McDonald v. Hoover

• Decision Date: 01 February 1898
• Citation: 44 S.W. 334,142 Mo. 484
• Parties: McDONALD et al. v. HOOVER et al. DOUGLASS et al. v. SAME. BROWN-DESNOYERS SHOE CO. v. SAME.
• Court: Missouri Supreme Court

44 S.W. 334

142 Mo. 484

McDONALD et al. v. HOOVER et al.

DOUGLASS et al. v. SAME.

BROWN-DESNOYERS SHOE CO. v. SAME.

Supreme Court of Missouri, Division No. 2.

February 1, 1898.

FRAUDULENT CONVEYANCES — SECRET TRUST — APPEAL — ABSTRACT.

1. A creditor of a firm induced it to return to him goods bought of him, and pay the balance due in cash. He then assumed certain debts due other creditors, by giving his notes therefor; and the firm gave him a note for the same amount, and a chattel mortgage, with possession and an unlimited time to sell the goods at private sale. The value of the property exceeded the firm's debts. There was a secret agreement that the creditor could pay unsecured creditors, who might be inclined to sue, out of the funds arising from the sale. Held, that the mortgage was void as to creditors, under 2 Rev. St. 1889, § 5170, providing that every conveyance "made or contrived with the intent to hinder, delay or defraud creditors," shall be void.

2. Under 1 Rev. St. 1889, § 2253, which in terms permits an appellant to make his own abstract, the recitals therein of facts shown by the record need not be authenticated, by the clerk.

Appeal from circuit court, Vernon county; D. P. Stratton, Judge.

Three actions, consolidated and tried together, — one by R. L. McDonald & Co. against Hoover Bros., one by R. Douglass & Co. against the same defendants, and one by the Brown-Desnoyers Shoe Company against the same defendants. W. W. Dillard interpleaded in each action. From a judgment in favor of the interpleader, plaintiffs in each case appeal. Reversed.

M. T. January, Seneca N. Taylor, and Charles Erd, for appellants. G. S. Hoss, for respondent.

GANTT, P. J.

This appeal was taken from a judgment in favor of the interpleader, Dillard, in each of the foregoing cases, in the Vernon circuit court, at the April term, 1895. Said causes had been consolidated, and were tried together. After a careful reading of the complete record, we are satisfied we cannot condense the facts into a more intelligible and accurate statement than that furnished us by Mr. January, the counsel for appellants, and hence we substantially adopt it. Prior to September 8, 1890, J. W. and R. E. Hoover, brothers, were engaged in the mercantile business at Richards, in Vernon county, under the firm name of "Hoover Bros." At the same time these two brothers, with H. C. Moore, were conducting a general store at Rinehart, in the same county, under the firm name of "Hoover Brothers & Co." Both firms, being pressed by their creditors, and unable to meet their debts maturing, executed to W. W. Dillard, of Ft. Scott, the interpleader in this case, a chattel mortgage, covering the following property: "The general stock of merchandise in and about the building known as `Hoover Bros. Store' at Richards, in Vernon county, Missouri, consisting of groceries, queensware, crockeryware, dry goods, and notions, together with the fixtures and furniture, including also every piece of personal property in and about and connected with the said store, including all accounts, bills, and notes due from the customers; also, the general stock of merchandise in the building known as `Hoover Bros. and Moore's Store,' at Rinehart, Vernon county, Missouri, consisting of groceries, queensware, hardware, dry goods, hats and caps, harness and notions, including the fixtures and furniture, etc., of said store, including also all accounts, bills, and notes due from customers; and this description is intended to cover everything of personal property in and about and connected with said store, also building and additions thereto in which said property is kept; also, fifty acres of growing corn now standing on the farm of Mrs. P. E. Hoover, six miles north of Richards," — by which said chattel mortgage it was provided that Dillard should take immediate possession of said property, and proceed to sell the same in the most economical and practical way, until he had realized enough to pay the note secured by said chattel mortgage, and any property remaining after said note was paid should be returned to grantors. The note secured by this chattel mortgage was for $3,338.62, and was dated September 8, 1890, due six months from date, bearing 8 per cent. interest from date. At the same time a trust deed was executed to Dillard by defendants, conveying certain real estate and stock to secure the payment of the same note. These two mortgages cover all of the property, of every kind and character, owned by defendants. Dillard immediately took possession of the two stocks of goods at Richards and Rinehart, retaining the old clerks, putting one in charge at each place, and proceeded to retail the goods just as Hoover Bros. and Moore had been doing, and disposed of goods for which he received the money, but could not state the amount. Dillard came to Nevada, the county seat of Vernon county, on the morning of September 9th, to record his chattel mortgage, and on that morning wrote the following letter to J. W. Hoover: "Nevada, Mo., Sept. 9. Dear Will: Tell Mr. Jackson, if the sheriff should attempt to serve the attachment, to give him a written protest. Use this form: `I hereby protest against your interruption of the legal rights of W. W. Dillard, assignee. John Jackson, Agent for W. W. Dillard, Assignee.'" Over on the reverse side of the sheet is the following letter: "Will, be sure to have the deed from your mother to you boys of the Hoover lot (one acre) recorded before Robert sends the mortgage to be recorded. If you find the deed, go at once or send it to Nevada, to be recorded. No time to lose on it. Yours, truly, W. W. Dillard, Assignee." As soon as Dillard took possession of the two stocks of goods aforesaid, he caused a notice to be posted up as follows, at each store: "Mortgagee's Notice. This store is now in the possession of the undersigned mortgagee, and the goods will be sold by him. W. W. Dillard, Mortgagee." On September 9, 1890, the Kelly-Goodfellow Shoe Company, the Alkire Grocer Company, and other creditors sued out attachments which were levied on all the property conveyed by Hoover Bros. and Moore to Dillard, and on September 12th other creditors, including these plaintiffs, sued out attachments against Hoover Bros. and Moore, the writs being levied on the goods at Richards and Rinehart subject to the prior levies. Dillard duly filed his interplea in each of said attachment suits. The case of R. L. McDonald coming on for trial by consent, the other cases shown in the caption were consolidated, and were all tried together. Dillard claimed under the chattel mortgage aforesaid. The defense was that said mortgages were fraudulent and void, because made to hinder, delay, or defraud creditors who were not secured thereby.

The evidence preserved in the bill of exceptions, detailed by interpleader, Dillard, himself, is substantially as follows: On September 6, 1890, Dillard received a letter from one of the Hoover boys, stating that the firm was in embarrassed circumstances, and asking him to come to Richards. In response to that letter, Dillard went to Richards, on Sunday, September 8th. Dillard had a claim of about $150 against Hoover Bros., for merchandise sold them; and after arranging his own claim, by taking back his unsold goods, and receiving the difference in money, he proceeded to inspect the stock of goods at Richards, and also at Rinehart, with a view of helping the firm out of its difficulty. He examined the two stocks of goods, and also examined the books, and was informed that the total indebtedness of both stores was about $2,100. The claim of Kelly-Goodfellow Shoe Company, and also Burnham, Hanna, Munger & Co., the first amounting to $569.80, and the latter to $652, were not mentioned to Dillard at that time, and he knew nothing of these claims until afterwards, he says. He then arranged to accompany Hoover Bros. to Ft. Scott, and the next day (Monday) consulted an attorney. They met at the office of Ware, Biddle & Cory, and, after a consultation with Mr. Cory, they were advised, so Dillard says, that the Hoover Brothers had so much property, and were so little in debt, that they could not make an assignment for the benefit of creditors. It was soon discovered that Mr. Cory had in his hands, for collection, the claims of the Kelly-Goodfellow Shoe Company, and also the Burnham, Hanna, Munger & Co. account. Dillard then arranged with the Ft. Scott creditors to take up their claims, which he did by executing his own note to each one of them, payable in six months, without interest, and also executed his own note for the Kelly-Goodfellow Shoe Company claim, and also the claim of Burnham, Hanna, Munger & Co.; the whole aggregating the sum of $3,338.62, being the exact amount of the note secured in the chattel mortgage afterwards executed. As soon as Dillard had completed this transaction, he and the Hoovers returned that day to Richards, where the chattel mortgage in controversy was drawn up and executed; the acknowledgment being taken by J. H. Rinehart, as justice of the peace, at 10 or 11 o'clock Monday night, at which time Rinehart was roused out of bed to perform the official duty of taking an acknowledgment.

In the course of his testimony, Dillard testified as follows: "Q. You testified in the case of the Alkire Grocery Company against Hoover Brothers, in which you were interpleader, didn't you? A. Yes, sir. Q. I will ask you if you gave this testimony on that trial, in answer to a question by Mr. Gordon: `And isn't it a further fact that you never intended to include that claim in the mortgage, — the claim of Burnham, Hanna, Munger & Co., and the Kelly-Goodfellow Shoe Co., until you went into Mr. Cory's office, and he forced the matter upon you?' A. Please repeat that. Q. Is it not a fact that you never intended to include those two claims in your mortgage indebtedness, — those secured by the mortgage, — until you went into Mr. Cory's...