Stahlhuth v. Nagle

• Decision Date: 30 June 1910
• Citation: 229 Mo. 570,129 S.W. 687
• Parties: STAHLHUTH v. NAGLE et al.
• Court: Missouri Supreme Court

129 S.W. 687

229 Mo. 570

STAHLHUTH v. NAGLE et al.

Supreme Court of Missouri, Division No. 2.

June 30, 1910.

1. FRAUDULENT CONVEYANCES (§ 118) — RIGHT TO CONVEY TO SECURE DEBT.

One bona fide indebted to his brother may secure a note for the debt by mortgage though indebted to others.

2. FRAUDULENT CONVEYANCES (§ 271)—BURDEN OF PROOF.

The burden is on one suing to vacate a conveyance as in fraud of creditors to show fraud.

3. FRAUDULENT CONVEYANCES (§ 118) — RIGHT TO PREFER CREDITORS.

A debtor may prefer a relative or other person as a creditor, but relationship may be considered in determining whether a conveyance is fraudulent.

4. FRAUDULENT CONVEYANCES (§ 295)—EVIDENCE —SUFFICIENCY.

Evidence held insufficient to show that a deed of trust was fraudulent.

5. MORTGAGES (§ 160)—CONSTRUCTIVE DELIVERY.

A deed of trust placed in a third person's hands with directions to deliver it to the mortgagee was constructively delivered to the mortgagee, as affecting its priority over a judgment lien where the mortgagee told such person to retain it for safe-keeping, though the mortgagor, acting under the mortgagee's directions, took the papers away temporarily in canceling some of the interest notes.

6. APPEAL AND ERROR (§ 1009)—REVIEW— EQUITY FINDINGS.

Equity findings are not conclusive on appeal, and the appellate court will render such judgment as the evidence requires.

Appeal from St. Louis Circuit Court; Moses N. Sale, Judge.

Action by Samuel G. Stahlhuth against Pierre Nagle and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Plaintiff claims title to a certain lot and part of lot in the city of St. Louis, and by this suit seeks to have set aside and for naught held a certain alleged false and fraudulent deed of trust executed by defendant Pierre Nagle on said property, the same constituting a cloud on plaintiff's title. In his petition plaintiff states that he is owner of lot 21, and 5 feet off the east part of lot 20, and 3 feet 9½ inches off the west part of lot 22, in city block 1024, in the city of St. Louis, the same being occupied by house numbered 3030 Morgan street, in said city; that said property was acquired by him at sheriff's sale, on June 14, 1905, under a judgment for debt against said Pierre Nagle; "that heretofore, to wit, from March 1 to March 20, 1903, the defendant, Pierre Nagle, who was then owner of the property aforesaid, was heavily indebted to divers and sundry persons in the city of St. Louis and elsewhere; that at said time the said Pierre Nagle, fearing lest said property should be seized upon by his creditors to satisfy their claims, did then and there collude and conspire with the defendants Richard Nagle and J. Pirtle and said Felix E. Gunn, trustee, to aid and assist him to hinder, delay, and defraud his said creditors, and to secrete his interest in the property aforesaid, and to prevent same being sequestrated and applied to the payment of said claims of said creditors, did enter into a fraudulent scheme and device, the general plan and purpose of which was that the said Pierre Nagle should execute a false and fraudulent note for a fictitious and wholly nonexistent indebtedness, ostensibly due to his brother, Richard Nagle, and should pretend to secure the same by a false and fraudulent deed of trust for a large amount, so as to make the equity of said Pierre Nagle appear small, insignificant, and practically valueless; that to still further mystify and conceal the false and fraudulent nature of the transaction said Pierre Nagle, acting upon the advice of one Brennan, did make out the notes to the defendant J. Pirtle, with the understanding that they were to be indorsed by him and turned over to the defendant Pierre Nagle, or whomsoever he might designate." The further allegations of the petition are, in substance: That the defendants fully executed said fraudulent scheme and device, and that said Pierre Nagle, on March 19, 1903, made a note for $1,700, payable three years after date, and interest notes, and executed and delivered to said Felix E. Gunn, as trustee, his certain deed of trust of even date therewith, for the ostensible purpose of securing said notes, which deed was placed of record, but that said notes and deed of trust were wholly fictitious and colorable, fraudulent, and invalid, and that no consideration was given therefor; that plaintiff is advised and believes that said notes and deed of trust are held by the defendant Richard Nagle without any right thereto or interest therein, and that neither of the defendants, nor any holder under them, has any right or interest in the property aforesaid by reason thereof; that said deed of trust creates a cloud on plaintiff's title, which ought to be removed therefrom; that said Pierre Nagle is insolvent, and that plaintiff is advised and believes, and alleges the fact to be, that said Richard Nagle is insolvent, and that the other defendants have no beneficial interest in said property or in said notes or deed of trust; that there is a genuine deed of trust on said property which matures one day prior to the maturity of the fraudulent deed of trust aforesaid; that plaintiff has no adequate remedy at law, and is in danger of losing his said property if equity does not intervene, and that he is likely to suffer irreparable harm and injury. Plaintiff prays "that the aforesaid deed of trust be set aside and for naught held, and that defendants be decreed to deliver up the same for cancellation, together with the notes described therein, and that the defendants Pierre Nagle and Richard Nagle be decreed and adjudged to pay to plaintiff any and all damages that may accrue to him by reason of their false and fraudulent clouding and incumbering his title, and for such other and further relief as to equity appertains, and which the court shall deem fit and proper."

The facts developed by the evidence are as follows: Defendants Pierre and Richard Nagle are brothers, living together in St. Louis at the time of the trial. Pierre was a carpenter and contractor, and Richard a teamster. Both were illiterate; Richard more so than his brother. Pierre was a married man and had several children; Richard was a bachelor. The latter testified at the trial that he was about 65 years old, had received no schooling, but learned to write his name after coming to America, when he was about 9 years of age. He was a teamster nearly all his life, and at one time owned several teams and wagons, also some real property in the city of St. Louis. He had been accustomed to loan his brother sums of money, and had helped him to raise his family. In the year 1893, Pierre, being in financial straits, obtained a loan of $2,000 from him. Richard did not have the money at the time Pierre applied to him for the loan, but raised it by hypothecating his property at the corner of Theresa and Clark avenues to August Gehner as trustee for Henry Hiemenz, who furnished the money. Pierre gave no note or other security to his brother for the money so borrowed, nor did Richard demand same of him, but Pierre afterwards promised to secure him. With the money thus borrowed, Pierre paid taxes on real property he owned, and paid other debts owing by him. Richard loaned other sums of money to Pierre at various times, the full amount, including the $2,000 loan, being about $2,700. Testifying at the trial, Richard said: "All the money I gave him put together made $2,700. He didn't give me any note for it. I never asked him for a note. I asked him one day for some money, and he said, `No; but I will secure you. I will give you a deed of trust.' I could not exactly say when that was. It must be three or four or five years ago; I could not say; I don't keep track of anything of that kind. It was up on Chestnut street, some place. I remember that very clearly. I didn't ask him only once. My brother spoke to me about that on Main street. He said he would secure me as quick as he could though." On March 18, 1903, Pierre Nagle obtained title to the property in dispute, located on Morgan street, and on the same day incumbered it with a deed of trust to secure a note for the sum of $2,200, with the proceeds of which he paid off an existing mortgage on the property, taxes, interest, and various debts. The next day, March 19, 1903, he incumbered the property with a second deed of trust to secure a note for $1,700, and delivered said note and deed of trust to Mr. Brennan, a real estate man, instructing him to turn them over to his brother Richard. Before doing this, Pierre had the deed of trust recorded. It appears from the evidence that the payee of the note for the principal sum, and interest notes, was one John Pirtle, and that the trustee was the defendant Felix Gunn. Pierre Nagle testified that he made the deed of trust to secure his brother for money loaned and advanced him, and said, "I made it in Pirtle's name because it was customary, and Mr. Brennan advised me to." He further testified: "I was going to make this deed in the name of my brother, and Mr. Brennan said, `No; don't do it. You make it the same as they all do—in some one else's name.' He gave no reason for that; only said it was customary. He didn't say anything at the time as to the putting of the deed in the name of my brother looking bad from the standpoint of my creditors, nor anything to that effect." Joseph C. Darst, a real estate agent, testified that it was customary to make the payee of notes secured by a deed of trust a "straw man," or some person other than the person loaning the money, and that "probably three-fourths of the notes made on Chestnut street are made in that way";...