Opinion
November 24, 1928.
TRUST ESTATE: Fraudulent Transfer: Accounting. For the reasons stated in Gaugh v. Gaugh, ante page 414, the judgment in this cause, wherein the petition charged that appellants had wrongfully appropriated, taken and held to themselves certain personal property belonging to the estate of their deceased father, and had destroyed records and books showing the ownership of the property, and prayed that they be decreed to hold the property in trust for the estate, that the alleged transfer of certain certificates of stock be held to be fraudulent and cancelled, and that an accounting of income and profits be had, is affirmed.
Appeal from Jackson Circuit Court. — Hon. O.A. Lucas, Judge.
AFFIRMED.
Hackney Welch for appellants.
(1) By the delivery and recording of their deed to the Queen City Building and Investment Company on June 11, 1917, under the agreement with their father, that they should own all capital stock of the corporation, Walter and Mort Gaugh became the equitable owners of all of the stock whether transferred to them or not. This on the principle that equity regards that as done which ought to have been done. 1 Pomeroy, Eq. Juris, (2 Ed.) secs. 364, 368; Story, Eq. Juris, secs. 64g, 1212; 14 C.J. 402, 403, sec. 545; Martin v. Martin, 250 Mo. 539; Thomas v. Malone, 142 Mo. App. 197; White v. Land Co., 49 Mo. App. 450; Rogers v. Mining Co., 154 F. 606; Bates v. Wilson, 14 Colo. 140. (2) By affixing his signature to the assignment of the stock certificates, even if the assignments were in blank, this having been done contemporaneously with the delivery of the deed, the surrender of the old certificates for 77 shares, and the issuance of these two new certificates for 38½ shares each, was a disavowal by Judge Gaugh of any right in himself to the shares of stock represented by the two certificates, and coupled with his agreement that the boys should own all of the stock, constituted an express trust in their favor as the beneficial owners of this stock and converted him into a mere trustee for his sons as to this stock. No delivery of the stock to the sons was necessary to complete this trust.
So that whether Judge Gaugh retained the possession of the certificates or whether the names of the appellants were written in the respective assignments, is wholly immaterial. The trust and the equitable rights thus created became fully declared and executed and vested at the time. Certificates of stock are, by our statute (Sec. 9743, R.S. 1919), declared to be personal property. Express trusts in personal property may be declared by parol and proven likewise. Harris Banking Co. v. Miller, 190 Mo. 640; Rollestone v. Nat. Bank of Commerce, 299 Mo. 57. (3) There was no resulting or other trust in favor of Judge Gaugh in any of the property standing in appellants' names and conveyed by them to the corporation. Hunnell v. Zinn (Mo.), 184 S.W. 1156; 30 Cyc. 143; Stevenson v. Haynes, 220 Mo. 199; Bender v. Bender, 281 Mo. 473. (4) If appellants did not obtain title to the stock in accordance with their agreement, a resulting trust arose in their favor in the land conveyed to the corporation. In making the conveyance of their land to the corporation, it is clearly established by the evidence, that appellants did not intend the same as a gift either to the corporation or to their father. The sole consideration for the conveyance was that they should receive and own all the capital stock of the corporation. If, therefore, by reason of any informality of their agreement with their father, or by reason of any inaction on their part or on their father's part, it could be held that they did not become the owners of the stock, the entire consideration of their transfer to the corporation failed and a resulting trust in the land so conveyed arose in their favor. 2 Pomeroy, Eq. Juris. (2 Ed.) sec. 981, pp. 1433-1436; 1 Perry on Trusts (4 Ed.) sec. 126, pp. 145, 146; 39 Cyc. 115, 104; Bennett v. Hutson, 33 Ark. 762. (5) The corporation having received the conveyance and retained the property in pursuance of the agreement of its stockholders, that appellants should own all the capital stock, thereby became a party to and was bound by this agreement. It was the corporation's duty, if it held onto the property, to see that the stock was placed on its books in the names of the appellants as the rightful owners thereof. (6) The finding and decree of the trial court that the stock certificates in question were owned by Judge Gaugh and in his safe deposit box at the time of his death, and that they were thereafter removed therefrom by appellants, is not only against the weight of the evidence but is not supported by any credible evidence. This finding rests on the unsupported testimony of Karalee Rankin. Her testimony on the subject of the contents of this box, as well as on every other important point on which she testified, will be found on examination so very unreasonable, so inordinately improbable, as to stamp it as wholly unworthy of belief. (7) Respondents are bound by the testimony of Walter Gaugh as to what he took from the safe deposit box. Respondents placed Walter Gaugh on the witness stand as their witness and twice inquired of him as to what he took from the safe deposit box. They vouched for the credibility of this witness by placing him on the witness stand and are bound by his testimony to the effect that he did not take the stock certificates from the box. Manchester Bank v. Harrington (Mo.), 199 S.W. 242; Claflin v. Dodson, 111 Mo. 195; Rodan v. St. Louis, 207 Mo. 408. (8) The decree is inequitable. If the decree rendered by the trial court is permitted to stand, it convicts the father of appellants of perpetrating a fraud upon them in inducing them to convey their real estate to the corporation and in appropriating to his own use and depriving the appellants of the purchase price of their real estate so conveyed. A.N. Gossett, Ira B. Bruns and John I. Williamson for respondent Seehorn.
(1) The law and the evidence support the finding of the court below. (2) The deed from respondent to George M. Gaugh was properly cancelled. Respondent in her amended petition offered to do equity and to conform to any order to be made by the court. That is all that equity requires of her. Peak v. Peak, 228 Mo. 536; Haydon v. Railroad, 222 Mo. 134; Custer v. Shackelford, 225 S.W. 455. (3) Because of their conduct in respect to suppression of evidence, interference with and concealment of decedent's property, every and the strongest presumption should prevail against appellants in this case. Pomeroy v. Benton, 77 Mo. 64; Hunt v. Sanders, 288 Mo. 337; Haid v. Prendeville, 292 Mo. 552; Secs. 57, 60, 61, 69, 568, R.S. 1919; Laws 1921, p. 120.
John S. Wise, Jr., for respondent Karalee G. Rankin.
(1) Appellants never became the equitable owners of any of the stock of the Queen City Investment Company. That a trust may be established by evidence is not disputed, but in the case at bar, there is no evidence of any agreement. The rule as to all parties in interest and conflicting testimony in Missouri is found in Black v. Epstein, 221 Mo. 304. The rule that a party who calls a witness shall not impeach his credibility does not prevent a party's proving the truth, notwithstanding contrary statements by his own witnesses. He may not impeach his witness' character and credibility, but he may prove the truth by other witnesses notwithstanding the testimony of any witnesses called by him. The testimony of a party in interest is not conclusive upon the court or the jury, but may be given credence by the court or jury in the light of his interest or disregarded when shown to be false in any respect. This rule is not relaxed by the fact that the witness is called by the other party. (2) There was no express trust declared by Judge Gaugh. The argument in appellants' brief that there was an express trust declared by Judge Gaugh, and the authorities cited, are without weight or merit in the present case. (3) The decree should be affirmed.
This is a suit by Thomas J. Seehorn, as Public Administrator of the Estate of George G. Gaugh, deceased. The essential charge of the petition is that defendants Walter W. Gaugh and George M. Gaugh, sons of the deceased had wrongfully appropriated, taken and held to themselves certain personal property belonging to the estate of deceased, and had destroyed records and books showing the ownership of the property. The evidence was especially directed to the question of ownership of seventy-seven shares of the capital stock of the Queen City Building Investment Company, a corporation, and to ownership of the business and certain chattel property of the Union Printing Binding Company, which is not a corporation.
Under the allegations of the petition it was prayed that defendants be decreed to hold said property in trust for the estate; that the alleged fraudulent transfers of certificates for said shares of stock be canceled, and an accounting of income and profits be had. There was a finding and decree in favor of the administrator, as to said shares of stock.
This is a companion case to the suit of Maude F. Gaugh, Respondent, v. George M. Gaugh (Impleaded with Walter W. Gaugh et al.), Appellant, and Karalee Rankin, Respondent, ante page 414, wherein respondent Maude Gaugh, widow of the deceased, sought to establish a resulting trust in favor of herself and the heirs of the deceased, in certain real estate, the title to which stood in the name of George M. Gaugh, and wherein also she sought to cancel the conveyance made by her to George M. Gaugh of her interest in the estate of the deceased; and Karalee Rankin, by her cross-bill in that suit, also sought to establish a resulting trust in said real estate.
The two cases were heard together, and the appeals taken were heard and submitted together upon a common bill of exceptions. The issues made by the pleadings, the evidence, and the conclusions applicable to both cases, are stated in the opinion in the case of Maude F. Gaugh, Respondent, v. George M. Gaugh (Impleaded with Walter W. Gaugh) Appellant, Karalee Rankin, Respondent, ante page 414, and reference is made thereto, for the conclusion announced and decisive of this case. Under what is there stated, the judgment herein, in favor of the administrator for the aforesaid shares of stock, is affirmed.
This cause coming into Court en Banc from Division One, the foregoing divisional opinion by LINDSAY, C., is adopted as the decision of the court. Ragland, Atwood, Walter and Gentry, JJ., concur; Gantt, J., concurs in the result; White, C.J., and Blair, J., dissent.