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Albert v. Besel; Regenhardt et al., Interpleaders, Appellants

Supreme Court of Missouri1885-10
88 Mo. 150

Summary

Holding. The judgment is reversed and the cause remanded because the trial court erroneously placed the burden of proving good faith on the interpleaders rather than requiring the plaintiff to prove fraudulent intent, and because the court admitted incompetent and irrelevant evidence that prejudiced the interpleaders' defense.

Besel mortgaged his merchandise to Meyer and faced a lawsuit from Schivelbeine. Besel's sureties—Regenhardt, Kempe, and Popp—purchased Besel's entire stock of goods for fair market value and satisfied both the mortgage and the pending suit by issuing their own notes to creditors. Two days later, the plaintiff attached the property and alleged the sale was fraudulent. The trial court instructed the jury to place the burden on the interpleaders to prove good faith, but the appellate court found this allocation of burden improper.

The court held that because the bill of sale was regular and the interpleaders were in possession when the attachment was levied, the burden fell on the plaintiff to prove the sale fraudulent, not on the interpleaders to prove good faith. The evidence showed the purchase was at fair value and motivated solely by the sureties' need to protect themselves from liability. The court also found numerous evidentiary errors, including admission of affidavits for attachment, unadmitted accounts, irrelevant testimony about church membership, and hearsay declarations by Besel made after the sale.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Burden of proof in fraudulent transfer cases when bill of sale is regular on its face
  • Whether sureties may purchase debtor's property to satisfy debts without committing fraud
  • Admissibility of attachment affidavits as evidence in interplea trials
  • Proper instructions on circumstantial evidence of fraud

Procedural posture

The interpleaders appealed from a trial court judgment against them in an interpleader action brought by the plaintiff to contest their purchase of the debtor's goods.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Black, J.

The defendant, Besel, on the twenty-second of Marchj 1883, made a mortgage to Meyer on his stock of goods to secure a. debt of four hundred and fifty dollars. Schivelbeine about the same time sued Besel for a debt of four hundred dollars. The appellants, Regenhardt, Kempe and Popp, being sureties for Besel, became alarmed, and on the twenty-sixth of April following purchased Besel’s entire stock of goods, agreeing to pay him therefor two thousand one hundred dollars, received a bill of sale, and at once took possession of the property so purchased. In payment therefor they gave their notes to the creditors before named, and thus satisfied the mortgage and pending suit. They also gave their notes to the other persons in payment of debts of Besel and upon which they or one or more of them were sureties. The debts thus assumed, including a rent account, amounted to about $2,000. Two days later the plaintiff brought this suit and attached the property so sold; other creditors brought like attachment suits. The appellants interpleaded for the property setting up their purchase. The plaintiff took issue on the interplea, alleging that the sale was fraudulent. The evidence in general tends to show that the inter-pleaders paid for the goods the fair value, and that they purchased the same for the sole purpose of protecting themselves, because of their suretyship for Besel on the debts assumed.

They had a perfect right to buy the goods for that purpose, though the purchase might operate to hinder and delay the other creditors in the collection of their demands, and though to their knowledge Besel intended the sale should have that effect, provided they did not participate in the fraudulent purpose of Besel. The instructions given at the request of the interpleaders proceed upon the principles heretofore announced in Shelley v. Boothe, 73 Mo. 74, and Holmes v. Braidwood, 82 Mo. 610, and need no special consideration. The first instruction given for the plaintiff placed the burden of proof upon the interpleaders to show that the sale to them was made in good faith and without any intent to defraud the creditors of Besel. The bill of sale is regular on its face. Interpleaders were in possession of the property when the writ of attachment was levied; the plaintiff seeks to show that the sale was fraudulent and, therefore, void as to him. The burden of proof was upon him to show that the transaction was in fact fraudulent, and the instructions should not have been given. Gutzweiler, Admr, v. Lackmann, 39 Mo. 91. It makes no difference in this respect that the inter-pleaders in their interplea say the sale was in good faith. There is really no evidence in the case tending to show that the interpleaders ever agreed to turn back to Besel any part or portion of the goods purchased by them, and for this reason the third instruction given at the request of the plaintiff, which hypothecates in part that state of facts, should not have been given. It is well enough as a proposition of law to say that: “Fraud is seldom susceptible of direct proof, but may be established by a number and variety of circumstances,.which though apparently trivial and unimportant when considered separately, may, when combined together, afford irrefragable proof of fraud.” But an instruction couched in that language is more liable to mislead jurors than to aid them in the determination of questions of fact. It is true the instruction uses almost the exact language used by the court in Hopkins v. Sievert, 58 Mo. 201, but it does not follow that it is good as an instruction. The proper province of an instruction is to submit questions of fact,-not propositions of law. It is well enough to instruct that although it devolves upon the party alleging fraud to prove it, yet the proof need • not be of a direct or positive character, but may be gathered from the surrounding circumstances indicative of a design to hinder, delay or defraud, creditors. Burgert v. Borchert, 59 Mo. 80.

The affidavit for attachment made in this suit and those made in the other suits, stating that Besel had fraudulently disposed of his property, etc., were wholly incompetent. It is impossible to see upon what ground or for what purpose they could be received as evidence on the trial of the interplea. They should have been excluded. Again if the plaintiff desired to show that Besel was indebted to other persons he should have done so by competent evidence. The production merely of accounts sued upon and upon which judgment had not been recovered was not sufficient proof. It does not appear that the accounts were admitted by the debtor to be correct. It was entirely competent for Regenhardt when on the witness stand to state why and for what purpose they, the interpleaders, took up the notes held by others and gave their notes therefor ; so, too, it was proper for him to state whether or not he knew the notice of sale under the Meyer mortgage had been posted. Several witnesses were allowed to state that interpleaders and Besel belonged tothe same church organization, and not a word of evidence is offered to give such testimony any application to the case. While we might not feel justified in reversing a cause because of the admission of such evidence, still it was irrelevant and ought to have been excluded. Declarations of Besel made after the sale was completed, and after the interpleaders had taken possession of the property, and not made in their presence or that of either of them, should have been excluded. They were not competent evidence as against the interpleaders, the vendees. Stewart v. Thomas, 35 Mo. 207; Enders v. Richards, 33 Mo. 598 ; Weinrich v. Porter, 47 Mo. 293. The judgment is reversed and the cause remanded.

All concur.