Scudder & Co. v. Morris , 107 Mo. App. 634 ( 1904 )

BLAND, P. J.

(after stating the facts). — The instructions given and refused by the trial court show that the court was of the opinion that the evidence did not show or tend to show that defendant and Mrs. Burr, as between themselves, stood in the relation of principal and surety as to the Brock note for three thousand dollars borrowed and turned over to C. M. Morris and that there was no evidence showing or tending to show the consideration for the deed from the defendant to Mrs. Burr was other than that expressed in the deed itself, that is ‘ ‘ one dollar and love and affection. ’ ’ The three thousand dollar note and the interest notes were all signed by Mrs. Burr, C. M. Morris and the defendant, and secured by Mrs. Burr’s deed of trust on her individual real estate. The evidence shows that the money was borrowed to be handed over to C. M. Morris and that he got all of it; that the principal and interest notes were paid by Mrs. Burr, the money for that purpose having been raised by the loan from C. K. Farrar on the individual note and deed of trust of Mrs. Burr. Mrs. Burr testified that her mother, the defendant, promised her at the time she procured the loan of three thousand dollars from the Mississippi Valley Trust Company that she should not lose anything, that she would give her the farm “if there wasn’t anything left,” for her, and that the real consideration for the conveyance from her mother to her was three thousand dollars. The date of the note and deed of trust to Brock was January 18, 1899. The deed from defendant to Mrs. Burr is dated April 3, 1901. The Farrar note for thirty-five hundred dollars is dated January 22, 1902. C. M. Morris testified that he failed in business January, February or March, 1901. It thus appears that the deed conveying the farm to Mrs. Burr was executed after C. M. Morris’ failure and prior to the payment of the three thousand dollar note to the Mississippi Valley Trust Company but at a time when it was apparent, to use Mrs. Burr’s own language, “there wasn’t anything left” for her, and when the contract of defendant, if there was one, to convey the farm to Mrs. Burr, had matured.

The question in the case is, was there a contract whereby the defendant obligated herself in law or equity to convey the farm to Mrs. Burr, in the event C. M. Morris failed in business and became unable to pay the three thousand dollars which Mrs. Burr had raised for him by a deed of trust on her property. In the light of the evidence, it is clear that C. M. Morris became indebted to Mrs. Burr in the sum of three thousand dollars. The evidence of this indebtedness is not shown by any of the notes or deed's of trust offered in evidence, but by the parol evidence offered at the trial which shows that the money was procured from the Mississippi Valley Trust Company on the security furnished by Mrs. Burr; that Morris got the money from Mrs. Burr and the latter paid the note on which this money was raised. On the face of the note (the three thousand dollar one) Mrs. Burr, O. M. Morris and defendant were all principals. As between themselves, in the light of the parol evidence, it was primarily the duty of O. M. Morris to pay the three thousand dollar note, and the defendant stood in the relation of surety for him to Mrs. Burr for its payment, if there was an express contract to that effect. The law is that no contract to answer for the debt or default of another can be created except in writing and the relation of principal and surety can not be made out by mere implication, and that the relation arises only in contract and to be binding must be in writing. Ingersoll v. Baker, 41 Mich. 48. There is no such writing to be found in the evidence. But it is contended by the defendant that the objection that the contract of suretyship was not in writing as required by the statute of frauds is not available to plaintiffs, who are strangers to the contract. It is unquestionably the law of this State that the plea of the statute of frauds is not available to a stranger to a contract to show that the contract is invalid because it is within the statute of frauds. Roth Tool Co. v. Champ Spring Co., 93 Mo. App. l. c. 536, 67 S. W. 967, and cases cited. According to the parol testimony C. M. Morris was primarily obliged to Mrs. Burr to pay the Brock note. The defendant joined with him in its execution and at the time promised Mrs. Burr to save her harmless by conveying her the farm as indemnity, in the event she should have to pay the note. This evidence, we think, shows that the defendant agreed with Mrs. Burr to be bound as surety for the payment of the Brock note to the extent of the farm. Whatever may be said of the legal effect of this understanding, a court of equity ought not to hesitate to look at the transaction in its proper light, divested of technicalities, and pronounce the conveyance from the defendant to Mrs. Burr just and proper, in contemplation of equity, if founded on a good and valid consideration. Burnside v. Fetzner, 68 Mo. l. c. 111; Crawford v. Greenleaf, 48 Mo. App. 590. The consideration for the contract of suretyship was concurrent with the contract by which C. M. Morris got the three thousand dollars and is supported by the consideration for the latter contract. Robertson v. Findley, 31 Mo. 384; Fullerton Lumber Co. v. Calhoun, 89 Mo. App. 209; Cooke v. Railway, 57 Mo. App. l. c. 473; Ring v. Kelly, 10 Mo. App. l. c. 413. If the parol evidence is sufficient to overcome the rer cital in the deed, that the consideration was for “one dollar and love and affection” and to show the real' consideration was to make good defendant’s promise to convey the farm to Mrs. Burr, in the event the latter had to pay the Brock note, we think the conveyance ought to be held valid as against the other creditors of the defendant.

Judgment reversed and cause remanded.

Reyburn and Goode, JJ., concur, the latter in a separate opinion..

SEPARATE OPINION.

GOODE, J.

Though I agree that the judgment in> this case ought to> be reversed and a new trial ordered, I do not think the defendant and her daughter, Mrs. Burr, bore to each other the relation of principal and surety on the notes to Brock. The principal debtor and the person primarily liable for those notes was C.. M. Morris, and the defendant and Mrs. Burr were co-sureties for him. The evidence does not go toward proving an agreement between the latter parties that Mrs. Burr was to sign as surety for her mother who> was to be treated between themselves as a principal; but tends to prove that Mrs. Burr was induced to lend the Gredit of her name and the security of her Kirkwood lots to her father, by her mother’s promise to- indemnify her against loss and to convey to her the farm in controversy if no other property was left for indemnity.. The outcome of that arrangement, when Mr. Morris failed to pay the Brock notes and the burden of taking care of them fell on Mrs. Burr, was not to make the latter creditor of her mother for the amount of the debt, but to give her a claim on her mother for protection-against ultimate loss and a conveyance of the farm if that act should become necessary to protect her. Mrs. Burr paid the debt and is entitled, regardless of the asserted agreement for indemnity, to contribution from her mother as a cosurety. This fact demanded' attention, as furnishing a consideration for the conveyance of the farm, and the defendant’s obligation to her daughter because of it was properly recognized in the first declaration of law given for the plaintiffs. No error was committed in that regard and the appeal must fail therefore, unless the declarations were erroneous in not stating correctly the legal effect of the arrangement between the defendant and her daughter for the latter’s indemnity, if such an arrangement was made. As this is an action at law, it is immaterial that equity might construe the arrangement to have created the relation of principal and surety in order to prevent injustice. For the present purpose no such relation can be enforced unless it is made out fairly by the evidence and I think this is not done. Nevertheless, if the defendant agreed to hold her daughter harmless as surety on the notes to Brock, and if Mrs. Burr was thereby induced to sign them, as there is evidence to prove, the authorities infra show that the agreement was a sufficient consideration for the conveyance of the farm by the defendant and relieves the act of a voluntary and fraudulent character if it was done in good faith — that is, for the purpose of carrying out the agreement and not with the intention of hindering and delaying the defendant’s creditors in the collection of their debts. As the defendant possessed no other property to which her creditors could look, the ground of attachment would be made good by proof, either that the conveyance was executed for the purpose of hindering and delaying said creditors, or, if the defendant cherished no fraudulent intention, that it was voluntary. Of course, the land would not be finally lost to Mrs. Burr in the first contingency unless she participated in the fraudulent intent, and in neither contingency can her claim be affected by this suit, to which she is no party. The question now is as to whether the defendant gave cause for attachment, which depends, as stated, either on proof that she actually intended to hinder and delay her creditors, or that she executed a voluntary conveyance which in legal contemplation, had the effect of hindering or delaying them.

The first declaration of law given at plaintiffs’ request, proceeds on the theory that the conveyance was voluntary even if the facts in testimony concerning the defendant’s promise to hold Mrs. Burr harmless as surety on the Brock notes, and to convey to the latter the farm if there was nothing else left for her, was true. A voluntary conveyance is one executed without a consideration; or, in some circumstances, for a consideration much less than the value of the property conveyed. 14 Am. and Eng. Ency. Law (2 Ed.), 298, 301; Oberneir v. Tresselor, 19 Mo. App. 519; Lionberger v. Baker, 88 Mo. 447. If the defendant’s alleged agreement to indemnify Mrs. Burr was such a consideration for the conveyance of the farm as the law will tolerate in any event, it was an adequate consideration; for the farm was worth about three thousand dollars, the amount which Mrs. Burr paid on the Brock notes. The argument brought forward against said agreement as a consideration is that it was verbal and within the statute of frauds, as it was an undertaking by the defendant to answer for the debt of her husband and a memorandum was essential to render it binding. But if the agreement was made, it was executed before the inception of this action, the defendant not choosing to avail himself of the statute of frauds to evade it. The question is then, was the transfer of the farm a voluntary or gratuitous one, lacking any valuable consideration to support it, because the agreement on which it was based was obnoxious to the statute of frauds and could not have been enforced had the defendant resisted enforcement on that ground. In other words, is an agreement within the statute of frauds a sufficient consideration to prevent a conveyance executed in good faith from being voluntary and fraudulent as to creditors of the debtor? It is the right, but not the duty, of the obligor of such an agreement to avail himself of the statute, and a conveyance in performance of the agreement is valid. First National Bank v. Bertschy, 52 Wis. 438; Hyde v. Chapman, 38 Wis. 391; Lefferson v. Dallas, 20 Ohio St. 68; Keen v.Kleckner, 42 Pa. St. 529; Sackett v. Spencer, 65 Pa. St. 89; Gullman v. Perrie, 47 Miss. 131; Clark’s Admr. v. Rucker, 7 B. Mon. 583; Livermore v. Northrup, 44 N. Y. 107; Stowell v. Hazlett, 57 N. Y. 637; Creswell v. McCaig, 11 Neb. 222. The statute of frauds may not be utilized by a stranger to a contract to set it aside, if the parties to it choose to perform notwithstanding the statute. The above cases are all in point and' in some of them the facts greatly resemble those before us. In the note in Hageman v. Buchanan, 14 Am. St. 732, on page 741, we find this statement of the law on the subject:

“If a transfer is made to discharge an obligation which the debtor might have escaped by pleading the statute of frauds, it must be deemed supported by a valuable consideration. The cases seem to establish the rule that a conveyance or security given for a debt or in fulfillment of a contract which could have been recovered or enforced in an action toere it not for some legal maxim or statutory provision which prevents such recovery by reason of the contract not being in the form prescribed by the statute — in other words not being evidenced in the manner prescribed by law — is not a voluntary conveyance or security, and therefore fraudulent and void as to creditors, if the evidence shows there was-a sufficient consideration for the debt or promise to support the same were it not for the statutory requirements. ’ ’

This rule takes no account of the purpose of the statute of frauds to require written evidence of certain agreements, and too, may open opportunities for collusive and fraudulent transfers. But it is established by the adjudged cases.

It follows that if the defendant agreed to indemnify ' Mrs. Burr and executed the conveyance solely to carry out that agreement, and not with an intent to hinder and delay creditors, the ground of attachment was not established. But if no such agreement was in fact made, or if it wa,s, but the defendant transferred the farm, not for that reason, but for the purpose of hindering or-delaying her creditors, the attachment was rightly brought. The declarations of law show that the trial court did not dispose of the plea in abatement on these theoxies, but held, in effect, that the alleged .agreement did xxot deprive the conveyance of the farm to Mrs. Burr of a voluntary character.

It might be said that the defendant adopted in the declarations asked by her the theory that the transfer was voluntary and fraudulent unless defendant and her daughter were principal and surety; but as the plaintiffs’ declarations propounding that proposition had been affeady given before the defendant requested any declaration and as defendant’s declaration merely declared that the agreement testified to create the relation of principal and surety, and did not declare that its validity depended on the existence of such a relationship, the cause ought to be remanded for another trial consistent with the above views.