Humphreys v. Atlantic Milling Co.

98 Mo. 542
CourtSupreme Court of Missouri
DecidedOctober 15, 1889
StatusPublished
Cited by36 cases

This text of 98 Mo. 542 (Humphreys v. Atlantic Milling Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Humphreys v. Atlantic Milling Co., 98 Mo. 542 (Mo. 1889).

Opinion

Black, J.

— This and four other suits of a like character were tried at the same time. The suit is one in equity, and the defendants are the Atlantic Milling Company, Geo. Bain, who is president and managing officer of that company, the Victoria Milling Company, A. H. Smith, who is managing officer of the last-named company, the White Line Central Transit Company, and F. N. Judson. The two milling companies are corporations doing business in St. Louis.

The evidence discloses these general facts: Plaintiff is a general creditor of the Atlantic Milling Company to the amount of $2,046 for wheat sold in December, 1888. In the spring of 1883, that company failed and suspended business. It resumed business in November of that year, most of the old debts having been extended. Towards the middle of December that company became indebted and was pressed on account of these new debts, called the debts of the ‘‘new running;” plaintiff’s demand is • of this class. The Atlantic Milling Company and the Victoria Milling Company had a demand against the transit company for rebates on shipments, and Mr. Bain, for the Atlantic Milling Company, promised to pay the proceeds of his share of this claim to the creditors of the “ new running.” The result of several trips to New York was, that Bain and Smith drew their individual and joint draft, of date January 12, 1884, on Darling, manager of the transit company, for $12,327.54, payable at Buffalo in sixty days, to the order of the Victoria Milling Company, which draft Darling accepted. The Victoria Milling Company then made its note of the same date for $9,818.24, payable to Bain in sixty days. This note represents the interest of the Atlantic Milling Company in the rebates. There was a verbal agreement that the payment of this note should be conditioned upon the payment of the draft. On January 14, 1884, Bain endorsed the note and delivered it to Mr. Judson for the purpose and with the understanding that [547]*547he should collect it and pay the proceeds pro rata to the November and December creditors.

The petition alleges that the draft upon Darling was drawn by Bain and Smith in their individual names for the purpose of defrauding the creditors of the Atlantic Milling Company; that in the furtherance of such purpose, Smith executed to Bain his note for the $9,818.24; that for a like purpose Bain endorsed the note to Judson who procured a discount of it, taking a check therefor with the understanding that the check should not be paid until the draft was paid; that these transactions were all thus made to defraud creditors. The prayer is, that defendants be restrained from collecting the draft or disposing of it, that it be delivered into court, the appointment of a receiver, and that plaintiff be paid out of the proceeds of the draft.

The defendant denied all the allegations of fraud and set out a history of the transactions as they are before stated, and as they appear on trial. Various creditors, both old and new, interpleaded for the fund and ask that the petition of the plaintiff be dismissed. The court granted a temporary injunction, ordered the acceptance to be collected by a receiver, and the $9,818.24 is in court. On the final hearing the plaintiff prevailed.

The proof shows that Bain, Smith and the Atlantic Milling Company were insolvent. Judson and the Victoria Milling Company are solvent. The note to Bain was made by the last-named company and not by Smith, as stated in the petition. Mr. Judson made no negotiation of the note, nor did he attempt to do so. Much is said about these variances between the petition and proofs. We do not regard them as fatal to the plaintiff, though the real facts are to be kept in mind.

The proof is clear that Bain and Smith drew the draft on Darling in their individual names because the transit company refused to settle in any other way. [548]*548There is no proof of any fraudulent purpose in the settlement with the transit company or in taking the draft payable to the Victoria Milling Company. It is clear, too, that Mr. Judson took the note from Bain in good faith and for the purposes before stated, without any knowledge of any fraudulent purpose on the part of Bain, if any there was.

As to the other questions of fraud in fact, it is sufficient to say, in the view we feel bound to take of this case, that there is much evidence tending to show that Bain urged the settlement of rebates for the sole purpose of paying these new creditors ; that he had agreed with them to pay their debts out of this collection, and that he placed the note with Mr. Judson for that purpose alone. The evidence shows that he was guilty of deception to some of these creditors, after he had given the note to Judson in thisj that he did not tell them who had the note, and that he said he had a check for it, when in fact he had no 'check. Bain says he made these statements because he wanted the matter of his getting the rebates kept quiet. Smith, however, did give the plaintiff a copy of the draft, and he endeavored to aid Smith in negotiating it, but the draft seems to have had no commercial standing.

That the plaintiff’s demand is just and due is conceded; but it stands in the shape of an open account, and the first question is, whether he can maintain this suit in equity. The general rule is that a creditor, before he can maintain a creditor’s bill, must show that he has exhausted all remedy at law; and this because a court of equity will not entertain such a suit where the plaintiff has a complete and adequate remedy at law. In general, it must be shown that judgment has been recovered and that execution has been issued and returned nulla bona, but there are exceptions to this rule. Thus where judgment has been recovered and the debtor is insolvent the issuance and return of an execution will be dispensed with. Turner v. Adams, 46 [549]*549Mo. 95. It is sufficient that the demand be allowed by the probate court where the debtor’s estate is insolvent. Merry v. Fremon, 44 Mo. 518; Lyons v. Murray, 95 Mo. 23. In Pendleton v. Perkins, 49 Mo. 565, the debtor had absconded and left money in the city treasury, but the city treasury could not be reached by statutory garnishment, and it was held that the creditor could maintain a suit in equity to subject the money to the payment of his debt, which had not been reduced to a judgment.- The general doctrine is there stated that where the debtor has absconded, so that no personal judgment can be obtained against him, and there is no statutory proceeding by which his property can be reached, a creditor’s bill will lie in the first instance. These cases all proceed upon the principle that the creditor has exhausted, or has no adequate remedy at law.

In the present case, the creditor, the Atlantic Milling Company is within and subject to the jurisdiction of the court, and if the allegations of fraud are true, then that company could be sued in attachment, and its property in the hands of others could be garnished. It is urged, however, that the process of garnishment would be of no avail in this case, because the transit company owed the debt to the two milling companies jointly, and that it could not be garnished as the debtor of one of them. The answer to this is, that the debt had been adjusted and the draft was made payable to the Yictoria Milling Company, which is perfectly solvent. The transit company was bound to pay only to that company or its order. There can be no pretense of any fraud in that transaction. Indeed it is this draft which the plaintiff; seeks to impound.

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Bluebook (online)
98 Mo. 542, Counsel Stack Legal Research, https://law.counselstack.com/opinion/humphreys-v-atlantic-milling-co-mo-1889.