4 Minn. 533 | Minn. | 1860
By the Court This action was brought by T. W. Bayard & Co., against the Plaintiffs in Error; to recover the value of certain goods, seized by the Defendants below on an execution against one J. G. Perenoud, as the property of said Perenoud. The Plaintiffs below claimed title to the property under a bill of sale from Perenoud to them. The answer justified the taking under execution, and set up that the bill of sale was made with intent to hinder, delay, and defraud the creditors of said Perenoud, and therefore void as to the Defendants, who were creditors of Perenoud at the time of the execution of the bill of sale, and also averred that the instrument conveyed all the property of every kind belonging to said Perenoud, which was subject to execution, which allegation was not denied by the reply. The cause was referred to E. A. Otis, Esq., who reported in favor of the Plaintiffs, upon which judgment was entered for the sum of $744 40. The Defendants bring the cause to this court by writ of error.
The only question necessary to be considered in this case, is as to the validity of the bill of sale from Perenoud to Bayard & Co. The facts in regard to that instrument are substantially as follows, viz: The instrument bears date the second day of December, 1858, and for the consideration of $2,810, purports to convey absolutely to Bayard & Co. all the personal property, goods, wares and merchandize and groceries, then in the store of Perenoud in St. Paul. The condition of the instrument then goes on to recite that Perenoud, at the date of the instrument, was indebted to' Bayard & Co. upon sundry promissory notes, which were then past due, and that the indenture was given to secure the payment of said notes,
It is further provided, that Perenoud shall not sell or encumber the goods, except by a regular sale at wholesale or retail for cash, shall account for such sales whenever called upon to do so by Bayard & Co., shall deliver up when called on to do so, all goods remaining unsold, and that Bayard & Co. shall have the right at any time to take absolute possession of all the goods, free and clear from any claim or equity of redemption on the part of Perenoud, unless he should sooner have paid the claim of Bayard & Co. in full. These are all the provisions which it is important to notice.
It will be observed that this instrument partakes of the nature both of a bill of sale and chattel mortgage. It purports to absolutely convey the property, and gives the right to the vendee to falce possession at any time, and also speaks of the transfer as security for a pre-existing debt, leaving the vendor in the possession and management of the property. But by whatever name it be called, the intent and effect of the instrument, with reference to the interests of creditors, are the important points for consideration. It may be proper 'to state, that the referee found as matters of fact, that Perenoud out of the proceeds of the sale of the merchandize retained enough for the support of his family, using all the balance to purchase new supplies of goods, and replenish his stock, that he was insolvent at the time of the execution of the bill of sale, and that the sale was not made with intent to hinder, delay or defraud his creditors. These findings, however, are not important in the consideration of the transaction, as the validity of the sale
Taking this whole instrument together, we can arrive at no other conclusion than that it bears upon its face the intent to hinder and delay the creditors of Perenoud. It is admitted that Perenoud at the time of its execution was insolvent. It is manifest from the provisions of the instrument that the vendor did not in fact, and did not intend to part with his entire interest in the property. It may be even well doubted whether he intended to part with any interest, for he has reserved to himself just as complete control over the property as he had before the conveyance was made, stipulating to “ account ” for the proceeds. An agreement to account for the proceeds is not equivalent to an agreement to pay over the proceeds, for without a violation of his agreement, he may apply them in such manner as he sees fit, and as it appears in this case, did actually apply them to the support of his family and the purchase of other goods. Perenoud might have disposed of the entire stock of goods, and put the proceeds into his pocket, or invested them in other property, and not have rendered himself liable to Bayard & Co. for any misappropriation of the goods or proceeds. In other words, the property was not devoted to the payment of Perenoud’s debt, and the entire stock of goods might have been disposed of, and the debt still have been left subsisting. It is true that Bayard & Co. stipulate, or rather, are required, (for they do not appear to have signed the instrument,) to apply the proceeds in payment of the notes of Perenoud, but this can only mean such proceeds as come into their hands ; at all events, it is not an agreement on the part of the vendor to pay over the money received on the sale of the goods.
Such being the provisions of the instrument with regard to the nature of the sale, the right of the vendor to retain possession of, and use the property, ánd control the proceeds, we find a further provision, giving the vendees the right of taking possession of the goods at any time upon demand. It will be observed that this forfeiture of the reserved interest of Perenoud, is not to occur at any fixed time, nor upon the happening of any certain event. It rests solely in the will of the
The counsel for the Defendant in Error treats of or terms the instrument in question a mortgage, and contends that as the mortgagor had only a right of possession, and that not for any definite or fixed period, he had no interest subject to levy and sale under execution. Such is doubtless the rule, though I do not think the cases cited decide, that such an interest as
There is some conflict of authorities as to the validity (so lar as creditors are concerned) of instruments like the one under consideration, but we think the weight of authority, and that supported by the best reasoning, holds them void, as a matter of law, leaving no. question of intent for the jury. The case of Griswold vs. Sheldon, 4 Com. 581, is closely analagous to the present, though it there appeared that the mortgagor was to keep up the stock of goods, &c., a circumstance which does not appear on the face of the instrument executed by Perenoud, although the referee finds that a part of the funds were actually used for such purpose. But the grounds on which the court seem to hold the mortgage in that case void, were that the mortgagor was permitted to go on and sell the goods as a merchant, and deal with them in all respects as absolute owner. And the court in that case say, that “ if the intention to allow Burdick to dispose of the mortgaged property as owner cannot be gathered from the face of the deed, still the goods were left in his possession, and he was in fact allowed to deal with them as owner, and disposed of them as a merchant to his customers, from the date of the conveyance down to the time of the levy. Such a transaction the law always has, and I trust always will, pronounce a fraud upon creditors and purchasers.” And in Edgell vs. Hart, 5 Com. 213, the decision in Griswold vs. Sheldon is approved, and it is held, that the existence of a provision, whether in or out of a mortgage, giving the mortgagor the right to sell, would invalidate it as a matter of law. The manifest tendency of such arrangements, (the court say) to defraud creditors by giving to the mortgagor a false credit, and their incongruity with the just- and legal idea of a mortgage are, in my mind, sufficient to-condemn them. It is also held in Divver vs. McLaughlin, 2