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Cape County Savings Bank v. Wilson

St. Louis Court of Appeals
Feb 3, 1931
225 Mo. App. 14 (Mo. Ct. App. 1931)

Opinion

Opinion filed February 3, 1931.

1. — Fraudulent Conveyances — Partnerships — Property Paid for by Partner — Conveyed to One Partner and Wife — Resulting Trusts — Creditors. Where real estate was purchased with partnership funds, or with funds owned in common by said partners and one partner caused the property to be conveyed to a member of the firm and his wife to enable him to hold and enjoy the property through them, as his own, and the purchase money was in fact, paid by him, then the partner and his wife took the property in their names for his use, and a trust resulted in favor of his existing and subsequent creditors, to the extent of his interest, though his intention by such conveyance was to deprive his wife of her marital rights in the property.

2. — Partnerships — Evidence — Declarations of Partners — Admissibility to Show Partnership. Declarations and acts of partners, made and done in the presence of each other and with the knowledge and acquiescence of each other in the conduct of their business, are original evidence and not hearsay, and are admissible to show partnership.

3. — Same — Same — Same — Same — Implied Contract of Partnership. In an action in equity in the nature of a creditor's bill seeking to impress a resulting trust on partnership property and other relief, evidence held sufficient to show an implied contract of partnership inter sese.

4. — Same — Same — Same — Same — Estoppel. A partnership by estoppel, is sufficient to make the members of the partnership severally liable for the partnership indebtedness.

5. — Appellate Practice — Evidence — Objection — No Ruling — Not Reviewable. Where a witness was allowed to testify to material facts before any objection was made to his competency, and when objection was made on that ground there was no ruling by the court, an assignment of error based thereon is not reviewable on appeal.

6. — Evidence — Statements of Partner Since Deceased — Competency. Statements of deceased, that he and his brother owned property together and contributed equally to the purchase price thereof held competent as a declaration against interest.

7. — Same — Statements Against Interest by Person Since Deceased — Admissibility. Statements made by a person, since deceased, against his pecuniary or proprietary interest, are admissible.

8. — Husband and Wife — Property Purchased with Partnership Assets — Title Taken in Names of One Partner and Wife — Presumption. Where real estate was purchased with partnership assets and the title thereto taken in the names of one partner and his wife, the presumption is that he caused the property to be so conveyed to make provision for his wife.

9. — Fraudulent Conveyances — Right of Debtor to Give Property to Wife — Subsequent Creditors. Subsequent creditors could not question the right of a debtor to give property to his wife, where there was no showing that he was insolvent or owned any debts at the time the conveyance was made.

10. — Same — Partnerships — Property Purchased with Partnership Assets — Title Taken in Names of One Partner and Wife — Creditors — Resulting Trusts. A partnership creditor held entitled to one-half of the proceeds in the hands of deceased partner's administrator arising from the sale of real estate purchased with partnership assets and title taken in the names of such deceased partner and his wife upon a resulting trust in the other partner's favor.

11. — Same — Same — Same — Same — Same — Claim Not Reduced to Judgment — Equitable Relief Under Resulting Trust Not Precluded. Where a creditor had obtained judgment on its note against the estate of a deceased partner and the surviving partner admitted liability and the fund in the hands of the administrator arising from the sale of the property purchased with partnership assets was the only property available for satisfaction of the creditor's demands, a failure of such creditor to reduce its claims to judgment against the surviving partner did not preclude granting it equitable relief to recover, under a resulting trust, funds in the hands of deceased partner's administrator.

12. — Courts — Circuit — Probate — Jurisdiction — Equity. An action in equity in the nature of a creditor's bill held within the jurisdiction of the circuit court and not within that of the probate court as the probate court has no jurisdiction of a purely equitable action.

13. — Equity — Creditor's Bill — Jury. An action in equity in the nature of a creditor's bill to satisfy a claim from a deceased partner's estate presented no cause of action at law requiring a jury trial.

14. — Same — Grants Full Relief. A court of equity has power to grant full and complete relief, though in doing so it may determine matters that would otherwise be cognizable exclusively at law.

15. — Actions — Petition — Action at Law and in Equity Joined — Demurrer. A petition is not demurrable merely because it joins a cause of action at law with one in equity.

16. — Pleadings — Petition — Joinder of Causes of Action in One Count — Election. An objection to a petition as improperly commingling in one count separate causes of action must be taken by motion to elect.

17. — Same — Same — Creditor's Bill — Amendments. In an action in equity in the nature of a creditor's bill, the trial court did not err in permitting an amendment after trial to pray for judgment for the amount of notes or debts represented by the notes, where no new facts were alleged.

18. — Partnerships — Creditors — Note Executed by One Partner — Proceeds Used in Partnership Business — Liability of Other Partner — Trust Funds. In an action in equity in the nature of a creditor's bill seeking to subject to the payment of the plaintiff's judgment certain assets in the hands of the administrator of a deceased partner claimed under a resulting trust, plaintiffs holding a note executed by a one partner for a loan used by the partnership could, under the evidence, recover against the other partner on the note in such suit.

19. — Same — Same — Same — Same — Heirs of Deceased Partner — Right to Question Liability of Surviving Partner — Estoppel. In an action in equity in the nature of a creditor's bill, by creditor of a partnership seeking to reach assets in deceased partner's estate, deceased partner's heirs could not object to plaintiff's recovery of a judgment against the surviving partner when he admitted his liability and there was no plea or suggestion of fraud or collusion.

20. — Limitations, Statute of — Resulting Trusts — Repudiation. The Statute of Limitations, section 861, Revised Statutes 1929, did not run against an action by a creditor to recover property placed by the debtor and held by him in a secret trust for his use while the property is so held in trust and the trust is not repudiated.

Appeal from the Cape Girardeau Court of Common Pleas. — Hon. Oscar A. Knehans, Judge.

REVERSED AND REMANDED ( with directions).

R.P. Smith and Robert S. Rutledge for appellants.

(1) (a) The Supreme Court has exclusive appellate jurisdiction in all cases wherein a constitutional question is timely and properly raised by the record. Constitution of Missouri, art. VI, sec. 12; State ex rel. v. Kansas City Court of Appeals, 105 Mo. 299, 16 S.W. 853; State ex rel. v. Heffernan, 148 S.W. 90. (b) Appellants are entitled under the Constitution of Missouri, to a trial by jury upon the notes here sued upon. Constitution of Missouri, art. II, sec. 28; Minor v. Burton, 228 Mo. 558, 128 S.W. 964; Berry v. Railroad, 223 Mo. 358, 122 S.W. 1043. (2) (a) Where the probate court has jurisdiction of the subject-matter of a suit or proceeding, it has exclusive original jurisdiction thereof. Brewing Co. v. Steckman, 180 Mo. App. 320, 168 S.W. 226; Kerwin v. Kerwin, 204 S.W. 922. (b) The probate court had such jurisdiction of the subject-matter with respect to the notes herein sued on. R.S. 1919, secs. 88 and 186. (c) The probate court had such jurisdiction of the subject-matter with respect to the title to the funds in the estate of Emma Hunter, deceased. R.S. 1919, secs. 62-66 inclusive; Tygard v. Falor, 163 Mo. 234, 63 S.W. 672; Re Estate of Huffman, 132 Mo. App. 44, 111 S.W. 848; Brewing Co. v. Steckman, supra; Clinton v. Clinton, 223 Mo. 371, 123 S.W. 1; Kerwin v. Kerwin, supra. (3) (a) A creditor's bill which does not allege that the creditor has reduced his claim to judgment, is fatally defective. Rumsey-Sikemeier Co. v. Bank, 139 Mo. App. 306, 123 S.W. 672; Coleman v. Hagey, 252 Mo. 102, 158 S.W. 829. (b) A creditor's bill which does not allege that the creditor was an existing creditor at the time his debtor parted with the property sought to be reached, is fatally defective. Coleman v. Hagey, supra; May v. Gibler, 4 S.W.2d 769. (4) A cause of action at law and a cause of action in equity cannot be properly joined, and when commingled in one count, are subject to a demurrer or a motion to strike. Repetto v. Walton, 313 Mo. 182, 281 S.W. 411; Bennett v. Crane, 220 Mo. App. 607, 289 S.W. 26. (5) Where the cause of action is founded upon a written instrument or instruments, those instruments must be filed with the pleadings in the cause. Upon a failure to file the instruments, the cause is subject to a motion to dismiss. R.S. 1919, sec. 1270; Hannibal etc. R.R. Co. v. Knudsen, 62 Mo. 569; Hess v. Appleton Mfg. Co., 164 Mo. App. 153, 148 S.W. 179. (6) An answer which states no defense, like a petition which states no cause of action, is subject to a motion to strike out, or to a demurrer. State ex rel. v. Ellison, 181 S.W. 998. (7) Statements, acts and declarations in the nature of admissions, by one alleged partner, made out of the presence of the other alleged partner or partners, are incompetent and inadmissible in proof of the existence of the alleged partnership, especially before a prima-facie case has otherwise been established with respect thereto. Wegman v. Joseph, 191 S.W. 1076; Scott v. Scott, 265 S.W. 864; Bevan v. Hill, 284 S.W. 174; Willoughby v. Hildreth, 182 Mo. App. 80, 167 S.W. 639; Harris v. McQuay, 300 S.W. 305. (8) Where one party to a contract or agreement is dead, the other party thereto is thereby rendered incompetent to testify concerning its terms. This rule applies as well to partnership agreements as to ordinary contracts. R.S. 1919, sec. 5410; Scott v. Scott, 265 S.W. 864; Denny v. Brown, 193 S.W. 552. (9) A plaintiff cannot, especially after trial of the cause, after briefs have been submitted and arguments heard, amend his petition so as to substitute an entirely new and different cause of action for that stated prior to the amendment. Ross v. Mineral Land Co., 162 Mo. 317; Boyd v. St. Louis Brewing Ass'n, 318 Mo. 1206, 5 S.W.2d 46; Arrowood v. Delaney's Estate, 295 S.W. 522; Schroll v. Noe et al., 297 S.W. 999. (10) Absent the necessary elements of a partnership by estoppel, the course of the relationship and the proof necessary to establish it, are identical in a suit by a creditor or other third party, and in a suit between the alleged partners. Mackie-Clemens Fuel Co. v. Brady, 208 S.W. 151; Horine v. Clear, 2 S.W.2d 154. A partnership (absent an estoppel) can only arise by virtue of a contract, express or implied. Furlong v. Druhe, 2 S.W.2d 162; Bevan v. Hill, 284 S.W. 174; Chapin v. Cherry, 243 Mo. 375, 147 S.W. 1084; Mackie-Clemens Fuel Co. v. Brady, supra; Ellis v. Brand, 176 Mo. App. 383, 158 S.W. 705. The existence of a partnership is never presumed, and the relationship never arises by operation of law. The burden of proving its existence is on the party alleging it. Dixon v. Dixon, 181 S.W. 84; Spurlock v. Wilson, 160 Mo. App. 14, 142 S.W. 363; Wittling v. Schreiber, 202 S.W. 418; Chapin v. Cherry, supra; Smith v. Shotliff, 169 Mo. App. 66, 154 S.W. 177. To establish the existence of a partnership, the record must disclose the existence of each of the necessary elements thereof, to-wit: 1. A contract of partnership, express or implied; 2. The joint prosecution of a joint business enterprise; 3. A sharing in the profits and losses as such, in definite proportion; 4. A community of interest in the property and the business; 5. A mutual agency of each for all. Hudson v. French, 241 S.W. 443; State ex rel. v. Daues, 13 S.W.2d 537. (11) Where oral testimony is relied on to establish a resulting trust, contrary to the terms of a deed, the law requires that such testimony must suffice to banish all reasonable doubt from the mind of the chancellor, or a resulting trust will not be decreed against the title conveyed by the deed. Dixon v. Dixon, 181 S.W. 84; Spurlock v. Wilson, 160 Mo. App. 14, 142 S.W. 363; Thompson v. Holden, 117 Mo. 118. (12) (a) No party is liable on a note whose name is not signed thereto, be that party individual, firm, or corporation. R.S. 1919, sec. 805; Mineral Belt Bank v. Lead Co., 173 Mo. App. 634, 158 S.W. 1066; Keck v. Brewing Co., 22 Mo. App. 187; Sparks v. Transfer Co., 104 Mo. 531, 15 S.W. 417. (b) A judgment against one partner for a partnership debt, is a bar to any suit on the same demand against the partnership, and taking such an individual judgment irrevocably waives any right to look primarily to the assets of the partnership. Cowan v. Leming, 111 Mo. App. 253, 85 S.W. 953. (13) A matter once adjudicated by a court of competent jurisdiction may be invoked as an estoppel in any collateral suit, when the same parties or their privies allege anything contradictory to it. Bennett v. Insurance Corp., 213 Mo. App. 421, 255 S.W. 1076; Citizens Bank v. Moore, 215 Mo. App. 21, 263 S.W. 530; Cowan v. Leming, supra. (14) A court of equity does not look with favor on those whose claims are of many years standing, and might have been established by a more timely suit. Goodson v. Goodson, 140 Mo. 206, l.c. 216, 41 S.W. 737; Klebba v. Struempf, 23 S.W.2d 205; Jacks v. Link, 291 Mo. 282, 236 S.W. 10. (15) A suit to establish a resulting trust is within the ten-year Statute of Limitations, and is barred after the expiration of ten years from the creation of the trust, or at most, from the time when the cestui discovers or could discover its creation. R.S. 1919, secs. 1305 and 1316; Hunter v. Hunter, 50 Mo. l.c. 451; Newton v. Rabenack, 90 Mo. App. l.c. 659; Burdett v. May, 100 Mo. 13; Shelby County v. Bragg, 135 Mo. 291, 36 S.W. 600; Kober v. Kober, 23 S.W.2d 149; Jacks v. Link, supra. (16) A resulting trust cannot arise from a transaction founded in any fraudulent purpose. This rule has been held to apply to trusts created to deprive the wife of the cestui que trust of her dower rights. Keener v. Williams, 307 Mo. 682, 271 S.W. 489; Sell v. West, 125 Mo. 621, 28 S.W. 969; Derry v. Fielder, 216 Mo. 176, 115 S.W. 412. (17) The only right which a partnership creditor has, to follow the partnership property and require that his debt be paid therefrom, is a derivative right, not for his own benefit but for the protection of the partners, and is subject to the will of the individual partners. If they waive this right, or forfeit it, the right of the creditor is thereby extinguished. Reyburn v. Mitchell, 106 Mo. 365, 16 S.W. 592; Grocery Co. v. McCune, 122 Mo. 426, 25 S.W. 904; Rumsey-Sikemeier Co. v. Bank, 139 Mo. App. 306, 123 S.W. 75. Spradling Dalton for respondent.

(1) The appellants did not preserve the objections and exceptions to the overruling of the demurrer and the motion to strike out in a term bill of exceptions and for that reason, the court should not consider those assignments in the appeal in this cause. Kline Cloak Suit Co. v. Morris, 240 S.W. 96, 99; Sweeney v. Sweeney, 283 S.W. 736; State v. Surety Co., 294 S.W. 123; Asphalt Paving Co. v. Ullman, 137 Mo. 543; Reineman v. Larkin, 222 Mo. 156. (2) (a) For more than thirty years G.W. Hunter and T.J. Hunter were engaged in different enterprises, each contributing a like amount of labor and money and sharing equally in the profits thereof. The first undertaking was farming, after that the livery stable business, then the taxi business and finally, the pool room and billiard business. Each owned an undivided one-half interest in these several undertakings. Part of the money derived from these several undertakings was invested in liberty bonds and with these liberty bonds the Schaefer property was acquired. The Sides property was acquired with cash which belonged to the two brothers. Each participated in the profits of the business and this raised a presumption of a partnership relation and is prima-facie evidence thereof. 20 R.C.L. 823; Minter v. Gidinsky, 228 S.W. 1075; Goodyear Tire Rubber Co. v. Ward, 195 S.W. 75; State v. Daues, 13 S.W.2d 537; Bank v. Lowder, 141 Mo. App. 603; Tamblyn v. Scott, 111 Mo. App. 46; Torbert v. Jeffrey, 161 Mo. 645; Lucas v. Cole, 67 Mo. 143. (2) When two or more persons hold themselves out to the public as partners, they will be estopped from denying such relationship. Bissell v. Ward, 129 Mo. 439; Brewing Assn. v. Schaefer, 242 S.W. 692; McCaskey Register Co. v. Blakeney, 224 S.W. 62; Drake Hardware Co. v. Bragg, 219 S.W. 717; Short v. Thomas, 178 Mo. App. 400; Gambel v. Grether, 108 Mo. App. 340; Lamwersick v. Boehmer, 77 Mo. App. 136. (3) When a note is signed by the individual member of a partnership, for and on behalf of the partnership, and the partnership gets the benefit of the money loaned, the partnership is liable. 47 C.J. 872; 22 Am. Eng. Cyc. 164; Jacks v. Greenhow (Ark.), 152 S.W. 160; Beckwith v. Mace (Mich.), 103 N.W. 559; Baxter v. Rollins (Iowa), 57 N.W. 836; Leabo v. Goode, 67 Mo. 126. (4) G.W. Hunter and T.J. Hunter had operated as partners for more than thirty years. They held themselves out to the public as partners. They conducted their business as partners. The public was led to believe that they were partners and they would be estopped from denying such partnership. The rights of appellants, if any, in the property would have to be traced to G.W. Hunter. They could have no greater rights than he had, and if he was estopped from denying the partnership, the appellants would likewise be estopped from denying the same. (3) Where realty is purchased with firm funds, but title is taken in the name of less than all the partners, there is a resulting trust in favor of the other partners in proportion to their respective partnership interests, and a resulting trust may also be implied where title is taken in the name of a third person. 47 C.J. 763; Smith v. Smith (Iowa), 160 N.W. 756; Lutz v. Billick (Iowa), 154 N.W. 884; McDonald v. Dabney (Ga.), 132 S.E. 547; Roach v. Roach (Ga.), 85 S.E. 703; Statts v. Statts (Utah), 226 p. 677; Thrasher v. Lawrence (N.H.), 101 A. 636; Stitt v. Lumber Co. (Minn.), 107 N.W. 824; People v. Sholen (Ill.), 91 N.E. 704; Crone v. Crone (Ill.), 54 N.E. 605; McCully v. McCully, 78 Va. 159; Williams v. Morgan, 26 P. 81; Orr v. Trust Co., 236 S.W. 642, 648; Watson v. Payne, 143 Mo. App. 721; Butler v. Lawson, 72 Mo. 227; Evert v. Meyers, 9 S.W.2d 1066; Clay v. Walker, 6 S.W.2d 961; Thierry v. Thierry, 249 S.W. 946. (4) Appellants contend that the cause of action to establish a resulting trust is barred by the Statute of Limitations. The Statute of Limitations does not begin to run in the case of a resulting trust until after the beneficiary therein repudiates the trust. Laughlin v. Laughlin, 237 S.W. 1024; Freeland v. Williams, 220 Mo. 217; Prewitt v. Prewitt, 188 Mo. 675; Watson v. Payne, 143 Mo. App. 721; Butler v. Lawson, 72 Mo. 227, 245. (5) (a) Appellants contend that before respondent can maintain this suit, it must be a judgment creditor. Respondent is a judgment creditor of the estate of G.W. Hunter. Respondent, on the 5th day of August, 1928, presented and the court allowed its claims against the estate of G.W. Hunter, and, after the judgment allowing said claims, the court placed them in the fifth class. (b) T.J. Hunter, the other member of the partnership, is not contesting this cause. He is willing and has consented for the court to enter judgment against him. The right of T.J. Hunter to require respondent to be a judgment creditor before proceeding is one that may be waived and was waived in this case. American Brake Foundry Co. v. Railroad, 123 C.C.A. 322; Matter of Reisenberg, 52 L.Ed. 403; 15 C.J. 1390. (c) Respondent contends that the general rule of law as to judgment creditors is subject to exceptions, and that where the purpose of the bill is to reach the interest of the debtor in property, or funds held in trust for him, or for his creditors, the claim need not be first established by a judgment at law. 15 C.J. 1391; Woolen Mills Co. v. Kempe, 38 Mo. App. 229; Brokerage Co. v. Rosenheim, 74 Mo. App. 621; Wyman v. Wallace, 50 L.Ed. 738; Trust Co. v. Flour Mills, 261 P. 441. (6) Appellants also contend that the circuit court had no jurisdiction of this cause, but that it was a matter for the probate court. The respondent sought in this case to establish, (1) a partnership, (2) a resulting trust, (3) enjoining the administrator from making final settlement, and, (4) judgment for its debt. (a) A probate court could not establish a resulting trust in real estate, and, when land is converted into money by sale under deed of trust or probate court, the proceeds thereof remain real estate in the hands of the trustee or administrator. Eubank v. Finnell, 118 Mo. App. 535; State ex rel. v. Doud, 269 S.W. 923. (b) The probate court has no jurisdiction in matters purely equitable, and has no right to follow trust funds through money transformations during a long series of years. Butler v. Lawson, 72 Mo. 227; Robert v. Bartlett, 26 Mo. App. 611. (c) The claimants to this property are adverse and the probate court has no jurisdiction to determine their rights or title. Estate of Garver v. Richardson, 77 Mo. App. 459; McClure v. Baker, 216 S.W. 1018; Johnson v. Jones, 47 Mo. App. 237; State v. Jones, 53 Mo. App. 207; Canley v. Truitt, 63 Mo. App. 356. (7) (a) The banking business of G.W. Hunter and T.J. Hunter was done in the name of G.W. Hunter. All deposits were made by him, and in his name. All checks were drawn by him. When they borrowed money all notes were signed by him. The notes, introduced in evidence, were the obligations of the partnership. The money was borrowed from respondent to purchase the pool and billiard room and to pay for damages on an automobile. All this property belonged to the partnership. The partnership transacted all of its business with the respondent bank in the name of G.W. Hunter. The partners adopted this name for the purpose of transacting their business with the bank; and the partnership would be liable under those circumstances. First Natl. Bank of Joplin v. Carter, 243 S.W. 234. (b) If the court should be of the opinion that respondent is not entitled to recover on the notes, then, under the facts in this case, and, under the pleadings, as amended, the respondent would be entitled to recover the amount of its debt. The respondent had the right to amend its pleadings to recover the amount of the debt. This has been held in the following case: State v. Cox, 19 S.W.2d 695. (8) Where a contract is made with a partnership in which all of the partners take part, the death of one of the partners does not disqualify the survivors. Short v. Thomas, 178 Mo. App. 400; Vandergrif v. Swinney, 158 Mo. 527; Goodrich Rubber Co. v. Bennett, 281 S.W. 75.


This is an action in equity in the nature of a creditor's bill. George W. Hunter died on March 13, 1928. He left surviving him, as his widow, Emma Hunter, who died on March 16, 1928. Defendant R.K. Wilson is administrator of the estate of George W. Hunter, and also of the estate of Emma Hunter. Defendant Thomas J. Hunter is a brother of George W. Hunter, and his only heir. Defendants C.B. Ruff, W.C. Ruff, R.P. Ruff and Anna Fox are the only heirs of Emma Hunter.

On December 14, 1926, George W. Hunter executed to the plaintiff a promissory note for $761.40. On August 8, 1927, he executed to plaintiff a promissory note for $500, and on October 24, 1927, he executed to plaintiff a promissory note for $93.82. These notes were all made payable on demand, with interest from date at the rate of eight per cent per annum. On August 15, 1928, these notes were duly allowed by the probate court of Cape Girardeau county, in the aggregate sum of $1,442.69.

On July 18, 1919, William B. Schaefer and Annia E. Schaefer, his wife, conveyed by regular warranty deed to George W. Hunter and Emma Hunter, his wife, the east part of Lot 29, in the city of Jackson, in Cape Girardeau county. On April 27, 1920, B.F. Sides and Amelia Sides, his wife, conveyed by regular warranty deed to George W. Hunter and Emma Hunter, his wife, the east part of Lot 7, in said city of Jackson. On March 18, 1929, the east part of Lot 29 was sold under a deed of trust, for the purpose of paying a note secured thereby. After paying off and discharging said note out of the proceeds of such sale, the remainder thereof, amounting to $1,465, was paid over R.K. Wilson, as administrator of the estate of Emma Hunter. On July 5, 1929, the probate court, on petition of R.K. Wilson, as administrator of the estate of Emma Hunter, ordered the administrator to sell the east part of Lot 7 to pay the debts of said estate. Pursuant to said order, said east part of Lot 7 was sold by the administrator and the proceeds thereof, amounting to $1,500, was credited to said estate. It appears that there were two dwelling houses on the property, one on Lot 29, and one on Lot 7. George W. Hunter and his wife and Thomas J. Hunter resided in the dwelling on Lot 29, and the dwelling on Lot 7 was rented out.

Plaintiff, in its petition, alleges that George W. Hunter and Thomas J. Hunter were for more than thirty years engaged in business as partners; that during all that period of time they were engaged in the farming business, livery stable business, taxi business, and pool and billiard room business; that in each of said business undertakings each partner contributed a like amount to the forming and operation of the business, and shared equally in the profits thereof; that both resided in the same house and contributed equally to the support and maintenance thereof; that all deposits of the partnership in the bank were made in the name of George W. Hunter, and that George W. Hunter drew all checks against said deposits, and made and executed all notes for the firm; that George W. Hunter and Thomas J. Hunter, at the time of the death of George W. Hunter, owned an automobile, a pool and billiard room in the city of Jackson, some household and kitchen furniture, and the east part of Lots 7 and 29 in said city, and that said property constituted the business holdings of said partners, and that all of said property had been acquired and paid for with partnership assets, and that the east part of Lot 7 and the east part of Lot 29 had been conveyed to George W. Hunter and Emma Hunter, his wife, for the use and benefit of the partnership, that the promissory notes executed to the plaintiff by George W. Hunter were executed by him for and on behalf of the partnership; that George W. Hunter and Thomas J. Hunter received cash for said notes, which they used in their partnership business; that the east half of Lot 7 and the east half of Lot 29 were both paid for, maintained and improved by George W. Hunter and Thomas J. Hunter, and that both parties occupied the dwelling on the east half of Lot 29, and collected the rent on the dwelling on the east half of Lot 7, and contributed an equal amount to making improvements and keeping both properties insured; that although the record title to said real estate is in the names of George W. Hunter and Emma Hunter, Thomas J. Hunter and George W. Hunter were the equal owners thereof; that the assets of the estate of George W. Hunter and Thomas J. Hunter are insufficient to pay the demands of the plaintiff, and that unless the proceeds derived from the sale of said real estate be subjected to the payments of the debts of George W. Hunter and Thomas J. Hunter, plaintiff will be unable to collect its notes; and prays: (1) That defendant R.K. Wilson be enjoined from making final settlement of the estate of Emma Hunter, and from making distribution to the heirs of Emma Hunter of the proceeds of the sale of said real estate; (2) that a resulting trust in favor of George W. Hunter and Thomas J. Hunter, be declared in all the proceeds of the sale of said real estate, and that all said proceeds be declared partnership assets, and subject to the payment of partnership debts; and (3) that judgment for plaintiff for the amount of said promissory notes, together with interest, be rendered in favor of plaintiff, and that defendant R.K. Wilson, as administrator of the estate of Emma Hunter, be directed to pay said notes out of the money now in his hands, derived from the sale of said real estate.

Thomas J. Hunter alleges in his answer that the real estate described in the petition was partnership property belonging to the partnership of George W. Hunter and Thomas J. Hunter, and was bought by him with partnership assets and earnings, and that the proceeds of the sale of such real estate belong to the partnership, and prays the court to so decree. He further avers that he is willing that the partnership debts be paid out of the partnership assets in the hands of the administrator. He makes no denial of the allegations in the petition. He alleges that he is entitled to one-half of all the partnership assets, after the payment of the partnership debts, and is entitled to a further interest in the estate of George W. Hunter, as his only heir, subject to the marital interest of Emma Hunter, and prays the court to so find by its decree to the end that he may receive his proper share on distribution.

The answer of R.K. Wilson as administrator of George W. Hunter, and also of Emma Hunter, sets forth in detail his receipts and disbursements as administrator of said estate, and prays that he may be allowed proper credit for all sums expended, and that may be expended by him, and that he may be allowed proper commissions for services, and the services of his counsel.

The defendants, C.B. Ruff, W.C. Ruff, R.P. Ruff and Anna Fox, by their answer, deny generally the allegations of the petition, and deny specifically that George W. Hunter and Thomas J. Hunter were partners, or that the real estate described in the petition was purchased with partnership funds, plead laches and the Statute of Limitations, charge that the real estate mentioned in the petition was conveyed to George W. Hunter and Emma Hunter for the purpose of defrauding the wife of Thome J. Hunter, and pray the court to find and declare by its decree that all the money arising from the sale of said real estate is the money of said defendants.

The cause was tried to the court. At the conclusion of the trial the court took the cause under advisement, and having been fully advised in the premises adjudged, found and decreed that George W. Hunter and Thomas J. Hunter were partners, and acquired the real estate mentioned in the petition with partnership assets, and that Emma Hunter and George W. Hunter held said real estate for the use of said partners; that the proceeds of the sale of said real estate did not belong to the estate of Emma Hunter, but belonged to the said partners; that the business of said partnership had for many years been conducted with the plaintiff bank in the name of George W. Hunter, and that George W. Hunter had the right and authority to contract debts and obligations for and on behalf of the partnership, and that the debts due plaintiff in this suit were made by said George W. Hunter for and on behalf of the partnership, and were partnership obligations. From this judgment the defendants, C.B. Ruff, W.C. Ruff, R.P. Ruff and Anna Fox, have appealed to this court.

The appellants insist upon a reversal of the judgment here on the ground that the evidence fails to show that a partnership existed between George W. Hunter and Thomas J. Hunter, or that the real estate in question was purchased with partnership funds, or with funds owned in common by said parties, so that there is no basis in the evidence for decreeing a resulting trust. Appellants also insist further that there can be no resulting trust in favor of Thomas J. Hunter, for the reason that he caused the title to the property to be taken in the names of George W. Hunter and Emma Hunter, for the purpose of defrauding the wife of said Thomas J. Hunter of her marital rights in the property. There can be no question that if it was the intention of Thomas J. Hunter, in making such a disposition of his property, to circumvent his wife and deprive her of her marital rights, a resulting trust cannot be declared in his favor. [Derry v. Fielder, 216 Mo. 176, 115 S.W. 412; Sell v. West, 125 Mo. 621, 28 S.W. 969; Keener v. Williams (Mo.), 271 S.W. 489.] But this does not mean that a trust may not result to him for the benefit of his creditors. If Thomas J. Hunter caused the property to be conveyed to George W. Hunter and Emma Hunter as a cover to enable him to hold and enjoy the property through them, as his own, and the purchase money was in fact paid by him, then George W. Hunter and Emma Hunter must be held to have taken the property in their names for his use, and a trust results to him in favor of his creditors, existing and subsequent. [McLaran v. Mead, 48 Mo. 115; Ebert v. Myers (Mo.), 9 S.W.2d 1066; Jamison v. Trust Co. (Mo.), 207 S.W. 788; Friedman v. Holberg, 74 Mo. App. 26; Pattison v. Letton, 56 Mo. App. 325; Sec. 3116, R.S. 1929.]

The evidence shows that George W. Hunter and Thomas J. Hunter engaged together first in the farming business, and later in the livery stable business, taxi business and pool room business, in the City of Jackson. They were engaged in the taxi business and pool room business at the time of the death of George W. Hunter, and also at the time the promissory notes in suit were executed. Their activities in these undertakings covered a period of about thirty years. The evidence is not only cogent, but overwhelming and undisputed, to show that a partnership existed between these parties, and that these various business enterprises were conducted by them as a partnership, and that the purchase price of the real estate involved here was contributed equally by them, and consisted of funds which they owned in common. They paid for the east half of Lot 29 with liberty bonds, and paid for the east half of Lot 7 with cash. These facts were shown by the testimony of Thomas J. Hunter and numerous other witnesses. The business dealings of the firm with the bank, however, were conducted in the name of George W. Hunter. For a number of years George W. Hunter and Thomas J. Hunter owned and lived in a home in Jackson known as the Schwab property. This property was purchased by both of them and they contributed equally to the purchase price. The title to the property, however, was taken in the name of George W. Hunter. The evidence shows, without dispute in the record, that the title to the Schwab property was taken in the name of George W. Hunter in order to circumvent the wife of Thomas J. Hunter, from whom he had separated, and deprive her of her marital rights. The same is true as to the real estate involved here. This was shown by the testimony of Thomas J. Hunter himself, as well as by that of other witnesses.

The appellants contend that the evidence to show the existence of a partnership consisted chiefly of the declarations of the partners, which were incompetent. Of course, it is well understood that a partnership inter sese can be created only by contract between the parties. But such contract may be either express or implied. The declarations and acts of the parties, made and done in the presence of each other, or with the knowledge and acquiescence of each other, in the conduct of their business, are original evidence, and not hearsay. Evidence of this character in this case was ample to show an implied contract of partnership inter sese. Moreover, the evidence was abundant to show a partnership by estoppel, which, of course, is sufficient to make the members of the partnership severally liable for the partnership indebtedness. Besides, a partnership inter sese was shown by the direct testimony of Thomas J. Hunter. Appellants insist that he was incompetent to testify for the reason that the other party to the partnership was dead. As to this, it will suffice to observe that the witness was allowed to testify to material facts concerning the partnership before any objection was made to his competency, and when objection was made on that ground, there was no ruling of the court thereon. When the objection was made counsel for plaintiff remarked that the matter had been passed on repeatedly by our courts. Whereupon the court remarked: "I rather think so." This did not amount to a ruling. It merely indicated that the court was in doubt as to the competency of the witness. Counsel did not insist upon a ruling of the court, but permitted the remainder of the testimony of the witness to come in without further objection on the ground of his incompetency.

In addition to the testimony of Thomas J. Hunter that he and his brother contributed equally to the purchase price of the real estate, and that he caused the title to be put in the name of George W. Hunter and his wife, to circumvent the wife of Thomas J. Hunter, and deprive her of her marital rights in the property, it was shown that George W. Hunter himself repeatedly made statements to his friends and persons with whom he had business dealings, to the effect that he and his brother owned the property together, and contributed equally to the purchase price thereof. It was clearly competent to show these statements. It is a well recognized rule that statements made by a person, since deceased, against his pecuniary or proprietary interest, are admissible. There is a strong presumption of the truth of such statements.

The evidence is abundant, and it is undisputed, to show that this real estate was conveyed to George W. Hunter and his wife to the use of Thomas J. Hunter, so far as his one-half interest in the property is concerned. However, we find no evidence in the record to show that the interest of George W. Hunter in the property was conveyed to his wife for his use. The conveyance created in him and his wife an estate by the entirety. The presumption is that he caused the property to be so conveyed to make provision for his wife. There is no evidence whatever to overcome this presumption. There is no showing that he was insolvent or owed any debts whatever at the time the conveyance was made, or that the partnership firm of which he was a member, was indebted. Under these circumstances, he had a right to make a gift of the property to his wife, and subsequent creditors cannot question his right to do so. There is no evidence whatever that the conveyance was so made in order to defraud subsequent creditors. The deed was promptly recorded, showing the character of the title conveyed, and subsequent creditors have no right to complain that he so conveyed the property to make provision for his wife. But we see no reason why a court of equity, by proper decree, may not make Thomas J. Hunter's interest in the proceeds of the sale of this property available to his creditors for the satisfaction of their claims against him.

Appellants contend that plaintiff is not entitled to equitable relief for the reason that it had not reduced its claims to judgment. This contention accords with the well settled general rule, but the rule has no application here. Plaintiff had obtained judgment on its notes in the probate court against the estate of George W. Hunter. Thomas J. Hunter did not deny his liability on the notes; on the contrary, he admitted his liability. There was a trust fund in the hands of the administrator, about to be dissipated through a final order of distribution. This fund was the only property available for the satisfaction of the plaintiff's demands. It is the peculiar province of a court of equity to give relief under such a state of facts; to fail to do so would be a denial of justice. [Edwards v. Rosenheim, 74 Mo. App. 621; Kankakee Woolen Mill Co. v. Kampe, 38 Mo. App. 229; 15 C.J. 1391.]

There is no merit in the contention that the circuit court has no jurisdiction of this action, but that jurisdiction rests exclusively in the probate court. The probate court has no jurisdiction of a purely equitable action such as this.

Appellants contend that the petition states a cause of action at law along with a cause of action in equity, and that the right of trial by jury on the cause of action at law, as guaranteed by the constitution, was denied them by reason of the joining in the petition of the cause of action at law with the cause of action in equity. We are not persuaded that there was a cause of action at law stated in the petition. The action is purely one in equity. It is true the petition sets up and asks for judgment on the promissory notes, but nevertheless, the action is in equity, and the whole matter is drawn into equity, and the court, as a court of equity, has power to grant full and complete relief, though in so doing, it may determine matters that would otherwise be cognizable exclusively at law. But aside from this, the appellants made no request for a trial by a jury on the matter which they claim constitutes a cause of action at law. Manifestly, the facts here do not present a case involving the construction of the Constitution.

Appellants demurred below to the petition on the ground that it joins a cause of action at law with a cause of action in equity, and also moved to strike out the allegations with respect to the promissory notes, and the prayer for judgment thereon, on the ground that the petition improperly commingles two separates causes of action in the one count. Both the demurrer and the motion were by the court overruled, and appellants insist that the court erred in so doing. This contention is necessarily ruled against the appellants by what we have already said. Nevertheless, it may not be impertinent to say that the petition is not demurrable merely because it joins a cause of action at law with one in equity. If the causes of action are so related that they may be otherwise joined, there is no misjoinder. And objection to a petition because it it improperly commingles in one count separate causes of action which may be properly joined is not properly raised by motion to strike, but must be raised by motion to elect.

Appellants urge that plaintiff is not entitled to judgment against Thomas J. Hunter on the notes in suit because the notes were not signed by him, and that this is an action on the notes and that plaintiff must recover on the notes, if at all. We are unable to accept this view. It is true the petition asks judgment on the notes, but it expressly alleges that the money received for the notes was used in the partnership business. And the evidence shows that the money was so used. In fact, it appears that practically all of it was used to purchase the pool room, which unquestionably was owned and conducted by the partnership as a partnership enterprise. The petition and the proof were sufficient to warrant a judgment for the indebtedness as for money had and received for the use and benefit of the partnership. The petition was amended after the cause was tried and submitted, so as to pray judgment for the amount of the notes, or the debt represented by the notes, but this added nothing to the facts as originally alleged, and there is no merit in the complaint that the court erred in permitting this amendment. We entertain no doubt, however, that plaintiff is entitled, on the petition and the evidence, to judgment against Thomas J. Hunter on the notes. All the business dealings of the partnership with the bank was for many years conducted in the name of George W. Hunter. The members of the partnership evidently adopted this name for use in the conduct of their business dealings with the bank, so that the execution of the note to the bank in that name was binding on both the members of the partnership. In this connection, it is well to be reminded that the plaintiff in this action is not suing the appellants, or asking for judgment against them, on these notes. It is asking for judgment against Thomas J. Hunter on the notes, and is seeking to subject to the satisfaction of such judgment, a trust fund which equitably belongs to him so far as his creditors are concerned. There was no denial by Thomas J. Hunter of his liability on the notes. On the contrary, he admitted his liability, and expressed his willingness, in open court, that judgment be rendered against him on the notes. Under such circumstances, in the absence of fraud or collusion between Thomas J. Hunter and the plaintiff, and there is no suggestion of such fraud or collusion in this case, we think the appellants should not be permitted to question the right of the plaintiff to have judgment against Thomas J. Hunter on the notes. If the plaintiff, before bringing this action, had brought its action on the notes against Thomas J. Hunter alone, and thereby obtained judgment thereon against him, as the appellants contend in this case it should have done, then the judgment would have been conclusive as against them in this action, in the absence of a showing of fraud or collusion. Why then should the appellants be permitted to question the right of the plaintiff to have judgment against Thomas J. Hunter on the notes in this action, when he admits his liability, and there is no plea or suggestion of fraud or collusion.

This action is not barred by the Statute of Limitations. The property was conveyed to George W. Hunter and his wife to the use of Thomas J. Hunter so far as his interest in the property is concerned. He continued to possess, use and enjoy the property as his own, up to the time it was sold. The property being placed by him and held in such a secret trust inures to the benefit of his creditors, and the statute does not run, while the property is so held in trust. The statute does not run so long as the trust is not repudiated. [Laughlin v. Laughlin (Mo.), 237 S.W. 1024:] Nor do we find in the record any evidence to show that the action is barred by laches.

This case was tried two years after the death of George W. Hunter. So far as the evidence shows there are no existing debts against his estate, or against the partnership, other than the notes in suit. Just what funds remain in the hands of R.K. Wilson as administrator of George W. Hunter, does not appear. It is admitted, however, that the funds in his hands, as such administrator, are not sufficient to pay the notes in suit.

Plaintiff should have judgment on the notes against Thomas J. Hunter, and R.K. Wilson should be ordered to pay on such judgment any funds in his hands, as administrator of George W. Hunter, available for payment thereon, not exceeding, however, one-half the amount of such judgment, and should be ordered to apply to the satisfaction of the remainder of such judgment the funds in his hands (not exceeding, however, one-half thereof) as administrator of the estate of Emma Hunter, arising from the sale of the real estate mentioned in the petition. The appellants should be adjudged to pay the costs. A copy of the judgment should be ordered certified to the probate court.

The commissioner, therefore, recommends that the judgment of the circuit court be reversed and the cause remanded, with directions to said court to enter judgment in accordance with the views herein expressed.


The foregoing opinion of SUTTON, C., is adopted as the opinion of the court. The judgment of the circuit court is accordingly reversed and the cause remanded, with directions to said court to enter judgment in accordance with the views expressed in the opinion. Haid, P.J., and Becker and Nipper, JJ., concur.


Summaries of

Cape County Savings Bank v. Wilson

St. Louis Court of Appeals
Feb 3, 1931
225 Mo. App. 14 (Mo. Ct. App. 1931)
Case details for

Cape County Savings Bank v. Wilson

Case Details

Full title:THE CAPE COUNTY SAVINGS BANK, A CORPORATION, RESPONDENT, v. R.K. WILSON…

Court:St. Louis Court of Appeals

Date published: Feb 3, 1931

Citations

225 Mo. App. 14 (Mo. Ct. App. 1931)
34 S.W.2d 981

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