Opinion
April 2, 1930.
1. FRAUDULENT CONVEYANCE. A conveyance made by an insolvent grantor for the sole purpose of defeating a bona-fide debt is fraudulent. And when the grantor so testifies, and continued to collect the rents and look after the property after she conveyed it, it can scarcely be held that the conveyance, made without any satisfactory proof of a consideration paid, was not fraudulent.
2. EVIDENCE OF DEBT: Judgment upon Constructive Notice: Section 1762. The judgment, rendered upon constructive service, and the sheriff's deed and other proceedings in the attachment suit, are evidence of debt against the lot attached, and are admissible in evidence as tending to show title in the plaintiff who bought at the attachment sale and received a sheriff's deed. Whether under Section 1762, Revised Statutes 1919, they are evidence of debt of the defendants, to whom the attachment debtor conveyed the lot, is not the question for decision where they are offered by the purchaser at the sheriff's sale as evidence tending to show title in her, in her suit to set aside the prior deed of the attachment debtor as a fraudulent conveyance.
3. ATTACHMENT: Ownership of Note: Collateral Proceeding. In a suit to set aside a conveyance to defendants, as fraudulent as against creditors, of a lot which had been attached and sold by the sheriff to plaintiff, and which had been previously conveyed by the attachment debtor to defendants, it will be assumed, in the absence of evidence to the contrary, that the plaintiff was the owner of the note made the basis of the attachment suit and judgment.
4. ____: ____: Finality of Judgment. If the circuit court had jurisdiction of the parties and the subject-matter in the attachment suit, the ownership of the note made the basis of that suit, so far as the title of the lot attached and sold in that suit is concerned, was fixed by the judgment therein.
5. ATTACHMENT: Irregularities: Collateral Attack. A judgment in an attachment suit, if the court had jurisdiction of the parties and subject-matter, in so far as the lot attached and sold by the sheriff is concerned, is conclusive against all mere irregularities in the attachment proceeding, and cannot subsequently be attacked collaterally.
Appeal from Jackson Circuit Court. — Hon. A. Stanford Lyon, Judge.
AFFIRMED.
Daniel H. Frost and Erasmus C. Hall for appellants.
(1) The plaintiff bases her title upon a sheriff's deed made under a judgment in favor of plaintiff and against Katherine DeMoss and E.M. DeMoss in an attachment suit against them as non-residents and notice by publication. There was no proof of such indebtedness offered at the trial. The plaintiff attempted to make such proof by introducing the judgment in the attachment suit; this is not evidence of debt under Sec. 1762, R.S. 1919. (2) The plaintiff was not the owner of the note sued on in the attachment suit. An executrix or administrator cannot assign or transfer any notes of the estate without an order of the probate court. The title to that note, if there was any, was in the John E. Frost estate and after final settlement, when plaintiff claims she became owner, it was de bonis non and of no value. 2 Woerner's American Law of Administration 693; Wiel v. Jones, 70 Mo. 560; R.S. 1919, sec. 116; Jacobs v. Maloney, 64 Mo. App. 270. Where administrator takes charge of note as a part of assets then legal title is in him, and no one else can sue. Todd v. James, 157 Mo. App. 421. That judgment is not binding on appellant Allen and no rights of his could be affected by it. (3) The judgment in the attachment suit cannot affect the defendants Chilton W. Allen and Marie Allen, as they were not parties to it, and had title to the land involved before the pretended transfer of the note by the plaintiff to herself. Barteron v. Real Estate Savings Bank, 10 Mo. App. 80; 34 C.J. 1011. Judgments bind privies, but one not a privy to a judgment where his succession to the rights of property thereby affected accrued to him previous to the institution of the suit. 34 C.J. 1010; Kootz v. Kaufman, 31 Mo. App. 397; Riescheck v. Klingelhoefer, 91 Mo. App. 430; Freeman on Judgments, sec. 162; Womack v. St. Joseph, 201 Mo. 478; Henry v. Woods, 77 Mo. 281. Defendants Allen had a right then to attack the validity of that attachment judgment and the title by which respondent claims title to Eden lot. Lahey v. Garbee, 105 Mo. 355. (4) The petition in the attachment suit does not allege that the plaintiff is the assignee or owner of the note sued on. The affidavit does not show that defendants are owners of property within the jurisdiction of the court; the order of publication based on such affidavit, was improper and void. 17 Plea. Prac. 35. The notice published was bad and not in conformity with Sec. 1729, R.S. 1919. The statute must be strictly complied with. The notice failed to describe the note sued on. Haywood v. Russell, 44 Mo. 253. (5) The judgment in the attachment suit is not evidence in any other suit. Sec. 1762, R.S. 1919. And as judgment was the only evidence of debt in the instant case, there was no proof of debt. The recital in the judgment in the attachment suit that defendants were duly served may be contradicted in a collateral proceeding. Lahey v. Garbee, 105 Mo. 355. (6) The plaintiff failed to prove any fraud or fraudulent conveyance. There was no proof of insolvency of grantor in the deed at the time it was made. Clark v. Lewis, 215 Mo. 173. Fraudulent intent must be proved. 6 Cyc., Evidence, 105, 116. The fact of relationship of grantor and grantee does not raise any presumption of fraud. Martin v. Fox, 40 Mo. App. 664.
L.W. Thomason, Mosman, Rogers Buzard and Don E. Black for respondent.
(1) Judgment in attachment suit was not introduced in this suit as an evidence of debt, but as evidence of title and ownership. The indebtedness from the DeMosses to plaintiff had been established in the attachment suit. Judgment in attachment suit can be used in any proceedings affecting the attached property. Cooper v. Reynolds, 77 U.S. (10 Wall.) 308; Massey v. Scott, 49 Mo. 278; Burnett v. McCluey, 92 Mo. 230; Bradshaw v. Halpin, 180 Mo. 666; Halstead v. Mustion, 166 Mo. 488; Oldham v. Wade, 273 Mo. 231, 200 S.W. 1053; Garrett v. Wagner, 125 Mo. 450. (2) Plaintiff was the owner of the note sued on in the attachment case. Judgment in the attachment suit conclusively established that plaintiff is the owner of the note. Lyons v. Doherty, 50 Mo. 38; Bank of Laddonia v. Friar, 88 Mo. App. 39; Massey v. Scott, 49 Mo. 278; Dawson v. Wombles, 123 Mo. App. 340; Boeka v. Nuella, 28 Mo. 180. (3) Judgment in attachment suit cannot be collaterally attacked where court had jurisdiction of the parties and subject-matter. Massey v. Scott, 49 Mo. 278; Cooper v. Reynolds, 77 U.S. (10 Wall.) 316; Martin v. McLean, 49 Mo. 361; Potter v. Whitten, 161 Mo. App. 118; Hardin v. Lee, 51 Mo. 241; Perryman v. State, 8 Mo. 208; Castleman v. Relfe, 50 Mo. 583; Lewis v. Morrow, 89 Mo. 174; Jones v. Edeman, 223 Mo. 312. Appellants Allen cannot attack attachment judgment as they are in privy with the DeMosses. Greenleaf, Evidence, sec. 189; Crispen v. Hannavan, 50 Mo. 415; Carver v. Jackson, 29 U.S. (4 Peters) 85; Litchfield v. Goodnow, 123 U.S. 549; Summit v. City R. E. Co., 208 Mo. 614; Brown v. Ry. Co., 281 S.W. 64; Murphy v. DeFrance, 101 Mo. 151; Henry v. Woods, 77 Mo. 281. (4) Defects, if any, in the attachment proceedings did not void the attachment judgment. Massey v. Scott, 49 Mo. 278; Cooper v. Reynolds, 77 U.S. (10 Wall.) 316; Hardin v. Lee, 51 Mo. 241; O'Reilly v. Nicholson, 45 Mo. 163; Gray v. Bowles, 74 Mo. 419; State ex rel. v. Donegan, 83 Mo. 374; Rosenheim v. Hartsock, 90 Mo. 357. (5) The evidence well established the fact that the conveyance was fraudulent — that it was the intent of Mrs. DeMoss to fraudulently convey the property in question, and that the Allens had knowledge of such intent. Burgert v. Borchert, 59 Mo. 80; Oldham v. Wade, 273 Mo. 231, 200 S.W. 1053; Sexton v. Anderson, 95 Mo. 373; Dougherty v. Cooper, 77 Mo. 529; Frederick v. Allagier, 88 Mo. 601. In dealings between brother and sister, where the rights of creditors are involved their acts should be closely scrutinized. Bank v. Fry, 216 Mo. 45; Cole v. Cole, 231 Mo. 236; Ice Cold Storage Co. v. Kuhlmann, 238 Mo. 697; National Bank of Rolla v. Leonard, 273 S.W. 723. There was ample proof of the grantors' insolvency at the time deed was made. Eddy v. Baldwin, 32 Mo. 369; Oldham v. Wade, 273 Mo. 231, 200 S.W. 1053.
Suit to set aside an alleged fraudulent conveyance of lot seventeen in Eden, Jackson County, by Katherine DeMoss and E.M. DeMoss, her husband, to Chilton W. Allen and Marie Allen, his wife, and to quiet the title. Judgment for plaintiff, and defendants appealed.
It is alleged that prior to October 23, 1920, plaintiff was the owner of "certain obligations" of defendants Katherine and E.M. DeMoss; that on said date the DeMosses, with intent to defraud plaintiff, conveyed the lot to the Allens without consideration; that thereafter plaintiff obtained judgment against the DeMosses on the "obligations," and on execution the lot was sold by the sheriff to plaintiff; that the Allens claim to own the lot by virtue of a deed of the DeMosses conveying to them the lot on October 23, 1920, and plaintiff prayed for cancellation of the deed to the Allens and determination of the interests of the parties.
The Allens answered by denying generally the allegations of the petition, and alleged they were the owners of the lot; that it was conveyed to them for a valuable consideration; that the judgment on the "obligations" against the DeMosses is void because plaintiff was not the owner of the "obligations," and prayed "to be dismissed and to recover of plaintiff their costs in this behalf expended." The answer of the DeMosses was a general denial. No reply was filed, but trial was had as if the reply were a general denial.
On December 29, 1915, John E. Frost signed as surety for the DeMosses a note for $2220.44 payable to a bank. Frost paid the note which was indorsed to him without recourse. He died October 10, 1920, the owner of the note, and plaintiff, his widow and administratrix, listed the note as an asset of the estate, but it was considered of no value. The widow married L.W. Thomason, and on September 6, 1924, filed suit against the DeMosses on the note, and Eden lot seventeen was attached as the property of the DeMosses, who then resided in Oklahoma. Service was had by publication. On November 29, 1924, judgment was rendered sustaining the attachment and adjudging the DeMosses indebted to plaintiff in the sum of $3606.53 with costs. Special execution was issued, and on July 17, 1925, the sheriff sold the lot. Plaintiff being the purchaser, the sheriff made conveyance to her. Plaintiff's claim of ownership rests on the sheriff's deed.
Defendant Chilton W. Allen is a brother of Katherine DeMoss. The families resided in Kansas City, Missouri, in 1914. The Allens lived at 311 Bellefontaine in property belonging to Katherine DeMoss, and paid her a rental of $35 per month. They testified that Chilton W. Allen inherited $950 from an aunt and used the money to pay a debt secured by a second deed of trust on the Bellefontaine property; that they also paid taxes and interest on the first mortgage debt on the Bellefontaine property, and that for these payments Mrs. DeMoss in 1914 conveyed to them the Bellefontaine property and the Eden lot; that after the DeMosses and the Allens moved to Oklahoma, and in 1917, Mr. DeMoss was arrested; that thereupon and at the instance of Mrs. DeMoss, they conveyed Eden lot to a Mr. Ewing to secure him as bondsman for DeMoss; that upon satisfaction of the bond, and in 1919, Ewing conveyed the lot to Mrs. DeMoss, who continued to hold the title until thirteen days after the death of John E. Frost, when she again conveyed the lot to the Allens. Thus it appears the Allens claim to be the owners of the lot from the time of the first conveyance in 1914, although in their answer it is alleged they are the owners of the lot by virtue of the conveyance of October 23, 1920.
I. Defendants contend the conveyance was not fraudulent. This calls for a consideration of the evidence. The Allens claim to have paid taxes and insurance on the Bellefontaine property and the debt secured by a second mortgage on said Evidence property. The claim rests solely on their testimony, of Fraud. for the persons to whom such payments would be made were not produced as witnesses, and no checks or receipts were produced, although they testified receipts were given to them. They also claim to have paid interest for the years 1914, 1915, 1916, 1917 and 1918 on the debt secured by the first mortgage on said property. However, they also failed to produce as witnesses the persons to whom such payments would be made, and produced no checks or receipts evidencing such payments, although they testified receipts were given to them. They testified to conveying the Bellefontaine property to a Mr. Miller on July 8, 1916, although they claim to have paid interest on the first mortgage for 1917 and 1918, which would be two years after they ceased to be owners of the property.
Katherine DeMoss tells a different story. She testified that she conveyed the Bellefontaine property and the Eden lot to the Allens in 1914 to beat a doctor's bill amounting to $50. And the Allens claim that the properties were deeded to them in 1914 in consideration of payment of the debt secured by a second mortgage on the Bellefontaine property, although the second mortgage debt was not paid until 1916. This conclusively shows the properties were conveyed to the Allens in 1914 for the reason stated by Katherine DeMoss. Moreover, the Allens did not conduct themselves as owners of the properties. They continued to pay rent for the Bellefontaine property to Mrs. DeMoss after the conveyance of 1914, and after the Allens moved to Oklahoma Mrs. DeMoss continued to collect the rent from others. They paid no interest on the debt against Eden lot and gave no attention to a renewal of the debt and mortgage on the lot. These matters were left to Mrs. DeMoss, who attended to them. They were not familiar with Eden lot, exercised no acts of ownership over it, and their testimony about the transactions with reference to the properties is wholly unsatisfactory. These properties were the only real estate owned by Mrs. DeMoss. She lost the Bellefontaine property by foreclosure of the first mortgage, and it is clear that she was insolvent at the time of these conveyances. When her husband was under arrest, the lot was, at her instance, conveyed by the Allens to the bondsman, who later conveyed it to Mrs. DeMoss. At that time her uncle, John E. Frost, was living. On October 10, 1920, Frost died, and Mrs. DeMoss knew she would be called upon to pay the note. In this situation she again conveyed the lot to the Allens without consideration. It is clear that she did so for the purpose of defrauding said estate.
II. Defendants contend it was error to admit in evidence the judgment in the attachment suit as "evidence of debt." Evidence Citing Section 1762, Revised Statutes 1919, which of Debt. follows:
" Judgment upon constructive service, effect of. — Such judgment shall bind only the property and effects attached, and no execution shall issue against any other property of the defendant; nor shall such judgment be any evidence of debt against the defendant in any subsequent suit."
We do not understand defendants' application of the section to the facts of this case. The judgment and the record of the proceedings in the attachment suit were not admitted as evidence of debt against the defendants. The judgment, sheriff's deed and the record of the other proceedings in that case are evidence of debt against the lot attached, and were admitted in evidence as tending to show title in plaintiff.
III. Defendants contend that plaintiff was not the owner of the note sued on by attachment, for the reason the note was transferred to her without an order of the probate court. There is no evidence in the record tending to show that the Ownership transfer was made without an order of court. The of Note. evidence does show that the note was considered of no value, and that it was not charged to the plaintiff as administratrix of the estate of John E. Frost in any of her settlements. The court may have ordered it transferred to her on distribution. In any event, the court had jurisdiction of the parties and the subject-matter in the attachment suit. Therefore, the ownership of the note, so far as the lot in question is concerned, was fixed by the judgment in that case.
IV. Defendants contend there were irregularities in the attachment proceedings. The record in the Irregularities. instant case discloses none. But even so, the judgment, so far as the lot is concerned, is conclusive against mere irregularities and cannot be attacked collaterally.
The judgment should be affirmed, and it is so ordered. All concur