Kitchen v. Reinsky

Fagg, Judge, delivered the opinion of the court. The subject matter of controversy in the suit between these parties is certain real estate in the city of St. Louis, to which the — 435 — plaintiff below claimed title as purchaser at a sale made by the assignees of Cochran & Pollack, and also by deed from Cochran himself.* The defendants set up a title to the property under proceedings in attachment commenced subsequent to the execution and recording of the deed of assignment. The deed was executed and acknowledged before a proper officer, and in due form, in the city of New York, on the 18th day of February, 1860, and filed for record in the office of the recorder of land titles for St. Louis county, on the 25th day of the same month. The attaching creditors of Cochran, being also residents of the city and State of New York, instituted their suit in St. Louis on the 2d day of March following, upon a judgment obtained in that State. This suit was prosecuted to a judgment and sale of the property, upon which rests the title set up by defendants. It appears from the bill of exceptions that there were two trials of this cause in the St. Louis Circuit Court. Although there is some confusion upon this point, sufficient appears to show that at the time of the first trial an application was made by the defendants for a continuance. The chief ground stated in the affidavit was that testimony had been discovered too late to be used in the trial to prove that “Cochran, one of the assignors under whom plaintiff claims title, was insolvent at the time he made the assignment, and that he made the same to hinder and delay creditors, and that the same is void.” It is further stated in the bill of exceptions that, the application being held sufficient by the court, “the plaintiff elected to go into trial, and admitted the facts stated in the affidavit.” At the second trial the defendants offered this admission in evidence, and it was excluded by the court. It was claimed, in the motion for a new trial, that the ruling of the court upon this point operated as a surprise to the parties, and they now insist that it was erroneous and constitutes good ground for a reversal of the judgment. It is plain that the statement of the counsel was not intended to go to the extent of admitting unconditionally the truth of the assertion made by the affiant in reference to the fraudulent intent of the party executing the deed. — 436 — At most, it simply admitted the fact that the statements of the. affidavit in reference to that matter were to be regarded as proved, for the purposes of that trial. Any other construction would place the plaintiff in the attitude of having admitted away the chief part of the grounds upon which he evidently rested his right to recover. It was not in any sense an admission of. record, and stood upon the same ground precisely as if the absent witness had himself been present and testified to the facts stated in the affidavit. The fact that the admission was preserved by a bill of exceptions does not alter the case at all. The testimony of the witness himself, if preserved in the same manner, could not have been read at the second trial. It was therefore not a surprise in a matter of fact, and constituted no ground for new trial. As no diligence was shown on the part of the defendants to procure the testimony of the witness, and there was no ground upon which the admission of plaintiff’s counsel could be introduced in evidence, this point must be decided against the appellants. That all the minor questions in the case may be first disposed of, we proceed to consider next the amendment of the sheriff’s return to the writ of attachment. It contained no description of the property levied upon, but referred to another writ of prior date for the same, and was in other respects informal. This writ was issued and served on the 2d day of March, 1860, and by permission of the court was amended on the 20th day of March, 1866, long after the institution of this suit. The discretion of the Circuit Court as to matters of this kind is very large under the laws of this State. Although an amendment of the process should be allowed after judgment, and without notice, still it will not be questioned in the absence of anything tending to show an improper exercise of such discretion. The effect of the amendment in this case was to give the defendants the benefit of a regular and valid service of the writ on the 2d day of March, 1860, and to make the title which passed by the conveyance of the property under the attachment sale relate back to that sale. The deed of Cochran to the plaintiff bears date September 1, 1860. The lien, therefore, which was acquired by the levy of the attachment was prior in point of time, and must — 437 — hold as against any subsequent conveyance of the property by Cochran himself. The court below committed no error in declaring that this conveyance was inoperative to pass any title to the land in question as against the purchaser under the attachment sale. The' plaintiff’s whole case, then, must stand exclusively upon the validity of the assignment. The conveyance made by the assignees of Cochran & Pollack to the plaintiff was also executed on the 1st day of September, 1860. On the trial the court refused an instruction asked by the defendants declaring this deed as well as the assignment inoperative to pass any title to the plaintiff. They seem to have been executed, acknowledged, and recorded substantially in conformity with the requirements of the statutes of this State regulating the conveyance-of real estate, and therefore present no difficulties on that score. The sole question remains as to whether the deed of assignment was fraudulent and void as to the attaching creditors of John Cochran. It purports upon its face to be a conveyance of all the property, real and personal, belonging to the firm, as well as to each of the members thereof, wherever situate, to the assignees named, in trust, for the uses and purposes declared. After providing for the payment of the costs and expenses of executing the trust, and the payment of wages due and owing to persons employed in their store in the city of -New York, they direct the assignee “to pay off all the debts due and owing by the said firm of Cochran & Pollack, or the late firm of Abbott, Cochran & Pollack, or either of the members of said firms, to Cornelius Eiske.” Directions were then given for the payment of certain specified creditors of both the firms mentioned, and lastly, “the surplus, if any, after the said debts and liabilities shall be paid in full, to restore and pay over to the said John Cochran, his heirs,” etc. The parties to be affected by the assignment were all citizens of the State of New York. Hence it is admitted that as to them, in the enforcement of its provisions in this State, the rule would hold without qualification, that if it is valid by the laws of the State of New York, it is so to be regarded here; so that if the question of its validity were to be decided without reference to — 438 — any rights or liens acquired under the laws o£ this State by any of the parties thus interested, we should look no further than the laws and adjudications of the courts of that State upon the subject. (Bur. on Ass. 370.) The claim of the defendants in the court below rests upon a lien acquired by a regular proceeding under the laws of this State. The parties acquiring that lien were judgment creditors of John Cochran, and had a right to inquire into the validity of any transfer of his individual property. The defendants claiming under them are- therefore clearly in a position to attack the bona fides of the assignment. It can make no difference whether this question is to be settled by the laws of this State or the law's of New York. It is apparent from the face of the deed that the individual property of Cochran was appropriated to the payment not alone of the debts of the firm, but the debts of his co-partner, Pollack, and also of Abbott. He was in no sense liable for the individual debts of these parties. It was a voluntary undertaking upon his part to pay the debts of other parties, and the appropriation of his own property to that purpose, to the manifest injury of his individual creditors. A conveyance or assignment by a debtor, especially of the whole or a greater part of his property, should not be employed as a means of preserving it for his own use or benefit, or of unduly protecting it from the remedies of his creditors. It may be conceded for all the purposes of this case that the individual property of Cochran could be appropriated to the payment of the partnership creditors, to the exclusion of his personal creditors. He was individually liable for all the partnership debts, and the question of preference as between the two classes of creditors need not be considered. The real matter of inquiry is, whether the individual debts due by his co-partner, or Abbott, a mere stranger, and without an interest either in the property of the partnership or either member of the firm, can be provided for in a conveyance covering his entire property, to the exclusion of his bona fide creditors. Such a conveyance cannot be upheld. As to the attaching creditors, it must be held as utterly fraudulent and void, and passed no title to the property in question. — 439 — The other provisions of the assignment need not be considered. The judgment o‘f the Circuit Court will therefore be reversed and the cause remanded. The other judges concur. Footnotes [*] The deeds were dated September 1, 1860.