May v. Gibler

• Citation: 4 S.W.2d 769,319 Mo. 672
• Decision Date: 24 March 1928
• Docket Number: 26663
• Parties: Lucien E. May, Trustee in Bankruptcy of Estate of Edward Franklin Gibler, v. Olin C. Gibler et al., Appellants
• Court: United States State Supreme Court of Missouri

4 S.W.2d 769

319 Mo. 672

Lucien E. May, Trustee in Bankruptcy of Estate of Edward Franklin Gibler, v. Olin C. Gibler et al., Appellants

No. 26663

Supreme Court of Missouri

March 24, 1928

Appeal from Mercer Circuit Court; Hon. L. B. Woods, Judge.

Affirmed (upon conditions).

W S. Thompson and Randall Wilson for appellants.

(1) The defendant had a right to make a purely voluntary conveyance and without consideration of the eighty acres of land to his son, if solvent at the time of the conveyance, and the conveyance did not have the effect of making him insolvent. Fehlig v. Bush, 165 Mo. 144; Welsh v Ketchum, 84 Mo. 430; Snyder v. Free, 114 Mo. 369; Hoffman v. Nolte, 120 Mo. 135; McMumigal v. Aylor, 204 Mo. 30; Welch v. Mann, 193 Mo. 324; Johnson v. Murphy, 180 Mo. 615; 27 C. J. 584, par. 248. (2) Edward Franklin Gibler was solvent at the time he made the conveyance. There was not a scintilla of evidence, offered by respondent, tending to show that defendant was insolvent at the time of the conveyance. On the other hand, the conveyance, a purely voluntary one, and without consideration, that the presumption of fraud might be explained and rebutted, the evidence clearly shows that at the time of conveyance defendant had more than $ 2900 in money and property, and the property saleable under execution, in excess of all property which he might claim was exempt from execution, which was subject to execution, and the payment of his debts. 27 C. J. 502, par. 165. (3) If as claimed by respondent and found by the trial court, defendant was insolvent at the time of the conveyance, then the trial court erred in its judgment and decree, in decreeing that plaintiff was entitled to possession and title, free and clear of any and all claim of the defendants, for the reason that at the time of the conveyance, the evidence conclusively shows, and we think plaintiff admits, that Edward Franklin Gibler occupied the land as a homestead, and should the Supreme Court affirm the finding and decree of the trial court as to the insolvency of Edward Franklin Gibler, the court should modify the trial court's finding and decree to the extent that plaintiff's right in and to the eighty acres of land will be subject to the homestead right of the defendant, Edward Franklin Gibler. Secs. 5853, 5854, R. S. 1919.

L. M. Hyde for respondent.

(1) The conveyance was fraudulent and void. Sec. 2276, R. S. 1919. Any conveyance of any estate, or interest in lands, made or contrived with attempt to hinder, delay or defraud creditors of their lawful actions, is deemed and taken as against said creditors to be utterly void. The conveyance was purely voluntary. Where a debtor in embarrassed circumstances makes a voluntary conveyance and is afterwards unable to meet his debts, existing at the time of the conveyance, in the ordinary course prescribed by law, the conveyance will be void as to such existing debts. Potter v. McDonald, 31 Mo. 62; Patten v. Casey, 57 Mo. 118; Lionberger v. Baker, 88 Mo. 447; Snyder v. Free, 114 Mo. 360. (2) The burden of proof is on the grantee, in a voluntary conveyance to show that a grantor has sufficient means to meet his liabilities; otherwise, the deed will be void against creditors. Snyder v. Free, 114 Mo. 360; Vandeventer v. Goss, 116 Mo.App. 316. Only a clear showing of solvency will uphold a voluntary conveyance against pre-existing debts. Eddy v. Baldwin, 32 Mo. 369; Land v. Kingsberry, 11 Mo. 402; McDonald v. Cash, 45 Mo.App. 66; Hoffman v. Nolte, 127 Mo. 120. (3) The actual intent is immaterial and regardless of intent, a conveyance made without consideration is void as to existing creditors. Early v. Taylor, 78 Mo. 238; 27 C. J. 509, sec. 176; Potter v. McDowell, 31 Mo. 62. And also if the effect of the conveyance is to hinder and delay creditors of the vendor, it is invalid without reference to intent with which it was made. Hewitt v. Price, 99 Mo.App. 666; Reed v. Pelletier, 28 Mo. 173; State ex rel. v. O'Neil, 151 Mo. 85; Noyes v. Cunningham, 51 Mo.App. 194; Gens & Tiede v. Hagadine Co., 56 Mo.App. 229. (4) The right of the trustee in bankruptcy to set aside this conveyance is the same as the right of the creditors. Sec. 70, Bankruptcy Act. (5) Appellant does not question this right, but does say that the trial court's decree was wrong in not mentioning defendants' homestead. Appellant seems to assume from that that the trustee has title to the land under the decree free and clear of the homestead right of Edward Franklin Gibler. The decree, however, does not so state. It merely finds that the conveyance "was and is fraudulent and void as against the creditors of said defendants, and as against this plaintiff, and that said land is an asset of the bankruptcy estate." The decree then orders the deed set aside and for naught held and bars the claim of the grantee, and orders "that the possession of said land be delivered to plaintiff, as an asset of the estate of Edward Franklin Gibler, bankrupt, to be disposed and distributed under the bankruptcy laws for the payment of the debts of said Edward Franklin Gibler." It does not determine the right to the homestead, and does not decree title to the plaintiff, free and clear of the homestead. The effect of the decree is merely to set aside the conveyance and that the land is to be disposed of, as provided by the bankruptcy laws, one of which provides that the trustee upon obtaining title to the land shall proceed to set off to the bankrupt his exemptions to which he would be entitled under the state laws. Sec. 6, A, sec. 47, A, Bankruptcy Act. There was no issue in the case anywhere in regard to the homestead of defendant, and no such issue was tried by the court. The trustee in bankruptcy is perfectly willing to set off to the defendant his exemptions, including his homestead, and he would be required to do so by the bankruptcy court, upon proper application, if he did not. The homestead right of defendant is not in any way in question, nor has it in any way been affected in this case.

OPINION

Walker, J.

This is a suit brought by Lucien E. May, as trustee in bankruptcy, against Olin C. Gibler, Edward F. Gibler and the wife of the latter, Bertha Gibler, in the Circuit Court of Mercer County. It sounds in equity and its purpose is to set aside an alleged fraudulent deed made by Edward F. Gibler and Bertha his wife, to their son, Olin C. Gibler, on the 27th day of April, 1923. Tried by the court, a judgment therein was rendered in favor of the plaintiff on the 11th day of December, 1924. From this judgment the defendants appeal.

The deed made by Edward F. Gibler and wife to the defendant Olin C. Gibler was voluntary and without consideration. At the time it was made and continuously thereafter Edward F. Gibler, with his family, has occupied and used the land as his own and the defendant, Olin C. Gibler, has resided with him. It is conceded that at the time the deed was made the grantee, Olin Clarence Gibler, was weak-minded and was "incompetent to manage his own affairs."

Plaintiff contends that at the time Edward F. Gibler conveyed the land to his son, April 27, 1923, he was indebted to his creditors, whom he never paid, in excess of $ 2800, and according to his testimony his debts, at the time, were in excess of the property he retained. The estimated value of the land conveyed was $ 4800. One year thereafter, May 16, 1924, he filed a voluntary petition in bankruptcy. The total amount realized from the sale of all of his property was $ 64.

The contentions of the defendants are that at the time of the making of the deed Edward F. Gibler, the grantor, was solvent; but if the deed was fraudulent and void that the right of the plaintiff therein is subject to the homestead right of Edward F. Gibler and until the same is set off to him, or he is tendered by plaintiff and accepts in lieu of his homestead right the sum of $ 1500, the trial court was in error in awarding the title and the possession of said land to the plaintiff as the trustee in bankruptcy of the estate of Edward F. Gibler; that at the time said deed was made Edward F. Gibler was, in addition to his homestead right, entitled, under the exemption laws of this State, to $ 300 in cash (Sec. 1614, R. S. 1919), or certain personal property, named in Section 1611, Revised Statutes 1919.

As indicative of the mental attitude of Edward F. Gibler he testified before the referee that he was willing that the deed should be set aside, the land sold and the proceeds arising therefrom applied by the trustee to the payment of his debts and that he and his wife would make a quit-claim deed to the purchaser; that the son to whom he made the deed was at the time weak-minded and had always been that way.

I. The National Bankruptcy Law, Section 70, Subdivision E (as amended, Acts of Congress of February 5, 1903, and May 27, 1926), confers authority upon trustees therein to prosecute actions of this character in the State as well as the Federal courts. Under this authority trustees are subrogated to the rights of creditors and the limitation as to the right of action is that prescribed by the State law concerning the setting aside of fraudulent conveyances and not the limitation of four months before the filing of the petition in bankruptcy as prescribed in Sections 60a and 67c of that act. We had occasion to review the statutes and rulings of the State and Federal courts on that question in Riggs v. Price, 277 Mo. 333, 343, 210 S.W. 420, in which the conclusion above indicated was reached.

II. A review of the evidence shows that at the time the deed in question was made the bankrupt, Edward F. Gibler was unable to pay his debts in the ordinary course of business. One is insolvent when he lacks this ability. [Bushman v....