Munford v. Sheldon

• Decision Date: 30 July 1928
• Docket Number: No. 26796.,26796.
• Parties: E.H. MUNFORD, Appellant, v. H.J. SHELDON, LYNN E. BOWMAN and MRS. LYNN E. BOWMAN.
• Court: Missouri Supreme Court

9 S.W.2d 907

E.H. MUNFORD, Appellant, v. H.J. SHELDON, LYNN E. BOWMAN and MRS. LYNN E. BOWMAN.

No. 26796.

Supreme Court of Missouri. Division One.

July 30, 1928.

Appeal from Jackson Circuit Court. — Hon. James A. Austin, Judge.

REVERSED AND REMANDED (with directions).

John Davis, Nelson H. Davis and Davis & Davis for appellant.

(1) The warranty deed to 3520 Forest Avenue, together with the contract dated April 3, 1925, between defendants Lynn E. Bowman and H.J. Sheldon, under the pleadings and evidence needs no evidence to show the fraudulent intent. The conveyance under the evidence and the withholding from record the secret contract between the parties make a fraudulent and void conveyance as a matter of law, and the trial court should have so decreed instead of dismissing plaintiff's bill. McDonald & Co. v. Hoover, 142 Mo. 484; Rubber Mfg. Co. v. Supply Co., 149 Mo. 538; Barton v. Sitlington, 128 Mo. 164. (2) The indebtedness of Sheldon to Lynn E. Bowman only figured $3460, and he took an absolute deed to the property well worth $10,000, with only a first encumbrance on it of $4000. The secret agreement set forth that Bowman would reconvey it to Sheldon within ninety days upon the payment of $8000 for the property. The $540 in excess of the indebtedness makes the conveyance fraudulent in part, hence it is fraudulent as a whole and void as to this plaintiff. Klanber v. Schloss. 198 Mo. 502; Boland v. Ross, 120 Mo. 208; Barton v. Sitlington, 128 Mo. 164; State ex rel. v. Hope, 102 Mo. 410; National Tube Works v. Machine Co., 118 Mo. 365; Gleitz v. Schuster, 168 Mo. 298; National Bank v. Fry, 168 Mo. 492; Imhoff & Co. v. McArthur, 146 Mo. 371; Bates County Bank v. Gailey, 177 Mo. 181; Rubber Mfg. Co. v. Supply Co., 149 Mo. 538.

Ed E. Aleshire for respondents.

(1) The objection to the introduction of any evidence should have been sustained, because the petition is silent as to its being a mortgage or a secret trust, but only describes it as a warranty deed. (2) There is no evidence of any fraudulent intent even on the part of the vendor, and much less of any knowledge of it, if such intent did exist, on the part of Bowman. Farmers Bank v. Worthington, 145 Mo. 91; Bobb v. Wolff, 148 Mo. 335. (3) The petition alleges that defendant Sheldon was the owner of certain property at 5019 Virginia Avenue and that the title was carried in the name of Millie Fry. There appears no evidence, in the record that it belonged to Sheldon. The further statement then is made that Georgia A. Moore owned the property at 3520 Forest Avenue, but there is no suggestion even that Sheldon had any interest in it. But the further statement is made that defendant Sheldon exchanged the Virginia Avenue property for the Moore property on Forest. But there is no allegation that the Moore property belonged to Sheldon or that it was held by any other person's use than that of Mrs. Moore. If these statements be true, and if plaintiff could have the prayer of his petition sustained, it would have the effect of setting aside the deed from Moore and wife to Bowman, which would leave the Forest property still the property of Georgia A. Moore, and would also leave her the owner of the property on Virginia. This would be a strange anomaly in a real estate transaction. No reason that is tangible or even a gesture toward any fraudulent intent is assigned.

GENTRY, J.

By bill in equity filed in the Circuit Court of Jackson County on April 16, 1925, plaintiff, a judgment creditor of defendant Sheldon, sought to set aside a deed made to defendant Lynn E. Bowman, alleging that the same was a fraudulent conveyance. The wife of Bowman was also made a defendant. The substance of plaintiff's bill was that he was the holder of a note for $1200 dated May 14, 1924, due in six months, at six per cent interest, executed to him by defendant Sheldon; that the note became due and remained unpaid and that he filed suit thereon in the Circuit Court of Jackson County on April 1, 1925. That the same was an attachment suit, and that on April 10, 1925, the sheriff attached certain real estate, hereinafter for convenience called the Sedgwick Place property in Kansas City. He further alleged that defendant Sheldon owned certain real estate in Kansas City, for convenience hereinafter designated as the Virginia Avenue property, but that he carried the title thereto in the name of his mother, Millie Fry, for the purpose of defrauding his creditors. That on March 18, 1925, defendant Sheldon, acting for himself and as attorney in fact for Millie Fry, conveyed said Virginia Avenue property to Georgia A. Moore and husband, in exchange for certain property, for convenience hereinafter called the Sedgwick Place property, in Kansas City, but that said deed was not delivered and recorded until April 3, 1925. That by reason of such exchange, the Sedgwick Place property became the property of defendant Sheldon, although the same was conveyed to defendant Bowman by Georgia A. Moore and husband. That while the record title thereto was in the defendant Bowman, "defendant Bowman is holding said Lot 17. Block One. Sedgwick Place, for and in behalf of defendant Sheldon: all of which is a fraudulent conveyance and contrary to law and was made for the purpose of defrauding and cheating plaintiff. That said lot, as a matter of fact, is the property of defendant Sheldon." Then followed an allegation that by reason of such transfer and by reason of the title of the same being carried in the name of defendant Bowman for defendant Sheldon, by reason of the authority given in Section 1775, Revised Statutes 1919, plaintiff was entitled to bring this bill for relief from said fraudulent transfer. The prayer of the bill was as follows:

"Wherefore, plaintiff prays the court that said fraudulent transfer aforesaid of lot seventeen (17) Block One (1) Sedgwick Place in Kansas City, Missouri, as evidenced by the deed of conveyance recorded April 3, 1925, in Book B 2545 at page 279, he declared a fraudulent and void transfer and that same be set aside and declared for naught and that said lot seventeen (17) Block One (1) Sedgwick Place be declared to be the property of defendant H.J. Sheldon and be declared subject to plaintiff's attachment as heretofore filed, same being a suit pending in this court under number 211956, and for such other and further relief as to the court may seem meet and proper."

The answer of defendant Sheldon was a general denial, though he did not appear at the trial either in person or by attorney. The answer of defendant Bowman and wife admitted that the Sedgwick Place property was conveyed to defendant Bowman on April 3, 1925. but alleged that said conveyance was made in the regular way for a valuable consideration, without notice of any prior or preceding claim, but in good faith. A reply put in issue the allegations of the last-named answer, and further alleged that the title to this property was conveyed to defendant Bowman for the purpose of hindering and delaying the creditors of defendant Sheldon, and that there was a secret agreement between them. There was an intervening petition filed by William M. Januey, in which it was stated that he had a judgment against defendant Sheldon for $2500 which was obtained on February 25, 1924, in the Circuit Court of Jackson County.

The chancellor, after duly considering the case, dismissed plaintiff's bill; and plaintiff, after complying with the usual formalities, has appealed.

There is no dispute about the facts. Defendant Sheldon did not testify; and the other defendants offered no evidence but stood on the case made by the plaintiff. The evidence shows that the plaintiff instituted a suit by attachment against defendant Sheldon, founded on the $1200 note, said suit being filed on March 31, 1925. On April 2, 1925, summons was served on defendant Sheldon and on April 10, 1925, the real estate here in controversy was attached by the sheriff. Judgment by default was later rendered in favor of the plaintiff in this suit, for $1356, which judgment has not been paid.

Title to certain real estate, for convenience called the Virginia Avenue property, was shown to be in Millie Fry, the mother of defendant Sheldon, although the property had been purchased by said defendant. The title was taken in the name of his mother because of debts owed by him, he acting as attorney in fact for his mother in the conveyance of this and other property. The deed dated April 1, 1925, executed by Georgia A. Moore and husband to defendant Bowman, conveying the Sedgwick Place property in consideration of one dollar and other goods and valuable considerations, was offered in evidence. This conveyance stated that it was subject to a deed of trust given to secure a note for $4000, and the deed was acknowledged April 3, 1925. The deed from Millie Fry to Georgia A. Moore was also offered; it was signed by defendant Sheldon as attorney in fact for Millie Fry and acknowledged before the same notary public on the same date as the deed above mentioned. The consideration was one dollar and other considerations.

Defendant Sheldon was in the real estate business, and defendant Bowman was a plumbing and heating contractor, also engaged to some extent in the real estate business. Bowman did work on various houses for Sheldon, the titles to which were in other parties, and when a settlement was had between them, it was ascertained that Sheldon owed Bowman $2650, for which a note was given in December, 1924, Bowman waiving his lien rights by the acceptance of such note. This note was secured by a collateral note for $4000 which was secured by a second mortgage on the Virginia Avenue property. About April 1, 1925, defendant Sheldon suggested to defendant Bowman that he would like to transfer the indebtedness from the Virginia Avenue property to the Sedgwick Place property, which, after some discussion, was agreed to: Mr. Vardaman, of the Missouri Abstract Company,...