National Bank of Commerce v. Brunswick Tobacco W. Co.

• Decision Date: 30 March 1900
• Citation: 56 S.W. 283,155 Mo. 602
• Parties: NATIONAL BANK OF COMMERCE OF KANSAS CITY v. BRUNSWICK TOBACCO WORKS CO. et al.
• Court: Missouri Supreme Court

56 S.W. 283

155 Mo. 602

NATIONAL BANK OF COMMERCE OF KANSAS CITY v. BRUNSWICK TOBACCO WORKS CO. et al.

Supreme Court of Missouri, Division No. 1.

March 30, 1900.

FRAUDULENT CONVEYANCES—SUIT TO VACATE —INSTRUCTIONS.

1. Where it is sought to set aside a chattel mortgage as in fraud of creditors, it is error to instruct that the mortgage could not be found invalid from facts and circumstances brought to the knowledge of the mortgagee which would have put a prudent man on an inquiry which would have shown the fraudulent intent of the mortgagor, as the effect to be given such facts was for the jury.

2. Where it is sought to set aside a chattel mortgage as in fraud of creditors, an erroneous instruction that the facts and circumstances giving the mortgagee knowledge which would have placed a prudent man on inquiry which would have shown the fraudulent purpose of the mortgagor were not sufficient to make the mortgage invalid is not cured by another instruction that the mortgage would be invalid if the mortgagee knew or had information of the fraudulent purpose of the mortgagor, as the latter instruction required actual knowledge.

Appeal from circuit court, Jackson county; James H. Slover, Judge.

Action in attachment by the National Bank of Commerce of Kansas City against the Brunswick Tobacco Works Company, in which R. S. Hickman interpleaded, and claimed the property attached. From an order granting plaintiff a new trial after verdict in favor of interpleader, he appeals. Affirmed.

Appeal by Hickman, interpleader, from an order granting plaintiff a new trial. For the purposes of this case, we adopt the statement of the appellant, which is as follows: "The defendant, the Brunswick Tobacco Works Company, was a corporation engaged in the business of manufacturing tobacco at Kansas City, Mo. It had become indebted to the plaintiff, the National Bank of Commerce of Kansas City, in the sum of $10,000, of which amount $1,500 fell due on December 30, 1895. The defendant had been endeavoring for some days or weeks to make a loan of between $4,000 and $5,000, and had spoken to Mr. C. F. Rieger, a loan broker, whose place of business was next door to the defendant. Mr. Rieger, in casting about for some one who could make the loan, bethought himself of Mr. R. S. Hickman, the interpleader, who was a jeweler and pawnbroker, and a partner of the firm of Eyssell & Hickman, located on Union avenue, in Kansas City. Mr. Rieger and Mr. Hickman had known each other for a long time, and were on friendly terms, and Mr. Rieger knew that Mr. Hickman had money to loan, and also that he was desirous of making such a loan as would give employment to his brother, Garland Hickman. Mr. Rieger broached the subject to Mr. Hickman, on December 29, 1895, he having previously ascertained from Mr. Kennedy, president of the defendant company, that they would be willing to make the loan, and, as a condition, to furnish employment to one man, who should be in charge while the mortgage was in force, and who should have a position after the mortgage had been discharged. The matter, on December 29th, was discussed in a general way; Mr. Hickman reaching the conclusion that, if the security was ample, he thought favorably of making the loan. On the morning of December 30th, Mr. Rieger and Mr. Hickman together went to the office of the Brunswick Tobacco Works Company, and looked over the stock of tobacco and fixtures, taking a list of it, and, after some further conversation, it was decided that Mr. Hickman would make the loan of $4,700 at 8 per cent., with the understanding that Mr. Hickman's brother, Garland, would be put in possession to represent him during the life of the mortgage, and that afterwards he should be given employment. Mr. Hickman then went to consult Mr. Day, an attorney, and gave the latter a general outline of what kind of a mortgage he wanted drawn up. Mr. Day took the information from Mr. Hickman, and worked out a form of mortgage which he thought would answer the purpose. Later on, during the same day, and about noon, Mr. Day having examined the records to see that there were no liens on the stock, the parties all repaired to the office of the defendant, where Mr. Day, in behalf of Mr. Hickman, examined the minute book of the corporation, and, not feeling entirely satisfied with the authority conferred upon the management for the execution of the mortgage, prepared, in the first place, a waiver of notice of a meeting of the directors of the company. There were but three stockholders of the company, Mr. Kennedy, Sr., the young Mr. Kennedy, and Mrs. Kennedy. These three were also the directors. The waiver was duly signed by all of the three, providing for a meeting of the directors that day at 1 o'clock. Accordingly, at 1 o'clock, the directors' meeting was held, the mortgage was duly authorized by resolution of the board, and the mortgage and notes duly executed, and the former was properly acknowledged and filed in the recorder's office during the afternoon of the same day. Upon the execution and delivery of the notes and mortgage, Mr. Hickman paid over to Mr. Kennedy, for the defendant company, the sum of $4,700 in cash; $700 of that he drew out of the Union National Bank, from money which he had to his credit, and the remainder, $4,000 in cash, he took from his safe in his store on Union avenue. After the delivery of the papers and the payment of the money, the possession of the property, including the key to the safe and the key to the store, was duly delivered to Mr. Hickman, and Mr. Day prepared the usual notice, stating that all property was in the hands of the mortgagee, Mr. Hickman, and posted the notice, or rather several notices, upon the...