Third National Bank v. Cramer

¶1This-is an appeal from a judgment dissolving an attachment. Plaintiff’s affidavit upon which the attachment writ was issued, set out three grounds, the first and second charging that defendant had, or was about to convey or assign his property so as to hinder and delay his creditors, and the third “that the debt sued for was fraudulently contracted on the' part of the debtor.” Defendant filed a plea in abatement, putting in issue the allegations of the affidavit, and upon a trial thereof, and at the close of plaintiff’s evidence, the court gave a peremptory instruction to find for defendant. The propriety of this action of the court is the question now here for review.

¶2Attachment: fraudulent conveyances: evidence: preferring wife’s debt. We have carefully gone over the entire evidence contained in the record, and in the light of the authorities, find no cause for disturbing the judgment. The plaintiff failed to make a case for the jury on either of the grounds set out in the affidavit. If plaintiff had any cause whatever for the attachment, it was either that defendant had fraudulently conveyed his property so as to hinder or delay his creditors, or had fraudulently contracted the debt sued for; there is no pretense that defendant was about to fraudulently convey or assign his property. To establish the first charge, this was the substance of the evidence adduced at the trial: Defendant was a merchant, having one store at Sedalia and one at St. Joseph. On August 3, 1896, he executed a deed of trust, naming one Buechle as trustee, conveying all his goods, accounts, etc., for the benefit of a large number of his creditors, and among them this plaintiff for the four notes here sued on aggregating $2,200. By the terms of the deed of trust, Buechle, the trustee, was to take possession of and sell the goods at public or piNate sale and collect outstanding claims, and out of the proceeds pay the creditors according to a classification there set out. The first to be paid were taxes and costs of executing the *480trust; second, unpaid salaries of employees; third to Harriet S. Oramer, defendant’s wife, the amount due and owing her for money borrowed, as follows: $2,923.63 on August 9, 1886, and $3,300 on April 23, 1894 — reciting in the deed of trust that “no part of said sums have ever been paid her, although said party of the first part promised when he received said money and frequently since, to repay her, and this said claim is hereby made a third class claim.” In the fourth class was placed a note in favor of Alex. Cramer; in the fifth class were placed the claim of this plaintiff for $2,200 and that of a bank at St. Joseph for about $1,400; and in the sixth class a large number of other creditors in amounts mentioned. The evidence shows that the trustee took open and notorious possession of the goods, evidences of debt, etc., began and continued the sale of goods at both stores (at Sedalia and St. Joseph) for about a year before this suit was brought. And it seems, when this attachment was instituted the goods remaining had been consolidated at Sedalia and the trustee had advertised the same to be closed out at auction.

¶3There was not a particle of evidence introduced tending to impeach the good faith and validity of the above named deed of trust, nor indeed tending to prove that any of the debts thereby secured were fraudulent or fictitious. All that can be said in that respect is that the maker of the deed of trust named his wife as a secured creditor to the amount of about $6,200. Neither was there any evidence to show the value of the property conveyed to the trustee, nor what amount he had realized from the sale thereof; and it therefore did not appear whether or not the trustee would have sufficient to pay off and satisfy every debt provided for, including that of this plaintiff.

¶4It seems then to us, that the court was justified in the holding that there was no evidence tending to prove a fraudulent conveyance. The mere fact that one of the parties *481secured was the wife of defendant could not, of itself, establish the invalidity of her claim, and if this was even so it could not render the deed of trust illegal or void as to the other creditors therein provided for. Robinson v. Dryden, 118 Mo. 534; Milling Co. v. Burnes, 144 Mo. 192; Woodson v. Carson, 135 Mo. 521. If the defendant was justly indebted to his wife (and as to this the evidence is all in the affirmative) then the law is well settled that he had the right to make such a conveyance as would prefer her claim over others. But, as already stated, there was no evidence to show that there was not sufficient property conveyed by the deed of trust to satisfy all the debts of the defendant. The burden of proving a fraudulent conveyance rested on the plaintiff; fraud will not be presumed but must be affirmatively established" by him who alleges it.

¶5-:fraudulently contracted debt. H. The remaining question is, was the plaintiff entitled to go to the jury on the allegation contained in the affidavit that the debt sued for was fraudulently contracted on the part of the defendant. In SUpp0r^ 0f this allegation plaintiff relies on the following written statement made by defendant, January 15, 1895, as to his financial condition at that time, and upon the faith of which plaintiff’s officers testify that they loaned defendant a portion of the money now sued for:

“Sedalia, Mo., Jan, 15, 1895.

Mdse, on hand, about..............$12,000.00

Book accounts.................... 1,650.00

$13,650.00

Mdse, liabilities................... 3,363.25

$10,287.00

A. B. Cramer.”

¶6*482Of the four notes sued on, two (one for $1,000 and one •of the $500 notes) are remote renewals of notes for the same amounts given the year previous to the above statement, and for money borrowed at such times. So then, the other two notes (of $500 and $200 respectively) are the only ones representing loans made by plaintiff to defendant nt and subsequent to the signing of the above quoted written statement. The evidence tends to prove that plaintiff .agreed to, and did loan the $700 (evidenced by the last two notes above mentioned) relying on the correctness of the .aforesaid written statement made by defendant. But plaintiff’s case is deficient in that it was not shown that such statement was false at the time. The statement taken literally, is, that on January 15, 1895, defendant had on hand about $12,000 in merchandise, and was at the time indebted for merchandise in the sum of $3,363.25. Plaintiff introduced no evidence at the trial tending to prove either of these matters to have been untrue at the time. It is clear that the burden of so showing was on the plaintiff.

¶7—: debt partly contracted in fraud; partly not. But plaintiff’s last ground of attachment fails for .another reason. The statute allows the plaintiff to attach “when the debt sued for was fraudulently contracted on the part of the debtor.” There is no pretense here that the $1,500 which defendant borrowed of plaintiff in August and October, 1894 (and for which . . _ 0 . . x a note of $1,000 and one lor $500 were given) were procured by any fraudulent representations of the defendant. The written statement forming the basis of this ground for attachment was not made and signed until long after said loans in 1894. Such statement then as to defendant’s financial standing in January, 1895, could not enter into or induce the credits extended in the preceding year. Oonceding then that the two loans made at and subsequent to January 15, 1895, may have been fraudulently procured through a false statement of assets and liabilities *483then signed by defendant, will tbe plaintiff be permitted to attach, not only for the loans so made on the faith of such false statement, but as well for other loans made long prior' thereto and of course in no way induced by such fraudulent statement? This is denied, it seems, by every court where the question has arisen. Estlow v. Hanna, 75 Mich. 219; Mayer v. Zingre, 18 Neb. 458; Stiff v. Fisher, 85 Tex. 556; s. c., 2 Tex. Civ. App. —; C. D. Smith Drug Co. v. Drug Co., 40 Pac. Rep. 979; Wilson v. Harvey, 52 How. Pr. 126. And the rule was so recognized by us in Mackey v. Hyatt, 42 Mo. App. 443. The reasoning of the Michigan court in Estlow v. Hanna, supra, is so conclusive that we here quote from the opinion and adopt the language as our own:

“Here the suit was brought to recover the money paid by plaintiff for defendant, upon three promissory notes. The debt as to two of them was not fraudulently contracted yet the lien created upon the property of defendant included the ¿mount of these two notes as well as the amount so fraudulently contracted. The amount of these two notes the plaintiff had no right to include in his lien, which was no part of the debt fraudulently contracted within the meaning of this statute. He had no right to have his writ for these ■ amounts, or to have a lien upon the property of the defendant therefor.

“If this writ had been levied upon personal property, the defendant, or any person in whose possession the same was found, would have had the right to. give a bond to the officer to satisfy the judgment, and retain possession. This-bond the officer may demand to be in double the amount specified in the affidavit before releasing the property, and. under plaintiff’s contention, though but $100 of the amount was fraudulently contracted, yet the defendant before he could get his property released, would be compelled to give-a bond for the entire amount of the debt sworn to be due.

*484“Again, one having a claim covered by this subdivision of the statute, might under the construction contended for, have attached thereto any number of assigned claims, and obtain a lien upon the property of- the debtor for the whole sum.

“We can not agree with any such harsh construction of this statute. The remedy itself is a harsh and extraordinary one, proper only when it comes within the plain provisions of the statute, but the statute should not be extended by construction. We are cited to no case by counsel, which upholds the doctrine for which they contend and we are satisfied upon principle none can be found. On the contrary, wherever this question has come before the courts of other states it has uniformly been held that attachments will not be upheld where a complaint or affidavit sets forth several causes of action, some of which are without the statute.”

¶8It matters nothing that the two notes in suit evidencing the $1,500 of the aggregate sued on, were in fact executed after the alleged false and fraudulent statement was made. Said notes were only renewals of originals executed when the money was obtained, and this was prior to such representations. The debt was contracted when the money was bor- . rowed, and the statute only has to do with whether or not it was then “fraudulently contracted.” The note first executed was but the contemporaneous evidence of the obligation first incurred, and the note renewed only a substituted memorial of the original transaction. Bank v. Swan, 3 Wyo. 356.

¶9In our opinion the court correctly sustained a demurrer to the plaintiff’s evidence and its judgment must be affirmed.