Teutenberg v. Hoover

• Decision Date: 13 April 1923
• Docket Number: No. 23142.,23142.
• Citation: 250 S.W. 561
• Parties: TEUTENBERG et al. v. HOOVER et al.
• Court: Missouri Supreme Court

250 S.W. 561

TEUTENBERG et al. v. HOOVER et al.

No. 23142.

Supreme Court of Missouri. Division No. 1.

April 13, 1923.

Appeal; from St. Louis Circuit Court; Franklin Ferries, Judge.

Action by Charles Teutenberg, administrator of the estate of William Grafeman and others, against Grace A. Hoover and others. From judgment dismissing the bill, plaintiffs appeal. Reversed, with directions.

Thos. S. Meng, of St. Louis, for appellants.

Wilfiey, Williams, McIntyre, Hensley & Nelson, of St. Louis, for respondents.

RAGLAND, J.

This is an action to set aside certain conveyances affecting real estate in the city of St. Louis on the alleged ground that they are fraudulent as to creditors. The real estate involved is described in the petition as follows:

"Parcel 1: A lot in city block No. 2002, fronting 99 feet 9 inches on the north line of Washington avenue and bounded Nineteenth street.

"Parcel 2: All of city block 2006, bounded on the south by Washington avenue, on the north by Lucas avenue, on the east by Twentieth street, and on the west by Twenty-First street.

"Parcel 3: A lot of ground in block numbered 2004 of the city of St. Louis, fronting 50 feet, more or less, on the southern line of Washington avenue, by a depth southwardly of 150 feet, more or less, to the north line of St. Charles street, on which said lot fronts 50 feet 5 inches, more or less, and bounded north by Washington avenue, east by land now or formerly owned by Wright, and west by a line parallel with and 113 feet east of the east line of Twentieth street.

"Parcel 4: Lots numbered 34 to 48, both inclusive, and the western 5 feet of lot No. 49 in block No. 1 of Lane and Renich's addition, and in block No. 444, north of the city of St. Louis, fronting together 308 feet, more or less, on the southern line of Poplar street, by depth southwardly of 100 feet, more or less, to an alley.

"Parcel 5: Lots numbered 50 to 56, both inclusive, of said subdivision, and in said block No. 444 north of the city of St. Louis, Mo., fronting together 182 feet 6 inches, more or less, on the southern line of Poplar street, by a depth southwardly of 100 feet, more or less, to an alley, and bounded west by lot 49 and east by Fourteenth street."

William Grafeman, having had to pay a note of Grace A. Leathe dated September 2, 1915, on which he was an indorser, instituted suit in the circuit court of the city of St. Louis against her and two of the defendants In this case, the Leathe Investment Company and Title Guaranty Trust Company, to recover the amount thereof. The suit was dismissed as to the guaranty company. The two remaining defendants failed to answer, and judgment was rendered against them and in favor of Grafeman, December 14, 1916, for the sum of $10,566.67. In execution of the judgment the interest of the two defendants therein in the real estate above described was sold and conveyed by sheriff's deed to Grafeman, December 10, 1917. The amount received on the execution sale was $350. Of this sum $168.54 was applied to the payment of costs, and the remainder was credited on the judgment. The execution was then returned unsatisfied. The present plaintiff, Julia Grafeman, is William Grafeman's successor in title as to both the judgment and the real estate, if any, conveyed by the sheriff's deed.

The conveyances sought to be set aside are as follows: Deed from Grace A. Leathe, dated April 7, 1914, to the guaranty company, purporting to convey said parcels and 2 and other real estate situated in the city of St. Louis; deed from Grace A. Leathe, dated May 22, 1914, to the Leathe Investment Company, purporting to convey said parcels 3, 4 and, 5: deed from Leathe Investment Company, dated May 20, 1915, to the guaranty company, purporting to convey said parcels 3, 4, and 5; two deeds from Mortgage Trust Company, pursuant to foreclosure sales under deeds of trust, dated August 10, 1916, to Thomas J. Sheridan, one of which purported to convey said parcel 1, and the other said parcels 2 and 3; and deed from Sheridan, dated August 11, 1916, to Thomas F. Stephens, purporting to convey said parcels 1, 2, and 3.

The deed from Grace A. Leathe to the guaranty company, which was absolute on its face, was made pursuant to a written agreement, duly signed and acknowledged in duplicate by the parties, whereby the conveyance was to be made to protect the guaranty company from all loss that might be occasioned by its insurance of Mrs. Leathe's title to certain real estate as against the lien of a possible judgment then impending. The deed from Leathe Investment Company (which was Mrs. Lea the's alter ego) to the guaranty company was also absolute on its face, but was made in accordance with an agreement similar to the one previously entered into between her and the latter company. The provisions of both agreements will more fully appear from the facts presently to be narrated.

The grounds upon which the deeds are sought to be annulled are practically the same with respect to each, namely, that—

"It was * * * made in secret trust for the benefit of * * * Grace A. Leathe, and was made, executed, and contrived for the purpose and with the intent of hindering, delaying, and defrauding the creditors of said Grace A. Leathe, and that the effect of the execution, delivery, and recording of the same was to hinder, delay, and defraud the creditors of said Grace A. Leathe."

A summary of the facts, chronologically stated, which have a direct bearing on the issues and about which there is practically no dispute, we take from respondents' statement and brief as follows:

"Samuel H. Leathe died in the city of St. Louis in 1907, and by will devised a large amount of real estate, including the real estate in question, to his wife. Grace A. Leathe, a defendant in the case at car. Before the contracts and conveyances in question were executed there was pending in the Supreme Court of Missouri a suit wherein Elizabeth C. Knisely, administratrix of Charles H. Knisely, was plaintiff, and Grace A. Leathe, executrix of Samuel H. Leathe, was defendant. The suit was on a claim against Samuel H. Leathe. 256 Mo. 341, 166 S. W. 257. Judgment had been rendered for the defendant in the circuit court of the city of St. Louis, and during the negotiations leading to the contract and conveyance of April 7, 1914, the case was pending on appeal in the Supreme Court of Missouri.

"The first opinion of this court ha the Knisely-Leathe litigation * * * was handed down on January 3, 1914; motion for rehearing overruled March 3, 1914. That decision clearly indicated * * * that the Knisely judgment might and most probably, if not certainly, would result in a judgment in favor of the plaintiff and become a lien against all of the real estate of the estate of Samuel H. Leathe, superior to all claiming through Mrs. Leathe.

"At the time this decision came down. Mr. McCawley's firm (Hildenbrant & Noble) were agents for Mrs. Leathe in the sale of real estate received from her husband's estate and in negotiating loans on such real estate. The decision of this court made it impossible for Mrs. Leathe to sell such real estate, to borrow money on such real estate, or in fact do anything with it.

"Mrs. Leathe some time before the decision had sold certain real estate to Leschen and had received in part payment therefor four notes for $20,000 each, secured by mortgage on the property sold. Because of the likelihood of the Knisely claim becoming a judgment and prior lien upon this property, Leschen was refusing to pay these notes. * * *

"At the time the decision mentioned came down, Mrs. Leathe had loans aggregating $490,000 with the Mortgage Trust Company which would become due in 1915, and in order to renew those loans guaranties of title would be necessary. There was a second deed of `mist on this same property for $100,000.

"Because of the necessity of having guaranties of title in order to renew loans, sell real estate, or secure the payment of the Leschen notes, Mr. McCawley, as Mrs. Leathe's agent, following the first decision of this court in the Knisely-Leathe litigation, went to the Title Guaranty Trust Company to procure it to issue guaranties of title against the Knisely claim and enable these matters of Mrs. Leathe to be handled. Negotiations were had for some period of time, resulting in the contract of April 7, 1914, which provided for the conveyance (with other property) of the first two parcels described in plaintiff's petition in the case at bar. * * *

"The contract itself shows that its purpose was to arrange for Mrs. Leathe to secure from the Title Guaranty Trust Company guaranties of title against the Knisely claim, and in order to secure such guaranties to provide for the protection of the Title Guaranty Trust Company against loss on account of such guaranties, if the Knisely claim should become a judgment, and therefore a lie a upon the properties. By this contract the Title Guaranty Trust Company agreed that, on receiving conveyances of the * * * parcels of real estate described in the contract to secure it against loss, it would issue its guaranties of title to Mrs. Leathe, subject only to liens and incumbrances other than the Knisely claim; in other words, that it would guarantee Mrs. Leathe's titles against the Knisely claim.

"The contract provided that, if the Knisely claim was defeated by final judgment or was settled so that it ceased to be a lien upon the real estate of Samuel H. Leathe, then the real estate conveyed to the Title Guaranty Trust Company, pursuant to the contract, and any money or securities held in lieu of any sue] real estate that might have been sold in accord mace with the contract, should be conveyed am transferred to Mrs. Leathe. * * *

"The contract also provided that, if line judgment should be rendered for the plaintiff in the Knisely claim, and the claim therefor became a lien upon the...