Bigelow v. Stringer

Fagg, Judge, delivered the opinion of the court. In the argument of this case several points have been discovered which we do not deem necessary to consider in this opinion, as the matter of chief importance is the construction of the instrument under which the respondents claim to be entitled to the property, for the taking of which by the appellants they instituted their suit in the court below. The determination of the case must at last turn upon the question as to whether or not this instrument upon its face shows that it is within the statute of this State concerning fraudulent. conveyances. If it can be shown to be so, then it was — 205 — the duty of the court in which the cause was tried, as a matter of law, to have declared it fraudulent and void by giving the instruction to that effect which was asked by the defendants. There was evidence, it is true, tending to show that the purpose of the grantors in making the conveyance was to get time, and to prevent a forced sale of the goods by other creditors, thereby caxxsing them to be sacrificed; and we think the court erred in refusing to give an instruction hypothecated upon the evidence of Williams, one of the grantors. It was shown that these grantors (Williams & Crooks) were largely indebted to other parties besides those provided for in the deed. These parties were obtaining judgments against them, and Williams, who testified in behalf of plaintiffs, says substantially that one of the chief inducements to the execution of the deed was to prevent these judgment creditors from forcing their property to sale, and that the persons representing the respondents told him that he coxxld prevent the sacrifice of the goods in that way, and he therefore executed the conveyance in order to get time. But passing this by, as well as the other points in reference to the competency of Williams to testify — the delivery of the goods to respondents — the assent of Crooks to the conveyance, which was executed by Williams alone after a refusal upon the part of the former to sign it — as well as other questions discxxssed, we come directly to consider the main question. It will not be necessary to review the former decisions in this court in the various cases which have arisen under this statute. It is perhaps safe to say, that, in every case to be found in our own reports, it has been held, that where it is apparent from the face of the deed itself that it is a conveyance to the use of the grantor, it is the duty of the coxxrt trying the cause, as a matter of law, to tell the jury that such conveyance is absolutely fraxxdulent and void as against creditors.—Robinson’s exec’rs v. Robards, 15 Mo. 459; Gates v. Labeaume, 19 Mo. 11; Brooks v. Wimer, 20 Mo. 508; Wal — 206 — ter v. Wimer, 24 Mo. 63; Stanley v. Bruce, 27 Mo. 269; Hall v. Webb, 28 Mo. 408; Johnson v. McAllister’s assignees, 30 Mo. 327; Potter v. McDowell, 31 Mo. 62; and State to use, &c. v. Benoist et al., 37 Mo. 500. In the case of Zeigler v. Maddox, 26 Mo. 575, Judge Scott, in delivering the opinion of the court, says: “When the deed is fair on its face, but is affected with a secret trust in favor of the grantor, as such secret trust can only be shown by extrinsic evidence, the existence of fraud is a matter of fact to be tried by a jury, who will determine whether a deed was made with an intent to hinder, delay or defraud creditors or purchasers, such case coming within the provisions of § 2 of the act concerning fraudulent conveyances. In a case arising under the first section of the act, it is not necessary that the deed in so many words should express that it was in trust to the use of the grantor ; but if such is the legal effect of it, as gathered from its language, the court will, as a matter of •law, declare that it is void.” If it is meant by this decision ¡that the court would only be authorized, as a matter of law, .to declare deeds void which come within the first section, .and that in every case arising under the second section the question as to hindering, delaying and defrauding creditors is one of fact necessarily to be submitted to a jury, it is difficult to perceive upon what ground such a distinction rests. Under the first section, the question is whether or not it is a conveyance to the use of the grantor; under the second, it is true the word “intent” is used, but it does not necessarily follow that this can only be ascertained by extrinsic evidence. It is as much the duty of the court to declare the legal force and effect of the deed in the one case as it is in the other ; and although it may not be expressed in terms, yet if a fair construction of its provisions will justify the conclusion that it will operate so as to hinder, delay or defraud creditors of their lawful actions and demands, it should be declared fraudulent and void as to creditors — State to use, &c. v. Benoist et al., 37 Mo. 500. Every man must be presumed to intend the necessary consequences of his act. — 207 — It is insisted on the part of the respondents that this conveyance was intended simply as a mortgage or security, and is not to be regarded as an absolute conveyance and transfer of the goods to be applied to the payment of the debts recited-in it. It is true that the deed was not executed, and the assignees have not proceeded in accordance with the provisions of the act in relation to voluntary assignments ; but we think that the theory upon which this suit was prosecuted in the lower court, as well as the intention of the parties to the deed, warrant us in treating it as an absolute conveyance and delivery of the property for the purposes indicated. Here was a stock of goods, stated in the schedule attached to the deed to be worth over $14,000, estimated at St. Louis wholesale prices, transferred for the payment of debts amounting in the aggregate to about |7,650. The deed after enumerating the debts to be paid, and describing the property conveyed, proceeds as follows : “ And the parties of the second part are by these presents authorized to take immediate possession of the same, and shall proceed as rapidly as possible to sell said goods, wares and merchandise, at wholesale or retail, as a prudent merchant would dispose of his own merchandise, and apply the proceeds, after the payment of necessary expenses, to the liquidation of the debts and interests aforesaid, distributing the proceeds among said debts and.interests according to amount so as to make the payment on each debt and interest equal; and if there should be a surplus of goods, wares and merchandise, or of the proceeds thereof, the parties of the second part shall deliver and pay over the same to the parties of the first part, their executors, administrators and assigns, and the parties of the second part covenant with the parties of the first part to keep accounts, and just accounts, of all sales of said goods, wares an'd merchandise, and of the necessary expenses, and at all times to allow the parties of the first part access to the accounts aforesaid, and to observe — 208 — in all things the provisions of this conveyance. If the proceeds of said goods, wares and merchandise should not amount to enough to liquidate said debts and interest, after the payment of necessary expenses, within two years from the date of these presents, the parties of the second part may proceed to sell the remnant of said goods, wares and merchandise at public auction to the highest bidder, for cash, upon thirty days’ notice of the time and place, disposing of the proceeds as hereinbefore provided.” The parties to this deed at the time of its execution must have contemplated a large surplus in the hands of the assignees, if the business should be carried on honestly and diligently. It really seems to have been intended simply as a continuation of the business in the ordinary way for a period of two years. It was not to be conducted by the grantors, or in their name, but it was at all times to be open to their supervision and inspection. The mere fact of a reservation of a surplus would not of itself make it a conveyance to the use of the grantor. Upon this point, the former decisions of this court have not followed the course of decisions of the New York courts—Richards et al. v. Levin, 16 Mo. 596; Johnson v. McAllister’s assignees, 30 Mo. 327. It was held in these two cases that such a reservation was really nothing more than what the grantor would be entitled to by law. This would certainly be taken to be the true interpretation óf a deed in a case where there was no doubt of the insufficiency of the property conveyed to pay the debts provided for, or that possibly there might be something more than the required amount. In either case, it could hardly be considered as good ground for attacking the bona fides of the transaction, because the surplus should be regarded as a mere contingency, and as something not certainly within the contemplation of the parties. Here the property was at least double in value the amount of the debts ; it was protected from forced sales by other creditors for a period of two years; the business to be — 209 — conducted in such a manner as to realize as much as possible for the goods, and, to a certain extent, under the supervision of the grantors. These were manifest advantages enuring directly to the benefit of the grantors. The property was safe from sacrifice for that period of time, and the surplus over and above the payment of expenses and the debts preferred was to be made as large as the nature of the case would admit of. There was no legal process by which the remaining creditors could have reached this surplus and made it available for the payment of their debts within the two years. These considerations would lead us very far towards the conclusion that the deed was in point of fact within the provisions of the first section of the act; and if the court below had so declared upon the trial, we should have felt much hesitation in reversing its judgment on that account. We think, however, that it comes most clearly within the second section, and should be held to be utterly void. This ruling is not believed to be contrary to the letter or 'spirit of any former determination of this question by this court, and is in strict accordance with the principles settled by the case of State to use, &c. v. Benoist et al., 37 Mo. 500. The judgment of the court of Common Pleas must be reversed and the cause remanded. The other judges concur. Motion for rehearing overruled.