49 Neb. 53 | Neb. | 1896
The defendants in error in this court were plaintiffs in the district court, where the action was originally commenced, and will hereinafter be referred to as plaintiffs and the opposing parties as defendants. The suit is one on the official bond of William H. Crites, of defendants, as sheriff of Merrick county, to recover of him and his bondsmen a sum named in the pleading as the value of certain personal property which it was claimed belonged to the plaintiffs, and of which, it was alleged, there was a wrongful seizure. and sale by the sheriff under and by virtue of executions issued by the county judge of said county, and placed in the hands of the sheriff for service, to enforce judgments rendered in that court against Edward P. Berryman, William Patterson, and Charles W. Rhodes, one in favor of the Studebaker Manufacturing Company, one belonging to I. L. Elwood & Co., and also one in favor of the United States Wind Engine & Pump Company. All claims asserted in the action arising from the completed service of the executions issued on the judgments in favor of the last two of the creditors just mentioned were either settled or abandoned before the time of the trial in the district court and did not further figure or appear in the controversy. The answer
It is claimed by counsel that certain facts were undisputed, among which are recited the following: That at the time of the transfer of the stock of goods, etc., to plaintiffs the Studebaker Manufacturing Company was a creditor of the firm making the transfer; that Levi 0. Hart, one of the plaintiffs, was a brother-in-law of Charles W. Rhodes, a member of the firm of Berryman, Patterson & Co., and Anson L. Havens, the other plaintiff, bore a like relationship to Edward P. Berryman, another member of said firm; that Charles W. Rhodes, at the date of the transfer of the stock, was indebted to Hart in the sum of $4,000, and that Berryman, Patterson & Co. then owed Hart $9,500; that at the time of the sale Edward P. Berryman, at Hart’s request, made a report, which was examined by Hart before the sale, of the assets and liabilities of the firm of which he, Berryman, was a member, which showed the aggregate amount of the indebtedness of the firm to be about thirty-one or thirty-two thousand dollars, and the assets consisted of the stock of goods, book accounts, bills receivable, etc., of the value of $30,000, and real estate of the value of $10,000 (this real estate was not sold or conveyed to plaintiffs); that of the consideration for the transfer of the stock, etc., in amount $30,000, no cash was paid, but three notes of $10,000 each were given, maturing in one, two, and three years from date; and it is asserted by counsel that, in view of the undisputed facts, the verdict and judgment ought not, and cannot, under the rules of law applicable and governing, be allowed to stand, but must be set aside, and states his further contention in this connection as follows:
“We maintain the law to be:
“1. That a debtor, while the owner of property, sustains two distinct relations in regard to it, viz., that of owner, and that of gwsi-trustee for his creditors.
“2. That all persons who have notice that a proposed*57 vendor has creditors and is in failing financial circumstances, or is insolvent, are bound to take notice of such trust relation in their dealings with reference to the property of such vendor, and when the natural and probable effect of a sale of the property of the vendor under such circumstances might reasonably be understood to hinder, delay, or defraud the creditors of the vendors in the collection of their claims, such sale will be held to have been made in bad faith, and be null and void as to creditors. This proposition follows as a legal corollary to the first, and is substantially the rule as announced by this court in the case of Beels v. Flynn, 28 Neb., 575.”
In relation to what is set forth under the heading “1,”" we will say that we do not understand that an individual or a partnership, the owner of property, even if insolvent, holds such property in trust for general creditors, in the true sense of the term, merely because the parties stand to each other in the relation of debtor and creditor. We understand it to mean no more, when used in such connection, than that the debtor will, in all his dealings with the property, be fair and honest, and will apply it, or its proceeds, in payment of any existing debts, in the manner- and to the extent honesty and uprightness among men demand. The creditors do not, merely because they are creditors, have any lien, either legal or-equitable, which is enforceable or recognized as such, or. which interferes with the debtor’s sale and disposal of property in any manner, provided it is not fraudulent or with intent to defraud creditors, or to hinder and delay them in the collection of their claims. The case of Beels v. Flynn, supra, the decision in which is relied upon as supporting the positions of counsel as stated in the quotations herein from his brief, is similar to the one at bar mainly in the fact that the payment of the consideration in the sale attacked in that case was almost entirely deferred and evidenced by the note of the purchaser, which, it was observed, might have the effect to hinder and delay creditors of the seller. The further fact was shown
In the opinion in the case of Nebraska Moline Plow Co. v. Klingman, 48 Neb., 204, it was held: “The fact that a copartnership, largely indebted, sells most of its property and its business to one of small means, in consideration of a small amount of cash and the purchaser’s promissory notes, is a circumstance tending to show that the transaction was fraudulent, but not conclusive, nor, alone, sufficient evidence that it was fraudulent.” It will •be gathered from such of the main facts as are stated in what we have just quoted that the point raised for consideration and adjudication was like unto that presented in the case of Beels v. Flynn, and also in the case at bar. In the body of the opinion, written by Ragan, C., it was said: “Counsel for the plow company insist, however, that as the evidence shows the consideration for the sale was $200 in money and the remainder of the purchase price was the notes of the purchaser, the court should therefore say the transaction was fraudulent; and counsel insist that Beels v. Flynn, 28 Neb., 575, supports their contention, where a sale is made by a debtor of all his property, for a part cash and the remainder in the promissory notes of the purchaser, such transaction is conclusive evidence of a fraudulent intent. In the case cited a debtor had sold all his property to Beels in consideration of some cash and the promissory notes of Beels. Flynn, as sheriff, seized the property under attachment process and sold it, and Beels sued the sheriff for conversion. The sheriff justified the seizure by virtue of his attachment writs, and defended on the ground that the sale to Beels was fraudulently made by the debtor, with the intention on the part of the debtor and Beels to defraud the latter’s creditors. The jury found on this issue
Affirmed.