Sellers v. Bailey

• Decision Date: 06 February 1888
• Citation: 29 Mo.App. 174
• Parties: WILLIAM SELLERS, Interpleader and Appellant, v. S. P. BAILEY, Plaintiff in Attachment, Respondent.
• Court: Kansas Court of Appeals

29 Mo.App. 174

WILLIAM SELLERS, Interpleader and Appellant, v. S. P. BAILEY, Plaintiff in Attachment, Respondent.

Court of Appeals of Missouri, Kansas City.

February 6, 1888

APPEAL from Atchison Circuit Court, HON. C. A. ANTHONY, Judge.

Affirmed.

The case is stated in the opinion.

A. B DURFEE, L. J. MILES, J. W. STOKES, and H. S. KELLEY, for the appellant.

I. The appellant insists that the court erred in overruling the motion for a new trial. This involves an inquiry into the merits of the causes or grounds upon which a new trial was asked. The verdict is against the evidence and against the law. It is not denied that the cows in controversy were purchased of Weaver by the interpleader. The question is, was the sale made by Weaver with intent to hinder, delay, or defraud his creditors, and if so, was Sellers a particeps in that intent, or did he have notice of it? The affirmative of these propositions is with the attaching creditor, and must be proved by him. We contend that there was no evidence before the jury to establish either of them. It is the settled law that the owner of property, although indebted or insolvent, may sell or dispose of it, and apply the proceeds in such manner as will best subserve his own interests; and his right to sell involves the right of another to purchase, and the only limitation upon these rights is, that the sale or transfer shall be in good faith--shall not be made with intent to hinder, delay or defraud creditors. The law presumes that the transaction was in good faith until the contrary be shown. And it is also, the settled law that if the transfer was in good faith on the part of the seller or grantor, there can be no fraud in the purchase; or if the transfer was for a valuable consideration, the good faith of the grantee or purchaser is the only question to be inquired into. He must participate in, or have notice of, the fraudulent design of the seller in which case the transfer, unless it be in payment of a debt, will be void as to creditors, although he may have paid a full consideration, otherwise it is valid and he will be protected. Bump on Fraud. Conv. 230; Little v. Eddy, 14 Mo. 160; Cason v. Murray, 15 Mo. 378; Johnson v. Sullivan, 23 Mo. 474; Knox v. Hunt, 18 Mo. 174; Byrne v. Becker, 42 Mo. 264; Bigelow v. Stringer, 40 Mo. 195; Allen v. Barry, 40 Mo. 282; Stone v. Spencer, 77 Mo. 386; Bobb v. Woodward, 50 Mo. 95; Dougherty v. Cooper, 77 Mo. 528; Henderson v. Henderson, 55 Mo. 534; Ames v. Gilmore, 59 Mo. 537; Holmes v. Braidwood, 82 Mo. 610; Frederick v. Allgaier, 88 Mo. 598. Gross inadequacy of price may be a badge of fraud, and when coupled with circumstances of secrecy and concealment, might be sufficient to avoid the sale as to creditors. Stern v. Mason, 16 Mo.App. 473. Here there was no inadequacy of price, and no secrecy or concealment. The trade was talked about, the property examined, an offer made which was as liberal as any man who had capital to invest in such property could afford to make, and after two days' deliberation it was accepted by Weaver; the papers were drawn up and executed, and the consideration paid at a public place in open day, witnessed by many--any and all who happened to be about the attorney's office, in the city of Tarkio, on that day. Weaver had a right to prefer his creditors by paying some in the sale of his property and others with the money received upon said sale, to the exclusion of others, even if one of such creditors was his father. Sibley v. Hood, 3 Mo. 290; Cason v. Murray, 15 Mo. 378; Henderson v. Henderson, 55 Mo. 534; Forrester v. Moore, 77 Mo. 651; Shelley v. Boothe, 73 Mo. 74; Crow v. Andrews, 24 Mo.App. 160. And it is no objection to the transfer, when made in payment of a debt, that it operates to hinder and delay other creditors, or that it was the intent of the debtor that it should so operate, and that the creditor receiving it was aware of that intent, provided he received it with the honest purpose of paying or securing his debt; i. e., the question is, did he owe the debt, and was the debt paid or secured; if so, there could be no fraud as against other creditors, and the motive of the parties to the transaction is wholly immaterial, for they did no more than they had a right to do under the law--pay or secure an honest debt. Shelley v. Boothe, 73 Mo. 74; Singer v. Goldenburg, 17 Mo.App. 549; State to use v. Frank, 22 Mo.App. 40; Schroeder v. Mason, 25 Mo.App. 190; State to use v. Mason, 24 Mo.App. 321; Keiler v. Tutt, 31 Mo. 301-7; Young v. Slattings, 5 B. Mon. 508. Although the purchaser may have known that the seller intended to delay or defeat some of his creditors, when the sale was for cash, yet if it can be fairly assumed that he expected the purchase money would be used, and was intended to be used, in the payment of other creditors, the sale will be upheld. Brown v. Foree, 7 B. Mon. 357.

II. The court erred in excluding evidence offered by interpleader, concerning the purpose of Weaver to go to Indiana. The interpleader had a right to all the conversation, after Bailey had called out a part of it. Binghart v. Brown, 51 Mo. 600; State v. Linney, 52 Mo. 40; Polston v. Lee, 54 Mo. 291; Mann v. Bist, 62 Mo. 491; Colt v. Ladue, 54 Mo. 486; State v. Barham, 82 Mo. 67.

III. The court erred in permitting proof of transactions had by McKee, Thomas Sellers, and Hopkins, after the sale to interpleader, with reference to the disposal of the property sold or mortgaged to them by Weaver. Such evidence was calculated to poison the minds of, and influence the jury improperly, against interpleader. It was objected to as irrelevant and incompetent, and should not have been admitted. Albert v. Besel, 88 Mo. 150; Nasse v. Algermissen, 25 Mo.App. 186; Ringo v. Richardson, 53 Mo. 385; Bank v. Russell, 50 Mo. 531; Worley ex rel. v. Watson, 22 Mo.App. 546.

IV. The court erred in permitting Ramsay to testify to conversation and transaction between himself and Weaver, in relation to which he was Weaver's attorney. Sellers was not present and such statements of Weaver were simply hearsay and incompetent, as against him, and besides they were privileged between attorney and client, and the client had not assented to the attorney's testifying. Cross v. Riggins, 50 Mo. 335.

V. The instructions given on the part of the defendant in the interplea, Bailey, were not warranted by the evidence, and were calculated to mislead the jury. These instructions, provided the transaction on the part of Weaver was fraudulent, held the interpleader chargeable with notice of that intent, if he was in possession of such information as would put a prudent man upon inquiry. It was not the duty of Sellers to inquire into the motives of Weaver for making the sale, and he is not chargeable with knowledge of a fraudulent purpose on the part of Weaver, merely because he failed to avail himself of an opportunity of making investigations which, if made, would have revealed the purpose. State ex rel. v. Merritt, 70 Mo. 275; S. C., 3 Mo.App. 578. But if the buyer knows enough of the purposes of the seller to put a prudent man on inquiry, it will be his duty to make reasonable inquiry, and if he fails of this he will be charged with notice of what might have been ascertained by such inquiry. Rupe v. Alkire, 77 Mo. 641.

VI. The instructions are not supported by the evidence. The court erred in refusing the second instruction asked by appellant, Sellers, viz: " It is not the duty or business of the buyer to see that the purchase price is paid to creditors on debts; therefore, if Weaver represented to Sellers that he wanted to sell, and was selling to relieve himself from the mortgages, and to raise money to pay his debts, and Sellers bought and paid for the property on the faith of such representation, and without knowledge that Weaver intended to delay, hinder, or defraud his creditors, he, Sellers, will be protected in his purchase, no matter what Weaver did with the money." We cannot conceive of any valid or even plausible objection to this instruction. It was warranted by the testimony of Sellers, corroborated by that of Weaver.

VII. The court erred, also, in refusing the seventh instruction asked by interpleader. The court having repeatedly asserted the principle in the instructions on both sides, that if Sellers had such information as to the intent of Weaver as would put a prudent man on inquiry, this instruction was intended to prevent such instructions from misleading the jury, by giving them to understand that, " unless the jury believed, from the evidence, that sufficient knowledge was obtained by said interpleader to put him upon his inquiry in regard to the motive of Weaver, and, upon such inquiry, he could have ascertained or learned that the intentions of Weaver were fraudulent in making the sale, etc., then, and in that case, he would not be required to make inquiries in regard to the motives or intentions of Weaver in making sale of his property."

VIII. The court erred in overruling the motion in arrest. There was a trial without an issue, a mistrial, and no judgment should have been given. There was no answer or denial filed to the interplea. The judgment was for the wrong party.

JOHN D. CAMPBELL, and LEWIS & RAMSAY, for the respondent.

I. Appellant's first point, " The verdict is against the evidence and against the law," has, to a great extent, already been anticipated in our statement. The jury were the judges of the weight of the testimony and the credibility of the witnesses, and, if there was evidence tending to show the fraud, and to show Sellers' knowledge thereof, or participation therein, the verdict should not be disturbed. Reid v. Ins. Co., 58 Mo. 429. Both the jury and the trial court below, who had before them all the evidence...