Publicity Bldg. Realty Corp. v. Thomann

• Decision Date: 03 July 1944
• Docket Number: No. 38286.,38286.
• Citation: 183 S.W.2d 69
• Parties: PUBLICITY BUILDING REALTY CORPORATION, a Corporation, for Its Own Account and as Trustee of an Express Trust for NELSON CHESMAN & COMPANY, a Corporation; RICHARD PENDERGAST and LOUIS H. BUDKE, Appellants, v. ROBERT A. THOMANN, Guardian of the Estate and Person of GEORGE C.V. FESLER, a Non Comp.; LEE HESS, Trustee for GEORGE C.V. FESLER; MARION L.J. LAMBERT, Trustee for GEORGE C.V. FESLER; TRAVELERS INSURANCE COMPANY OF HARTFORD, CONNECTICUT, a Connecticut Corporation; CHIPPEWA TRUST COMPANY, a Missouri Corporation; GEORGE C.V. FESLER, ESTELLE L. HESS, JUNE E. HESS, a Minor, by EMERSON BAETZ, Guardian ad litem, and WILLIAM HESS.
• Court: Missouri Supreme Court

183 S.W.2d 69

PUBLICITY BUILDING REALTY CORPORATION, a Corporation, for Its Own Account and as Trustee of an Express Trust for NELSON CHESMAN & COMPANY, a Corporation; RICHARD PENDERGAST and LOUIS H. BUDKE, Appellants, v. ROBERT A. THOMANN, Guardian of the Estate and Person of GEORGE C.V. FESLER, a Non Comp.; LEE HESS, Trustee for GEORGE C.V. FESLER; MARION L.J. LAMBERT, Trustee for GEORGE C.V. FESLER; TRAVELERS INSURANCE COMPANY OF HARTFORD, CONNECTICUT, a Connecticut Corporation; CHIPPEWA TRUST COMPANY, a Missouri Corporation; GEORGE C.V. FESLER, ESTELLE L. HESS, JUNE E. HESS, a Minor, by EMERSON BAETZ, Guardian ad litem, and WILLIAM HESS.

No. 38286.

Supreme Court of Missouri.

Division One, July 3, 1944.

Rehearing Denied and Opinion Modified, October 9, 1944.

Motion to Set Aside Overruled, November 6, 1944.

Appeal from Circuit Court of City of St. Louis. — Hon. William B. Flynn, Judge.

AFFIRMED.

Taylor R. Young, Stephen A. Boggiano, James T. Riley and Alvin Goldman for appellants.

(1) Where debtor has admitted his indebtedness to his creditor, has transferred all of his property to another so as to render himself wholly insolvent, is a fugitive from justice, has absconded, has absented himself and concealed himself so that the ordinary process of law could not be served upon him in this State, and he has transferred and conveyed his property in fraud of his creditors, and has thus made it impossible for his creditor to obtain a judgment at law, a creditor's bill will lie, without the necessity of an action at law for the purpose of first obtaining a judgment on the creditor's claims. Bewes v. Buster, 108 S.W. (2d) 66; Farmers & Traders Bank v. Kendrick, 108 S.W. (2d) 62; State ex rel. Brigance v. Smith, 135 S.W. (2d) 355, 345 Mo. 793; Buckley v. Maupin, 125 S.W. (2d) 820, 344 Mo. 193; General American Life Ins. Co. v. Leavenworth, 149 S.W. (2d) 360, 347 Mo. 876. (2) Where a debtor has entered his appearance in a suit in equity as a plaintiff and has filed an intervening petition in such cause admitting his indebtedness to his creditor (co-plaintiff) under oath, he should not be allowed, after full hearing of said cause by a referee, and after submission of said cause to the referee, and after findings made by the referee, to withdraw his intervening petition, assume a new role as a party defendant, and file a general denial, for the reason that such procedure would substantially change the issues, prejudice the plaintiff-creditors' cause, and compel such plaintiffs after trial to meet issues that plaintiffs had not prepared to meet, would be contrary to all the rules and maxims of equity, and would not do justice between the parties. Clark v. St. Louis Transfer Co., 30 S.W. 121, 127 Mo. 255; Joyce v. Growney, 55 S.W. 466, 154 Mo. 253; Ryans v. Hospes, 67 S.W. 285, 167 Mo. 342; Neville v. D'Oench, 34 S.W. (2d) 491, 327 Mo. 34; Fischman-Harris Realty Co. v. Klene, 82 S.W. (2d) 605. (3) Where a deed and a contract were executed contemporaneously, or as one transaction, the deed and the contract should be read together to ascertain the intent of the parties in the execution of the deed. Carr v. Holbrook, 1 Mo. 240; Smith v. Smith, 233 S.W. 183, 289 Mo. 405; 26 C.J.S., sec. 91, p. 338. (4) Where a deed is executed to secure the payment of a debt or notes, which notes remain in the hands of the holder thereof unpaid, and as a part of the same transaction, the debtor also executes a contract or agreement with his creditor by the terms of which contract or agreement the creditor agrees to re-convey the deeded property upon payment of the notes or debt, the deed is to be construed to be a mortgage, though absolute in form; and whether a deed is intended as an absolute conveyance or a mortgage must be determined from the intention of the parties; and in the case at bar by the written contract, plaintiffs' Exhibit A-174, the deed is a mortgage. Knight v. Firemen's Ins. Co. of Newark, N.J., 49 S.W. (2d) 682, 227 Mo. App. 426; Younger v. Evers, 64 S.W. (2d) 936, 333 Mo. 931; Citizens Bank of Pleasant Hill v. Robinson, 117 S.W. (2d) 263; Phillips v. Jackson, 144 S.W. 112, 240 Mo. 310; Branham v. Peltzer, 177 S.W. 373. (5) The deed to the Duncan Avenue real estate was executed by George C.V. Fesler individually, but the title to that property was held by George C.V. Fesler, Incorporated, and therefore, the deed conveyed no title, and the deed did not extinguish the indebtedness and notes of Fesler, even if the property could be held to have been conveyed in payment of the notes and indebtedness, because there was a complete failure of consideration. 66 C.J., p. 555, sec. 103; Jones v. Shaver, 6 Mo. 642. (6) Where debtor has admitted his indebtedness to his creditor, under oath, on promissory notes, and has executed a deed and contract in the nature of a mortgage, he will not be allowed to deny or avoid the effect of his acts, and in equity, judgment will be entered against him on such notes, for the reason that equity regards that as done which ought to be done. Dinkelman v. Hovekamp, 80 S.W. (2d) 681; Woolery v. Todd, 139 S.W. (2d) 1005. (7) Where a debtor admitted his indebtedness to his creditor plaintiff in an equitable action, and at the same time made claims against defendants in such action, the court was right in permitting the debtor to join with plaintiffs and permitting him to file in such action an intervening petition as a new party plaintiff necessary to a complete determination of the matters in controversy. Zeitinger v. McKittrick, 250 S.W. 913; Monticello Bldg. Corp. v. Monticello Inv. Co., 52 S.W. (2d) 545, 330 Mo. 1128; Davis v. Austin, 156 S.W. (2d) 903. (8) It is well settled that equity has jurisdiction to trace trust funds and charge them against the property into which they can be traced; and where it has been shown that real estate has been purchased with trust funds, and the title to such property placed in the name of a person other than the trustee and the cestui que trust, such third person becomes and is a "constructive trustee," and holds such property subject to a lien in favor of creditors of the cestui que trust and the cestui que trust, in amount equal to the sum of the trust funds traced into the property. Farrell v. Farrell, 91 Mo. App. 665; Liflander v. Bobbitt, 111 S.W. (2d) 72; State ex rel. and to the use of Clay County State Bank v. Walther, 145 S.W. (2d) 152, 346 Mo. 1138; Schneider v. Schneider, 146 S.W. (2d) 584, 347 Mo. 102. (9) Where equity has acquired jurisdiction of a cause, such jurisdiction shall be retained until full and complete justice has been done between the parties, and all matters in controversy adjudicated. Cooper v. Cook, 148 S.W. (2d) 512, 347 Mo. 528; Lortz v. Rose, 145 S.W. (2d) 385, 346 Mo. 1212; Waugh v. Williams, 119 S.W. (2d) 223, 342 Mo. 903; Selle v. Selle, 88 S.W. (2d) 877, 337 Mo. 1234. (10) If, on this appeal, the Supreme Court should hold, as did the referee, that there is no equity in plaintiffs' bill, but that plaintiffs' cause is one at law, the referee having found that plaintiffs are entitled to judgment on Counts I and XII of its petition, and having found that the money and property in the hands of Lee Hess was in fact George Fesler's money and property, and that Lee Hess had not fully accounted to Fesler therefor, the costs should be taxed against defendants, Lee and George C.V. Fesler, because where plaintiff is the prevailing party, the whole costs should be taxed against defendants. Sec. 1406, R.S. 1939; Du Pont v. McLaran, 61 Mo. 502; Huggins v. Hill, 236 S.W. 1054; Oldham v. McKay, 138 S.W. (2d) 735, 235 Mo. App. 348. (11) Should the Supreme Court hold on this appeal, that a creditor's bill will lie, and that plaintiffs should recover on all of the counts of its petition, then all of the costs, including the referee's fees and stenographic fees, should be taxed against defendant, Lee Hess. Sec. 1406, R.S. 1939; Du Pont v. McLaran, 61 Mo. 502; Huggins v. Hill, 236 S.W. 1054; Troost Ave. Cemetery Co. v. Kansas City, 154 S.W. (2d) 90, 348 Mo. 561; Oldham v. McKay, 138 S.W. (2d) 735, 235 Mo. App. 348. (12) Contrary to the finding of the referee in his report, there was ample evidence to show that George C.V. Fesler did intend by his acts and conduct to transfer all of his property for the purpose of hindering, delaying and defrauding his creditors, and therefore, a creditor's bill is the proper remedy. Bewes v. Buster, 108 S.W. (2d) 66; Farmers & Traders Bank v. Kendrick, 108 S.W. (2d) 62; State ex rel. Brigance v. Smith, 135 S.W. (2d) 355, 345 Mo. 793; Buckley v. Maupin, 125 S.W. (2d) 820, 344 Mo. 193; General American Life Ins. Co. v. Leavenworth, 149 S.W. (2d) 360, 347 Mo. 876.

Lee, Fricke & Lee for Lee Hess, Estelle L. Hess, June E. Hess and William Hess, respondents.

(1) Fesler's intervention, under Section 3506, R.S. 1939, on the theory of a trust void as to existing and subsequent creditors, was improper and inconsistent with appellants' theory under Section 3507, R.S. 1939, that defendant Fesler, a co-conspirator, fraudulently conveyed his property to escape his creditors. Monticello Bldg. Corp. v. Monticello Inv. Co., 330 Mo. 1128, 52 S.W. (2d) 545; Muster v. Mallen, 163 S.W. (2d) 578; McCluer v. White, 338 Mo. 1017, 93 S.W. (2d) 696. (2) Ordinary unsecured creditor must reduce claim to judgment before seeking relief in equity, as amount of money indebtedness should be determined by a jury. State ex rel. Brigance v. Smith, 345 Mo. 793, 135 S.W. (2d) 355; Buckley v. Maupin, 344 Mo. 193, 125 S.W. (2d) 820. (3) Admission of liability and offer to pay a debt not legally enforceable, did not create liability where there is no liability, and is not binding on the referee, the chancellor or this court, or the alleged co-conspirator Fesler, nor on defendant Hess answering separately under the statute. Pitcairn v. American Refrigerator Transit Co., 101 F. (2d) 929; Whittington v. Westport Hotel Operating Co., 326 Mo. 1117, ...