Jt appears that Moses Kaplon at and prior to the execution of the deeds of assignment to Mr. Gulley and Mr. Jeffries resided at Chase City, Va. His son, Saul Kaplon, and his wife, Bessy Kaplon, resided at Wake Forest, N. C. Bessy Kaplon is the daughter of S. D. Devine of Chicago. 111. Saul Kaplon married her in Chicago, August, 1907, and during the month of March, 1910, they went to W/ake Forest, taking charge of the business, then opened, for Moses Kaplon, under the name of M. Kaplon & Co. The larger part of the stock of goods with which the business was begun was shipped from Chase City, Va. Saul Kaplon and his wife had absolute control of the business, bought and sold goods, received and paid out money, executed notes, deposited money in hank, checking it out as they saw fit. They did not at any time render to Moses Kaplon any account of the money received and paid out, or the manner in which they conducted said business; nor did they keep any books of account except their bank book and invoices when paid. They paid hut small sums of money received from said business to Moses Kaplon, and of these they kept no account. They were to receive for their services, in conducting said business, $100 a month and all of their expenses, including house rent, groceries, traveling expenses, and “anything that was necessary to keep us up.” On August 19, 1911, defendant Saul Kaplon made in his own hand
“Send Porfman at once, very important, train leaves twelve thirty and two to-day. Wire answer. Will take two days liere.”
On same day Moses Kaplon, from Wake Forest, wires Max Kaplon at Chase City:
“Cannot come koine before Wednesday — 109k after business, get all kelp needed, get out circulars.”
On December 12th Saul Kaplon, from Rutherfordton, wires Balkind at Wake Forest:
“Will be at Wake Forest to-nigkt.”
“Dorfman leaves to-day on two o’clock train.”
Dorfman was a cousin of Saul Kaplon. There is evidence that Balkind and Dorfman looked over, and took an inventory of, the stock of goods. On December 31st M. Kaplon, from Wake Forest, wires Balkind at Brooklyn, N. Y. :
“Come at once to Chase City. Stock for sale at Chase City. Will be home to-morrow.”
On January 4th Balkind from New York wires Aarons at Wake Forest:
“You need not stay for sale. They can buy it themselves. Prefer your name not to be mentioned, apt to be complications. Will send Lemson if possible. Rosenthal and others are going to fight.”
On same day Aarons, from Wake Forest, wires Balkind at New York:
“Must I come home. If I leave I am sure they will not get the stock. Can buy on some other name — answer if I should come home. Can leave to-night.”
On January 6th Saul Kaplon, from'Wake Forest, wires Aarons at New York:
“You or. Mr. Balkind come at once. Stock to be sold Monday.”
On January 7th Aarons wires Saul:
“Must postpone sale till Monday — impossible to come over. See Mr. Professor.”
On January 8th Aarons from New York wires Prof. Gulley'
"Will give thirty cents on dollar for stock of Kaplon.”
On same day he wires Saul:
“Must 1 come to-day. Answer immediately at home address.”
On same day he wires Saul:
“Have wired Prof. G. per your letter; answer if sale postponed, then I will leave to-night, expect money from Applefield Tuesday in Wake Forest.”
On same day defendant Bessy, from Wake Forest, wires M. Kaplon Chase City;
“Everything all right. I bought stock same price Chase City.”
On same day M. Kaplon, from Wake Forest, wires Aarons, at Brooklyn, N. Y.:
“Not necessary for you to come. Bessy Kaplon bought stock same price as Chase City. Need one thousand. Send at once.”
On same day, Bessy, from Wake Forest, wires her sister Mrs. E. H. Flowers, Chicago, 111.:
“Have just bought stock under my name, paid 50 cents on dollar. Did not use check you sent; will bring it home. We may leave Sunday. It is snowing. Love to all — tell Pa and Ma.”
“Don’t send man until further notice. Bad weather.”
It is in evidence that the assignee, both at Wake Forest and at Chase City, made the sales upon the advice of the counsel for Moses Kaplon. From the foregoing and other evidence, appearing in the examination of Saul and Bessy Kaplon, it is manifest that the business of Moses Kaplon & Co., at Wake Forest, was conducted exclusively by them and that, as between them, defendant Bessy was the controlling spirit. She spent a large part of her time in the active management of the business. Her husband was during the time intervening, between March, 1910, and December, 1911, traveling about, endeavoring to establish branch stores at Zebulon, Hillsboro, and Rutherf ordton.. This is shown by his own testimony, other witnesses examined and the telegrams. It appears that the statement made to Bradstreet was recalled. In his several examinations regarding these statements Saul makes many contradictory statements. It is impossible to draw any very satisfactory conclusions from his testimony in regard to the statements. It is apparent that they were made with either a purpose to deceive and obtain a very much larger line of credit than he was entitled to, or with a reckless disregard of the truth. If he had a stock of goods, inventoried on July 25, 1911, at $8,200, as he.stated, it is impossible to understand what became of them between that date and the date of the inventory taken by the assignee about January 4, 1912. It is conceded that they purchased during the fall season of 1911 goods amounting to $11,135.85. This.amount added to $8,200 makes $19,355.85. The amount deposited in bank during the same period representing, they say, the amount of cash sales, is $5,284.80. They sold nothing on credit. Assuming that the goods were sold at cost, although they say that they were sold for a profit, there should have been on hand December 26, 1911, approximately, goods of the value of $14,071. No cash or balance in bank nor accounts payable were delivered to the assignee. The inventory shows goods of but $7,506 value, thus showing a shortage of $6,565. Mr. D. Gulley, who is an attorney, says that he has no special knowledge of the prices of goods. He also says that. Saul Kaplon alone assisted him in taking the inventory, calling out the prices — that it was taken “in a very general way.” Plaintiff insists that the real value of the goods was very much in excess of the inventory. I think it very probable that the statement made by Saul Kaplon in regard to the value of the goods on hand August 19, 1911, is false, but to what extent it is impossible to even conj ecture. His testimony indicates either a reckless disregard of the truth or a disordered mind. Whether true or not that the statement made to commercial agencies had the effect of giving to them a large credit is evidenced by the amount of debts proven against Moses Kaplon & Co. in bankruptcy for goods purchased subsequent to the statement. Of the arilount deposited in bank only $2,435 was paid on account of debts. Saul and his wife were to receive $100 per month and ex
To meet the case thus made by plaintiff, defendants rely upon the testimony of Bessy Kaplon, introduced by plaintiff, insisting that it shbws the sources from which she obtained the money with which she paid for the Wake Forest stock of goods, and explains the entire transaction consistently with honesty and good faith. Bessy Kaplon was examined before a commissioner. She says that her father gave her, as her “marriage portion,” $6,000, a part'of which she had deposited in certain banks, named by her, in Chicago, and a part was left with him, the balance she kept in her trunk. She further says that her sister, Mrs. E. H. Flowers, residing in Chicago, sent her on January 6, 1912, $1,547. In this statement she is corroborated by a telegram from her sister of that date. Her telegram of January 6th says: “Just mailed $1547 — some hustling to-day.” Bessy Kaplon says that this amount was sent in three checks, one for $1,000, which she sent back to her sister in a few days, that she returned the $1,000 check, depositing $547. The bank book shows a deposit by Bessy Kaplon January 9th of $1,-615; that, when she wrote her sister for it, shé did not tell her for what purpose she wanted it; that she did not want it to buy the stock. Her sister was examined in Chicago, and says that she sent to Bessy Kaplon a draft for $1,547; that she got it from a bailk in Chicago, the name of which she cannot remember. She says that she had the money in a vault of the Citizens’ Savings & Trust Company, Chicago, that she had “saved it up,” that Bessy did not return any part of it to her — owes it all now. Her testimony in regard to the source from which,this money came and the correspondence with Bessy in regard to it is very unsatisfactory. She says that she had a letter telling her to send the money, but destroyed it. She admits that her testimony, taken at another time, in regard to the amount of money which she had, was untrue. The cashier of the Citizens’ Trust & Savings Bank was examined, and stated that Esther Flower rented a box in its vault November 4, 1911. The transaction is involved in mystery and doubt. Where the money came from, in what form it was sent, whether in one check or draft as testified by Mrs. Flower, or in three, as Bessy' Kaplon swears, at w'hat bank in Chicago the check or checks were issued, are uncertain. Mrs. Flower says that she does not know; that although she has resided in Chicago a long time, had a box in the vault of the bank, she is unable to tell where, or in what form, she got the exchange, etc. The deposition of the clerk in the First National Bank of Chicago was taken. He says no such check was issued by that bank
Coming to the alleged loan by Louis Applefield of $2,100, defendant produced notes executed by her to Applefield and checks showing their payment. The testimony in regard to this transaction comes from Bessy Kaplon, and in this respect is important. At her examination i«iken before a commissioner (In re M. Kaplon & Co.) May 16, 1912, she says:
“I borrowed $2,100 from Louis Applefield of Baltimore. I don’t know how long I had known him — about two or three years. He is' a wholesale merchant. He was down here at the time. He just came down here. He travels all around, and he heard about the assignment being filed, and he said: ‘If I were you, I would buy that stock of goods.’ I said: T want to go to Chicago. I don’t want .to live here.’ He said: T think you ought to buy it.’ I said: ‘Will you loan me the money?’ He said: T will loan you all you want.’ And he loaned me $2,100. The day I borrowed the money I went over and he gave it to Mr. Brewer. He was there when I signed the note. I gave him notes. I have just got through paying the notes, four notes. Three amounted to $500 and one $600. I paid the last May, 10th. Business is so dull here. I had to draw money from Chicago, a thousand dollars, and gave it to Mr. Brewer. I drew it on the First National Bank of Chicago. I wrote to the bank in Chicago, and told them to send me the thousand dollars. * * * I certainly had money in Chicago. I did not want to take my money. Wanted to save it to educate my child.”
_ Mr. Brewer says that Bessy Kaplon and Louis Applefield came into his bank and asked him to fill up a couple of drafts on Applefield in Baltimore, and to take off the interest on two or three notes. The drafts were paid. The bank books show a deposit by Bessy Kaplon
“Have wired 3ToJ\ G-. per your letter, answer it sale postponed — then 1 will leave to-niglit. Expect money from Applefield Tuesday in Waive Forest.”
On the same day Bessy Kaplon buys the stock, and so wires Moses Kaplon at Chase City. Louis Applefield wires from Chase City to “Louis Applefield, Baltimore”:
“Between January 2nd and 4tli 1912. Have arranged everything satisfactory. Will leave for Durham to-morrow.”
It is difficult to reconcile these facts. There is evidence tending to show that Applefield was about this time at Chase City, and that he and Aarons went together from there to Wake Forest. The telegram of January 8th, from Aarons to Saul Kaplon, indicates that he expected to get money from Applefield to buy the goods at Wake Forest. It is evident that Applefield did not reach Wake Forest until January 10, 1912. That is the date of the deposit by Bessy Kaplon of $2,073.75, as shown by bank book. It is evident that the transaction between Bessy Kaplon and Applefield took place on one day. This must have been January 10th. .She says that they went to the bank. Mr. Brewer says that they came to the bank in the afternoon. Mr. Gulley says:
“The goods were sold on the Sth of January. The payment of .SJO was made on the 8tli and on the 10th. She paid the balance by check on the Citizens’ Bank.”
How is it possible to reconcile these indisputable facts with Bessy Kaplon’s testimony in regard to the transaction between Applefield and herself ? She had bought the goods two days before she saw Applefield at whose suggestion and upon whose offer to loan her the money she says she purchased them. Her statement as to the manner in which Applefield loaned her the money is unreasonable. That a business man should, almost accidentally, find himself in Wake Forest, find a stock of goods in the hands of an assignee, suggest to a young married woman, without consultation with her husband, as she says against the advice of her father-in-law, to- buy a stock of goods for $3,723.29, and propose to loan her, on her own notes, without security, or the signature of her husband, $2,100, is a very remarkable transaction and calls for explanation, especially in view of the many and manifest contradictions found in the testimony of Bessy Kaplon in regard to the transaction. .Applefield was with Aarons at Chase City, and in some way, and in regard to some matter, “arranged everything satisfactorily.” It will be recalled that Aarons wires Saul Kaplon “expect to get money from Applefield,” yet, when he buys at Chase City, he gets no money from Applefield, but borrows $1,434 from Bessy Kaplon, who, in turn, accepts Applefield’s unsolicited offer to loan $2,100. Bessy Kaplon says that at that time she had $3,000 in her trunk, $1,200 in her father’s hands, and $3,000 on deposit in Chicago banks. Why were all of these mysterious methods resorted to when she had ample money of her own to pay for the goods? Why send Aarons $1,434 and immediately borrow $2,100 from Applefield? AVhy did she not write to her father, or draw' on the Chicago banks, or open her trunk and use her own money ?
“Fraud rarely lurks In the written agreement of parties, entered into at the end of their negotiations with each other, but almost universally precedes it, and consisting, as it must necessarily do in such case, of acts and declarations merely, i,t can only be exposed by allowing the conduct of the parties, their words and deeds throughout the entire treaty, to be shown to the jury. To hold the law to be * * * that because the negotiations of the parties culminated in a written instrument all inquiry into their preceding conduct is excluded would be to say that fraud by its very success might be made secure, unless, as can seldom happen, it would be detected in the mere words of the instrument.” Ruffin, J., in Knight v. Houghtalling, 85 N. C. 17.
Applying this language to the disclosures in this record, it is difficult to avoid the conclusion that the execution of the notes to Apple-field by Bessy Kaplon was the final means resorted to for the purpose of covering up and concealing the truth, that Applefield was a party to the scheme or conspiracy which found its consummation in the execution of the notes to him for the purpose of putting the stock of goods into the possession of Bessy Kaplon by the use of money which justly belonged to the creditors of Moses Kaplon. It may be that we have not been able to accurately interpret all of the facts and circumstances surrounding and permeating this transaction from start to finish. I cannot find that Bessy Kaplon had on January 8, 1912, the money which she claims derived from the sources claimed by her. I entertain a strong conviction that she and her husband have either made away with goods which in equity and justice belonged to the creditors of Moses Kaplon, or have used the proceeds of goods purchased and not paid for to consummate a fraud upon them. In either event, she is not, as against them or their representative the plaintiff, entitled to hold these goods as her property.