National Refining Co. v. Continental Development Corp.

• Decision Date: 04 September 1945
• Docket Number: 39476
• Citation: 189 S.W.2d 551,354 Mo. 402
• Parties: National Refining Company, Appellant, v. Continental Development Corporation and Charlotte Zuckerman
• Court: Missouri Supreme Court

189 S.W.2d 551

354 Mo. 402

National Refining Company, Appellant, v. Continental Development Corporation and Charlotte Zuckerman

No. 39476

Supreme Court of Missouri

September 4, 1945

Motion for Rehearing or to Transfer to Banc Overruled October 1 1945.

Appeal from Circuit Court of City of St. Louis; Hon. William L Mason, Judge.

Affirmed.

Kenneth Teasdale for appellant.

(1) A foreclosure sale shall be deemed to have commenced, within the meaning of the law, upon the first publication of notice of the sale. Sec. 3484, R.S. 1939. (2) The court erred in not recognizing and attaching significance to the fact that the conveyance from respondent Zuckerman to respondent Continental, was made in law after the foreclosure sale which rendered the debt of Zuckerman definite and liquidated. Nat. Ref. Co. v. Zuckerman, 183 S.W.2d 390. (3) A conveyance in fraud of creditors is void. Sec. 3507, R.S. 1939. (4) A conveyance by one indebted, or about to become so, without consideration, is fraudulent and void. Hence, Continental took nothing; the title, in law, is still in Zuckerman and answerable for the judgment against her. Conrad v. Diehl, 344 Mo. 811, 129 S.W.2d 870; Cole v. Cole, 231 Mo. 236, 132 S.W. 734; Madden v. Fitzsimmons, 150 S.W.2d 761; Headley Grocer Co. v. Walker, 69 Mo.App. 553. (5) And this is true, irrespective of the motives of the grantor. Seger v. Thomas, 107 Mo. 635, 18 S.W. 33. (6) If a conveyance is voluntary, the burden rests on the party seeking to sustain it to establish circumstances to repel the presumption of a fraudulent intent. Godchaux Sugars, Inc., v. Quinn, 95 S.W.2d 82; McCluer v. White, 338 Mo. 1017, 93 S.W.2d 696. (7) Withholding from record the deeds back from Zuckerman to the real owners, to give the appearance of ownership in her, is fraudulent. Gentry v. Field, 143 Mo. 399, 45 S.W. 286; First Natl. Bank v. Rohrer, 138 Mo. 369, 39 S.W. 1047; State Sav. Bank v. Buck, 123 Mo. 141, 27 S.W. 341. (8) A petition alleging that plaintiff was an existing creditor and that defendant, debtor, made a voluntary conveyance, sufficiently charges fraud, in view of the presumption thereof, without alleging facts constituting fraud. Godchaux Sugars, Inc., v. Quinn, 95 S.W.2d 82. (9) No resulting trust arises in favor of "real owners," when the transactions upon which the supposed trust is bottomed appear to have had their origin in any fraudulent purpose. Keiner v. Williams, 307 Mo. 631, 271 S.W. 489. (10) An innocent purchaser for value takes title free from secret unrecorded trust (straw man). Gill on Missouri Titles, sec. 403. (11) Estoppel by deed is a bar which precludes a party to a deed, and his privies, from asserting against the other and his privies, any right or title in derogation of the deed, or from denying the truth of any material fact asserted in it. One giving a deed, or causing it to be given, may not deny to the deed its full operation and effect as a conveyance. Coates & Hopkins Rlty. Co. v. K.C. Term. Ry. Co., 328 Mo. 1118, 43 S.W.2d 817; 21 C.J., pp. 1067, 1109. (12) The recording acts protect a creditor of a straw party holding title to land. A reconveyance even to the real owner would be fraudulent and voidable, if the straw is insolvent. A conveyance to anyone else which is fraudulent, a fortiori, cannot defeat a creditor of the straw. 25 W. U. Quarterly 232, 252. (13) The recording act was designed to have the record of land titles carry absolute verity upon its face. Harrison v. Moore, 199 S.W. 188. (14) Knowledge of an agent is not imputed to his principal when the agent acts for himself; in circumstances where it is unreasonable to assume the agent would communicate the knowledge to his principal; where the third person acts in collusion with the agent against the interests of the principal. Smith v. Boyd, 162 Mo. 146, 62 S.W. 439; Traber v. Hicks, 131 Mo. 180, 32 S.W. 1145; 2 C.J., pp. 868, 871. (15) A third party, at the time ignorant of the existence of such, may elect to hold the undisclosed principal, when he is discovered. This is true regardless of representations, reliance on specific property, estoppel, knowledge of agent, etc. Hartwig-Dischinger Realty Co. v. Commission, 350 Mo. 690, 168 S.W.2d 78; 2 C.J. 840.

Ben L. Shifrin and Taylor, Mayer, Shifrin & Willer for respondents.

(1) The use of a straw party for holding title to real estate in order to avoid personal liability is recognized and permissible under the Missouri law. Mesker v. Harper, 221 S.W. 407; Yeoman v. Nachman, 198 S.W. 180; Sporing v. Dittmeier, 213 S.W. 176; Benton v. Alcazar Hotel, 180 S.W.2d 33. (2) A real owner is not liable for deficiency where property is purchased in straw party's name and note executed by straw party with knowledge. Sporing v. Dittmeier, 213 S.W. 176; Fuchs v. Leahy, 9 S.W.2d 897. (3) Fraudulent conveyance only applies to fraudulent transfers and has no application to a conveyance made solely for transferring property to the rightful owner. DeBerry v. Wheeler, 128 Mo. 84; Alkire Grocer Co. v. Ballenger, 137 Mo. 369; Chicago & Alton Bridge Co. v. Anglo-American Packing & Provision Co., 46 F. 584. (4) A trust estate is not subject to sale under an execution issued against a Trustee, he (the Trustee) having no beneficial interest in such trust. Sorrell v. Bradshaw, 222 S.W. 1024; Anderson v. Biddle, 10 Mo. 23; Matador Land & Cattle Co. v. Cooper, 87 S.W. 235; Morrison v. Herrington, 120 Mo. 665. (5) A conveyance by a debtor of property in which his creditors have and can have no interest or concern is not fraudulent as to such creditors. Matador Land & Cattle Co. v. Cooper, 87 S.W. 235; McClelland v. Bernard, 81 S.W. 591. (6) There can be no estoppel in this case because there was no showing of reliance by the appellant on other property being in the name of Charlotte Zuckerman. DeBerry v. Wheeler, 128 Mo. 84. (7) Nor can there be any estoppel in this case because there was no concealment or misrepresentation of any material facts. Blodgett v. Perry, 97 Mo. 263. (8) In this case, agent Thornhill had complete authority to represent his principal; and knowledge of any material facts which the agent receives notice of while acting in the course of his employment, or within the scope of his authority, is the knowledge of the principal. Fuchs v. Leahy, 9 S.W.2d 879; Barth v. Hasse, 139 S.W.2d 1058; Smith v. Farrell, 66 Mo.App. 8; Beaudry v. United States, 106 F.2d 987. (9) In this case, the court made a specific finding of fact in the form of a memorandum accompanying its finding, judgment and decree, and it is well settled that this court will defer to the findings of the trial court unless the trial court has manifestly disregarded the evidence; and, where the evidence is conflicting, it is a well settled rule that the findings of the chancellor will not be disturbed. Keener v. Williams, 271 S.W. 489; Taylor v. Cayce, 97 Mo. 242; Snell v. Harrison, 83 Mo. 651.

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

OPINION

BARRETT

By this action the National Refining Company seeks to set aside a conveyance of real estate from Charlotte Zuckerman to Continental Development Corporation and to subject the property to the payment of a deficiency judgment against Miss Zuckerman. The theory of the action is that the conveyance was in fraud of creditors. Mo. R.S.A., Sec. 3507.

The National Refining Company, desiring to sell its filling station at Southwest and Sulphur Streets in St. Louis, placed it in the hands of a real estate agent, Edward M. Thornhill. Mr. Thornhill had previously represented the company in its real estate transactions. Originally the sale of this property was to have been for cash. Accordingly, after some negotiations with Mr. Glick of the Glick Real Estate Company, an earnest money contract for the sale of the property was entered into for $ 9000.00 cash. The contract of purchase was executed in the name of Charlotte Zuckerman and $ 300.00 earnest money was paid to Mr. Thornhill by the Glick Real Estate Company. The agreement for a cash sale of the property was not carried out. After Mr. Glick had determined to forfeit the $ 300.00 earnest money there were further negotiations with a view to selling the property on some other basis. Finally it was suggested that the property might be sold on the basis of a cash payment of $ 1000.00 with a note and deed of trust for the balance of the purchase price in the sum of $ 8000.00. Mr. Thornhill said that he would submit such a sale to the refining company's Kansas City office. Mr. Glick says that Thornhill suggested that he was already out $ 300.00 and that he might as well gamble another $ 700.00. In any event, a note and deed of trust were prepared and submitted to the company and after some charges in the terms of the deed of trust, suggested by the refining company, the transaction was consummated on that basis.

The Glick Real Estate Company paid Mr. Thornhill an additional $ 700.00 and on April 23, 1941 the National Refining Company executed a warranty deed to the property to Charlotte Zuckerman. She in turn gave the National Refining Company a note for $ 8000.00 secured by a deed of trust on the property. The note was for one year. One installment of $ 162.90 was paid by the Glick Real Estate Company directly to the National Refining Company's office in Kansas City. No other or further payments were made and on March 24, 1943 the deed of trust was foreclosed and the filling station was purchased at the foreclosure sale by the National Refining Company for $ 6000.00. In February 1944 a deficiency judgment was entered in favor of the refining company against Miss Zuckerman. National Refining Co. v. Zuckerman (Mo. App.), 183 S.W.2d 390.

Miss Zuckerman is a stenographer in the Glick Real Estate Company's office. Admittedly, in this...