State ex rel. Williams v. Netherton

• Decision Date: 23 May 1887
• Parties: STATE EX REL. SAMUEL W. WILLIAMS ET AL., Appellants, v. MOSES G. NETHERTON, ADMINISTRATOR; SOLOMON WILES ET AL., GARNISHEES, Respondents.
• Court: Kansas Court of Appeals

26 Mo.App. 414

STATE EX REL. SAMUEL W. WILLIAMS ET AL., Appellants, v. MOSES G. NETHERTON, ADMINISTRATOR; SOLOMON WILES ET AL., GARNISHEES, Respondents.

Court of Appeals of Missouri, Kansas City.

May 23, 1887

APPEAL from Livingston Circuit Court, HON. JAMES M. DAVIS, Judge.

Reversed and remanded with directions.

Statement of case by the court.

The record in this case is quite voluminous; but the facts essential to a proper understanding of the issues, are substantially as follows. On the third day of April, 1877, P S. Winn and wife gave a deed of trust on a large amount of real and personal property to Solomon Wiles, as trustee, to secure certain creditors therein named. On the breach of the conditions of this deed, the said trustee sold the property pursuant to the provision of the trust deed. Being in doubt as to whom, and in what proportions, he should distribute the proceeds arising on such sale, he presented his petition to the Daviess circuit court, the proper jurisdiction over the subject matter and the parties, setting forth the facts, and praying the court for a construction of the provisions of the deed, and its direction for the distribution of the said fund. All the parties in interest were duly brought before the court. The court, after hearing the proofs, held that the deed was not an assignment, as claimed by one or more of the alleged beneficiaries, but was a deed of trust, valid and subsisting. The decree then set out the respective interests and rights of the claimants thereunder, and ordered and directed the trustee to pay the same over to the distributees, as therein specified. Some of the distributees being dissatisfied with the order of distribution, appealed the case to the supreme court.

In the meantime, certain creditors (the plaintiffs herein) obtained a judgment in the circuit court of Livingston county against the maker of said deed of trust, for a large sum of money.

After the first named cause had been appealed to the supreme court the plaintiffs in the Livingston circuit court judgment had execution issued thereon, directed to the sheriff of Daviess county, on which the said trustee was summoned as garnishee. The garnishee answered therein, setting up the facts aforesaid, stating the amount of the funds in his hands, and how he held the same, as also, the facts before stated, respecting the proceedings in the Daviess circuit court, and the pendency of the appeal to the supreme court.

The plaintiffs made reply thereto, alleging that the said deed of trust was fraudulent and void as to the plaintiffs, as the same was made to hinder and delay the creditors of said P S. Winn, and that the beneficiaries therein were privy to, and aiding in, the said fraudulent intent. The other parties to the deed were summoned.

While matters thus stood, the cause in the supreme court was decided, and is reported in 80 Mo. 47. Thereafter, the said trustee died, and the cause was revived against his administrators, and his successor in the trust, who had been appointed thereto by the Daviess circuit court. The Daviess circuit court, on the appeal being taken from its judgment to the supreme court, ordered and directed the said trustee to loan out the funds in his hands, at the best rate of interest he could command, not longer than the time which the cause would probably remain in the supreme court, supposed to be about two years; and, further, to hold the money subject to the order of the court.

The administrator and new trustee appeared to the action in the Livingston circuit court, and made answer, setting up, substantially, the same facts as contained in the answer of the first trustee (one of them, perhaps, adopting that answer), and further setting up the fact that the supreme court had, in the meantime, finally decided the cause therein, on appeal, affirming the judgment of the Daviess circuit court, except as to the decree respecting some of the beneficiaries, and remanding the cause, with special directions to the Daviess circuit court to enter up judgment in conformity with the opinion of the supreme court.

The plaintiffs made reply thereto, setting up the same facts, substantially, which they pleaded to the former answer.

After hearing the proofs, the jury found the issues for the plaintiffs, and judgment was accordingly rendered against the garnishees for the amount so found in their hands, or loaned out by the trustee, under the order of the Daviess circuit court.

From this judgment the garnishees have appealed.

H. C. MCDOUGAL, STEPHEN PEERY, and GEORGE HALL, for the appellants.

I. The circuit court of Daviess county, Missouri, had acquired jurisdiction of garnishees and defendants, as well as the funds in the garnishees' hands prior to the institution of proceedings in this cause, and could not be divested of such jurisdiction, nor could the Liv ingston circuit court acquire jurisdiction of said funds or parties by this garnishment proceeding, because said parties and funds were already in the custody of a court of competent concurrent jurisdiction. Hardin v. Lee, 51 Mo. 241; Seibel v. Simeon, 62 Mo. 255; Merrill v. Lake, 47 Am. Dec. 377 (16 Ohio 373); West v. Morris, 2 Disney 416; State v. Railroad, 3 Ohio State, 157; Aldridge v. City of Polo, 8 Bradw. (Ill.) 48; Mason v. Piggett, 11 Ill. 89; Keating v. Spink, 62 Am. Dec. 214, note 7, p. 244; Hines and Hobbs v. Rowson, 2 Am. Rep. 581; Chapman v. James, 23 Am. Rep. 412; Wallace v. McConnell, 13 Pet. [U. S.] 136; Smith v. McIves, 9 Wheat. 532; Peak et al. v. Jennesse et al., 7 How. 612, o. p. 624-5; Freeman v. Howe, 24 How. 450, 457; Bush v. Colbath, 3 Wall. 334-341; Drake on Attachments [3 Ed.] sects. 619, 621, 625; In re Cunningham, 9 Cent. Law Jour. 208; Freeman on Executions, 204; Young v. Young, 2 Hill (S. C.) 426.

II. Relator's denial of garnishee's answer, and the other pleadings in the case, do not state a cause of action against appellants. There is no charge that the trustee in the deed of trust, or the beneficiaries in said deed, ever knew of, much less participated in, any fraudulent designs of the grantor in said deed, which fact they must plead and prove to entitle them to a recovery. Byrne v. Becker, 42 Mo. 264; Hardcastle v. Fisher, 24 Mo. 70; Pineo v. Hart, 30 Mo. 561; Shelley v. Boothe, 73 Mo. 74; Holmes v. Braidwood, 82 Mo. 615; Singer v. Goldenberg, 17 Mo.App. 549; Hausmann v. Hope, 20 Mo.App. 193; Gentry v. Robinson, 55 Mo. 260.

III. The court erred in giving the instructions, as prayed by appellees, and in refusing to sustain the appellants' demurrer to the testimony, or first instruction asked by the appellants; for while there was but one deed of trust given, it was given to secure separate and distinct debts owned by different parties, and was equivalent to giving separate deeds of trust to the several creditors with the same trustee, and the knowledge of, and participation in, the fraud by one creditor could have no effect on the rights of the others, who did not know of, and participate in, the fraud, and there was no evidence that appellants knew of, or participated in, any fraudulent design, and these instructions could have no application to those who did not participate in the fraud. In addition to the authorities cited in support of our second point, which we also rely upon in support of this, we also cite the following: Ellis, Adm'r, v. Lamme, 42 Mo. 153; Mitchell v. Ladew, 56 Mo. 526.

IV. The court erred in refusing to let witness, Stephen Peery, testify as to the conversation between himself and witness, P. S. Winn, as to the objects and purposes for which the deed of trust in controversy was made.

V. The fund was in custodia legis, and being in the hands of the officer of the court, was not liable, legally, to either seizure under execution, nor to the summary remedy of statutory garnishment. Freeman on Executions, sect. 129 and cases cited; Martin v. Davis, 21 Iowa 535; Curling v. Hyde, 10 Mo. 237; Waples Att. and Gar. p. 218, sect. 5; In re Cunningham, 9 Cent. Law Jour. 208; McPherson v. Snowden, 19 Md. 196, and cases cited. While the Daviess circuit court and the supreme court recognized the right of the chosen officer of the former to manage and control a fund entrusted to its care, and call him, as the deed of trust does, a trustee; yet, from the fact that the former would have the same right to appoint a receiver to take charge of the fund, the difference between a trustee and receiver is not apparent, so far as the law is concerned. The possession of either is the possession of the court making the appointment. No suit, by which either is sought to be disturbed in his possession, or to charge either with any liability for an act omitted or performed by him as such officer, should be entertained in or by any other court, without first obtaining the consent of the court whose officer he is. And so strict is the rule relating to receivers, that a party bringing such suit, without such consent, may be attached or enjoined for contempt. Kennedy v. Railroad, 3 F. 97, and cases cited; Railroad v. Railroad, 43 Vt. 792; Taylor v. Baldwin, 14 Abb. Pr. 166; Dagroot v. Say, 30 Barb. 483; Thompson v. Scott, 3 Cent. Law Jour. 787.

GEORGE HALL and R. A. DEBOLT, for the respondents.

I. Where a conveyance in trust is made in fraud of creditors, the instrument is void, and conveys no title, and the property is subject to attachment or garnishment; for, when such issue is raised and found in favor of the creditors, no trust exists. Lackland v. Garesché , 56 Mo. 267, 271; McIlvain v. Smith et al., 42 Mo. 45, 58; Armstrong v. Tuttle et al., 34 Mo. 432, 444, 445; Doggett v. Insurance Co., 19 Mo. 201, 202, 203; Lee et al v. Tabor et al., 8 Mo. 322; Drake on Attachments, sects. 523, 524, 598, 599, 600, 601. If...