Summary
concluding that, although the real estate in question had been acquired with funds belonging to the husband, it had been placed in the wife's name for the mere purpose of avoiding his creditors and would therefore be subjected to a lien in the creditors' favor
Summary of this case from In re TrueOpinion
July 3, 1931.
1. EVIDENCE: Admission Against Interest: Deposition. In an action to set aside a conveyance to a defendant wife and subject the real estate to a lien of a judgment in favor of plaintiff against her defendant husband, the deposition of the husband may be taken in the cause and read in evidence by the plaintiff, if relevant as an admission, though he is present and willing to testify, where neither husband nor wife, in their respective depositions, testified to any admission or confidential communication of the one to the other.
2. FRAUD: Deals Between Husband and Wife. Courts in search of fraud scrutinize deals between husband and wife with a jealous eye. They do not assume fraud, but they may infer it from facts and circumstances. The relation of husband and wife afford a convenient and much-used cover for transactions designed to screen property from creditors.
3. ____: Deference to Chancellor. The trial court who has before him all the parties to a conveyance to a wife alleged to have been made in fraud of creditors, and observes their manner of testifying, is in a better position to weigh their credibility than the appellate court can be, and therefore deference to his ruling will be made.
4. ____: Wife's Estate: Management by Husband. A husband may manage his wife's separate property without subjecting it or the profits arising from his management to claims of his creditors, but this rule has no application where it is predicated on an assumption that all the investments which the husband made were made for his wife with her inheritances and profits arising from his management of the investments.
Appeal from Circuit Court of St. Louis County. — Hon. J.C. Kiskaddon, Judge.
AFFIRMED.
W.L. Cole and T.P. Hukriede for appellants.
(1) The declarations of a coconspirator are only admissible against their associates when such declarations form a part of the res gestae and accompany the prosecution of the common object. Poe v. Stockton, 39 Mo. App. 550. (2) To render statements of one coconspirator admissible as against the other, competent evidence must be adduced tending to establish the conspiracy. In re Largue's Estate, 200 S.W. 83; Lewellen v. Haynie, 25 S.W.2d 502; 12 C.J. 639. (3) The acts and the words of the husband regarding his wife's property are no more binding on her than they would be on an entire stranger. Baker v. Thompson, 114 S.W. 498. (4) The money, being originally the separate estate of the wife, furnished a good consideration for the transfer to her as against the creditors of her husband. Cooper v. Standley, 40 Mo. App. 138; Citizens' Bank v. Burrus, 77 S.W. 748. (5) A husband may manage separate property of his wife without necessarily subjecting it or profits arising from his management to claims of his creditors. Clapp v. Kenley, 210 S.W. 10. (6) The simple taking of the deed without an intention on the part of the grantee to defraud creditors was not sufficient to avoid it. Implement Co. v. Ritchic, 60 S.W. 87; Ulrich v. Pierce, 233 S.W. 401. The evidence in this case falls short of showing any intent to hinder and delay creditors, and the whole case, being based on the admission of evidence not admissible, should be reversed.
James Booth for respondent.
(1) If defendant Matilda Williams bought the Owensville property here in controversy, and it was paid for with the moneys of her husband, then the conveyance complained of would be fraudulent as to the creditors of D.E. Williams, and his wife would merely hold the legal title as trustee for him, subject to be divested and subject to the lien of plaintiff's judgment. East St. Louis Ice Cold Storage Co. v. Kuhlman, 238 Mo. 685; Garrett v. Wagner, 125 Mo. 450; Patton v. Brag, 113 Mo. 595. (2) Such a conveyance would be voluntary, presumptively fraudulent, and the burden would be on the grantee to establish its validity. Miller v. Allen, 192 S.W. 167; Scraff v. McGaugh, 205 Mo. 344; Vandeventer v. Goss, 116 Mo. App. 316. (3) While fraud is never presumed, yet it may be established by facts and circumstances. Fraud is never proclaimed from the housetops, nor are fraudulent intentions reduced to writing and given to the public press; fraudulent intentions and fraudulent acts have their birth and origin in darkness, and are fathered by a desire to do wrong. Ofttimes the parties attempt to dress them with adornments of honesty, but behind it all there may be found unconscious blazing which marks the real pathway followed by plaintiffs. Farmers Bank v. Handley, 9 S.W.2d 891; St. Francis Milling Co. v. Sugg, 206 Mo. 148; Massey v. Young, 73 Mo. 260. (4) Defendants do not usually enter into a scheme to hinder, delay and defraud creditors and later, when called into court to explain their acts, openly admit the facts; and such has been the experience of both the Bench and the Bar, so that, after all, in these cases, we are forced to take the facts and circumstances as they appear and from them attempt to draw rational and reasonable inferences and conclusions. St. Francis Milling Co. v. Sugg, supra. (5) If the consideration for the transfer to the wife comes from the husband wholly or in part the property may be reached by his creditors. 27 C.J. 645, sec. 410. (6) It was a question of fact for determination by the trial court whether the husband was really managing his wife's business or merely carrying on his own. Lochman v. Martin, 139 Ill. 450; Ladd v. Muwell, 34 Ind. 107; Knapp v. Smith, 27 N.Y. 277; Osborne v. Wilks, 108 N.C. 651. (7) Any equitable right or interest which may be reached in equity by a creditor's suit may be the subject of a fraudulent conveyance and may be reached and subjected by creditors in equity or by statute in some jurisdictions, even at law, in the hands of the fraudulent transferees. 27 C.J. 432, sec. 47. (8) If a transfer is made by a debtor in anticipation of a suit against him or if a suit has been begun or while it is pending against him, as here, it is a badge of fraud and especially so if it leaves the debtor without any estate or greatly reduces his property. 27 C.J. 488, sec. 139. (9) A transfer between near relations may, in connection with other circumstances, carry a suggestion of fraud or even furnish satisfactory proof of fraud. 47 C.J. 495, sec. 153; Renney v. Williams, 89 Mo. 139. (10) The failure of the deed to the wife to show the true consideration was of itself a badge of fraud. 27 C.J. 495, sec. 155. (11) The fact that there was a studied effort of defendants to make their testimony consistent, although without success, in view of the facts in this case, is a badge of fraud. Bank v. Rennick, 246 Mo. 500; Moore on "Facts," secs. 893, 1059. (12) In determining the correctness of the decision of the trial court this court may properly take into consideration the relationship of the parties, the manner in which their business was conducted before and after the deed, and the continued exercise of authority of Dr. Williams over the property after the deed was made, in determining as to the existence of fraud. Barker v. Nunn, 275 Mo. 572; Cole v. Cole, 231 Mo. 255. (13) The trial court properly admitted in evidence the depositions of defendants taken in said cause as an admission against their interests. Maccaslin v. Mullins, 17 S.W.2d 685.
Defendants are husband and wife. This is an appeal from a decree of the Circuit Court of St. Louis County, setting aside a conveyance of certain land in Owensville, Gasconade County, standing in the name of defendant, Mrs. Matilda Williams, and subjecting it to a lien of a judgment of plaintiff against her husband, defendant, D.E. Williams. The suit was begun in Franklin County, but on application of defendants the venue was changed to St. Louis County.
The petition charges: Defendant D.E. Williams sold a tract of land owned by him, situated in St. Louis County and containing 42.85 acres for $25,000, and thereupon defendant Williams became indebted to plaintiff in the sum of $1,250 for services rendered in procuring the purchaser. Plaintiff on February 18, 1926, sued defendant Williams in the Circuit Court of Franklin County, for the debt alleged, and on May 18, 1926, while the action was pending, and when both defendants had knowledge of the pendency of the action, defendant Williams bought from Robert J. Horsefield, Jr., and wife, for a consideration of $15,000, certain described real estate situated in the city of Owensville, Gasconade County, Missouri, and known as the Gasconade Theatre. Plaintiff recovered judgment in the sum of $1,286.25 upon the debt sued for in the Circuit Court of Franklin County on August 12, 1926. The sum of $500 has been paid upon the judgment, but the balance was due and unpaid. A transcript of the judgment was of record in Gasconade County, and the petition alleged that in equity and good faith the judgment was a lien upon the Gasconade Theatre property, it being charged that the defendants, for the purpose of hindering, delaying and defrauding the creditors of defendant, Williams, and particularly plaintiff, had caused the Horsefields to convey the theatre property to defendant Matilda Williams. The petition further charged that D.E. Williams was insolvent and that plaintiff had no adequate remedy at law. The prayer was that the deed from the Horsefields to defendant Matilda Williams be set aside and that the theatre property be made subject to the lien of plaintiff's judgment.
The answer admitted that defendants were husband and wife, and denied all other allegations of the petition.
The judgment in favor of plaintiff and against defendant Williams was proved by the records. By deeds and by records, plaintiff established these further facts, which were not disputed: On April 16, 1918, Valley Park Realty Company by its trustee, sold a tract of land in St. Louis County to Warren W. Goran, for the consideration of $9,960. On May 31, 1921, defendant D.E. Williams, as lessor, leased to Goran, as lessee, for a term of twenty years, what was described in the indenture as Williams' undivided one-half interest in the land which Goran had acquired in 1918. It was a white sand mining lease. Goran was to work the property and was to pay Williams a royalty of five cents per ton for all sand mined, removed and sold. On August 21, 1925, Goran and wife by deed conveyed to defendant Williams 42.85 acres of the St. Louis County land, which Goran had bought in 1918 and which Williams had leased to Goran in 1921. On December 21, 1925, defendants D.E. Williams and Matilda Williams, his wife, conveyed the tract of 42.85 acres of land, which Williams had acquired from Goran, to Hardstone Brick Tile Company for a consideration of $25,000. On May 18, 1926. Robert J. Horsefield and wife, by deed, conveyed to defendant Matilda Williams, the Gasconade Theatre in Owensville, Gasconade County, upon which plaintiff has sued to establish a lien for the satisfaction of his judgment. Defendant, Williams, admitted his insolvency by testifying that his total worth was $1.15.
On this record it would seem that a decree would go as a matter of course. But defendants contend that the money with which defendant Dr. Williams (a practicing physician) bought an undivided one-half interest in the St. Louis County land, and took 42.85 acres of it for his partitioned share, belonged to Mrs. Williams. It was the increase of $1500 or $2,000 which she had inherited years before. She married Dr. Williams in 1902, when she was a school teacher twenty years of age, and he was a medical student. She entrusted her inheritance to him, as a confiding wife should. He invested $2,200 for her in a farm in Reynolds County. Later this was sold at a profit of several thousand dollars and a farm in Laclede County was bought, held for a time, and sold, and on this deal, Mrs. Williams "made quite a bit also." Mrs. Williams testified that "the money realized from these investments was what went into the purchase of the sand bluff at Pacific," that is, into the land which Goran bought for $9,960 in 1918, for himself and Dr. Williams, in equal shares. Out of the handsome profit which Mrs. Williams made upon the sale of the sand bluff at Pacific through the investing and selling agency of her husband, Mrs. Williams bought with her own money the Gasconade Theatre at Owensville. In this view of the case, plaintiff should not have a lien upon the theatre for the satisfaction of his judgment against Dr. Williams.
But the trial chancellor with all the parties before him searched their consciences and gave a decree for plaintiff. We can but search the printed record to see whether he had reason for his judgment. Many lights and shadows change the appearance and the effect of the picture painted by the defendants.
Both Dr. and Mrs. Williams knew of Mr. Dawes's suit against the Doctor for $1250 soon after it was filed on February 18, 1926. The sheriff of Franklin County made service by delivering a copy of the writ and petition to Mrs. Williams at their home in Pacific, and Dr. Williams heard of the suit from his lawyer. The money derived from the sale of the sand bluff at Pacific was then in hand, for the Gasconade Theatre at Owensville was not bought until May 18, 1926, three months later. Mrs. Williams testified that her inheritance of $1500 or $2,000 came from her father and grandmother. But her father died when she was four years old and her grandmother died when Mrs. Williams was twelve years old. She testified that she received five or six hundred dollars from her father; that her grandmother was worth $50,000 when she died, and that she, Mrs. Williams, derived the remainder of her first capital from the grandmother's estate. But the records of the Probate Court of St. Louis County showed that Mrs. Williams received only $259.74 upon final distribution of the grandmother's estate. Under the operating lease of the sand bluff by Williams to Goran, the Doctor received royalties amounting to $5,000 which the Doctor spent. Out of the sale price of $25,000 which was received from the Hardstone Brick Tile Company for the sand bluff at Pacific, Dr. Williams kept at least part of it for himself. Mrs. Williams thought that he kept about three or four thousand dollars. The doctor believed it was about $5,000, out of which he paid off a deed of trust for $2,500 on the Gasconade Theatre. Mrs. Williams knew that the deed of trust had been paid off, but she was not certain how it had been paid. It is quite clear from the record that, during the years that the defendant Dr. Williams was investing and reinvesting funds which both defendants claim were derived from Mrs. Williams's inheritance, the Doctor kept the moneys in his own name in the bank. He exercised complete dominion over the properties purchased, and decided questions of sales as if the lands were his own. There were no accountings between the defendants. As Mrs. Williams said: "We never kept any account of the money of mine the Doctor had." But after the sale in December, 1925, for $25,000, of the sand bluff at Pacific, title to which was in Dr. Williams, the defendants seem to have put their financial affairs on a more businesslike basis. The Doctor turned the money over to Mrs. Williams a few days following the sale. She deposited it in St. Louis banks, and she was able to exhibit her checks which she had delivered to the Horsefields in payment for the Gasconade Theatre in Owensville, the deed for which ran to her. This seems to have been the only investment about which the Doctor had consulted her. And the money derived from the sale of the sand bluff appears to be the only funds derived from a sale which were put under her control. Mrs. Williams was asked: "Since you have been married, have you been transacting any business in your own name until this property was bought here in Owensville?" Her answer was: "No, sir." Both defendants admitted freely that money derived from the sale of the sand bluff was used to purchase the theatre. Mrs. Williams did not make any assessment returns or pay any property taxes upon the investments, which she said the Doctor made for her. Nor did she pay any income taxes upon the profits of the turnovers. The Doctor paid the income and all other taxes, he explaining that the property was carried in his name and it gave him a better standing in the community. He made property tax returns from 1923 to 1926. But the latter year, which was the year of the plaintiff's suit for debt, his personal list showed only $100 of household furniture. Certain minor collateral matters brought out at the trial may be mentioned without comment. Of these is the purported sale by the Doctor to his wife for cash, of his shares of stock in two banks, of one of which he was president, without transfer of the stock upon the books of the banks. Then there were two automobiles which he had listed in his assessment returns and which he used in his practice, but which he testified belonged to his wife and son, the cars having been bought by them with their separate funds. By these explanations he arrived at his net worth of $1.15. And Mrs. Williams by her testimony supported him in his statements about the bank stock and the automobiles. More might be said of the case as made. Suffice it to say that the record, viewed in the light of the settled law applicable to cases of this kind, upholds the decree of the chancellor.
I. Defendants assign as error the action of the trial court in receiving in evidence on behalf of plaintiff the deposition of Dr. Williams as an admission against the interest of Mrs. Williams and the deposition of Mrs. Williams as an admission against the interest of Dr. Williams. As far as the Admission record shows the depositions were admitted as Against admissions against the interests of the respective Interest: deponents. It has long been held that the deposition Deposition. of a defendant taken in the cause may be read in evidence by the plaintiff, if relevant as an admission of defendant, though he is present and willing to testify. [McCaslin v. Mullins (Mo. App.), 17 S.W.2d 684; Mahon v. Fletcher's Estate (Mo. App.), 245 S.W. 373; Bogie v. Nolan, 96 Mo. 85, 9 S.W. 14; Pomeroy v. Benton, 77 Mo. 64.] Neither husband nor wife, in the depositions, testified to any admission or confidential communication of the one to the other.
II. When courts, in search of fraud, come upon deals between husband and wife, they scrutinize them with a jealous eye. They may not assume fraud but they may infer it from facts and circumstances. Those at whose door the charge of fraud is laid disavow it always and make hard the way of him who would prove it. And the most difficult cases in which to determine whether there is or is not fraud, are those involving transfers and conveyances from a husband, pressed by creditors, to his loyal wife. [Daggs v. McDermott, 34 S.W.2d 46; Zehnder v. Stark, 248 Mo. 39, 154 S.W. 92; East St. Louis Ice Cold Storage Co. v. Kuhlmann, 238 Mo. 685, 142 S.W. 253; Cole v. Cole, 231 Mo. 236, 132 S.W. 734.] But, as this court said in Zehnder v. Stark, supra: "He would be a dull observer of the affairs of mankind whose powers of comprehension and appreciation were so in vacuo that he did not recognize the relation of husband and wife as affording a convenient and much-used cover for transactions designed to screen property from creditors. Accordingly when in pursuit of fraud courts eye such transactions with jealousy to see they do not hide and consummate fraud, the latter being easy to accomplish and hard to prove."
The trial court in the instant case has before him the parties. He observed the witnesses on the stand, their manner of testifying and was in a better position to weigh their credibility than we could be. We should therefore defer to his ruling under the showing made. [Barnard v. Keathley, 230 Mo. l.c. 236, 130 S.W. 306; Bryant v. Stahl (Mo. Sup.), 217 S.W. 31; Creamer v. Bivert, 214 Mo. 473, 113 S.W. 1118.] Defendants, in support of their appeal, contend that the money, being originally the separate estate of the wife, furnished a good consideration for the transfer to her of the Gasconade Theatre property as against the creditors of her husband. A husband may manage the separate property of his wife without necessarily subjecting it or profits arising from his management to claims of his creditors. The cases which defendants cite abundantly support these unquestioned truths of the law. But they have no application to the instant case, because they are predicated on the assumption that all the business investments which Dr. Williams made were for his wife with her inheritances in the first instance and with the avails and increases in the later and larger operations. In the nature of things the chancellor by granting a decree to plaintiff, registered his want of faith in these assumptions. And upon the record presented, it is not for us to gainsay the chancellor. The case bears a striking resemblance to the facts in East St. Louis Ice Cold Storage Co. v. Kuhlmann, 238 Mo. 685, 142 S.W. 253, in which a similar decree was affirmed.
Finding no reversible error the judgment and decree is affirmed. Cooley and Westhues, CC., concur.
The foregoing opinion by FITZSIMMONS, C., is adopted as the opinion of the court. White, P.J., and Ellison, J., concur; Henwood, J., concurs in the result.