Reyburn v. Mitchell
| Decision Date | 02 June 1891 |
| Citation | 16 S.W. 592,106 Mo. 365 |
| Parties | Reyburn, Administrator, v. Mitchell et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. L. B. Valliant Judge.
Reversed and remanded.
D. P Dyer for appellants.
(1) The mortgages to Mr. Kilgour and Mrs. Mitchell were valid by reason of Mr. Robertson's acquiescence. Sexton v Anderson, 95 Mo. 373; State ex rel. v. Brockman, 39 Mo.App. 136, 137; Huiskamp v. Wagon Co., 121 U.S. 310; Purple v. Farrington, 119 Ind. 164; Pepper v. Peck, 20 A. 16; Coakley v. Weil, 47 Md. 277; Bank v. Klein, 64 Miss. 141; Sickman v. Abernathy, 23 P. 447; Carver v. Bannon, 85 Tenn. 712; Woodmansie v. Holcomb, 34 Kan. 35. Express acquiescence is established by the evidence. The acquiescence implied from a mere failure to object after knowledge of the mortgage (which was obtained by Mr. Robertson in May, 1883) would have sufficed. Davis v. Atkinson, 124 Ill. 474. And in the case at bar the partnership is not alleged nor shown to have been insolvent at the date of the execution of these mortgages. (2) This is especially so as to Mr. Kilgour's interest, since his equities are at least equal to those of the partnership creditors. Reeves v. Ayers, 38 Ill. 421; Siegel v. Chidsey, 28 Pa. St. 286, 287; Rose v. Shoe Co., 18 Weekly Notes of Cases (Pa.) 565, 568; Marks v. Hill, 15 Gratt. 400. (3) The suit at bar does not lie, because the claimants are subsequent creditors. Farwell v. Metcalf, 63 N.H. 276; Haber v. Harshaw, 49 Wis. 379; Bank v. Overall, 16 Mo.App. 510; Payne v. Stanton, 59 Mo. 158; Hurley v. Taylor, 78 Mo. 238. Indeed, the claims sued on occurred after the mortgages were recorded, and after the holders of them had notice of them, which debars complaint on their part. Bump on Fraudulent Conveyances [3 Ed.] p. 471. (4) The transfer of Mr. Robertson's interest to Mr. Mitchell had the effect of rendering these mortgages valid, even if they would otherwise not have been so. Fargo v. Ames, 45 Ia. 491; Jones v. Fletcher, 42 Ark. 422. Especially in view of the covenants in the mortgages. 2 Herman on Estoppel, secs. 668, 670. (5) The conveyance from Mr. Mitchell to Mr. Kilgour, in 1884, being made with the acquiescence of Mr. Robertson was valid. See authorities under point 1. Indeed, on the transfer from Mr. Robertson to Mr. Mitchell, in 1884, the property became the individual estate of Mr. Mitchell, and he had the right to apply it to his individual indebtedness without Robertson's consent, especially since no fraud is either proven or even alleged as to that transfer. Ex parte Williams, 11 Vesey, 3; Hapsgood v. Cornwell, 48 Ill. 64; Goembel v. Arnett, 100 Ill. 34; Hanford v. Prouty, 24 N.E. 568; Armstrong v. Fahnestock, 19 Md. 58; Giddings v. Palmer, 107 Mass. 269; Allen v. Centre Valley Co., 21 Conn. 130; Fulton v. Hughes, 63 Miss. 61; Poole v. Seney, 66 Iowa 506; Trentman v. Swartzell, 85 Ind. 443; Hart v. Blum, 13 S.W. 181; 1 Jones on Liens, sec. 791, et seq.; Lindley on Partnership [2 Am. Ed.] Ewell's notes, star p. 334, bot. p. 777, et seq. (6) Even if the quitclaim were invalid as security for the transfer of Mr. Robertson's interest, it would be valid to secure the claims of Mr. Kilgour against the partnership. Clements v. Moore, 6 Wall. 299; Wait on Fraud. Conv., sec. 193, p. 275; Bump on Fraud. Com. [3 Ed.] pp. 616, 617. (7) But even otherwise, the plaintiff acquiesced in and waived all right to object to the trustee's sale, in December, 1885, and, therefore, is restricted solely to whatever claim he has to the proceeds thereof, and has no right of action, if he had no right to any of those proceeds. Boubede v. Ayers, 29 La. Ann. 274; Bump on Fraud. Conv., pp. 464, 467; Herman on Estoppel, p. 1199; also secs. 1140, 1143 and 1144. (8) And this is so, for the further reason that there was no obligation, on the part of Mr. Kilgour, to pay the interest. (9) The present plaintiff, to-wit, Mr. Colville's administrator, has no right to prosecute this suit, since Mr. Colville had no interest whatsoever in any of the claims against the partnership for which alone there could be any recovery in any event. R. S. 1879, sec. 3363; Titterington v. Hooker, 58 Mo. 593; Cape Girardeau v. Harbison, 58 Mo. 94, 95; Reynolds v. Qualey, 18 Kan. 361. (10) There cannot be a recovery as to any of the claims which have not been reduced to judgment. Case v. Beauregard, 99 U.S. 119; Young v. Frier, 9 N.J.Eq. (1 Stockt.) pp. 466, 467; Mittnight v. Smith, 17 N.J.Eq. (2 C. E. Green) p. 262; Robb v. Stevens, Clark's Ch. (N. Y.) 191; Greenwood v. Broadhead, 8 Barb., pp. 595, 597. There cannot be any recovery as to the claims of Mr. Adkins, who accepted Mr. Mitchell's note, with knowledge of the fact that Mr. Mitchell had assumed the partnership liabilities, and that the property had been conveyed to Mr. Kilgour. This indebtedness thereby ceased to be a partnership liability, and became the individual indebtedness of Mr. Mitchell. Stone v. Chamberlain, 20 Ga. 259; Maier v. Canavan, 8 Daly, 272; Millard v. Thorn, 56 N.Y. 402; Colgrove v. Tallman, 87 N.Y. 95; Smith v. Shelton, 35 Mich. 42; Sefton v. Hargett, 113 Ind. 595, 596; Gates v. Hughes, 44 Wis. 338; Johnson v. Young, 2 W.Va. 614; Bell v. Hall, 5 N.J.Eq. 447; Brandt on Suretyship, sec. 23.
Valle Reyburn and Joseph S. Laurie for respondent.
(1) The evidence shows that Kilgour's acquisition of title was in fraud of the rights of the partnership creditors, and that said property continued liable for the payment of their debts. Shackelford v. Clark, 78 Mo. 49; Hilliker v. Franciscus, 65 Mo. 598; Chouteau v. Priest, 85 Mo. 398; Phelps v. McNeely, 66 Mo. 554; Sexton v. Anderson, 95 Mo. 373; Bank v. Brenneisen, 97 Mo. 145; Hundley v. Farris, 103 Mo. 78; Bulger v. Rosa, 119 N.Y. 459; Stanton v. Westover, 101 N.Y. 265; Arnold v. Hagermann, 45 N.J.Eq. 186; Darby v. Gilligan, 33 W.Va. 246; Scott v. Caldwell, 54 N.H. 414; Roop v. Herron, 15 Neb. 73; Davis v. Burchard, 53 Wis. 492; Flack v. Charron, 29 Md. 311. (2) Colville, and after him his administrator, was entitled to maintain this suit. Hook v. Dyer, 47 Mo. 214; Mauldon v. Armistead, 14 Ala. 702; Emerson v. Bleakley, 5 Abb. Prac. (N. S.) 350; Keller v. West, 39 Hun, 348; Wetmore v. Hegeman, 88 N.Y. 69. (3) When a court of equity once acquires jurisdiction of a cause it will avoid a multiplicity of suits by doing complete justice between the parties. Sav. Inst. v. Collonius, 63 Mo. 920; Bank v. Harris, 84 N.C. 206; Clapp v. Dittman, 21 F. 15; Const. Co. v. K. C., etc., Co., 45 F. 7. Nor is it necessary that in all cases the creditor's demand shall be first put in judgment. Humphreys v. Milling Co, 98 Mo. 542. Adkins not only never released the firm, but there was an express agreement to the contrary, and further there was no consideration to support or sustain the alleged release. Leabo v. Goode, 67 Mo. 126; Appleton v. Kennon, 19 Mo. 637; Bates on Part., secs. 524, 538.
This is a suit by plaintiff, as administrator of the trustee of certain creditors of a dissolved partnership, composed of Mitchell and Robertson, to subject to the payment of their debts certain property, formerly held by the partnership, but which had been transferred to defendant Kilgour, an individual creditor of Mitchell, for the satisfaction or security of his debts.
About the first of September, 1881, Mitchell and Robertson entered into a partnership. At the time Mitchell owned a thirty years' lease upon a lot in the city of St. Louis upon which the People's Theater was situated. The lease was in the name of Mitchell, and the theater had been built for him during the year, under the direction and supervision of Robertson, who had advanced a part of the money therefor. On the fifteenth of September, 1881, in settlement for the money advanced, Mitchell conveyed to Robinson an undivided one-third of this property, the express consideration being $ 35,000. This leasehold and buildings constituted all the property of the firm. Previous to the formation of this partnership, defendant Kilgour had loaned to Mitchell, at different times, sums which then aggregated $ 25,000, about $ 23,000 of which had also been used in the construction of the theater.
On the twenty-third of September, 1881, Mitchell made to Kilgour a mortgage on all his "right, title and interest" in said property, to secure the $ 25,000 indebtedness due to him. This deed was not recorded until May, 1883, and Robertson had no notice of it until then.
On the eighteenth of October, 1882, Mitchell and Robertson made a deed of trust to Wolf and Capin to secure a partnership debt for $ 35,000 for money borrowed from defendant Rea. This deed was at once recorded.
April 28, 1883, Mitchell made to his mother, Rebecca Mitchell, a mortgage on his "right, title and interest" in the property, to secure a note for an individual indebtedness to her for $ 10,000. This note was subsequently assigned to Kilgour.
During the partnership, the firm borrowed considerable sums of money from the Franklin Bank of Cincinnati, by means of the accommodation indorsement of Kilgour. At the dissolution, this indebtedness remaining unpaid amounted to $ 2,000 to $ 4,000.
In June, 1882, in settlement of partnership balances, Mitchell conveyed to Robinson an additional one-sixth of the property, thus making their interests equal.
The firm having become largely indebted, some of the debts having been reduced to judgments, and being unable to pay on June 17, 1884, Robertson conveyed by quitclaim deed to Mitchell, and on the fifth day of June, 1884, Mitchell conveyed by quitclaim deed to Kilgour; the former of these deeds was recorded July 22, 1884, and the latter the next day.
Under the contract of sale by Robertson to Mitchell, the latter...
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