Leeper v. Kurth

• Decision Date: 01 July 1942
• Docket Number: 37967
• Parties: Clarence R. Leeper, Appellant, v. Herman R. Kurth, Regina E. Kurth and Marvin W. Leeper
• Court: Missouri Supreme Court

163 S.W.2d 1031

349 Mo. 938

Clarence R. Leeper, Appellant, v. Herman R. Kurth, Regina E. Kurth and Marvin W. Leeper

No. 37967

Supreme Court of Missouri

July 1, 1942

Rehearing Denied July 28, 1942.

Appeal from Nodaway Circuit Court; Hon. Ellis Beavers Judge.

Affirmed as to Count Three and reversed and remanded (with directions) as to all other counts.

A F. Harvey and Wright & Ford for appellant.

(1) Fraud is never presumed. It must be established by clear and convincing evidence. Jones v. Nichols, 280 Mo. 653, 216 S.W. 962. (2) The burden was on respondents to prove that appellant knowingly and intentionally conveyed the land in controversy for the purpose of defrauding creditors. Curtin v. Benson, 222 U.S. 78, 32 S.Ct. 31. (3) The "clean hands" maxim applies only to wilful misconduct. Also it applies only to the particular transaction in controversy. Appellant, therefore, must have conveyed the particular land in controversy to defraud creditors, else the maxim does not apply. 21 C. J. 184, sec. 166; Slegmann v. Weeke, 279 Mo. 131, 214 S.W. 134; Tubeke v. Salzwedel, 15 Wis. 601, 147 N.W. 831. (4) The evidence wholly fails to show that appellant knew he had an interest in the land in controversy. Utterly fails to show he intended to convey any interest in the land in controversy. On the contrary it clearly shows he intended to convey his interest in another tract of land. There was, then, no delivery of the deed and delivery is essential to the application of the clean hands maxim. Morris v. Morris, 171 Ga. 642, 156 S.E. 256; Tuebke v. Salzwedel, 157 Wis. 601, 147 N.W. 831. (5) Delivery by one grantor does not bind another grantor unless the delivery was authorized by the nondelivering grantor. Dallas v. McNutt, 297 Mo. 535, 249 S.W. 35. (6) The maxim that he who comes into a court of equity must come with clean hands is founded in public policy. It will not be applied where a greater wrong would result. Hobbs v. Boatright, 195 Mo. 693; Smith v. Holdoway Const. Co., 344 Mo. 862, 129 S.W.2d 894. (7) The maxim is for the protection of the public and not for the parties to the suit and will not be applied for the benefit of a defendant whose hands are also unclean. New England, etc., Co. v. Holland, 141 F. 202. (8) The maxim will be strictly applied if the grantee has no rights in the property other than such as he acquires by the fraudulent conveyance. Gowan's Adm. v. Gowan, 30 Mo. 472; Swift v. Holdridge, 10 Ohio St. 231; Lockren v. Ruston, 9 N.D. 43, 81 N.W. 60; Biccochi v. Casey-Swasey Co., 91 Tex. 259, 42 S.W. 963; Holman v. Johnson, 1 Cowp. 343; Wait on Fraudulent Conveyances, sec. 398. (9) Where the plaintiff does not rely on a fraudulent contract as a part of his cause of action, defendant will not be allowed to plead or prove such a contract as an affirmative defense. Defendant must come in with clean hands in making his defense. Lufkin v. Jakeman, 188 Mass. 528, 74 N.E. 933; O'Gasapian v. Danielson, 187 N.E. 107; Paul v. Paul, 266 Penn. 241, 109 A. 674; Day v. Day, 17 Ont. App. 157; Roselle v. Beckemeier, 134 Mo. 380; Allgear v. Walsh, 24 Mo.App. 134. (10) Herman R. Kurth and Regina E. Kurth have conceived the idea of taking advantage of Clarence R. Leeper, which is clearly shown by all of the evidence in this case, are not in a position to take advantage of said Clarence R. Leeper and then say that they are equally guilty of the fraud that they perpetrated on Clarence R. Leeper and therefor he cannot recover. Hobbs v. Boatright, 195 Mo. 693; Smith v. Holdoway Const. Co., 129 S.W.2d 894.

Livengood & Weightman for respondents.

(1) The chancellor has found the facts on all disputed matters and such finding will not be disturbed by the court. Young v. Levine, 31 S.W.2d 978, 326 Mo. 593; Little v. Mettee, 93 S.W.2d 1000, 338 Mo. 1223; Kingston v. Mitchell, 117 S.W.2d 226; Dreyer v. Videmschek, 123 S.W.2d 63; Aetna Ins. Co. v. O'Malley, 124 S.W.2d 1164, 343 Mo. 1232; Burroughs v. Lasswell, 108 S.W.2d 705; Mozingo v. Mozingo, 149 S.W.2d 897. (2) The appellant fraudulently conveyed this land to the grantees for the purpose of cheating and defrauding his creditors. The conveyance is good as between the parties even though no consideration passed between them. Price v. Morrison, 236 S.W. 297; Raney v. Home Ins. Co., 246 S.W. 57; Sterlin v. Teschemacher, 64 S.W.2d 653. (3) Appellant contends that he did not convey this property to the grantees for the reason that he had only a contingent interest in the real estate in controversy at the time he made the deed. A warranty deed containing the usual covenants, as was contained in this deed, passes every interest of every kind and character of the grantor, and this is true even where the conveyance is fraudulent.. Sec. 3497, R. S. 1939; 27 C. J. 655, sec. 422; 21 C. J. 998; Perry v. Calvert, 22 Mo. 361; Godman v. Simmons, 113 Mo. 122; McClure v. Baker, 216 S.W. 1018; Bogey v. Shoab, 13 Mo. 366; Vance v. Humphreys, 241 S.W. 91; Cockrill v. Bone, 94 Mo. 444; Donaldson v. Donaldson, 311 Mo. 208; Dunbar v. Sims, 222 S.W. 838; Hume v. Hopkins, 140 Mo. 65; Johnson v. Johnson, 170 Mo. 34; Stoepler v. Silberberg, 222 Mo. 258; Fordyce v. Rapp, 131 Mo. 354. (4) The fact that the deed in question contained the following "Subject to restrictions, conditions and limitations under a deed wherein William Leeper and his wife, etc." does not destroy the effect of appellant's deed. Whatever interest he had, either vested, contingent, remote or a mere possibility, passed under his deed. Evans v. Labaddie, 10 Mo. 425. (5) Appellant, having conveyed away his property for the purpose of defrauding his creditors, cannot now have said conveyance set aside and thereby profit from his own wrong. Hall v. Callahan, 66 Mo. 316; Larimore v. Tyler, 88 Mo. 661; Chambers v. Chambers, 127 S.W. 86, 227 Mo. 262, 137 Am. St. Rep. 567; Elliott v. Landis Machine Co., 139 S.W. 356, 236 Mo. 546; Mongler v. Mongler, 57 S.W.2d 740; Stierlin v. Teschemacher, 64 S.W.2d 647, 333 Mo. 1208, 91 A. L. R. 121. (6) Appellant did not come into a court of equity with clean hands, therefore he was properly denied relief. Keener v. Williams, 271 S.W. 489, 307 Mo. 682; Stillwell v. Bell, 154 S.W. 85, 248 Mo. 61; Derry v. Felder, 115 S.W. 412, 216 Mo. 176; LaRue v. LaRue, 294 S.W. 723, 317 Mo. 207; Crane v. Deacon, 253 S.W. 1068; Jones v. Jefferson, 66 S.W.2d 555, 334 Mo. 606; Smith v. Holdoway Const. Co., 129 S.W.2d 894, 344 Mo. 862. (7) Moreover, the deed from the appellant to the grantees creates an estoppel against him, and he is bound thereby. This applies not only to present ownership but after acquired title or interest as well. State Bank of Willow Springs v. Lillibridge, 293 S.W. 116; Clark v. Ferguson, 144 S.W.2d 116; 58 A. L. R. l. c. 350; Patton v. Forgey, 171 Mo.App. 1; Sorrell v. Bradshaw, 222 S.W. 1024; Barada et al. v. Kelcher, 214 S.W. 961; Marsten v. Catterlin, 239 Mo. l. c. 400; Evans v. Labaddie, 10 Mo. l. c. 430. (8) Appellant's contention that he participated in the fraudulent conveyance to benefit his brother and not himself does not relieve him. He is bound by his action. Shaw v. Tracy, 83 Mo. l. c. 231.

Hyde, C. Bradley and Dalton, CC., concur.

OPINION

HYDE

This is an action in equity to cancel a deed to land in Nodaway County. Counts in ejectment, quiet title and for conversion of crops were also stated. Defendants Kurths' answer stated that the deed was made to them by plaintiff to defraud his creditors, and asked affirmative relief of determination of title. Defendant Marvin W. Leeper's answer stated that there had been a settlement of all claims for rents and crops. The court found for defendants on all issues and plaintiff has appealed.

Plaintiff's father conveyed 450 acres of land to plaintiff's brother in 1900. This deed conveyed the land to "William F Leeper during his natural life and at his death to his heirs but should he die without children, then to his full brothers or their heirs." After the death of William F. Leeper, in 1938, there was a controversy over the title to this land on the claim of defendant Marvin W. Leeper (adopted child of William F.) to the whole tract, in Leeper v. Leeper, 347 Mo. 442, 147 S.W.2d 660, decided in February, 1941. After the decision in that case (which held that title went to plaintiff and his two brothers) the whole tract was partitioned in kind, being divided in three parts. The part in controversy here (144 acres) was set off in April, 1941, "as the separate property of plaintiff and defendants (Kurths) subject to the adverse claims of each." This suit was commenced May 3, 1941. Defendant Marvin W. Leeper was then in possession under a lease from defendants. The court found that Count Three for damages and conversion of crops had been settled, and no point is made about this here.

Plaintiff and William F. Leeper were in partnership in farming and livestock business under the name of Leeper Brothers. Plaintiff owned 505 acres which had been conveyed to him by his father unconditionally. Leeper Brothers had jointly purchased a farm of 118 acres and another farm of 173 acres. They also purchased smaller tracts of 10 acres and 54 acres. They borrowed $ 38,500, through the Bartlett Trust Company at St. Joseph, which was a first mortgage on plaintiff's 505 acres and the 173-acre farm owned by both. They also borrowed $ 6000.00 from a local bank which was secured by a first mortgage on the 118 acres and by a chattel mortgage on livestock. They had some other indebtedness in smaller amounts. In 1932 they were in financial difficulties and sought to turn over the mortgaged property to the holders of the mortgage debts. These creditors would not agree to take the property in settlement of the debts but preferred to take title by foreclosure. It was apparent that...