State ex rel. Voullaire v. Tasker

Bates, Judge,

delivered the opinion of. the court.

This case was heretofore submitted to the court, and an opinion prepared by Judge Napton, but no.-judgment entered upon it. The parties now consent that judgment may b.e entered in accordance with that opinion.

Therefore, the other judges concurring,

the judgment below is affirmed.

Napton, Judge.

The invalidity of such deeds as were passed upon by the court, in Brooks v. Wimer, 20 Mo. 503 , Walter v. Wimer, 24 Mo. 63 , and Stanley v. Bunce, 27 Mo. 270 , is based upon a principle of public policy embodied in our statute concerning fraudulent conveyances. No actual fraudulent intention is imputed to the grantors or grantees in such deeds, but the attempted disposition of the property is considered inconsistent with the rights of creditors — a virtual exclusion of the property from a liability to levy; whilst, at the same time, the debtor retains not only the use of it, but an absolute power of disposition. The effect is, of course, that the property thus shut up from the reach of general creditors may be entirely disposed of without the proceeds going either to the outside creditors or to the beneficiaries in the deed. The only party certainly benefitted by it is the debtor or grantor, who has the power to convert every portion of the property to his own use. The deed, if sustained, would serve the purpose- of protecting the property against the grantor’s creditors, and at the same time authorize him to convert it to his own use by an absolute sale. It is not the mere possession of the property by the.grantor, but it is the possession, with the power of sale, which defeats the instrument; and if this appears to be the intent of the parties, although neither expressed in terms or necessarily implied from the deed, yet the effect must necessarily be the same. (Reed v. Pelletier, 28 Mo. 177 .) But where this character *448 istic is not stamped on the face of the deed, either expressly or by implication, the question is for the jury, under instructions explanatory of the facts, which will constitute legal fraud. It is like the case of a voluntary conveyance by a party who is insolvent. Whatever may be the intentions of the parties, such conveyances are invalid against prior creditors, and no inquiry into the motive is necessary. A conveyance or assignment may, however, be totally inoperative, by reason of some rule of law; for some purposes, and yet may be entirely operative for others. It is not a question of fraud in fact, but of fraud in law; and when the law is satisfied, the question is then open for the jury as to the intentions and object of the instrument. Thus in the case of Stanley v. Bunce, the instrument conveyed land and slaves as well as merchandise. The only question in that case was as to the efficacy of the instrument to carry the merchandise, and, so far as that property was concerned, the deeds were pronounced void. But it is not to be inferred that the deeds failed to convey the land or the slaves. No authority was given to the grantor to retain possession of either the land or slaves; and if there had been, unless he had also the power of disposing of them, the transfer was valid. If the law pronounced such a conveyance void, or inoperative, because the retention of the possession and the power of disposition was considered conclusive of actual fraud, the rule would be different; but we have seen that this is not the ground upon which the statute is based, but it rests upon a principle of public policy. The intentions of the parties, as in cases of voluntary conveyances, may be entirely honest; but, to put an end to all questions of intention, or fraud in fact, the legislature have thought it expedient to prevent such transfers of property from affecting creditors as impolitic and dangerous, and tending to promote fraud. So far, then, as a deed or a written transfer of personal property falls within the prohibition of the statute, it is void ; but so far as it does not, it may be effectual. Because a deed or instrument is ineffectual for some purposes, it does not follow that it is for all, unless the *449 defect in it, or the objection, reaches every part of it, and runs through the whole instrument. In the case of Howell v. Bell, 29 Mo. 137 , it was held that a conveyance of land and slaves, with a stipulation in it that, the grantor should retain possession, was not within the first section of an act concerning fraudulent conveyances. If the deed had also contained a-transfer of cattle or merchandise, with a power in the grantor to sell them, the deed would have certainly fallen within the principle declared in Brooks v. Wimer, and to that extent would have failed, but it would have been still effectual to convey the land and the negroes.

The present case involves the construction of two deeds, in many respects differing from any of those heretofore passed upon by the court. They are transfers, in trust to pay debts, of the machinery, fixtures, tools and materials of a manufacturing establishment. The first deed is admitted to be unexceptionable. The second deed embraces all the property enumerated in the first, and is for the security of the same debts, but embraces some additional property of the same description, and contains this additional clause: “Also, all property, goods, tools, wares, material's, fixtures, machinery, stock, rough or finished materials, and all things whatever now, or that may be hereafter used, bought or belong to the said party of the first part, in the course of his usual trade or business.”

It is insisted that these expressions, by a necessary implication, recognize the right of the grantor to retain possession and dispose of the property conveyed, and- therefore bring the deed within the principle heretofore established by this court. These two deeds may be considered as embracing, in the main, without going into details, two classes of property. The first class comprises the machinery and other incidental requisites to a manufacturing establishment; and the second consists of the materials upon which the labor, both artificial and natural, is to be expended.. •

In reference to the first class of property, it is evident that no implication arises from the fact that the grantor .is left in *450 .possession, that he has any power of selling them in order to carry on his business ; on the contrary, the implication is otherwise. The mechanic can not carry on his trade without his tools ; and if the intention be to go on with his business, it must also be intended that he shall retain the implements and machinery by which alone it can be conducted. So far, therefore, as these deeds convey the machinery in the workshop, it is clear that they do not fall within the objection of being a conveyance to the use of the grantor alone. They are no more liable to this objection than would be the conveyance of a farm or of slaves, to be retained by the grantor and worked for his benefit. Such property is not to be consumed in the use, although, like land and slaves, they may possibly be injured and deteriorated to some extent.

In relation to the materials in the shop or manufactory, there is more difficulty; but even in reference to them it must be observed that they differ essentially from mere articles of merchandise. So far as the second deed attempts to embrace after-acquired materials, we can not see how the beneficiaries could be injured by such a clause ; for even if the power of sale is to be implied, yet the grantee only loses the value of the labor bestowed on them. There is this difference between materials, either on hand at the date of the deed or to be acquired in future: th'at no implication can be made, from any general power given to the grantor to carry on his trade or business, that they are to be sold as such in their crude shape, but they could only be designed for sale after their value had been increased by the labor and skill of the artisan. It would be going very far to infer from a clause which recognized the right of the grantor to prosecute his business as a mechanic, that he had necessarily to buy and sell the materials upon which he was to be employed. His labor might be profitably employed upon the materials furnished by his customers. In looking into the evidence in this case we find that all, or nearly all, the gas and steam pipe which was found in the workshop had been furnished by others for repair, and was claimed by its owners. In *451 short, it is quite plain that the articles were of great value ; the great bulk of the property conveyed by these deeds consisted of the machinery and fixtures of the establishment. Our conclusion is that the circuit court was right in refusing to declare either of these deeds void upon its face.

In relation to the instructions upon the question of actual fraud, we have not perceived any serious objections. The testimony on this point is indeed so conclusive of the bona fides of the debt, that even if some one of the numerous given instructions might be considered questionable, it would appear to be hopeless to expect a different result.

The disparity between the amount of damages and the sum for which the property actually sold at the sheriff’s sale, is no ground for a reversal of the judgment. The property evidently sold at a great sacrifice, as such property necessarily or ordinarily will, when sold under the hammer. This was a matter for the jury, and there was ample evidence to sustain the verdict.

Judgment affirmed.