The Waggoner-Gates Milling Company v. The Ziegler-Zaiss Commission Company
| Decision Date | 21 May 1895 |
| Citation | 31 S.W. 28,128 Mo. 473 |
| Parties | The Waggoner-Gates Milling Company v. The Ziegler-Zaiss Commission Company et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. John W. Henry, Judge.
Affirmed in part and reversed in part.
Warner Dean, Gibson & McLeod for appellant The American National Bank.
(1) A debtor, though in failing circumstances, may prefer one creditor over another. Hargadine v. Henderson, 97 Mo. 375; Sampson v. Shaw, 19 Mo.App. 274; Hard v. Foster, 98 Mo. 279; Sellers v. Bailey, 29 Mo.App. 174. This proposition is so well settled in this state that it is unnecessary to make any extended citation of authorities in support of it. (2) A creditor of a corporation has the same right to secure and retain a preference for his claim against a private corporation that he would have, were his debtor an individual engaged in the same line of business. Alberger v. Bank, 123 Mo. 313; St Louis v. Alexander, 23 Mo. 524; Kitchen v Company, 69 Mo. 254; Foster v. Planing Mill Co., 92 Mo. 87; La Grange, etc., Co. v. Bank, 122 Mo. 154. (3) The fact that after executing a mortgage giving a preference to a particular creditor, the debtor, on the same day, makes a general assignment of the balance of his property for the equal benefit of all his creditors does not affect the validity of the preference. Alberger v. Bank, 123 Mo. 313; Sampson v. Shaw, 19 Mo.App. 274; Bascom v. Rainwater, 30 Mo.App. 483; Rosenthal v. Frank, 37 Mo.App. 272; Brown v. Foster, 2 Metc. 152; Fairbanks v. Haines, 23 Pick. 323; Co. v. Mehl, 33 N.E. 773; Gilbert v. McCorkle, 11 N.E. 296; Cross v. Carstens, 31 N.E. 506; Whipple v. Stebbins, 35 N.W. 94; Nelson v. Gary, 19 N.W. 630; Bates v. Coe, 10 Conn. 280.
C. W. Chase for appellants Clara Zaiss, The Ziegler-Zaiss Commission Company and A. Schieferle.
(1) The petition did not state a cause of action. Sanger v. Flow, 48 F. 152; State to use v. Keeler, 49 Mo. 548; Manning v. Beck, 29 N.E. 90; Shelley v. Boothe, 73 Mo. 74; Williams v. Society, 1 Ohio St. 478; Jones v. Co., 39 Ga. 138; Armstrong v. Sanford, 7 Minn. 49. (2) It was error to admit any evidence at all, on account of the petitions not stating a cause of action. All of last above authorities. (3) A corporation has a right to prefer its creditors. La Grange, etc., Co. v. Bank, 122 Mo. 154; Foster v. Planing Mill Co., 92 Mo. 79; Sampson v. Shaw, 19 Mo.App. 274; Hargadine v. Henderson, 97 Mo. 375; Larrabee v. Bank, 114 Mo. 592; Bank v. Bank, 136 U.S. 223; Rosenthal v. Frank, 37 Mo.App. 272; Manhattan v. Co., 37 Mo.App. 145. (4) In the case at bar, the execution of the chattel mortgages and the execution of the assignment were separate and distinct transactions. Recording deed is delivery. Lumber Co. v. Anderson, 13 Mo.App. 429; Kane v. McCowen, 55 Mo. 181; Devorse v. Snyder, 60 Mo. 235; Turner v. Carpenter, 83 Mo. 333; Boyle v. Boyle, 6 Mo.App. 594; Hammerslough v. Cheatham, 84 Mo. 13. Assignment and mortgages not simultaneously executed. Sampson v. Shaw, 19 Mo.App. 274; Bates v. Coe, 10 Conn. 280; Brown v. Foster, 2 Metc. (Mass.) 152; Henshaw v. Summer, 23 Pick. 446; Cornell v. Todd, 2 Denio, 130; Cross v. Carstens, 31 N.E. 506; Brown v. Williams, 51 N.W. 851; Manning v. Beck, 29 N.E. 90; Co. v. Mehl, 33 N.E. 773; Bascom v. Rainwater, 30 Mo.App. 490. (5) In the case at bar, the mortgages were not executed for the purpose of hindering, delaying, or defrauding creditors. Sampson v. Shaw, 19 Mo.App. 274; Co. v. Mehl, supra; Hard v. Foster, 98 Mo. 297; Brown v. Banking Co., 54 N.W. 671; Cross v. Costens, 31 N.E. 506; Brown v. Williams, 51 N.W. 851; Kaufman v. Schnieder, 35 Ill.App. 256; Manning v. Beck, 29 N.E. 90; Sanger v. Flow, supra; Shelley v. Boothe, supra. (6) Section 424, of Revised Statutes of Missouri, 1889, makes preferences of creditors void only when such preferences are made in the deed of assignment itself. Douglass v. Cissna, 17 Mo.App. 44; Sampson v. Shaw, supra; Brown v. Foster, supra; Bates v. Coe, supra.
J. B. Hamner and Shelley Grover for appellant B. F. Coombs & Bro. Commission Company.
(1) Upon the facts found by the court, the judgment should have been for the defendant, B. F. Coombs & Brother Commission Company, instead of for the plaintiff, if a corporation can prefer creditors. First. A corporation may pay or secure some of its creditors in preference to others, although it is insolvent at the time of making such preference. La Grange, etc., Co. v. Bank, 122 Mo. 154; Foster v. Planing Mill Co., 92 Mo. 79. Second. And this is true, even though such preference may hinder and delay other creditors, provided the preference is a bona fide transaction. Foster v. Planing Mill Co., supra. (2) In the case at bar the execution of the two chattel mortgages and the deed of assignment were separate transactions, and all were valid and lawful. Sampson v. Shaw, 19 Mo.App. 274; Hargadine v. Henderson, 97 Mo. 375; Foster v. Planing Mill Co., 92 Mo. 79, which is cited with approval in Larrabee v. Bank, 114 Mo. 592; Shelley v. Boothe, 73 Mo. 74. And this is true, even though the mortgagor intended at the time of the execution of the mortgage to immediately thereafter make a general assignment. Sampson v. Shaw, supra; Larrabee v. Bank, 114 Mo. 592; Bank v. Bank, 136 U.S. 223. (3) The statutes of this state in reference to assignments, like the statutes of some of the other states, which make the preference of creditors invalid, was never intended to apply to any other instrument than the instrument of assignment itself, and the authorities all tend, and many expressly hold, in that direction. R. S. 1889, sec. 424; Sampson v. Shaw, 19 Mo.App. 274; Brown v. Foster, 2 Metc. (Mass.) 152; Bates v. Coe, supra.
Gates & Wallace for respondent.
(1) The making of the conveyances and the deed of assignment constituted one and the same transaction. These instruments were all drawn by the same attorney during the forenoon of the same day. They were all acknowledged by the same notary public. They were all taken to the recorder's office by one representative of the company at the same time, and filed for record within a few minutes of each other. The law will look upon such a transaction in its entirety, and treat the whole thing, as it is in fact, as an assignment for the benefit of creditors. The preferences will be declared void whether the preferred creditors at the time of accepting the same, knew of the assignment or not. Larrabee v. Bank, 114 Mo. 592; Preston v. Spaulding, 120 Ill. 208; In Re Geohegan, 24 Ill.App. 157; Reed v. Elliott, 134 Ind. 536; Berger v. Varrelmann, 127 N.Y. 281; Bank v. Bard, 59 Hun, 529; Holt v. Bancroft, 30 Ala. 221; Ellison v. Moses, 95 Ala. 221; Hardware Co. v. Implement Co., 47 Kan. 423; Bank v. Sands, 47 Kan. 591; Jones v. Kellogg, 51 Kan. 263; Lancaster v. Wheeler, 62 N.H. 479; Kellogg v. Root, 23 F. 525; Berry v. Cutts, 42 Me. 445; Van Patten v. Burr, 52 Iowa 518; Mahn v. Salmon, 20 F. 801. (2) The corporation, being insolvent and about to quit business, could not, in the settlement of its affairs, provide for the payment of those debts upon which the stockholders and directors were liable as sureties or indorsers, and leave its other creditors practically unprovided for. By this act, the directors, who were also the stockholders, secured to themselves a benefit and advantage which the law will not tolerate. The general rule may be admitted that the directors of a corporation in such a condition can prefer one creditor over another. But there is another rule which is a limitation upon this one, and that is, that they can not do so to their own advantage, and to the disadvantage of the unsecured creditor. Good-year Rubber Co. v. Geo. D. Scott & Co., 96 Ala. 439; Cory v. Wadsworth, 11 S. Rep. (Ala.) 350; Lippincott v. Carriage Co., 25 F. 577; Tank Line Co. v. Varnish Co., 45 F. 7; Howe v. Co., 44 F. 231; Banking Co. v. Empire Co., 91 Ga. 624; Adams v. Milling Co., 35 F. 433; Hayes v. Bank, 51 Kan. 535; Gibson v. Furniture Co., 96 Ala. 357; Beach v. Miller, 130 Ill. 162; Haywood v. Lumber Co., 64 Wis. 646; Sicardi v. Oil Co., 149 Pa. St. 148; Morawetz on Corp. [2 Ed.], sec. 787; Roan v. White, 93 Mo. 504; Williams v. Jones, 23 Mo.App. 132. (3) A conveyance by an insolvent debtor which is voluntary in part is fraudulent in toto. National Tube Works v. Machine Co., 118 Mo. 365; State ex rel. v. Hope, 102 Mo. 410; Boland v. Ross, 120 Mo. 208.
On the seventeenth day of April, 1890, the Ziegler-Zaiss Commission Company, an insolvent corporation, intending to prefer some of its creditors to others, and then to make a general assignment for the benefit of their creditors not preferred, executed two chattel mortgages, the first to the American National Bank and certain other parties, and the second to B. F. Coombs Commission Company and Henry Albers, and then a voluntary assignment for the benefit of all its creditors, the assignment being made subject to said mortgages. The mortgages and deed of assignment were all executed on the same day, delivered to an attorney of the Ziegler-Zaiss Commission Company and by him taken to and deposited in the recorder's office of Jackson county, Missouri, where the members of the company last named resided, for record, in the order above named, the space of time between their filing, being about five minutes between the first two, and fifteen minutes between the last two.
At the time of the execution of the mortgages and assignment the Ziegler-Zaiss Commission Company was indebted to the American National Bank in the sum of $ 2,000 as evidenced by two notes of $ 1,000 each, held by said bank, and said commission company was also indebted to said bank as indorser upon certain notes held by the bank, which the bank had...
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