Peoples Bank of Memphis by Moberly v. Jones

• Citation: 93 S.W.2d 903,338 Mo. 1048
• Decision Date: 23 April 1936
• Docket Number: 33831
• Parties: Peoples Bank of Memphis, By O. H. Moberly, Commissioner of Finance, Appellant, v. H. H. Jones, Ida Jones, A. C. Love, H. A. Kerr, C. C. Fogle, Trustee, and H. O. Jones
• Court: United States State Supreme Court of Missouri

93 S.W.2d 903

338 Mo. 1048

Peoples Bank of Memphis, By O. H. Moberly, Commissioner of Finance, Appellant, v. H. H. Jones, Ida Jones, A. C. Love, H. A. Kerr, C. C. Fogle, Trustee, and H. O. Jones

No. 33831

Supreme Court of Missouri

April 23, 1936

Appeal from Knox Circuit Court; Hon. Harry S. Rouse, Judge.

Affirmed.

Smoot & Smoot for appellant.

(1) The plaintiff bank, by becoming a purchaser under the execution issued on its judgment, lost none of its rights as an existing or judgment creditor and is entitled to all the advantages of such creditor. Dalton v. Barron, 239 S.W. 97, 293 Mo. 36; Bradshaw v. Halpin, 180 Mo 672; Knoop v. Kelsey, 121 Mo. 672; Rhinehart v Long, 95 Mo. 401. (2) The defendant, A. C. Love, at the time of the execution of the deeds of trust by H. H. Jones on April 23, 1931, then had and held ample security to protect and pay his claimed indebtedness, and is not such an unsecured creditor that the defendant, H. H. Jones, might prefer by conveying the lands in controversy to secure payment of such indebtedness. Farmers Bank of Higginsville v. Handly, 9 S.W.2d 893. (3) The defendant A. C. Love, although having a bona fide indebtedness owing him by defendant, H. H. Jones, is not permitted under the laws of Missouri to enter into a scheme with his debtor to hinder and delay other creditors in the collection of their just claims and demands. Farmers Bank of Higginsville v. Handly, 9 S.W.2d 880; McElvain v. McElvain, 20 S.W.2d 912; Bishop v. Bishop, 228 S.W. 1065; Munford v. Sheldon, 9 S.W.2d 910. (4) Defendant H. O. Jones, was not, at the time of the execution of the warranty deed, an existing creditor of his father, H. H. Jones, and had no existing interest to preserve or protect, and having claimed to have purchased the lands for a fresh consideration is not protected in his purported purchase, having knowledge that the purpose of his father in the execution of the warranty deed to him was to remove his surplus property from the reach of his unsecured creditors and delay such creditors in the collection of their demands, and the defendants asserting therein to be the purchaser of said lands, the burden rests on him to prove the bona fide-ness of such purchase. Farmers Bank of Higginsville v. Handly, 9 S.W.2d 894; Gust v. Hoppe, 201 Mo. 293; Conn. Mut. Life Ins. Co. v. Smith, 117 Mo. 261; Weber v. Rothchild, 15 Ore. 385, 3 Am. St. Rep. 162. (5) Under the undisputed evidence in the cause, the note described in the Kerr deed of trust was paid by the defendants, H. H. Jones and H. O. Jones, and the acquiring thereof by defendant, H. O. Jones, the same was merged in the fee. Gerardi v. Christie, 148 Mo.App. 75. (6) The transfer of his property by defendant, H. H. Jones, pending suit; his secrecy and haste in making the transfers; his insolvency or indebtedness; his attempt to give the transfers the appearance of fairness and regularity, and the suspicious circumstances under which the transfers were made; the failure of the parties to produce available explanatory or rebutting evidence are all badges of fraud; and the relationship with other circumstances furnish satisfactory evidence of fraud herein. 27 C. J. 488-494.

Earle E. Fogle for respondents.

The decree herein should be affirmed on account of the failure of the appellant to file such an abstract of the record as required by the rules of this court, promulgated under the statutes. The abstract of the record herein does not properly show the taking of any of the steps set forth above, and the decree herein should be affirmed. Harding v. Bedoll, 202 Mo. 625. A judgment may be affirmed on appeal, although it is infected with error if it is apparent that a reversal would prove ineffectual and of no benefit to the party asking it, as where the court can see that the same result would inevitably be reached a second time. 3 Cyc., pp. 420, 421; 4 C. J., pp. 1134, 1135.

Bradley, C. Ferguson and Hyde, CC., concur.

OPINION

BRADLEY

This is an action commenced August 23, 1933, in the name of the Peoples Bank of Memphis, Missouri, by the Commissioner of Finance, in charge of the bank, to set aside a deed of trust and a warranty deed to 180 acres of land, and to have declared paid and discharged a second deed of trust on said lands. Petition was filed in Scotland County, but the cause went on change of venue to Knox County, where trial before the court resulted in a judgment for defendants. Motion for a new trial was overruled and plaintiff appealed.

The deed of trust and warranty deed sought to be set aside, and the deed of trust sought to be adjudged as paid off and discharged, were executed by defendants, H. H. Jones and wife on April 23, 1931. We do not deem it necessary to refer at length to the pleadings. It is sufficient to say that the petition, as to the deed of trust and warranty deed sought to be set aside, is bottomed on the theory that these conveyances were fraudulent as to creditors. The answer is joint and admits the execution of the instruments in question, but denies that they were executed to defraud creditors; and denies that the second deed of trust was paid off and discharged.

Plaintiff bank, appellant here, makes several separate assignments of error, but they all go to the contention that the finding and judgment for defendants is not supported by the evidence.

Defendants, H. H. Jones and his wife, Ida, grantors in the conveyances in question, were, at the time this cause was filed, judgment debtors to plaintiff in the sum of $ 1580, plus costs, $ 159, which included an attorney's fee; said judgment is based on a note given plaintiff by defendants, H. H. Jones and wife. These defendants, at the time of the conveyances in question, also owed defendant, Love, a note for $ 3000, which note, prior to the transactions involved here, was secured by a first deed of trust on the homestead in Memphis, Missouri, of defendants, H. H. Jones and wife. Defendant, H. O. Jones, is a son of H. H. and Ida, and is the grantee in the warranty deed; defendant, Fogle, is the trustee in both deeds of trust mentioned; defendant, Love, is beneficiary in the first deed of trust, and defendant, Kerr, is beneficiary in the second deed of trust, the one claimed to be paid.

Plaintiff's judgment against defendants, H. H. Jones and wife, was procured May 19, 1931, in the Scotland County Circuit Court, in which county the land is located, and the deeds of trust on and warranty deed to the land were executed on April 23, 1931, and recorded prior to plaintiff's judgment. Defendants, H. H. Jones and wife, were served with process in plaintiff's suit on its note on April 21, 1931, two days prior to the execution of the deeds of trust and warranty deed. Notwithstanding the deeds of trust and the warranty deed, plaintiff under its execution against defendants, H. H. Jones and wife, had the lands levied upon and sold and plaintiff was the purchaser at the sale. The sale was had on May 19, 1932.

We might state here some history which figures in this cause as appears from the record. Defendant, H. H. Jones, was plaintiff in Jones v. Jones et al., 333 Mo. 418, 63 S.W.2d 146, which cause involved the same 180 acres of land as involved here. In that case H. H. Jones, a defendant here, obtained, on December 22, 1930, a decree in the circuit court vesting in him the title to said lands. Appeal was taken in that case February 10, 1931. H. H. Jones, according to plaintiff bank, promised to give to it a deed of trust on these lands, but did not do so. It will be noted that plaintiff commenced its suit on its note against H. H. Jones and wife and that they made the conveyances here in question not long after H. H. Jones obtained his favorable decree in the circuit court in Jones v. Jones, et al. The decree in that case was affirmed in this court on August 9, 1933, and, as stated, plaintiff commenced the present cause August 23, 1933.

The background which gave rise to the deed of trust to defendant Love, is as follows: In 1922, defendant, H. H. Jones, borrowed $ 2000 from Love and secured the note given therefor by first deed of trust on his homestead in Memphis, Missouri. When this note became due, the loan was increased $ 1000, the old note taken up and a new one given for $ 3000, which note for $ 3000 was dated September 10, 1923, and was secured by a first deed of trust on the same property, the homestead. The note for $ 3000 was made payable to Melba Moore, an office girl, but assigned by her to Love, who made the loan. This $ 3000 note was carried along, with payments at intervals, until April 23, 1931. On this date, defendants, H. H. Jones and wife, in order to take up this $ 3000 note, executed two notes to Love, each due in three years. One of these notes was for $ 2000 and the other for $ 1000. To secure the $ 2000 note a first deed of trust (in question here) was given, and to secure the note for $ 1000 a first deed of trust (not in question here) was given on the homestead, and the lien of the $ 3000 deed of trust on the homestead released. The facts concerning the second deed of trust (the Kerr deed of trust) involved here are that H. H. Jones owed one Elmer Israel a note for $ 1000 due one year after date, and dated February 28, 1931, upon which note Kerr was surety for Jones. April 23, 1931, H. H. Jones and wife, to secure Kerr executed their note to Kerr for $ 1000, secured by a second deed of trust on the lands in question. When the Elmer Israel note became due, defendant, H. O. Jones, at his father's request, sent him a check for $ 1000. H. H. Jones, the father, cashed the check and paid to Israel $ 1080, the amount due on the note, furnishing $ 80 himself to cover the interest. Upon receipt of the $ 1080 Israel endorsed the note in blank and without recourse and...