Fisher v. Herrmann, 118 Wis. 424

118 Wis. 424 | Wis. | 1903

Siebecker, J.

The first ground of error assigns that the sale from Croak to the plaintiff was fraudulent and void as against Croak’s creditors, mainly upon the ground that such sale was not accompanied by immediate delivery and change-of possession of the goods. An examination of the testimony discloses that- plaintiff took possession of the goods immediately after the mortgage and attachment claims had been paid, the day after the purchase; that the mortgage and the attachment claims were satisfied by the authority of Croak, and the stock and the possession of the building was delivered to the plaintiff, who exercised all the rights of ownership, and opened up business to make sales. Croak was employed by plaintiff to assist him in reopening the store and conducting the business. Nothing appears that Mr. Croak exercised" any control over the stock as owner, but that he merely assisted plaintiff in reopening the business. These facts are practically uncontradicted, and they must be given their natural and ordinary significance under the circumstances presented. The evidence supports the conclusion that the amount paid by plaintiff for the stock was its full market value. These facts do not establish that fraud infected the transaction, as claimed, under sec. 2310, Stats. 1898. The evidence fails to indicate any bad motive in the transaction. It shows that plaintiff paid full value for the goods, and that the delivery thereof and his possession were in good faith.

It is, however, asserted that the sale must be held fraudulent as against creditors of the vendor under the provisions of sec. 23175, Stats. 1898, as enacted by ch. 463, Laws of 1901, which provides:

“The sale of any portion of a stock of merchandise otherwise than in the ordinary course of trade, in the regular and usual prosecution of the seller’s business, or the sale of an entire stock of merchandise in bullí, shall be presumed to be fraudulent and void as against the -creditors of the seller, unless the seller and purchaser at least five days before the sale notify, or cause to be notified, personally or by registered mail, each of the seller’s creditors whom the purchaser has knowledge of, or can, with the exercise of reasonable diligence, acquire knowledge, of -said proposed sale. Except as expressly provided, nothing herein contained shall affect or change present rules of evidence or presumptions of law.” '

This is a new section, by which it is evidently sought to impose restraints upon the class of dealers comprehended by its terms from perpetrating frauds against their creditors. To accomplish that object, the legislature has imposed upon all such dealers and.persons negotiating with them for the sale of any portion or all of their stock of merchandise, otherwise than in the ordinary course of trade, the burden of notifying the seller’s creditors of whom the purchaser had actual knowledge, or of whom he could acquire knowledge by reasonable diligence within five days; and, unless this notice- is given,, the sale shall be presumed to be fraudulent and void as against such creditors.

It is contended that the statute intends such want of notice to creditors of whom the purchaser had knowledge, or by the exercise of reasonable diligence could have acquired knowledge, to be conclusive evidence of fraud — that is, make a sale under such circumstances absolutely fraudulent and void. The terms of this statute, bearing in mind the object sought to be accomplished — to suppress fraud in the sale of merchandise in the particular manner covered by the act— make it the samé in purpose and principle as sec. 2310, Stats. 1898, pertaining to. fraudulent conveyances and contracts. The interpretation placed upon the latter section by this court will therefore be helpful and suggestive in correctly interpreting and applying the provisions of this recent enactment. The terms of sec. 2310 analogous to those of this section declare such a sale fraudulent and void as to creditors, unless it be accomplished by an immediate delivery, and followed by an actual continued change of possession. These provisions have been construed, and considered in many cases wherein it is held that the continued possession of the property after such sale is only prima facie evidence of fraud, and may be explained by the parties, and the presumptions of fraud arising therefrom be rebutted by showing it was made without any intent to hinder, delay, or defraud creditors and subsequent purchasers in good faith. When good faith has been shown, this presumption of fraud, under the particular terms of the statute, is held to have been rebutted and fully overcome and the sale proved valid. Whitney v. State Bank, 7 Wis. 620; Cook v. Van Horne, 76 Wis. 520, 44 N. W. 767; Michelstetter v. Weiner, 82 Wis. 298, 52 N. W. 435; Densmore C. Co. v. Shong, 98 Wis. 380, 74 N. W. 114; Rindskopf v. Myers, 87 Wis. 80, 57 N. W. 967; Missinskie v. McMurdo, 107 Wis. 578, 83 N. W. 758. The terms of sec. 23175 are that a sale of property covered by it “shall be presumed to be fraudulent and void as against the creditors of the seller,” unless the seller and purchaser notify, or cause to be notified, the seller’s creditors of which the seller has notice, or by reasonable diligence can acquire knowledge of, personally or by mail, of the proposed sale. Want of such notice to the seller’s creditors of whom the purchaser had notice, or could have acquired knowledge by reasonable diligence, is thereby declared of itself a circumstance of fraud; yet it is not to be conclusive, but only presumptive, of the fact of fraud. This import of the terms of the statute necessarily implies, though there is a want of notice to creditors, the transaction must be held open to explanation, and the fraud presumed may be effectually repelled by the- bona fides of the transaction. The terms of the statute are in their nature strict and severe when applied to ordinary business transactions. They should not be held to imply conclusively that such transactions are infected with bad faith when the parties are actuated by fair and honest motives. This, in effect, accords with the provisions of sec. 2323, Stats. 1898, pertaining to fraudulent conveyances and contracts, declaring that the fact of fraudulent intent in such transactions is to be determined as a fact by the jury, or an inference of law by the court, upon all the facts and circumstances of the case. Whitney v. State Bank, supra; Michelstetter v. Weiner, supra; Rindskopf v. Myers, supra; Norwegian P. Co. v. Hanthorn, 71 Wis. 529, 37 N. W. 825; Erdall v. Atwood, 79 Wis. 1, 47 N. W. 1124; Bleiler v. Moore, 94 Wis. 385, 69 N. W. 164.

The question, then, arises, Does the evidence establish the facts required by sec. 2317& to repel the legal presumption of fraud raised by the want of notice by plaintiff to the seller’s creditors ? The trial court found upon the proofs that plaintiff paid full value for the merchandise; that he made search of the records for mortgages, and as to other liens on the stock; that he paid all claims discovered by him by authority of the seller, and turned over a small balance of the consideration, having no knowledge that the seller had other creditors, nor any information concerning the seller’s property aside from this stock of merchandise. These facts, in connection with'all the circumstances of the transaction, are sufficient to show that plaintiff acted with ordinary care, and they rebut the legal presumption of fraud predicated on the want of notice to other creditors. These conclusions dispose of the questions upon this appeal. The validity of ch. 463, Laws of 1901, now sec. 2317&, Stats. 1898, was not questioned on the argument, nor is it presented in the briefs of counsel. We do not, therefore, consider that the question of its validity is before us for determination, and therefore express no opinion on the subject.

By the Court. — Judgment affirmed.