plaintiff attacked the sale to Shryack on the general principle which invalidates a fraudulent transaction, —in this instance conceived and carried out by the parties in fraud of the creditors of the McNairs. In the present action he attacks the legality of the payment to defendant, and receipt of the money by defendant, on the arbitrary right given him by the statute of bankruptcy. There is no inconsistency in affirming the right to follow both remedies. He sought to recover the value of the goods in the one instance for the reason that they had been fraudulently received from his debtor, thereby attempting to deprive him of his right, as a creditor, to make his debt out of them. In the other instance he seeks to recover the money paid out by the bankrupt, which the bankrupt law declares to be unauthorized. "A party cannot ask the aid of the law upon inconsistent and contradictory grounds; but, if co-existent remedies are consistent with each other, he may adopt all, or select any one which he thinks best suited to the end sought, and only the satisfaction of the claim in one case constitutes a bar in the other." Bradner, Smith & Co. v. Williams, 178 Ill. 420, 53 N. E. 358. And so it was held that there was no inconsistency in an action against a guardian for conversion of funds, and an action against one who received the funds, and hence either action did not constitute an election to renounce the other. Easton v. Somerville, 111 Iowa, 164. 82 N. W. 475, 82 Am. St. Rep. 502. It was held in this court that the fact that a depositor in an insolvent bank had proved up his claim before the bank's assignee did not preclude him from pursuing his statutory remedy against an offending officer in receiving deposits, knowing the bank to be insolvent. Eads v. Orcutt, 79 Mo. App. 511. And so a plaintiff, at the same time he proceeds against a sheriff for an escape, may take out a fi. fa. against the property of the defendant; the remedies not being deemed inconsistent. Jackson v. Bartlett, 8 Johns. 361. See, also, Typograph Co. v. Macgurn, 119 Mich. 533, 78 N. W. 542; Clark v. Hall, 54 Neb. 479, 74 N. W. 856; Vulcanite Co. v. Caduc, 144 Mass. 85, 10 N. E. 483; Bank v. Birch, 130 N. Y. 221, 29 N. E. 127, 14 L. R. A. 211; Bundy v. Town of Monticello, 84 Ind. 119.

But it is insisted by the defendant that the goods, the value of which plaintiff recovered against Shryack, and the money which the McNairs received for them, were one and the same thing, and that when the McNairs paid to defendant $1,200, which was received for the goods, it was but the representative of the goods, and this suit for the $1,200 is but another suit for the goods, the value of which has already been recovered (or, which is the same thing, compromised) in the Shryack suit. We regard the argument as unsound. The goods and the money they brought at the sale are not one and the same thing. For, as between the McNairs and Shryack the sale of the goods was valid, and the goods became Shryack's, while the money became the McNairs'. They exchanged separate properties, each becoming the owner of separate properties. Shryack's money became the property of the McNairs, and the McNairs' goods became the property of Shryack. This case is different in its fundamental facts from that class of cases in equity where a certain article of property or amount of money may be followed through various mutations and ownerships, and wherever found, in whatever changed aspect, or in whomsoever's hands, may be made to stand for whatever it was liable to stand for originally. The conclusion asserted by the defendant, that both the goods in...