Green v. Baxter

GOODE, J".- — No point was made by any of the parties about the propriety of this proceeding on the part of the constable, nor shall we make any. It ought to be stated there is no evidence proving or tending to prove the transaction between Baxter and RoBards, by which the former’s note against Barkley was assigned to the latter as collateral security for money borrowed and legal services to be rendered, or the subsequent assignment of the judgment for the amount of said note for the same purpose, was inspired by a corrupt motive — 639 — or made for the purpose of hindering or defrauding Baxter’s creditors. If the transaction was fraudulent at all, it was constructively so because the residuary interest Baxter retained, to be received by him after RoBards’ claim was satisfied, was not disclosed. The evidence shows and the court found that at the date of the assignment of the judgment to RoBards, Baxter was and ever since has been a resident of Marion county, the head of a family and that he did not own any of the articles of personal property enumerated as exempt from execution (R. S. 1899, sec. 3159) and had no personal property subject to levy at the time the execution on Riefesel’s judgment was issued unless the debt in controversy was. The constable did not apprise Baxter of his exemption rights before the garnishment was served; but the latter claimed the fund impounded or attached in Barkley’s hands as exempt, by a written notice served on the constable prior to the rendition of judgment against the garnishee and in ample time to protect his statutory right to the exemption. State ex rel. v. O’Neill, 78 Mo. App. 20; State ex rel. v. Emerson, 74 Mo. 607. Riefesel contends, and the court below held, that Baxter could not claim the excess of his judgment against Barkley over and above RoBards’ interest therein as exempt, because he had made a fraudulent assignment of it. It is doubtful whether the assignment to RoBards was even constructively fraudulent, and beyond doubt that it was not actually so. But putting aside the query as to whether it would have been voidable at the instance of a creditor if it had covered property in excess of appellant’s exemption rights, the question that remains is, conceding for the sake of argument that it was legally fraudulent, as Baxter owned nothing else, was lie not, nevertheless, entitled to claim this fund in lieu of the articles mentioned in the first and second subdivisions of the section of the statutes above cited ? No court of this State, or so far as our examination has shown, of any other, has decided that — 640 — a conveyance or assignment of property made without any dishonest intention, but which the policy of the law might hold to be invalid as to creditors, precludes a debtor from claiming the assigned property as exempt if it falls within the exemptions allowed by the statutes. In some cases where property which was not specifically exempted from execution by a statutory provision, had been transferred for the purpose of defrauding creditors, the ruling was that it could not be selected by the fraudulent debtor as exempt in lieu of other property which was specially exempted. This view finds slight countenance, we think, from the decisions in our State; at least from the later and more authoritative ones, which recognize the principle that creditors have no right to complain of a disposition either voluntary or for a consideration, bona fide or fraudulent, which a debtor may make of property that could in no event be taken by them for the satisfaction of their demands. This is the doctrine laid down in Davis v. Land, 88 Mo. 436, where the matter discussed was whether a fraudulent conveyance of a homestead could be subjected to process at the instance of a creditor of the owner. It has been followed ever since. Bank v. Guthrey, 127 Mo. 189 ; Bartels v. Kinnenger, 144 Mo. 370. In Bank v. Guthrey, supra, where the defendant had conveyed a farm worth fifteen hundred dollars to his daughter in consideration of her supporting him during his life, such conveyance was recognized as one that would have been invalid against creditors if the land had been subject to execution, but valid because it w'as a homestead. The court said: “That rule has no application to property which is exempt from seizure and sale under attachment and execution, such as a homestead. Creditors have no interest in such property, as it can not be subjected to the payment of their debts by proceeding in equity any more than it can be seized under attachment or execution.” — 641 — In Vogler v. Montgomery et al., 54 Mo. 577, where the question wTas, whether the owner of a homestead, by conveying it prior to a levy on it, had forfeited his right to be protected from a sale which would cloud his title, it was said: “If this conveyance was in good faith and valid then it is obvious that an execution and a sale under it would convey nothing; but if it is fraudulent, as it doubtless was claimed to be by the execution creditor, then the title was in Yogler, and the homestead law7 exempted it from execution. It appears to be the received opinion that neither a fraudulent conveyance nor an act of bankruptcy on the part of the head of a family will produce a forfeiture of the benefits of the homestead exemption (Cox v. Wilder, 2 Dillon, O. C. 46). Judge DilloN thinks these laws are chiefly for the benefit of the family and, therefore, wdll not allow the fraudulent acts of the head of the family to subvert the policy of the law, and this opinion was upon our Missouri statute.” In Megehe v. Draper, 21 Mo. 510, the defendant had caused certain property of the plaintiff to be seized on execution which the plaintiff claimed was exempt to the value of one hundred and fifty dollars, but the defendant caused it to be sold and on being sued for that act, defended on the ground that the plaintiff had other property not exempt from execution which he had concealed from the officer so as to prevent it from being seized. This defense proved unavailing, the court holding in effect that the merits or demerits of an execution debtor who is the head of a family, or the good or bad faith which marked his conduct, did not affect the protective efficacy of the statutes, which were intended, not for his benefit alone, but for that of his wife and children as well. “The Legislature had an eye to the family of the debtor, to his household, and determined to prevent as much suffering and misery from entering into such abodes as they could, by sav — 642 — mg to them tbe small allowance mentioned in tbe statutes/’ says tbe opinion. It is true, a homestead is specifically exempted from levy by tbe statute, as are certain articles of personal property; whereas, tbe debt garnished in tbe present case only became exempt when selected by the execution debtor in lieu of exempt articles which be preferred to part with or did not own. On this ground a distinction has been drawn in some decisions between the two binds of property; namely, that whose status, as exempt from execution, is fixed by the very terms of the statutes, and that which only acquires such a status when the owner has exercised his privilege to claim it in place of the articles designated in the statutes. The theory of the distinction is, that property which only possesses immunity from levy at the option of the owner, which option he must exercise personally, can not be raised to the status of exempt property after the owner has made a fraudulent transfer of it; because, as he no longer owns it, he can not himself exercise the option, and as the exemption exists for his benefit exclusively, neither can the transferee. That doctrine is fallacious and tends to defeat the policy of the law, as it enables a creditor to seize goods of a debtor, because of a wrongful disposition of them by him, which his family would otherwise enjoy free from the creditor’s claim. It deprives the innocent beneficiaries of the law of the protection to which they are entitled because of the husband’s or father’s guilty act. The rule laid down in the above mentioned cases in regard to homesteads is sounder and more fully realizes the beneficent purpose of the statutes. And it has been ruled that the provisions in relation to the homestead right and those relating to the exemption of personal property from execution are in pari materia and" should be construed together. “They have a common object in view. In the one case it is to allow the family for their comfort and support to keep certain necessary articles of which they can not be — 643 — deprived; and in the other to have and secure a permanent home free from the attacks of all creditors.” State v. Pitts, 51 Mo. 133. From the debtor’s prison to the free homestead and its furniture, is one of the longest strides upward the law has ever taken; a benign result of the sympathetic and essentially truer conception of right and justice which gradually became dominant in public opinion and finally took effect in legislation during the last century. Applying the 'doctrine announced in the homestead cases, on the principle that all the exemption statutes are parts of one body of laws designed to protect unfortunate families from the rapacity of creditors who might otherwise strip them of food, raiment and shelter, this court decided in State ex rel. Neimann v. Koch, 47 Mo. App. 269, that where a debtor had made a fraudulent conveyance of certain personal property, but had remained in possession of it, he might claim the same as exempt from execution if he owned no other property when the levy was made, on the ground that he ought not to be es-topped from asserting his statutory privilege (which would inure and was intended to inure to the benefit of his wife and children) as possession had not been taken by the transferee in the fraudulent conveyance. Riefesel’s legal rights can be in no way infringed by permitting appellant to claim the fund in controversy as exempt he having given notice of his claim before judgment was rendered against the garnishee and it appearing that he had no other property which Riefesel could have seized if he had not pursued this fund, nor any other which the appellant could have claimed. Riefesel was not and could not have been misled to his prejudice by the assignment to RoBards being absolute on its face, and there was no element of estoppel in the case, to prevent Baxter from selecting this money in lieu of other articles which he would have been entitled to hold free from levy if he had possessed them. From the foregoing considerations the conclusion results — 644 — that the court below erred in adjudging that the money be paid to respondent and that judgment is, therefore, reversed and the cause remanded with the direction that a decree be entered in favor of the appellant. Bland,, P. J., and Barclay, J., concur.