Riggs v. Price
| Decision Date | 15 March 1919 |
| Citation | 210 S.W. 420,277 Mo. 333 |
| Parties | ZADOCK T. RIGGS, Trustee in Bankruptcy of Estate of TOM PRICE, Appellant, v. IVA PRICE, Appellant |
| Court | Missouri Supreme Court |
Appeal from DeKalb Circuit Court. -- Hon. Alonzo D. Burnes, Judge.
Reversed and remanded (with directions).
Hewitt & Hewitt for appellant.
(1) The transfer of the homestead in question was not made within four months prior to the filing of the petition in bankruptcy. The trustee was never vested with the title of the bankrupt to said property. The bankruptcy court did not have any jurisdiction to try and determine this cause, and the State court acquired none. Coleman v. Hagey, 252 Mo. 102; Coleman v. Dana, 191 Mo.App. 370; Mayhugh v. Todison, 246 Mo. 288; Blake v Meadows, 225 Mo. 46. (2) There was no such creditor as contemplated in law, in existence, if bankruptcy had not intervened, who could have complained, or sustained a creditors' bill to set aside the deed in question. Secs 70a and 70e, Bankruptcy Act; Crim v. Walker, 79 Mo 335; Ready v. Smith, 170 Mo. 163; Davidson v. Dockery, 179 Mo. 687; Mayhugh v. Todison, 246 Mo. 288; Blake v. Meadows, 225 Mo. 26; Stam v. Smith, 183 Mo. 464; Scott v. Neely, 140 U.S. 106; Atlas Nat. Bank v. Moran P. Co., 138 Mo. 59; Mellier v. Bartlett, 106 Mo. 381. There can be no creditor unless he has a valid claim or debt against a debtor -- a claim incapable of being rightfully overthrown, 8 Words and Phrases, p. 7269. (3) The admission of testimony by the court at the trial offered by the plaintiff as to the value of the homstead was error; it is not within the province of a court of equity to try and determine the value of a homestead. Courts of equity are bound by the homestead laws. R. S. 1909, secs. 6705-6706; Reed v. Nicholson, 189 Mo. 396. (4) The court erred in admitting in evidence the debts secured by the various chattel mortgages amounting to more than $ 26,500, also the Stafford and Allen Trust Deeds amounting to more than $ 15,000. These being all secured claims were without the law, and without the allegations of plaintiff's bill. There could be no intent to delay or defraud a secured creditor. Coleman v. Hagey, 252 Mo. 132; Woodman on Trustees in Bankruptcy, sec. 358; Fraudulent Conv., 20 Cyc. 455. (5) It was error on the part of the court, in allowing the testimony of the various persons claiming debts against the husband of the defendant, to testify as to such indebtedness, this not being a suit to try and determine the validity of claims against the alleged fraudulent grantor. And this error was magnified later, by the court's refusal to permit Tom Price, the alleged debtor and grantor, to testify in the matter. And who would have denied the validity of many of them, and denied that many others were in existence at the time of the conveyance in question. Crim v. Walker, 79 Mo. 335; Davidson v. Dockery, 179 Mo. 163; Commercial Bank v. Ankrum, 191 Mo.App. 251; Coleman v. Hagey, 252 Mo. 125. (6) To allow alleged creditors to go upon the stand and testify to the bankrupt's indebtedness to them in the loose manner in which they did, and refuse to permit him to testify was error. And to charge one with being insolvent and a defrauder and refuse him permission to deny it on the witness stand and also deny the indebtedness, is yet a more grievous error. He had such a resulting interest in the homestead as the husband of the defendant -- courtesy initiate -- as to entitle him to be heard. It is also against equity and justice. There was absent any conspiracy to defraud. Roberts v. Bartlett, 190 Mo. 704; Steffen v. Bauer, 70 Mo. 399. (7) There can be no fraudulent conveyance of property as to a creditor where he has no right to subject the property to his debts. Stam v. Smith, 183 Mo. 464; Reed v. Nicholson, 189 Mo. 404; Mellier v. Bartlett, 106 Mo. 381. (8) The conveyance of the homestead did not make the debtor insolvent; it constituted no part of his assets that could be reached by his creditors. (9) A voluntary conveyance is not fraudulent per se as to existing creditors; the circumstances of each case must be considered. Lane v. Kingsbury, 11 Mo. 402; Walsh v. Ketchum, 84 Mo. 427; Welch v. Mann, 193 Mo. 325. (10) The fact of solvency is always presumed until insolvency is established; and he who asserts the fact of insolvency has the burden of proving it. 7 Ency. Evidence, p. 482. (11) The relationship of the parties and the insolvency of the grantor are not alone sufficient to establish fraud. Robinson v. Dryden, 118 Mo. 534. (12) To make a voluntary conveyance fraudulent as to subsequent creditors there must be proof of actual or intentional fraud. Payne v. Stanton, 59 Mo. 158; Krenger v. Vehor, 164 Mo. 163 (13) If a debtor in conveying his property does not make himself insolvent, it is immaterial whether he conveys for a valuable consideration or gives it away. It cannot be set aside for debts prior to its execution. Felig v. Bush, 165 Mo. 144; Reed v. Bott, 100 Mo. 62; Burnham v. Boyd, 167 Mo. 189.
Edward G. Robison and Kendall B. Randolph for respondent.
(1) Where a voluntary conveyance is made by one in such pecuniary circumstances that the conveyance itself renders him insolvent the conveyance is presumptively fraudulent, and it is immaterial that no actual fraud is shown or was intended. Where a debtor, who makes a voluntary conveyance is afterwards unable to pay his existing debts at the time of the conveyance, in ordinary course the conveyance will be held void as to such existing debts, and the burden of proof is on the donee to repel the presumption of a fraudulent intent. A voluntary conveyance by a debtor to his wife is as against prior creditors presumptively fraudulent and coverture is no defense in a court of equity for fraud. The solvency essential to protect a voluntary gift consists not only in the present ability of the debtor to pay his debts, but in such a condition of his means that payment can be enforced by process of law. Scharff v. McGaugh, 205 Mo. 364; Snyder v. Free, 114 Mo. 369. It is immaterial that no actual fraud is shown or was intended. White v. McPheeters, 75 Mo. 386; Bohannon v. Combs, 79 Mo. 305. Where a debtor who makes a voluntary conveyance is afterwards unable to pay his existing debts at the time of the conveyance, in ordinary course, the conveyance will be held void as to such existing debts. Headley Grocer Co. v. Walker, 69 Mo.App. 553; Lionberger v. Baker, 114 Mo.App. 353, affirmed 88 Mo. 447; St. George's Church Society v. Branch, 120 Mo. 226. The burden of proof is on the donee to repel the presumption of a fraudulent intent. Walsh v. Ketchum, 84 Mo. 427. A voluntary conveyance by a debtor to his wife, is as against prior creditors, presumptively fraudulent. Hoffman v. Nolte, 127 Mo. 120; Garrett v. Wagner, 125 Mo. 450. The creditors may maintain a suit to set aside a voluntary conveyance to the wife, though he has a lien on other property of the husband. Patton v. Bragg, 113 Mo. 595. To make a voluntary deed void as to existing creditors, it is not necessary that the assignor should have been insolvent at the time of its execution. Potter v. McDowell, 31 Mo. 62; Updegraff v. Theaker, 57 Mo.App. 45. The solvency essential to protect a voluntary gift consists not only in the present ability of the debtor to pay his debts, but in such a condition of his means that payment can be enforced by process of law. State ex rel. v. Koontz, 83 Mo. 332; Hoffman v. Nolte, 127 Mo. 135; Lionberger v. Baker, 88 Mo. 447. (2) Sec. 6704, R. S. 1909, gives a homestead in the country not exceeding one hundred sixty acres of land and not to exceed the total value of $ 1500. Where there is a mortgage on the homestead the value of $ 1500 is taken out of the excess over the mortgage. Reed Bros. v. Nicholson, 189 Mo. 396; Adams v. Adams, 183 Mo. 396; Hauf v. Brown, 171 Mo. 207. The owner of a homestead may sell his homestead or may give it away and the creditors have no concern to the amount of $ 1500 which is exempt. Grimes v. Portman, 99 Mo. 229. The fraudulent grantor, however, can convey only his homestead right and can convey no more, and the fraudulent grantee can acquire only the right to the $ 1500 exemption.
WALKER, J. Blair, J., not sitting; Faris and Williams, JJ., concur in the result and in all except paragraph 6.
In Banc
This appeal seeks a review of a judgment rendered in the Circuit Court of DeKalb County, in a suit brought by plaintiff, as trustee in bankruptcy of the estate of Thomas Price, to set aside as fraudulent deeds to certain land in said county, transferring the title to same to the defendant, the wife of Thomas Price. The trial court adjudged the deeds fraudulent and decreed that the title to the land was in the trustee, subject to a homestead interest of $ 1500, a mortgage for $ 5500 of prior date to said deeds, and a mortgage for $ 1000 made by the defendant subsequent to the transfer of the land to her. Neither party being content with the findings of the trial court, both appealed; the defendant from the entire judgment, and the plaintiff from the finding as to the $ 1000 encumbrance. A single review will suffice to determine all of the matters at issue.
After the formal allegations, proper in a proceeding of this character, concerning which there is no controversy, the petition avers in substance the ownership by Thomas Price on October 8, 1913, of the land, describing it; that the same was encumbered by a mortgage theretofore given by him to secure a debt of $ 5500; that at the time of the making of the deeds, Thomas Price was indebted to various persons, firms and corporations in the sum of $ 44,647, and was insolvent, and had no property with which to pay his debts; that while so insolvent, he and his wife, Ivie Price, with the intent...
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