McCluer v. White

• Decision Date: 23 April 1936
• Docket Number: 33591
• Parties: Halbert H. McCluer, Trustee in Bankruptcy of the Estate of Nannie I. Payne, Bankrupt, Appellant, v. Guiles White, Nannie Ruth White, Bruce White, Edna White, Elizabeth M. Kerwin, Frank Kerwin, Charles A. Payne, William D. Payne, Clarence E. Payne, Verna I. Chancey and James R. Chancey
• Court: Missouri Supreme Court

93 S.W.2d 696

338 Mo. 1017

Halbert H. McCluer, Trustee in Bankruptcy of the Estate of Nannie I. Payne, Bankrupt, Appellant, v. Guiles White, Nannie Ruth White, Bruce White, Edna White, Elizabeth M. Kerwin, Frank Kerwin, Charles A. Payne, William D. Payne, Clarence E. Payne, Verna I. Chancey and James R. Chancey

No. 33591

Supreme Court of Missouri

April 23, 1936

Appellant's Motion for Rehearing Overruled April 23 1936.

Appeal from Sullivan Circuit Court; Hon. Paul Van Osdol Judge.

Affirmed.

L. E. Atherton for appellant.

(1) Plaintiff, trustee in bankruptcy of Nannie I. Payne, bankrupt, stands in the shoes of a judgment creditor holding an execution duly returned unsatisfied. Dickey v. Thompson, 323 Mo. 107, 18 S.W.2d 388; Coleman v. Hagey, 252 Mo. 102, 158 S.W. 829; Riggs v. Price, 277 Mo. 333, 210 S.W. 420. (a) Creditor may sue on the note and obtain judgment; he may foreclose and sue for deficiency, if any; or he may, at his election, pursue both remedies simultaneously. Bush v. Block, 187 S.W. 153, 193 Mo.App. 704; Watson v. Hawkins, 60 Mo. 550. (b) Nannie I. Payne was liable on the note to the Abraham Lincoln Life Insurance Company since 1924, and although it was secured by a deed of trust on the home property this liability must be regarded in determining whether the conveyance is fraudulent or not. Welch v. Mann, 193 Mo. 304, 92 S.W. 98. (2) That one must be just before he can be generous is axiomatic in law. May v. Gibler, 4 S.W.2d 769, 319 Mo. 672; Walther v. Null, 233 Mo. 104, 134 S.W. 993; Welch v. Mann, 193 Mo. 304, 92 S.W. 98. (a) Fraud need not be proved by direct evidence but may be inferred from circumstaces. Munford v. Sheldon, 9 S.W.2d 907; St. Francis Milling Co. v. Sugg, 104 S.W. 47, 206 Mo. 148; Burgert v. Borchert, 59 Mo. 83. (b) Insolvency of grantor, inadequacy of consideration, unusual acts, secret trusts, keeping off creditors, acceptance of more property than necessary or a consideration fraudulent in part are "badges of fraud," which, when taken singularly appear to be of minor importance, yet when combined, furnish clear evidence of fraud, proof of which will invalidate a conveyance. Munford v. Sheldon, 9 S.W.2d 907; Friedel v. Bailey, 329 Mo. 22, 44 S.W.2d 9; Ward v. Stutzman, 212 S.W. 65; Barrett v. Foote, 187 S.W. 67; Hewitt v. Price, 99 Mo.App. 666, 74 S.W. 414; Potter v. McDowell, 31 Mo. 62; Citizens' Bank v. McElvain, 219 S.W. 75, 280 Mo. 505; Benne v. Schnecko, 100 Mo. 250. (c) The intention of the grantor is immaterial so long as the effect of the conveyance was to hinder, delay or defraud creditors. Munford v. Sheldon, 9 S.W.2d 907; Seger's Sons v. Thomas Bros., 107 Mo. 635, 18 S.W. 33; Cases under 2(b) supra. (d) Transactions between relatives to the prejudice of creditors are looked on with suspicion. Friedel v. Bailey, 44 S.W.2d 9, 329 Mo. 22. (3) A conveyance of property in trust for the use of the grantor is fraudulent as to creditors. Oldham v. Wright, 85 S.W.2d 483; Sec. 3117, R. S. 1929; Stierlin v. Teschemacher, 64 S.W.2d 647, 333 Mo. 1208; Ebert v. Myers, 9 S.W.2d 1066; MacDonald v. Rumer, 8 S.W.2d 592. (a) The deed from Mrs. Payne to her children, being in consideration of future support, is void as against creditors, as future support is not a valid consideration. Ebert v. Myers, 9 S.W.2d 1066; Oldham v. Wright, 85 S.W.2d 483; Walther v. Null, 134 S.W. 993, 233 Mo. 104; Massey v. McCoy, 79 Mo.App. 169; Kegan v. Haslett, 128 Mo.App. 286, 107 S.W. 17.

P. M. Marr for respondents.

(1) Appellant cannot now contend that the conveyance was one to the use of the grantor and void as against creditors under Section 3116, Revised Statutes 1929, because his petition is not drawn on that theory. Citizens' Bank of Union v. Hilkemeyer, 29 S.W.2d 1095, 325 Mo. 849. (2) Plaintiff's petition is drawn under the provisions of Section 3117, Revised Statutes 1929, and cannot recover thereunder because of failure to prove the conveyance rendered the grantor insolvent at the time of its execution. Citizens' Bank of Union v. Hilkemeyer, 29 S.W.2d 1095, 325 Mo. 849. (3) The mere fact that Mrs. Payne was indebted to the Abraham Lincoln Life Insurance Company at the time the deed was made did not render the conveyance fraudulent, because she retained property, the reasonable value of which far exceeded her indebtedness. Citizens' Bank of Union v. Hilkemeyer, 29 S.W.2d 1095, 325 Mo. 849; Klaber v. Booth, 49 S.W.2d 181; Welch v. Mann, 193 Mo. 304; Johnson v. Murphy, 180 Mo. 597; Updegraff v. Theaker, 57 Mo.App. 45; Christopher-Simpson Iron Works v. Bajohr, 190 S.W. 615. (4) Where a grantor ultimately becomes insolvent that fact does not render a transfer, when he was solvent, fraudulent. Citizens' Bank of Union v. Hilkemeyer, 29 S.W.2d 1095, 325 Mo. 849; Christopher-Simpson Iron Works v. Bajohr, 190 S.W. 615; McMunnigal v. Aylor, 204 Mo. 19; American Nat. Bank v. Thornburrow & Stone, 109 Mo.App. 639; Clark v. Lewis, 215 Mo. 173. (5) The $ 4000 debt to the Abraham Lincoln Life Insurance Company is not to be considered in determining whether Mrs. Payne was insolvent and the conveyance fraudulent at the time the conveyance was made, because it was a secured debt, and secured by property worth more than the debt. Welch v. Mann, 193 Mo. 326; Klaber v. Booth, 49 S.W.2d 183; 27 C. J., p. 498, secs. 160, 161.

Cooley, C. Westhues and Bohling, CC., concur.

OPINION

COOLEY

Suit in equity to set aside a deed as being in fraud of creditors. Finding and judgment for the defendants and plaintiff appeals. Plaintiff is trustee in bankruptcy of Nannie I. Payne, grantor in the assailed deed. His authority to institute and prosecute the suit is not questioned. Defendant Guiles White is the surviving husband and Nannie Ruth, Bruce and Edna White are minor children (represented by guardian ad litem), of Delia V. White, a daughter of Nannie I. Payne who died after the conveyance in question. Frank Kerwin and James R. Chancey are, respectively, husbands of Elizabeth M. Kerwin and Verna I. Chancey, daughters of Nannie I. Payne. The other defendants are children of Nannie I. Payne. Defendants claim title through the deed sought to be set aside.

By the deed in question, a general warranty deed, dated and executed June 25, 1929, and recorded the same day, Nannie I. Payne conveyed to all of her children, for a recited consideration of "love and affection and one and no/100 dollars," four described parcels of real estate situated in Milan, Missouri. The value of the real estate so conveyed is not shown. From the rentals received from it, as shown by the evidence, the value could not have been very large. The only other real estate she then owned was a house and lot in Milan, referred to as the residence property, well located and well improved. That she retained. She had but very little money and no other personal property aside from her household goods. Her husband, D. A. Payne, had died in January, 1929. We gather from the record and briefs that prior to D. A. Payne's death, he and his wife, Nannie, owned all of the real estate above mentioned as tenants by the entirety, she, therefore, becoming sole owner upon his death.

On October 10, 1924, D. A. and Nannie I. Payne borrowed $ 4000 from a life insurance company and to secure the loan gave a first deed of trust on the residence property above referred to. That loan, due October 10, 1929, was outstanding on June 25, 1929, when Nannie I. Payne made the conveyance herein sought to be set aside.

It does not appear from the record what, if any, estate D. A. Payne left, nor what, if any, debts he owed, aside from the $ 4000 note above referred to and two small notes, to be presently mentioned. It is fairly inferable, however, that his estate was not sufficient to pay said two small notes.

Mrs. Payne, called as a witness by plaintiff, and upon whose testimony plaintiff's case largely depends, testified that after her husband's death two notes turned up, one, a small note, the exact amount of which is not disclosed, to a Mr. Price, and one of about $ 200 to a Mr. Quigley. She said she did not sign those notes and did not know of their existence until they were presented for payment. It seems, however, that her name appeared upon them as comaker with her husband. We suspect that her husband had signed her name to them without consulting her. Be that as it may her testimony shows that when she learned that her husband had given the notes she, desiring that his debts be paid, agreed to pay them, and did so. The actual payment was not made until shortly after the execution of the deed to her children. In the meantime Price, becoming impatient, had sued on his note, but Mrs. Payne's uncontradicted testimony is to the effect that before Price filed suit she had told him she intended to and would pay the note. It is not disputed that both those notes were paid in full. Except for those two small notes and the $ 4000 note secured by the deed of trust on the residence Mrs. Payne had no debts or liabilities, present or contingent, at the time she made the deed to her children. The children knew of the $ 4000 note and deed of trust.

Relative to the consideration for the deed Mrs. Payne testified "I wrote the children in the spring after their father died, and I told them there wasn't enough income on this property to take care of me and pay the expenses, and if they thought it best I would sign it over to them and them take care of me. . . . I was to have the rents and they was to supply me with money in my needs. . . . There wasn't enough income to pay taxes, insurance and $ 120 every six months to the loan company that I was paying without their help." On this point she further testified, speaking of the above-mentioned debts, "The children was to help and send the money to fix up...