Court Opinion

ID: 8013747
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:01:31.242923+00
Date Added: 2024-06-11T16:36:12.825743
License: Public Domain

Separate Opinion.
BRAOE, J.
I concur in the legal propositions' laid down by Valliant, J., in the foregoing opinion, and agree that the declarations of law numbered 2 and 4 for the plaintiff are obnoxious to the criticism passed upon them in the opinion. But I do not think the judgment should be reversed for the inaccuracies therein. The judgment of the circuit court is in accordance with the merits of the case, and under section 2303, Revised Statutes 1889, should be affirmed.
Separate Opinion.
MARSHALL, J. — The facts in this case are set out in this same case, on former appeal, 143 Mo. 587.
Bluntly stated 'the crucial facts are: Ritchie and Ratliff were partners, and the firm was insolvent. Hudson *228bought Ratliff’s interest in the firm. To do so he borrowed money from the Sturgeon Savings Bank, the bank knowing the pur-pose of the loan. Afterwards Ritchie and Pludson continued the business as partners, and contracted the debt with plaintiff. Then Ritchie bought out Hudson’s interest and gave his note secured by a chattel mortgage on the .stock to secure the note and Hudson transferred the note and mortgage to the bank as collateral security for what he, Hudson, owed the bank. Thereafter,' upon being advised that the transaction was not valid, Ritchie gave the note and deed of trust, in suit, to Hudson and Hudson transferred them to the bank and the bank surrendered Hudson’s note to him. The bank had full knowledge of all the facts.
The legal effect of this is this: Ratliff realized on his interest in the firm, to the disadvantage' and in fraud of the creditors of the firm. Hudson became a partner in an insolvent firm and of course became liable for its debts. Thereafter, Hudson sold his interest in the firm to his partner Ritchie, and recovered all he had put into the firm, leaving the creditors unpaid, and Ritchie was enabled to buy out Hudson’s interest in the firm by giving a deed of trust on the goods of the firm, most of which were purchased from plaintiff after Hudson became a partner. The result, if the claim of the interpleader is sustained, is to permit one partner to buy another partner’s interest in the firm and to-use the assets of the firm for that purpose, and thereby let one of the partners recover what he put into the firm and leave the creditors unpaid. One partner can not thus enable the other partner to come out whole and thus defraud the firm’s creditors. In this case the bank knew all these facts and the purposes of the partners and actually assisted in the fraud, in fact made the fraud possible. The bank is therefore in no better position than Hudson would be *229if he held the Ritchie note secured by the deed of trust, given by Ritchie to purchase Hudson’s interest in the firm. No one would contend that Hudson could maintain the dee/d of trust against the creditors of the firm. The bank stands in Hudson’s shoes and has no better claim than Hudson would have if he was the party claiming the validity of the deed of trust.
No decision of this or any other court can be found to support such a transaction, and none of the cases cited give any countenance to or support for such a proposition.
There is a vital difference between this case and the case of Huiskamp v. Moline Wagon Co., 121 U. S. 310, relied on by appellant’s counsel, in this, that in that case the individual debt of the partner, which was paid out of partnership assets, was .an honest debt, not tainted with fraud in its creation, and the party paid was not a partner, and the creditor had no knowledge of any fraud on the part of the firm or the partner who owed him, while here the debt secured was fraudulent in law as between the firm and its members and the creditors of the firm and the bank knew it. Hence the difference between this case and the Huiskamp case.
This is conclusively demonstrated by the fact that the parties were advised that the first note and mortgage, made in March, by Ritchie to Hudson, and by the latter transferred to the bank as collateral security for his debt to the bank, was not valid, and so the matter was, in May, put in the shape it now appears.
Eor these reasons I do not think any judgment in favor of the interpleader herein establishing the validity of this deed of trust could ever be allowed to stand in any court, and hence, without following the criticisms as to the instructions given or deciding whether they were erroneous or not, I am *230of opinion that the judgment of the circuit court was for the right party and should be affirmed.
Sherwood and Robinson, JJ., concur.