McFarland v. Bishop

222 S.W. 143, 282 Mo. 534, 1920 Mo. LEXIS 133
CourtSupreme Court of Missouri
DecidedJune 2, 1920
StatusPublished
Cited by18 cases

This text of 222 S.W. 143 (McFarland v. Bishop) 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
McFarland v. Bishop, 222 S.W. 143, 282 Mo. 534, 1920 Mo. LEXIS 133 (Mo. 1920).

Opinions

Appeal from the Circuit Court of the City of St. Louis. On May 24, 1916, Henry B. Graham of that city, then about 41 years of age, signed and delivered an agreement dated May 23, 1916, which is sought to be set aside by this proceeding. By said agreement Graham conveyed to the defendants, John E. Bishop, his attorney, and the American Trust Company, as joint trustees, all of his estate, consisting of both real and personal property, all located in St. Louis. The real estate was encumbered and the equities were of the estimated value of $87,200. The personal property, consisting mostly of stocks and bonds, was of the value of about $513,351.81. The yearly gross income from the personal estate was about $32,420. Not including the deeds of trust on the real estate, the amount of his indebtedness was $168,000, and the total yearly fixed *Page 542 charges, including interest, amounted to $23,246.22. In addition, he owed sundry current bills, amounting to $2,772. The larger part of this indebtedness was held by W.K. Bixby, all of which was secured by stock in the Graham Paper Company, a very prosperous concern, the common stock of which was then paying 27 per cent annual dividends. Afterwards, such dividends were greatly increased, so that from the time the deed of trust was made, until the trial, a period of less than two years, the aggregate dividends on such common stock of which the trustees held 700 shares, was $220 on each share. His net income at the time the first deed of trust was made, over interest and other charges, was about $9,000 per annum, and at the time the petition was filed, it alleges, the gross income from the estate was $5,000 per month.

The deed of trust by which the property was conveyed to the defendants, Bishop and the American Trust Company, as trustees, after reciting that it was made "to make provision for the party of the first part and his children, Dorothy, Marjorie and Henry B. Graham III., and any child or children that may hereafter be born to the party of the first part," and with the power and obligation on the part of the trustee to hold, sell, manage, invest and re-invest said property, and to that end, to undertake to provide for the payment to the then existing debts and obligations of the said Graham, and of all liens and incumbrances upon said property from either sale or by pledging said property, provided that "from the property hereby conveyed to said trustees, or from the income or proceeds of sale of said property, or from any property or proceeds thereof, acquired by the trustees, under the provisions and powers hereof, the said trustees shall pay or provide for the payment of the fixed charges," etc. And also by paragraph 4 it was provided that "from said estate, or from the income or proceeds thereof, said trustees shall during the life time of the party of the first part [said Graham], and the continuance of this trust, pay to the party of the first *Page 543 part, the sum of $500 per month . . . and in addition thereto, such further sums, as in the sole discretion of the said trustees, may be necessary and proper to provide for medical and hospital care and treatment, and such extraordinary care and expenses as may arise from bodily injury, sickness or ill health of the party of the first part." Then follows a provision that, after all the debts of said Graham have been paid, together with all expenses and indebtedness incurred by the trustees, the said Graham shall receive "all of the income from said estate." It was also then provided as follows in said agreement: "The trust hereby created shall be a continuing one, and the trust estate shall be held intact subject to the payments hereinabove provided, during the life of the party of the first part, and after his death, the same shall be held for his children in equal parts, and as they severally arrive at the age of twenty-five years the proportionate part of the estate then held by the trustees hereunder shall be paid to said children, except that no child shall receive his or her proportionate part of said estate until one year after the death of the party of the first part. And providing further that the trustees are authorized after the death of the party of the first part from said estate to pay to or on behalf of each of said children such amount as in the judgment of said trustees may be necessary and proper for the support, maintenance, education and comforts of said children."

At the time said agreement was executed and delivered, the American Trust Company agreed to and did advance some $15,000 or $16,000 to pay off pressing debts secured thereby, and at the time of the trial had paid off about one-half of the total indebtedness, leaving about one-half thereof unpaid, and had also, in the meantime, paid the said Graham $500 per month.

On March 12, 1917. Graham and his then wife made another deed of trust, revoking the deed of trust of May 23, 1916 made to the defendants. Bishop and American Trust Company, and conveying to the plaintiffs. McFarland and Janis, as trustees, all of his property, real *Page 544 and personal, including that in possession of the defendants, and authorizing them to take possession thereof and, if necessary, to resort to the courts for that purpose. Plaintiff thereupon, on March 14, 1917, demanded of said defendants, trustees, the possession of all the property conveyed to them, and then in their hands, with which demand they refused to comply. Thereupon on March 17, 1917, this suit was brought.

The deed of trust executed to the plaintiffs on March 12, 1917, after conveying all said property, provided that the much larger part thereof in value should be held by said trustees for the joint use and benefit of the said Henry B. Graham and Georgine Graham, his wife, and to the survivor of them, and also contained the following clause:

"In case of the death or divorcement of my wife, prior to my decease, said estate shall vest automatically in said trustees and be thereafter held and administered by them as part of my general estate, under paragraph second hereof, subject to the order, as to alimony, of the court granting such divorce and said joint estate may be changed or revoked at any time prior to such death or divorcement by joint action of myself and my wife, Georgine Graham."

The balance of the property not included in the joint estate in case he died before his wife, was to be held in trust and paid to his children then living and afterwards born, in practically the same manner as in the deed of trust of May 23, 1916. As to this part of the trust estate, a power of revocation was vested in Graham alone. There was also a similar provision for the payment of all existing creditors by the trustees, and like powers of management, control, sale, investment and re-investment, as in the conveyance of May 23, 1916. Also a provision for a payment of $1,000 per month to said Graham, until all debts were paid, and then the whole income from the joint estate was to be paid to his wife and himself jointly, and the income on the balance of his estate to himself. The instrument further provided that in consideration of the *Page 545 creation of the joint estate in the wife and the husband, the wife relinquished all her rights of dower to her husband in said estate. It was signed by Graham and his wife, Georgine Graham.

The petition, after setting up the execution of these two deeds of trust, charged that the deed of trust of May 23, 1916, made to the defendants, Bishop and American Trust Company, as trustees, was void under Section 2880, Revised Statutes 1909, which provides that all conveyances for the use of the grantor shall be void as to existing creditors and subsequent creditors and purchasers.

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Bluebook (online)
222 S.W. 143, 282 Mo. 534, 1920 Mo. LEXIS 133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcfarland-v-bishop-mo-1920.