Potter v. Stevens

• Decision Date: 31 March 1867
• Citation: 40 Mo. 229
• Parties: JOHN C. POTTER, Respondent, v. ANDREW J. L. STEVENS, Appellant.
• Court: Missouri Supreme Court

40 Mo. 229

JOHN C. POTTER, Respondent,

v.ANDREW J. L. STEVENS, Appellant.

Supreme Court of Missouri.

March Term, 1867.

Appeal from St. Louis Circuit Court.

Cline & Jamison, for appellant.

I. Though the deed in controversy from McDowell to Stevens may have been fraudulent in fact as to both those parties, yet if these note holders stand in the position of subsequent purchasers in good faith without any notice that such original conveyance was fraudulent, they take a good title to the extent of their interest to the property, and are unaffected by the nature of the original deed as regards both the grantor and grantee--R. C. 1855, p. 803, § 3.

There is no intimation in the case that these note holders had any knowledge or notice that the conveyance from McDowell to Stevens was fraudulent, or that they knew that the deed of trust from Stevens to McDowell to secure payment of the notes was fraudulent; so that, if they are to be regarded as purchasers in the sense of the statute and of the above cases, they are also innocent purchasers.

II. The transfer of the notes to the present holders made them such purchasers.--Anderson v. Baumgartner, 27 Mo. 80; Thayer v. Campbell, 9 Mo. 277; Keyes v. Wood, 21 Vt. 331; 1 Hill. Mortg., ch. 11, § 11.

The fact that some of these holders took their notes as collateral security for antecedent debts does not affect their rights; they are, having taken the same before maturity and without any notice of any infirmities attached to them, under the decisions of this State and of almost every State in the Union, regarded as good faith holders for value--Grant v. Kidwell, 30 Mo. 455; Swift v. Tyson, 16 Pet. 19, 20, 22; Blanchard v. Stevens, 3 Cush. 168; 26 Vt. 568; 1 Zab. (N. J.) 667; 11 Ohio, 191-2; 1 Smith (Ind.) 89; 8 Cal. 266; Sto. on Bills, § 192.

The case then stands as though this property had been carved up into five different mortgages for the benefit of the creditors, being the five note holders in question, four of whom still remain unpaid; that is, as to them the mortgage is still outstanding. And it can make no difference whether these note holders be regarded as deriving their title as mortgagees immediately from Stevens, or from Stevens through the intervention of McDowell as payee and endorser of the notes. A party can as well take a good title from a fraudulent grantor as from a fraudulent grantee, provided he be himself an innocent purchaser for value--Wheaton v. Sexton, 4 Whea. 507; Pope v. Andrews, 1 Sm. & M. 135; Storer v. Hemington, 7 Ala.

And it is well settled that a mortgagee is a purchaser to the extent of his interest in the premises within the meaning of the term “purchaser” as used in the statute of fraudulent conveyances--Ledyard v. Butler, 9 Pai. Ch. 137, and numerous cases there cited.

III. These note holders should have been made parties to this suit before the court could proceed to set aside the deed in controversy.--Sto. Eq. Pl. § 75.

And in numerous cases it is declared to be incumbent on the court when a decree will have the effect of depriving third parties of their legal rights, to notice the fact at the hearing and cause them to be brought in, and that the court ought to order the cause to stand over to make the plaintiff bring such necessary parties before the court; and that it is an error that will be fatal, though the objection may not have been made at any time before the hearing in the appellate court.--Shaver v. Brainard, 29 Barb. 25; O'Brien v. Heeney, 2 Edw. Ch. 242; Morse v. Water-power Co., 42 Me. 119; Felch v. Hooper, 20 Me. 159; Clark v. Long, 4 Rand. 451; Woodward v. Wood, 19 Ala. 213; Prentice v. Kimball, 19 Ills. 320.

Knox & Smith, for respondent.

FAGG, Judge, delivered the opinion of the court.

This was a proceeding instituted in the St. Louis Circuit Court for the purpose of declaring null and void a deed to certain property in the City of St. Louis, familiarly known in this case as “the St. Ange property.” The deed was executed on the 31st of March, 1858, by John McDowell and wife, conveying said property to the appellant Stevens for the consideration of $25,000, and for which five several notes were executed at the time and delivered. The notes were due and payable respectively in one, two, three, four and five years. The plaintiff Potter asked to have this conveyance declared null and void, and for a decree divesting the title to the premises in question out of said Stevens and vesting the same in him.

The firm of Potter, Nute, White & Bagly, of which this plaintiff was a member, instituted a suit by attachment against the said McDowell on the 7th day of April, 1858, upon the ground that this conveyance had been fraudulently made so far as to hinder and delay his creditors. That case was before this court by appeal, and may be found reported in 31 Mo. 62. The court at that time virtually disposed of all the questions growing out of this transfer to Stevens, and the judgment was reversed and the cause remanded. The plaintiffs prosecuted their suit to final judgment, and at the sheriff's sale under execution in their favor this plaintiff became the purchaser of the property in question.

At the trial below, it was shown that the five notes before mentioned had been transferred before maturity to different parties; that one of them was assigned by McDowell to one Andrew Christy in the month of April, 1858, and had since been paid off and discharged by Stevens; the remaining four notes had been placed in the hands of other parties by the assignment of McDowell, to be held as collateral security for amounts alleged to be due and owing to them by him. One of these notes, payable four years after date, was held by the administrator of the estate of W. H. Dorsett, deceased, but the time of its assignment is not shown; another, payable two years after date, was held by Richard H. Stevens, brother of the appellant in this case, and is said to have been transferred in 1858, but the precise time is not shown; the others, payable in three and five years, were transferred in the months of February and March, respectively, in the year 1861, nearly three years after the commencement of the attachment suit.

The determination of all the questions in this case as between Potter and Stevens in the court below, we consider fully warranted by the opinion of this court in the case of Potter et al. v. McDowell, 31 Mo. 62, and the evidence introduced on the trial. The books furnish no clearer case of fraud in the conveyance of property than the one at bar, and we may now as well as at any other point dispose of...