Guerin v. Hunt

| Minn. | Dec 15, 1861

By the Oowrt —

FlaNdbau, J.

— This action is to recover the value of certain chattels alleged to have been wrongfully taken by the Defendants from the Plaintiff. The defence is, that the Plaintiff is assignee of Louis Bartlett,'Jr., and Fir-man Oazean. That the assignment is fraudulent. That the Defendants are creditors of the assignors, and that the taking was for their debt and made under attachment duly issued and levied, &c. Upon the trial the assignment was' attacked as being fraudulent in fact, having been made to hinder and delay the creditors of the assignors, The first evidence that was introduced to show the fraudulent intent of the assignors, came out on the cross-examination of the Plaintiff. It was. proved that the assignee was illiterate and could not read or wi'ite. The selection of an incompetent assignee is regarded in the law as a badge of fraud. The assignor having the choice of his assignee without consultation with, or consent of his creditors, must take care that he appoints a person competent to protect the rights of all parties interested under the assignment. If it appears that the selection of an incompetent assignee was made in order to allow the assignor to control the administration of the estate, then the assignment will be declared void, because such an intent on the part of the assignor would be a fraud upon his creditors. If it-should appear that the assignee was incompetent in fact from any cause, but that his selection was not made from any improper motive on the part of the assignor, then the assignee would be subj'ect to removal at the instance of a creditor of the estate, and a proper person would be substituted by the Court to carry out the trust. The assignment would be sustained in such case, because of the absence of the vitiating element in its inception, to-wit, a fraudulent intent in tbe assignor. This intent, however, when it is not apparent on tbe face of tbe instrument, is always a question of fact and must be determined by tbe evidence adduced. It does not necessarily follow that because an assignee is illiterate and cannot read or write, that he was selected by tbe assignor for that reason, and with tbe fraudulent design of retaining control of tbe assigned property; yet if a jury should upon that fact alone so find, it would require a very strong array of counter facts to induce a Court to disturb tbe finding. And should a jury vindicate tbe competency of the assignee, and tbe good faith of tbe assignor in bis selection, notwithstanding bis inability to read and write, it would be equally difficult to interfere with tbe verdict. Tbe question therefore as to tbe validity of tbe assignment is upon tbe intent of tbe assignor,' ascertainable not by any one fact or circumstance, but by every fact and circumstance that may throw light upon -the transaction. If tbe fraudulent intent is sought to be - established by proving the appointment of an assignee, incompetent by reason of being illiterate, then any facts may be shown in contradiction of that fact, or its effect may be avoided by proof of a sufficient degree of intelligence and business capacity to justify tbe choice of tbe assignee, notwithstanding bis want of scholarship ; because a man may be fully capable of administering an estate and not know bow to read or write, yet we admit that such in our opinion is not very often the case.

In answer to this proof tbe Plaintiff proposed to show that the assignee was possessed of a large property at tbe time of tbe assignment, which he was prevented from doing by tbe ruling of tbe Court. There was no charge made by the Defendants that the assignee was insolvent, which fact is generally a badge of fraud; had there been, it would have been competent for the Plaintiff to show the contrary; but it is difficult to see how the proof of solvency could aid the defect of want of education, especially when the presumption is in favor of solvency, when nothing is shown to impeach the as-signee in that respect. Blindness in an assignee is regarded as a badge of fraud on the part of the assignor who selects him. Crane vs. Mitchell, 1 Sandf. Ch., 251. And so also of an assignee who was unfit to attend to business by reason of a lingering disease, which fact was known to the assignor. Carrie vs. Hart., 2 Sandf. Ch., 353; Burrill on Ass’ts, 62. Both blindness and sickness stand upon the same footing as badges of fraud, with ignorance, and might be rebutted by appropriate facts showing that their existence in the particular case did not disqualify. Yet proof of solvency could in no manner mitigate these defects. The Court properly rejected this offer.

The Defendants had a right of course to reduce the value of the goods taken in order to lessen the recovery against them. They asked the Sheriff and the Deputy how the goods sold at the sale on the execution. This, although by no means conclusive of their value, was one means of ascertaining it. It was known-how much they sold for, and if the witnesses testified it was all they were worth, or. nearly so, it shed some light upon the question of value. We see no error in the admission of this evidence. Had the Plaintiff recovered a verdict for less than he claimed the goods to be worth, the evidence given by the Defendants on the question of value might have been material on this -review, but as the verdict was against the Plaintiff on the question of fraud, the measure of damages loses its significance.

Whether the execution and return offered by the Sheriff in his justification were admitted or rejected, is impossible to decipher from the paper books furnished the Court. The propriety of the evidence offered and admitted, touching the conveyance of certain property by the assignor Cazeau, to the assignee Guerin, shortly before the assignment, claimed to have been upon a secret trust -in favor of Cazeau, depends upon the character of the assignment. If it was strictly a partnership assignment, designed to convey nothing but the copartnership property, then the evidence was not admissible. If on the other hand it was a general assignment of all the property of the assignors, both joint and individual, then an abstraction of so large an amount of real estate immediately previous to its execution by one of the assignors for his own benefit, would be a strong circumstance to prove that the assignment w;as not made in good faith for the benefit of the creditors. If tbe first conveyance to Gruerin of the land was admissible, all the subsequent changes that the land so conveyed went through, and the considerations moving between the parties, were also admissible to characterize the first, and establish the intent with which it was made, or in other words to show whether there was really a secret trust reserved in iavor of the first grantor. The assignment executed by the parties in this case was in the form given by Mr. Burrill in his work on assignments, page 582, appendix, under the head of “Assignments by a co-partnership giving preferences.” In the beginning they describe themselves as “Louis Bartlett, Jr., and Firman Oazeau, copartners under the name, style and firm of Bartlett & Oazeau, of the first part.” They say they are indebted and desirous of making a fair and equitable distribution of their property and effects among their creditors. They then sell and assign to the- party of the second part, his heirs, &c., “all and singular the lands, tenements and heredit-aments of the said parties of the first part, situate, lying and being in the Territory of Minnesota, and all the goods, chattels, wares, merchandize, bills, bonds, notes, book accounts, claims, demands, judgments, choses in action, evidences ofdebt and property of every nature and description of the said parties of the first part, óf which said lands .and property aforesaid a schedule will be hereto annexed marked ‘A,’ and also all the books of accounts of the said parties of the first part, and all papers, documents and vouchers relating to their business dealings or property.” The assignment then creates a trust for the creditors of the partnership with preferences. Next, the individual creditors. Next, surplus if any to themselves. It is signed and sealed by each of the members of the firm with his own name. There is a schedule of the property intended to be transferred annexed, which enumerates the property specifically, and contains no words of general import indicating that any other than the specific property mentioned was designed to be passed.

It is a general rule in the construction of assignments containing general words of transfer, such as all the debtors’ property, that subsequent words of description or a reference to a schedule as setting it forth particularly will operate to> limit tbe general clause of transfer, and nothing will pass that is not set forth or specified. Burrill on Ass’ts, 321, 244-5-6, ancl oases there cited. Nor does any presumption arise from such an assignment that'it is a general one. Id., 244-5; Willces m. Ferris, 5 John., 335. It was perfectly, competent for these partners to mate an assignment of their partnership property alone, reserving their individual estates, which would be liable to seizure for their firm debts at any time; or they might have assigned their partnership property, and put into the same instrument portions of their individual property without its being a general assignment or subject to the rules applicable to such instruments. One of the partners did in-fact put into the schedule the individual half of the store in Earibault, which was the individual property of Bartlett. We think the assignment was not a general one, but was an assignment of the partners.in their associate capacity, and was not to be affected by the acts of the individuals in relation to their separate property.

The Defendants had the right to inquire of .the assignee all about the manner he conducted the business under the assignment, as to moneys received, notice given to creditors, &c., if for no other purpose, to test his business capacity in connection with the charge of his ignorance. ' There was no error in admitting the evidence ox this nature. The same is applicable to the witness Demules. He transacted the 'business for'the assignee, and the Defendants might question him concerning all these matters to see whether the assignee had stated them correctly. The assignee was the Plaintiff’s witness, and as the enquiries were material he might be contradicted, if not for impeachment, at least to show by his ignorance of the business intrusted to him his incapacity to transact it.

The deed from Bartlett, Jr., to Cummings, Seaman & Co., was properly admitted to show a payment on their debt. If the debt of this firm had been paid in whole or in part, the Defendants had a right to show it, as it is always a badge of fraud to insert debts in the schedule that are not owing by the assignors, and give them a preference.

The Plaintiff offered to prove the value of the property so conreyed, in order to sbow that it was worth much less than $2,500, the amount named in the deed. The competency of this proof would depend altogether upon the fact whether the creditors had agreed to receive the land at the stipulated sum of $2,500, or merely took it in part payment to the extent ot its real value. The mere fact of the consideration in the deed being stated at $2,500, would not be conclusive that it was agreed to be taken for that sum. The testimony concerning the transaction is very meagre, as presented in the paper-books. Mr. Sanborn testified that he had a conversation with one of the firm of Cummings, Seaman & Co., and that he said their claim was about $5,000, and that a payment had been made upon it in real estate of $2,500. The conveyance had not then been received by Cummings, Seaman & Co. The inference to be drawn from this testimony is that it was taken at the agreed amount, as the member of the firm did not speak from the deed, but from some previous arrangement that had been made between the firm and Bartlett,-or Bartlett & Ca-zeau. The testimony was therefore properly rejected.

The Court clearly erred in allowing the witness Dufresne to give the contents of the letter received by witness from Louis Bartlett, Jr., a few days prior to the date oí the assignment. No foundation whatever was laid for the admission of secondary evidence of its contents. The witness simply stated that he had not the letter then, and did not know who had it. That he had not seen it since he left Faribault, on the 27th of February, 1857. That the letter was put among the letters pertaining to the business of the store. That as near as he could remember he left it there when he came away, and that he did not know where to look for the letter. It does not appear that the slightest effort had been made to find it, either by search or inquiry. Proof of its contents should, under this state of the proof, have been injected.

The second, third and fourth requests of the Plaintiff to the Court to charge the jury, were based upon the theory that the assignment was the joint act of the firm, and not a general assignment of all the property of the assignors, and should have been given as requested.

The fifth request was also a correct statement of the law concerning an assignee who is charged with incompetency by reason of want of education, wbicb we have' discussed above.

The charge of the Court 'given under the sixth request of the Plaintiff was not erroneous, in telling the jury that a fraudulent intent was to be presumed from the appointment of an incompetent assignee, and that the Plaintiff must rebut the presumption, because the whole charge must be taken together and with reference to the facts proved. The Court had previously charged that if the assignors had been informed by the assignee of his want of education and incom'petency to execute the trust, and they had appointed him, well knowing all these facts, that it was evidence from which they might find the assignment was executed with intent to hinder and defraud creditors. Taken together, they contain the element from which a fraudulent intention would be inferable, to-wit, a knowledge in the assignors that they were appointing an improper person. The Court would have been less liable to misapprehension had it reiterated that fact in the charge under sixth request of the Plaintiff, but the omission of it was not error.

The ninth request of the Plaintiff was properly corrected by the Court. The employment of the assignors, and their continuance and connection with the business, is always a fact to go to the jury for what it is worth. It may be innocent or not, according to the developments in the case. In this case it was highly proper that it should go to the jury.

The eleventh request was properly refused. The removal of goods from the store by the assignors after the assignment, did not depend wholly upon its being with the consent of the assignee to make it evidence against the assignment. It would be proper upon the question of the competeney of the assignee to protect the trust property, unless perhaps the taking was a larceny.

There should be a new trial of the cause.

[Judge Palmer, of the 2d District, being interested as a party ih the cases arising under this assignment, Judge Yanderburg, of the 4th District, presided upon the trial in the Court below.]