State ex rel. Holliday v. Benoist

• Decision Date: 31 March 1866
• Citation: 37 Mo. 500
• Parties: THE STATE OF MISSOURI TO USE OF SAMUEL N. HOLLIDAY et al., Respondent, v. LOUIS A. BENOIST et als., Appellants.
• Court: Missouri Supreme Court

37 Mo. 500

THE STATE OF MISSOURI TO USE OF SAMUEL N. HOLLIDAY et al., Respondent,

v.LOUIS A. BENOIST et als., Appellants.

Supreme Court of Missouri.

March Term, 1866.

Error to St. Louis Court of Common Pleas.

This was an action instituted by the plaintiffs on a bond given by Benoist to the sheriff of St. Louis county, upon the levy of an execution in favor of Benoist against the Pilot Knob Iron Company. Plaintiffs claimed the property as trustees and assignees. The execution creditor gave bond as required by the St. Louis act respecting sheriffs, &c. The action involves the validity of an assignment, or conveyance in trust, made by the Pilot Knob Iron Company in February, 1862. The powers given in the deed were as follows:

“In trust, however, for the following purposes, to-wit:--The said parties of the second part shall enter into and take immediate possession of all the property, real, personal and mixed, herein conveyed, and shall proceed to dispose of the same at public or private sale, as to them may seem most advantageous, and on such terms and for such prices as they may deem proper after consulting with the principal holders of the notes and bonds described in the beginning of this deed, or with the said John S. McCune and James H. Lucas, and shall use their best endeavors to collect in, recover, receive and convert into money the notes, debts and judgments herein described as owing to the said party of the first part; and may institute, prosecute and defend all such suits, process at law or in equity, and execute, perform and transact all such deeds, writings, acquittances, acts, matters and things as shall be necessary or expedient to carry into effect the trusts, uses, interests and purposes herein declared and contained; and may, at discretion, compound any of the debts due or owing to said party of the first part, and herein transferred to said parties of the second part, and enter into and execute any bargain of composition, compromise or arrangement with any of said persons indebted to the said party of the first part, as before said, who shall be or become insolvent or unable to make punctual payment; and also may make any such agreement or arrangement as shall be deemed reasonable with any person possessing any of the said securities given by the said party of the first part to parties of the second part; but it is understood, agreed and provided, that the naming of any debt or debts in this deed required to be paid, shall not prevent the parties of the first or second part from calling in question or controversy the amount of same, or taking any course at law or in equity to have the same disallowed or adjusted; and if the said trustees shall determine to sell all or any of said property at public sale, they are hereby authorized to sell the same at any time at public vendue to the highest bidder, for cash, or part cash and part on time, as to said trustees may seem best, first giving twenty days' public notice of the time, terms and place of said sale, and of the property to be sold, by advertisement in the St. Louis County Legal Record and Advertiser, or some other paper printed in the city of St. Louis, Missouri (the place of sale to be left to the discretion of the trustees); and upon such private or public sale shall execute and deliver deeds in fee simple of the property sold, if real property, and bills of sale, if personal property, to the purchaser or purchasers thereof, and receive the proceeds of such sale or sales, out of which they shall pay, first, the costs and expenses of executing this trust, including compensation to the trustees, and shall pay pro rata the bonds and coupons endorsed by John S. McCune and James H. Lucas, as described in the beginning of this deed and the notes, as described in the beginning of this deed as made or endorsed by John S. McCune and James H. Lucas, and all other notes described in this deed; and also the amount due Mrs. Jane F. Clapp, as also stated in the beginning of this deed; and they may repeat said process of public sale as often as may be necessary And the said trustees are hereby authorized to hire a good and competent clerk or clerks, and as many men as may be necessary, to gather together, watch and protect and dispose of said property, at reasonable wages. And the said parties of the second part covenant faithfully to perform and fulfill the trust herein created.

In witness whereof,” &c.

The petition sets forth the deed as plaintiff's title, and the answer puts its validity in issue, and states that said deed is fraudulent and void, and a contrivance to hinder, delay and defraud the creditors of the company. The answer further averred, that since the execution of said deed all of the debts due by said company, in said deed expressed, have been fully paid and satisfied.

The plaintiff, on the trial, read in evidence the deed of trust or assignment. The defendants insisted that the deed was void on its face; this objection was overruled, and defendants duly excepted.

The parol evidence tended to prove that the company was largely in debt at the time of the conveyance; that defendants, Benoist & Co., were creditors: that the debts of the company were fast maturing; that the assignee or trustee, Yore, was clerk of Lucas, and Holliday a relative of McCune, that McCune and Lucas were heavy stockholders and directors; that after the assignment the office of the company continued at its former place, McCune's office; that McCune continued to direct sales of property; Holliday and Yore never assumed control, but directed the clerk to receive instructions from McCune, which he did; and so McCune carried on the business, he being president of the company; property was sold at McCune's direction, debts paid by his direction, money drawn on his checks, no checks drawn by Holliday or Yore; and in September, 1863, Holliday and Yore made a deed back to the company, in a re-organized condition. The debts secured were nearly all paid, except ninety thousand dollars not due.

The evidence tended further to prove that Benoist was a creditor of the company; suit brought and judgment obtained, and execution issued.

Defendants also read in evidence the proceedings of the board of directors of the Pilot Knob Iron Company, May 13, 1861--present Lucas and McCune--tending to show that the deeds were made for the security and benefit of McCune and Lucas, and also for the purpose of keeping the property temporarily out of the market.

It did not appear that any of the holders of the bonds were ever consulted, or ever knew anything about the assignment, or ever claimed under it. Further, that Holliday and Yore never assumed actual possession, but permitted the president of the company (McCune) to continue its business until they (Holliday and Yore) again released the property.

All the instructions asked by the defendants were refused. The only question submitted to the jury was, whether the debts mentioned in the deed were genuine. All questions of fraud were taken away from the consideration of the jury.Krum & Decker, for appellants.

I. The deed of conveyance was, in law, void on its face.

II. The court erred in refusing to allow the jury to inquire into the actual intent with which the deed was made, and whether the beneficiaries were parties to a fraudulent intent.

1. The court erred in admitting the deed of trust or assignment under which the plaintiff claims; this conveyance is absolutety void on its face.

Every transfer of property must be in accordance with the established rules of law; where a party attempts to evade the law, the law will foil his attempt. In this State, the statute of assignments (R. C. 1855) declares the policy of the State in regard to assignments, and provides positively the mode in which assigned effects shall be administered for the benefit of creditors.

Contracts of assignment made in violation of this statute will be held void-- Emerick v. Harlan, 1 Beasley, N. J. 230; 4 Sandf., S. C. 252; 7 Gill. 446; 21 Conn. 604.

The case at bar presents an assignment, in which the attempt to coerce the creditors is more apparent than in 6 Mo. The assignment before the court is a bold attempt to evade the masculine provisions of the statute law.

The deed under consideration conflicts with all the material provisions of this statute, and is an attempt to make an assignment, and place the assignee beyond the control of the court, by vesting him with certain special trusts personal in their nature, and which cannot be transferred to another, or exercised by another.

They could not make any preferences among the creditors within the assignment, but they attempt to evade this by putting it within the power of the assignee to dispute the creditor's claim, to compromise, compound, and settle with him; thus indirectly giving a preference among creditors, which directly they are prohibited from doing--Leading case, Grover v. Wakeman, 11 Wend. 187; Murphy v. Bell. 8 How. Pr. 468; Woodburn v. Musher, 9 Barb. 255; Hudson v. Bell, 3 Scam., Ills., 578.

An assignment, to be valid, must be free from all provisions tending to hinder or delay creditors--Burr. Assign. 236.

The power given to the assignee to compound, and compromise, and settle with the creditors, is of itself fatal; but this deed goes further. It will be observed that it is declared, that “the naming of any debt in this deed, required to be paid, shall not prevent the assignor or assignee from calling in question or controversy the amount of the same, or taking any course at law or equity to have the same disallowed;” then there is the power to retain the property from sale for an indefinite period, at the discretion of the trustee; and then the power to compromise and settle with the creditors, given to the trustee. If a stronger case of intent to hinder, delay or defraud creditors has ever appeared, it is unknown to us. But in the case at bar, we have an assignment designed to create preferences...