Mansur-Tebbetts Implement Company v. Ritchie
| Decision Date | 18 December 1900 |
| Citation | 60 S.W. 87,159 Mo. 213 |
| Parties | MANSUR-TEBBETTS IMPLEMENT COMPANY v. J. J. RITCHIE and S. P. HUDSON; E. E. BRUTON, Interpleader, Appellant |
| Court | Missouri Supreme Court |
Appeal from Montgomery Circuit Court. -- Hon. E. M. Hughes, Judge.
Affirmed.
Wm. M Williams and G. Pitman Smith for appellant.
The court erred in giving declarations of law numbered 2 and 4 asked by the attaching creditor. Ritchie had the right to prefer one creditor to another, even though the effect of such preference was necessarily to hinder or delay other creditors in the collection of their debts. The declarations of law complained of announce the proposition that notwithstanding the Sturgeon Savings Bank had a bona fide debt, and accepted the assignment of the Ritchie note in payment thereof, yet, if, in taking said deed of trust, it assisted Ritchie and Hudson, or either of them, to hinder or delay their creditors, the finding should be against the interpleader. Omitting the alternative proposition contained in the fourth declaration of law, it required a finding against the interpleader, if the court believed from the evidence that the Sturgeon Savings Bank took an assignment of the deed of trust put in evidence, upon the stock of goods of J. J. Ritchie, to secure the payment of a debt actually due to it, provided the court should also believe that the Sturgeon Savings Bank, or J. S. Ritchie, its cashier, in taking said deed of trust, did assist Ritchie and Hudson, or either of them, to hinder or delay any of their other creditors. Under this declaration of the law, the court was bound to find for the attaching creditor, notwithstanding the debt due the Sturgeon Savings Bank was an honest one, if, in taking said deed of trust, said bank did assist either Hudson or Ritchie to hinder or delay any of their other creditors. A conveyance of property may have the effect of hindering or delaying some creditors of an insolvent, but this will not render the conveyance void. A conveyance made with the intent of paying some creditors, or one creditor, though it might necessarily hinder and delay other creditors, and must therefore have been made with that intent, also, and was therefore, actually made to hinder and delay creditors -- that is, some creditors of the insolvent -- would not be bad on that account. State to use v. Laurie, 1 Mo.App. 377; Shelly v. Boothe, 73 Mo. 76; Hazel v. Bank, 95 Mo. 66; Gates v. Lebaume, 19 Mo. 29; Etlinger v. Kahn, 134 Mo. 495; Henley v. Taylor, 78 Mo. 240.
George Robertson and Morton Jourdan for respondent.
(1) There was an abundance of evidence to establish the partnership between J. J. Ritchie and S. P. Hudson. Mansur-Tebbetts Implement Company v. Ritchie, et al., Bruton, Interpleader, 143 Mo. 587. It would be impossible, under the circumstances, for the cashier of the bank not to have known that fact. While it is true that Ritchie gave his note to Hudson, March 5, 1894, for an amount corresponding to the amount Hudson had put into the partnership, it is also true that there is no credible evidence of any dissolution of the partnership at that or any other time. Instead of this being an evidence of dissolution, it is the most potent evidence of fraud on the part of both partners. At that time the firm owed from ten to twelve thousand dollars; were hopelessly insolvent, and that Hudson should sell to J. J. Ritchie for something over $ 2,000, and that this note should be used to pay the debt of Hudson at the bank, is within itself a fraud upon the partnership creditors and establishes conclusively an intent on the part of the persons participating in the transaction to defraud the creditors of the firm. Mansur v. Ritchie, 143 Mo. 587; Priest v. Chouteau, 85 Mo. 398; Cannon v. Lindsay, 7 Am. St. Rep. 38; Wright v. Boynton, 72 Am. Dec. 319, note 323; Wait on Fraud. Con. (2 Ed.), 308; U. S. v. Hack, 8 Peters 271. (2) Plaintiff's third and fourth instructions properly declare the law. They simply declare that if the cashier of the beneficiary bank took the deed of trust with intent to hinder, delay or defraud creditors of the grantor, or to assist J. J. Ritchie in such intent or design, then the deed is fraudulent. This is certainly the law. R. S. 1899, sec. 3398; Mansur v. Ritchie, supra; Ensworth v. King, 50 Mo. 477; Farwell v. Meyer, 67 Mo.App. 566; Van Raalte v. Harrington, 101 Mo. 602; McDonald v. Hoover, 142 Mo. 484; Black v. Ryan, 65 Mo.App. 230; Pierson v. Stifer, 52 Mo.App. 273; Deering v. Collins, 38 Mo.App. 73; Sexton v. Anderson, 95 Mo. 373; State ex rel. v. Purcell, 131 Mo. 312; Rupe v. Alkire, 77 Mo. 641. (3) While the court refused plaintiff's instructions authorizing a recovery that the conveyance is fraudulent per se, as against the partnership creditors, for the reason that it is an effort on the part of the one partner to pay his individual debt by a transfer of the whole of the partnership property when the partnership is insolvent, yet the verdict may be sustained on this ground alone. Mansur v. Ritchie, 143 Mo. 587; Menaugh v. Whitewell, 52 N.Y. 146; Wilson v. Robertson, 21 N.Y. 587; Reyburn v. Mitchell, 106 Mo. 365; Grocery Co. v. McCune, 122 Mo. 426; Paper Co. v. Haskell, 144 Mo. 331.
VALLIANT, J. Gantt, C. J., concurs. Brace and Robinson, JJ., concur in paragraphs I and II, but do not concur in the result. The views of Brace, J., on the result are expressed in a separate opinion by him. The views of Sherwood, Robinson and Marshall, JJ., are expressed in the separate opinion by Marshall, J. Burgess, J., absent.
In Banc
This is a controversy between the plaintiff, who is an attaching creditor of defendants Ritchie and Hudson, on the one part, and F. E. Bruton, trustee for the Sturgeon Savings Bank, who claims the goods attached, on the other part.
This is the second appeal to this court in the same cause. A full statement of the case by Marshall, J., is contained in the report of the former appeal, Mansur-Tebbetts Imp. Co. v. Ritchie, 143 Mo. 587, 45 S.W. 634, a reference to which will render only a very brief statement necessary at this time.
On May 10, 1894, defendant Ritchie, who was then engaged in mercantile business, made his note to defendant Hudson for $ 2,224.75, and executed a deed of trust conveying to interpleader Bruton, as trustee, his whole stock of goods to secure the note. Hudson immediately transferred the note to the Sturgeon Savings Bank, in payment of notes of his held by the bank, and the deed was recorded that day. Bruton took possession of the goods on May 11, and the next day, May 12, plaintiff had them seized under its attachment and they were sold, under order of the court, for $ 2,593.05. Bruton filed an interplea in the attachment suit, claiming the goods attached by virtue of the deed of trust. Plaintiff answered attacking the note and deed of trust on the ground of fraud, averring that Ritchie and Hudson were partners and that the note and deed were made without consideration, executed for the purpose of hindering, delaying and defrauding their creditors and that the Sturgeon Savings Bank took the note and deed with the knowledge of that purpose, and with the intent to aid them in it. Issues were joined and the cause was tried by the court, a jury being waived. There was testimony tending to prove that Ritchie and Hudson were partners in trade, and that they had purchased goods from plaintiff on credit when they were insolvent, had made a false statement of their financial standing to obtain the credit, and that the goods obtained from plaintiff were included in those covered by the deed of trust in question; that at the date of the deed of trust Ritchie and Hudson were insolvent, owing over $ 5,000 of merchandise accounts, besides considerable individual debts, and this deed of trust covered practically all they had that was available to their creditors. Plaintiff's testimony also tended to show that the cashier of the bank who transacted this business was the father of defendant Ritchie and was cognizant of his business affairs.
On the part of the interpleader the testimony tended to prove that Hudson had borrowed money from the bank to buy out a former partner of Ritchie, for which he had given the bank his note, and had also given the bank his note for part of an overdraft that Ritchie owed the bank. Just what the relations of Ritchie and Hudson were after the latter bought out the interest of Ritchie's former partner, he did not very clearly show, but his testimony did tend to show that in March, 1894, Ritchie assumed to pay Hudson for the debt that he had incurred with the bank, and gave him his note for the amount, and a chattel mortgage to secure it, and thus became, if he had not been before, the sole owner of the business, and that note and chattel mortgage Hudson had given to the bank as collateral to his notes. But in May, 1894, they were advised that the chattel mortgage was not valid and in order to secure his debt to Hudson, Ritchie executed the note and deed of trust in suit with the purpose of having Hudson transfer them to the bank and take up his paper there; the bank was also cognizant of this purpose. Accordingly, immediately on the execution of the note and deed, Hudson transferred them to the bank, and the bank surrendered to him his notes and the collateral it had formerly held.
The court gave a number of instructions, both for plaintiff and for the interpleader, but as the correctness of only two of those given is challenged, it is necessary to copy only those two here. They are the second and fourth instructions given for the plaintiff, and are as follows:
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