Court Opinion

ID: 8009142
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:56:15.563629+00
Date Added: 2024-06-11T16:36:00.075475
License: Public Domain

Norton, C. J.
It is substantially alleged by the petition in this case, that the Mac'on Savings Bank, on the sixteenth day of February, 1882, made an assignment for the benefit of its creditors, to the defendant, Web. M. Rubey; that, at the time of the failure and assignment by the said bank, the> bank was indebted to the plaintiff in the sum of $1,333.78; that, previous to said assignment, on the eleventh day of February, and on the second day of March, 1880, said bank conveyed by deed to defendant, Winn, two parcels of land, the property of said bank, in consideration of said Winn (who was then, and had been since 1874, a stockholder and director in said bank) surrendering to said bank twenty-seven hundred dollars of his paid-up stock ; that, at the time these deeds were made, the bank was insolvent and in failing circumstances, of which it is alleged defendant, Winn, had knowledge. The prayer of the petition is, in effect, that the property so conveyed be subjected to sale for the payment of plaintiff’s debt as a creditor of said bank.
The answer of defendant, Winn, is a general denial; •defendant, Rubey, answers, and in effect admits the facts set up in the petition, and by way of cross-action, sets up the assignment made to him by the bank, and as the representative of the creditors, asks the court to deny the prayer of the plaintiff, and grant a decree in his favor, declaring the rents and profits of the land conveyed to his co-defendant, Winn, trust jxroperty for the benefit of the creditors, and that Winn be required to re-convey the land to him as assignee of the bank. The court found that the deeds to Winn were void, and decreed that the title to the premises be vested in defendant, Rubey, to be administered by him under the deed of assignment, and that he pay plaintiff out of the proceeds of the premises two hundred dollars, assessed by the court in his favor for an attorney’s fee in bring*509ing the suit. The case is before us on cross-appeals-from this judgment taken by plaintiff, Roan, and defendant, Winn, Roan complaining that the court erred in not decreeing the land to be sold for the satisfaction of the debt, and Winn complaining that it erred in-holding the deeds to be void.
It is conceded that the relation of .defendant to the-bank as stockholder and director was such as is stated in the petition; that Winn paid for the property in dispute by surrendering to the bank twenty-seven hundred dollars of his paid-up stock, and that the stock so surrendered was selling at par, and that twenty-seven hundred dollars was the fair and full value of the land,, at the time of the sale, and it was agreed to be worth, at the time of the trial, twenty-two hundred dollars, and that the bank did not become indebted to plaintiff until fifteen months after the sale. The defendant, Winn, over the objection of plaintiff, testifies that he-had no personal knowledge that the bank was insolvent, or in failing circumstances, at the time he purchased the property ; that he bought it in good faith ; had heard some rumors that the bank was not solvent.
The first question presented by the record is: Are the deeds made to Winn fraudulent as to creditors of the bank, and the property conveyed subject to their claims ? It is an admitted fact, that when these deeds were-' executed, that the Macon Savings Bank was insolvent, and in such case the law is settled that the assets of the bank became a trust fund to be managed by the directors, for the benefit of the creditors, and that, after such confessed insolvency, the directors cannot, inequity, secure any advantage to themselves. This has been so held in a well-considered case by Judge Philips (Williams v. Jones, 23 Mo. App. 132), and the authorities there cited sustain the proposition; in one of which (Marr v. Bank, 4 Cold. 471) it is said: ‘ ‘ By the insolvency of the bank, the corporation is incapable of *510pursuing the objects for which it is created, without .defrauding the public and existing creditors. Its officers or agents properly ceased to use its franchises after the insolvency was ascertained; but their responsibility as to the assets did not cease. They continued to hold them as before; not for themselves, or for the use and benefit of the stockholders, but for the creditors of the corporation. After the insolvency of the corporation, although the legal ownership of the assets may continue as before, the beneficial interest of the stockholders clearly no longer exists, as a state of insolvency presupposes that the capital and assets are insufficient to meet the liabilities. The stockholders having incurred no personal liability for the debts of the corporation, have, in point of fact, no interest in the disposition of the assets of the bank after its insolvency. In equity, as well as at law, the beneficial interest therein belongs to the creditors. The capital is the fund they trusted, and to which, with the after-acquired property, or assets of the corporation, they can alone look for indemnity. Both stand pledged for the payment of the corporation debts, and a court of equity will follow them into the hands of stockholders, or other persons receiving them with notice, for the benefit of creditors.”
Now, under the. principle stated above, if the bank was actually insolvent at the time the deeds were made to Winn, and he had knowledge of such insolvency, the deeds must give way to the claims of a creditor when a court of equity is asked by him to avoid them. Did Winn have such knowledge ? He testified that he had no personal knowledge of the insolvency of the bank, and admitted that he had heard rumors that it was not solvent. In view of this statement, and the fact that he had been a director of the bank since 1873 or 1874, and also a stockholder, under the rulings of this court, in the cases of Kitchen v. Railroad, 69 Mo. 265, and Leavitt *511v. Laforce, 71 Mo. 356, lie is chargeable in the eye of the law with.knowledge. In the first case cited, it is said: “The law imputes to a purchaser the knowledge of a fact, of which the exercise of common prudence and ordinary diligence must have apprised him.” Whatever is sufficient to put a person on enquiry is notice ; that is, when a man has sufficient information to lead him to a fact, he shall be deemed to be cognizant of it. In the case last cited, it is said that, when a person has not actual notice, he ought not to be treated as if he had notice, unless the circumstances are such as to enable the court to say, not only that he might have acquired, but also that he ought to have acquired, the notice with which it is sought to charge him ; that he would have acquired it but for his gross negligence of the conduct of the business in question. “In short, gross negligence under certain circumstances, is held, in equity, to be equivalent to notice.”
Winn having this knowledge, could only, thereafter, deal with the assets of the bank as a trustee for the creditors, and having no beneficial interest as a stockholder, he is chargeable with knowledge of the fact that the twenty-seven hundred dollars of stock which he paid for the land, and withdrew from the trust fund, though having a marketable value, was of no value and- worthless. In view of what has been said, the conclusion follows, that the deeds to Winn must be held to be fraudulent in law, and the property conveyed subject to the claim of creditors.
While the court in its decree properly set aside the deeds to Winn, it committed error in decreeing that the land should pass to defendant, Rubey, tobe administered. It is well settled, by numerous decisions of this court, that neither the grantor in a fraudulent deed nor his heirs, executors, or assigns can sue to set aside such deed. Zoll v. Soper, 75 Mo. 460; Jackman v. Robinson, 64 Mo. 289; Merry v. Freeman, 44 Mo. 518. Un*512der our assignment law, the assignee stands in the shoes of the assignor, and if the assignor or grantor could not assail the deeds as fraudulent, neither can the assignee. While this precise question may not have been passed upon by this court, it follows as a corollary, from what has been held, and it has been passed upon,, as above stated, and, we think, correctly, by the St. Louis court of appeals. Shultz v. Christman, 6 Mo. App. 338; Heinrichs v. Wood, 7 Mo. App. 236.
It is a rule, so well established as not to require the citation of authorities in support of it, that, before a creditor can proceed in equity to have a deed, made in fraud of the creditors of the grantor, set aside, and the property subjected to the payment of his debt, he must first have his claim established at law ; the spirit and reason of the rule being that a court of equity is not the proper tribunal to ascertain what is due from one to another on a demand purely legal. It is insisted by counsel that plaintiff has not complied with this rule. We think the point is not well taken. While the plaintiff did not sue in a court of law and obtain judgment against the bank, it sufficiently appears in the record that the assignee of the bank adjusted his claim, ascertained and allowed the amount due, and gave him a certificate therefor, which adjudication was, under section 376, Revised Statutes, in so far as its finality was concerned, as much as if rendered by a court, and it has been so held in the case of Eppright v. Kauffman, 90 Mo. 25, where it is said: “When the assignee passes on a claim and: allows it, the question involved therein becomes res judicata, and the decision of the assignee becomes final •, in a word, a judgment, having all the force, effect, and conclusive attributes of any other judgment.”
Under the facts in the case, and the law applicable to them, the prayer of the plaintiff should have been granted, and the court, in refusing it, committed error..
*513The judgment will be reversed and the cause remanded, with directions to the circuit court to enter up a decree in favor of plaintiff in conformity with this opinion.
All concur, Black, J., concurring in the result.