Ross v. Ashton

Ellison, J. The plaintiff is trustee in a deed of trust given by one Scanlan, an insolvent debtor, to secure certain creditors. Defendant Ashton is a constable who held an execution against Scanlan in favor of defendant Jacobson and who had received certain sums of money from garnishees (alleged debtors of Scanlan) whom he had garnished under the writ of execution. This action is in equity and is to restrain defendant Ashton from paying the proceeds of such garnishment to Jacobson and to declare the money a trust fund to be administered by plaintiff as trustee under the deed of trust. Plaintiff makes his contest here in behalf of the preferred creditors named in the deed of trust. Defendant Jacobson (plaintiff in the execution) not being named in the deed of trust, attacked it as fraudulent, and the circuit court sustained his contention. There was evidence fully warranting the court in finding that it was the purpose of both Scanlan and plaintiff as trustee, the former in executing and the latter accepting the trusteeship, to hinder and delay other creditors not named in the trust deed. While the law is that a debtor may make preference among his [257] creditors and that a creditor may rightfully accept such preference, though he knows the debtor’s object is to defraud, hinder or delay other creditors, yet if the creditor goes beyond the point of obtaining or securing his own debt and participates in the intention of the debtor to defraud, hinder or delay other creditors, his action is wrongful and the transaction will be declared fraudulent. Meyberg v. Jacobs, 40 Mo. App. 128. partícipation^iiis fraud. Nhístü/ wllose gjiriiishmentj66' 2. In the case at bar there is no evidence that the preferred creditors named in the deed of trust participated in Scanlan’s fraudulent purpose. But it is sufficient to taint the transaction if the trustee participated in such purpose. Beardsley v. Crow, 68 Mo. 435. 3. Plaintiff, however, contends that he was Scanlan’s trustee and not the trustee of the preferred creditors, and therefore his intent and purpose can not be attributed to the preferred creditors. This contention can not be allowed. The action of plaintiff in accepting the trusteeship and the creditors in claiming preference by reason of the deed of trust, made plaintiff the trustee for both parties. The preferred creditors can not be permitted to make claim of preference through the deed of trust and at the same time reject the consequences following it. 4. The further point is made that the money garnished was money owing to plaintiff as trustee and was therefore not subject to the execution. The case of Woodson v. Carson, 135 Mo. 521, is cited in support of the point. It is said in that case: “It is settled law in this state that property in possession of a mortgagee or trustee under a valid mortgage or deed of trust, is not subject to levy under execution or attachment by creditors of the [258] mortgagor.7’ That case has no hearing on this for the all-sufficient reason that the deed of trust in this ease was found not to be valid. We are satisfied from the whole record, that the judgment should be affirmed. All concur.