Talley v. Richart

• Decision Date: 05 February 1945
• Docket Number: 39111
• Parties: Forrest A. Talley and Cyrena M. Talley v. Betty Buchanan and Granville A. Richart, Appellants
• Court: Missouri Supreme Court

185 S.W.2d 23

353 Mo. 912

Forrest A. Talley and Cyrena M. Talley v. Betty Buchanan and Granville A. Richart, Appellants

No. 39111

Supreme Court of Missouri

February 5, 1945

Appeal from Jackson Circuit Court; Hon. John R. James Judge.

Affirmed.

C W. Prince and William R. Ross for appellants.

(1) Creditors may not be deprived of the benefit of execution by the subterfuge of foreclosure or other public sale. Woodard v. Mastin, 106 Mo. 324, 17 S.W. 308; Miller v. Leeper, 120 Mo. 466, 25 S.W. 378; Sec 3507, R.S. 1939. (2) Where a party introduces in evidence, without qualification, an instrument of writing, he vouches for its verity and in the absence of countervailing evidence is conclusively bound by it. Chlanda v. St. Louis Transit Co., 213 Mo. 244, 112 S.W.2d 249; Klotsch v. P. F. Collier & Son Corp., 349 Mo. 40, 159 S.W.2d 589; Kolman v. His Creditors, 3 So. 382; 4 Wigmore on Evidence (3 Ed.) 97; 32 C.J.S. 1113, sec. 1040; 20 Am. Jur. 771, sec. 915; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 308. (3) Nominal consideration of $ 1, expressed on face of deed, shows, in absence of evidence to contrary, that it was purely voluntary conveyance without valuable consideration. Sanford v. Van Pelt, 314 Mo. 175, 282 S.W. 1022; May v. Gibler, 319 Mo. 672, 4 S.W.2d 769. (4) Transactions between husband and wife to the prejudice of creditors are looked upon with suspicion and their good faith must be so clearly shown that there can be no reasonable doubt of the honesty of the transaction. Oetting v. Green, 350 Mo. 457, 166 S.W.2d 548. (5) This same principle applies to transactions between parent and child. McDonald v. Rumer, 320 Mo. 605, 8 S.W.2d 592. (6) A voluntary conveyance is presumptively fraudulent and void as to creditors. When such facts are shown, the burden rests on the grantee or donee. To rebut the presumption of fraud, the proof must be clear, full and satisfactory. If there is reasonable doubt of the adequacy of grantor's means then the voluntary conveyance must fall. Miller v. Leeper, 120 Mo. 466, 25 S.W. 378; Godchaux Sugars v. Quinn, 95 S.W.2d 82; Scharff v. McGaugh, 205 Mo. 344, 103 S.W. 550; 27 C.J.S. 1002. (7) Failure of a party to testify in his own behalf or to call other witnesses within his power who have knowledge of the circumstances, raises a strong presumption and inference that the testimony of such persons would have been unfavorable. Russell v. Franks, 343 Mo. 159, 120 S.W.2d 37; Barber v. Nunn, 275 Mo. 565, 205 S.W. 14; MacDonald v. Rumer, 320 Mo. 605, 8 S.W.2d 592; Mason v. Perkins, 180 Mo. 702, 79 S.W. 683; Weil v. Richardson, 24 S.W.2d 175. (8) When a creditor, by fraud, will attempt to defeat the claims of other creditors, there is no hardship in postponing his demand, although a just one, to those claims which he is endeavoring to defeat. Farmers' Bank v. Handly, 320 Mo. 754, 9 S.W.2d 895.

Schultz & Bodney and Walter A. Raymond for respondents.

(1) The burden of proof was on the defendants to prove the fraud claimed by clear, cogent and convincing proof. As the decree is dependent on the credibility of oral testimony and is not palpably insufficient to sustain the findings for the plaintiffs the findings of the chancellor should be deferred to. Farmers & Merchants Bank of Festus v. Funk, 338 Mo. 508, 92 S.W.2d 587; Shelton v. McHaney, 338 Mo. 749, 92 S.W.2d 173; Strype v. Lewis, 180 S.W.2d 688; Moberly v. Watson, 340 Mo. 820, 102 S.W.2d 886; Stubblefield v. Husband, 341 Mo. 38, 106 S.W.2d 419; Daudt v. Steiert, 205 S.W. 222; Suhre v. Busch, 343 Mo. 679, 123 S.W.2d 8. (2) The trustee's sale was a valid sale and plaintiffs as purchasers at that sale acquired good title to the property in question. Title Guaranty Co. v. Sessinghaus, 325 Mo. 420, 28 S.W.2d 1001; Webb v. Salisbury, 327 Mo. 1123, 39 S.W.2d 1045; Sec. 3481, R.S. 1939; Brown v. McGuire's Real Estate Agency, 101 S.W.2d 41; 10 C.J.S., p. 744, sec. 247; 8 Am. Jur., p. 26, sec. 278; Brown v. McGuire's Real Estate Agency, 343 Mo. 336, 121 S.W.2d 754; Owens v. Owens, 347 Mo. 80, 146 S.W.2d 569. (3) The bankruptcy papers introduced in evidence by plaintiffs were not conclusively binding on them as they were impeached by defendants and there was other countervailing evidence. Diariotti v. Mo. Pac. Ry. Co., 262 Mo. 1, 170 S.W. 865; Concrete Steel Co. v. Reinforced Concrete Co., 72 S.W.2d 118. (4) Plaintiffs' title was not acquired by a voluntary conveyance without valuable consideration. They gave full value running over. See argument and cases cited under Point (3), supra, this brief. Vrooman v. Burdett, 336 Mo. 1181, 83 S.W.2d 95. (5) Plaintiffs' title was acquired at a valid trustee's sale unaffected by any previous transaction between Mr. and Mrs. Morgan. See argument and cases cited under Point (3), supra, this brief. (6) Plaintiffs invested far more than the income from this property. See argument and cases cited under Point (2), supra, this brief. (7) The failure of plaintiff, Forrest A. Talley, to testify, and the failure of plaintiffs to call Mrs. Morgan as a witness constitutes no basis for an unfavorable inference as defendants failed to make a case on the issue of fraud. Shidlowski v. New York, C. & St. L.R. Co., 333 Mo. 1134, 64 S.W.2d 259; Bahl v. Miles, 6 S.W.2d 661; Roehl v. Ralpy, 84 S.W.2d 405; Transamerican Freight Line, Inc., v. Monark Egg Corp., 236 Mo.App. 1046, 161 S.W.2d 687; Laughlin v. Boatmen's Natl. Bank of St. Louis, 163 S.W.2d 761; Bradley v. Becker, 246 S.W. 561. (8) As no fraud was shown the doctrine of postponement of the rights of a fraud feasor is inapplicable. See authorities cited under Point (1), supra, this brief.

OPINION

Douglas, J.

This is an action to enjoin the sheriff of Jackson County from selling real property under an execution and to prevent the holder of a judgment from asserting any claim against the property.

John R. Morgan acquired two adjoining apartment buildings in Kansas City. He borrowed from Betty Buchanan the amounts of the down payments he made in purchasing each apartment. An insurance company held a first mortgage and the Chrisman-Sawyer bank of Independence a second blanket mortgage covering both of them. Morgan became financially distressed. Proceedings were started to foreclose the first mortgage. They were stopped upon Morgan's producing receipted tax bills covering the properties and upon his making certain payments. The check which Morgan gave in payment of the tax bills was not paid but was returned by the bank so that the taxes were still not satisfied. The holder of the first mortgage then insisted Morgan have nothing further to do with the management of the properties. He thereupon deeded them to his wife who took over the management and collected the rents. Mrs. Morgan turned to her daughter, plaintiff Cyrena R. Talley, for help in keeping up the payments. Cyrena and her husband, plaintiff Forrest A. Talley, made payments which totalled $ 3,006.16 in an attempt to meet the obligations of the deeds of trust and maintenance expenses. A garnishment of the rents due apparently stimulated the bank to action in foreclosing the second mortgage for the nonpayment of two years' delinquent taxes. The Talleys made plans for a line of credit at their bank to finance the purchase of the apartments at the foreclosure sale. They were sent by their bank to the Chrisman-Sawyer bank where they learned the upset price at the sale would be the amount of the second mortgage and cost of foreclosure or a total of $ 3,822.96. They were advised by the officials of the latter bank to write off the money they had already paid on the apartments and were discouraged from bidding for them for the reason real estate values were then depressed and apartments a bad risk. However, at the sale the Talleys bid in the apartments at the upset price. The Chrisman-Sawyer bank loaned them the amount of their payment secured by a second mortgage on the apartments. The Talleys put up no cash for the purchase. They bought the apartments subject to the first mortgage and also subject to the unpaid taxes which amounted to about $ 3,000.

About a year later Morgan took bankruptcy. In his schedules he stated the plaintiffs held the title to the apartments for him; the foreclosure was for the purpose of shutting out other creditors and that the equity "is actually my equity subject to the rights of Talley and wife who I owe $ 1,500." He also stated the Talleys "bought in my apartments for me, to return same when I repay them." The trustee in bankruptcy seemingly was unsuccessful in having Morgan's alleged equity in the apartments included in the bankrupt's estate. At the time Morgan was to be discharged from bankruptcy Betty Buchanan objected to his discharge but withdrew her objections when he gave her his promissory note for $ 10,378. She later got judgment on the note and instructed the sheriff to levy on the apartments and sell Morgan's interest in them. The sheriff made the levy and was advertising the apartments for sale when the Talleys filed this suit to enjoin the sale.

The defendants' answer alleged the Talleys obtained the apartments under an agreement with Morgan for the purpose of defrauding his creditors and in pursuance of the agreement they provoked the foreclosure; and the Talleys hold the title in trust for Morgan.

The chancellor found the evidence did not sustain the allegations of defendants' answer; the foreclosure sale was regular and valid; the plaintiffs were the absolute owners of the apartments; and the apartments were not subject to the lien of Betty Buchanan's judgment. He cancelled the levy and enjoined defendants from proceeding with the execution sale. Defendants appealed.

No question is raised about the propriety of subjecting the apartments to the lien of the second deed...