Sexton v. Anderson
| Decision Date | 04 June 1888 |
| Parties | Sexton, Interpleader, v. Anderson et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Boone Circuit Court. -- Hon. G. H. Burckhartt, Judge.
Affirmed.
E Smith, S. Turner and C. B. Sebastian for appellants.
(1) The answer to the amended interplea avers that at the time of the conveyance to Elisha Sexton and Bush, by the firm, of their stock in trade, etc., the firm was insolvent, and that such insolvency was known to the grantees; and that the sale was made by the firm, and accepted by Elisha Sexton, in contemplation of such insolvency, and with the intention of hindering, delaying, and defrauding, the other creditors of the firm in the collection of their debts. This, under long-established practice, is a proper issue in matters of this nature. Kneeland on Att., sec. 334; Bobb v Woodward, 50 Mo. 95; Ryland v. Callison, 54 Mo 513. And if the averments of the answer were sustained, the conveyance was void under section 2497, Revised Statutes of Missouri, in relation to fraudulent conveyances. (2) Instructions one, two, and nine given by the court do not in any respect touch the question of the fraudulent character of the bill of sale, on account of its having been made and accepted with intent to hinder, delay, and defraud creditors, which question was directly in issue, and to sustain which evidence was offered and admitted. In cases where the terms of a conveyance are by possibility consistent with good faith and it has upon it the elements of a legal instrument, the question of fraudulent intent and want of good faith in making it must be submitted to the jury. Brooks v. Wimer, 20 Mo. 507; Shepherd v. Trigg, 7 Mo. 151; Ross v. Crutsinger, 7 Mo. 249; Potter v. McDowell, 31 Mo. 62; Chouteau v. Valle, 11 Mo. 390; Claflin v. Rosenberg, 42 Mo. 439; Henson v. Tootle, 72 Mo. 632; 1 Wade on Attach., sec. 96. (3) Instructions numbered three, four, and seven asked by appellants should have been given by the court. Bank v. Carter, 38 Pa. St. 446; Hailstrom v. Eames, 31 Me. 93; Sibley v. Hood, 3 Mo. 290. (4) The court also erred in refusing to give instructions numbered five, six, and eight asked by appellants.
Boyle, Adams & McKeighan also for appellants.
(1) The court erred in refusing and giving instructions. (2) The court should have found as a matter of law that the transaction in question was fraudulent and void as to the creditors of Sexton Brothers & Company. State v. Bank, 2 Mo.App. 102; Kitchen v. Reinsky, 42 Mo. 427; Lionberger v. Baker, 88 Mo. 447; Wilson v. Robertson, 21 N.Y. 587; Ferson v. Monroe, 21 N.H. 462; Tenney v. Johnson, 43 N.H. 144; Bump on Fraud. Con. 464, 487. (3) The court should have found for appellants and rendered judgment accordingly. Wright v. McCormick, 67 Mo. 426; Pierce v. Merritt, 70 Mo. 275. The conveyance was to all intents and purposes a deed of assignment. Douglass v. Cissna, 17 Mo.App. 44; Ring v. Ring, 12 Mo.App. 88; Crow v. Beardsley, 68 Mo. 435.
S. C. Douglass for respondent.
(1) Instructions numbered one and two, as to the kind or character of possession required, on the part of the respondent, stated the law very strongly against him and exacted a greater degree of proof than was necessary for his recovery. If the bill of sale was void on its face, possession by respondent, before the levy, cured all defects, and entitles him to recover in this action. Greeley v. Reading, 74 Mo. 309; State ex rel. v. Cooper, 79 Mo. 464. (2) It devolved on the defendants in the interplea to show that the interpleader had more than mere knowledge or information of the insolvency or fraudulent purpose of his debtors in the transfer of their property to himself and Bush. Shelley v. Boothe, 73 Mo. 77; Dougherty v. Cooper, 77 Mo. 528; Frederick v. Allgaier, 88 Mo. 603. (3) One partner cannot apply the partnership funds to the discharge of his own private debt without the assent or consent of his copartners. But it is equally true that all of the partners of a firm can, by their joint act, dispose of the partnership property in the payment of the individual indebtedness of one of the members thereof, provided such disposition be in good faith, and not for fraudulent purposes. Rogers v. Batchelor, 12 Peters [U.S.] 230; Dob v. Halsey, 16 Johns. 34; Managh v. Whitwell, 52 N.Y. 146; Schmidlapp v. Curry, 30 Am. Rep. 530; Cotter v. Beaman, 6 Johns. 40; Stokes v. Stevens, 40 Cal. 391; City v. Willey, 35 Iowa 323; Case v. Beauregard, 99 U.S. 119; Flanagan v. Alexander, 50 Mo. 50; Ackley v. Staehlin, 56 Mo. 561; Phelps v. Neely, 66 Mo. 558. The deed of sale, executed in due form by all the members of the firm, was prima facie valid as their joint act in the disposition of the firm property and it devolved upon the appellants to show it was fraudulent in fact, in order to have vitiated it. (4) Partners have a lien on the joint property for the payment of firm liabilities and their creditors have a quasi lien, or rather an equity in the nature of a lien. The equity of the firm creditor is worked out through the equity of the partner, operating to the payment of the partnership debts. This lien is waived if all the partners assent to or join in the disposition of the partnership property to pay the debts of one of the partners, and fraud is repelled when such assent or joint act is shown. Monagh v. Whitwell, supra; Rogers v. Batchelor, supra; Case v. Beauregard, supra; Carter v. Beaman, supra; City v. Wiley, supra; Johnson v. Hersey, supra; 3 Kent. Com. 65. (5) The evidence fails to support the fraud charged in appellants' answer. On the contrary, it shows that the interpleader was in possession of the goods for the purpose of securing himself and others in the payment of certain indebtedness due by and from the firm of Sexton Brothers & Company. (a) Fraud must be proved and not conjectured. Priest v. Way, 87 Mo. 16. (b) The interpleader and other preferred creditors must have participated in the intent to defraud the unsecured creditors of Sexton Brothers & Company, before the debtors' transfer of their property can be considered fraudulent. Shelley v. Boothe, 73 Mo. 74; Dougherty v. Cooper, 77 Mo. 528.
James M. and James W. Anderson brought suit by attachment against William J. and Thomas D. Sexton and James W. Kanatzar, partners doing business under the name of Sexton Brothers & Company. The writ was levied upon a stock of merchandise on the twenty-second of December, 1883. Other creditors attached about the same time, and the property was sold by order of the court. Elisha Sexton interpleaded, claiming the property and the proceeds arising from the sale thereof, amounting to forty-five hundred and thirty-two dollars, by virtue of a sale to him and M. S. Bush. Issues were made on this interplea, in which the attaching creditors take the ground that the sale to Elisha Sexton and Bush was fraudulent as to them. The court, sitting as a jury, found the issues for the interpleader.
The evidence discloses these facts: On the eighteenth of December, 1883, Sexton Brothers & Company made an instrument in writing, in the form of a warranty deed, whereby they sold their entire stock of merchandise and store fixtures to Elisha Sexton and M. S. Bush for the recited consideration of sixty-eight hundred and fifty-five dollars. At the same time and as a part of the same transaction, Elisha Sexton signed another writing which recites the sale, and in consideration thereof he and Bush agree to pay certain debts of Sexton Brothers & Company, one being a debt of two thousand dollars to Elisha Sexton, another a debt of thirteen hundred and thirty dollars to Bush, with other described debts. By the terms of this contract, they covenant to pay these debts and to release Sexton Brothers & Company from the payment of any of them. It winds up with the following stipulations: "It is further understood and agreed by the parties aforesaid that if the parties of the second part fail to make the amount necessary out of the goods and chattels and fixtures herein bargained and sold to the said parties of the second part, to pay the foregoing indebtedness mentioned, that the said parties of the first part are not to be held liable further than the proceeds of the sale of the said goods and chattels and fixtures, and that the said parties of the second part shall be paid a just and reasonable compensation for services and expenses for selling said goods and chattels and fixtures."
The bill of sale was acknowledged, and was recorded on the twenty-second of December, 1883, just anterior to the levy of the attachment by Anderson & Company. The other document was withheld by the parties thereto, and not made known until it appeared in evidence in the trial of this cause. An issue was made on the trial as to whether Elisha Sexton and Bush had possession of the goods at the date of the attachment, but that issue was found for the interpleader on favorable instructions for the attaching creditors. It is shown that Elisha Sexton and Bush took possession of the property on the eighteenth of December, and sold from the stock until the twenty-second. Bush then brought an attachment suit, and hence does not join in the interplea.
The evidence for the interpleader is, that the debts mentioned in the agreement were bona fide, his own being for money loaned the firm; that Sexton Brothers & Company became embarrassed, were pressed by other creditors applied to him for another loan, but he refused and demanded security for what he had loaned thereon; and that he took the bill of sale and property under these circumstances to secure his and the other specified debts. Other evidence tends to show that Sexton Brothers & Company made gross misrepresentations to their unsecured creditors as to their...
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