114 Iowa 291 | Iowa | 1901
Flanders Sisters were engaged in the millinery business at Peoria, 111., and the defendant N. M. Flanders had the stock in question at Ottumwa, where she was doing business on her individual account. Being pressed by creditors, the Peoria stock was sold to an employe, and a bill of sale of the Ottumwa stock was made by N. M. Flanders to her brother, J. W. Flanders’ for a purported consideration of $2,500, which was paid in a manner we shall have occasion to relate hereafter. On the day following the delivery of' this bill of sale, and after J. W. Flanders had taken possession of the property, plaintiff firm attached. Two questions are presented by the facts for solution: (A) Was the sale by N. M. Flanders to her brother made with intent
If the sale was made by N. M. Flanders with intent to hinder and delay plaintiffs, it was fraudulent on her part, and could be avoided against any purchaser from her, even though he paid full value, if such purchaser bought with notice, either actual or constructive, of the grantor’s intent. Steele v. Ward, 25 Iowa, 535; Kellogg v. Aherin, 48 Iowa, 299 ; Preston v. Turner, 36 Iowa, 671; Bixby v. Carskaddon, 55 Iowa, 533; Kelley v. Flory, 84 Iowa, 671. The grantee in such a case will be held to have constructive notice of the grantor’s intent when he knows of such facts as would put. a man of ordinary prudence upon inquiry which, if pursued, would lead to a knowledge of the grantor’s purpose. Jones v. Hetherington, 45 Iowa, 681; Williamson v. Wachenheim, 58 Iowa, 277; Spaulding v. Adams, 63 Iowa, 437; Lyons v. Hamilton, 69 Iowa, 47. This is the rule with regard to a purchaser, but it does not apply to a creditor seeking security for his claim. A creditor acting in good faith may take security from his debtor, even though he knows there are other creditors, and that the effect of the debtor’s action will be to defeat them. Carson v. Byers, 67 Iowa, 606; Crawford v. Nolan, 70 Iowa, 97. He is even protected in such case although he knows the debtor is prompted by' a fraudulent intent. Chase v. Walters, 28 Iowa, 460; Aultman v. Heiney, 59 Iowa, 654; Stroff v. Swafford, 81 Iowa, 695. He may lawfully take a conveyance that secures debts due to others as well as to himself. Gould v. Hurto, 61 Iowa, 45 ; Roberts v. Press, 97 Iowa, 475. But the creditor must act in good faith; for, if he takes the conveyance for the purpose of aiding in the fraud, it is void. Richards v. Schreiber, Conchar & Westphal Co., 98 Iowa, 422. Or if, in seeking to secure
Having settled the legal principles governing transactions of this kind, we shall now take up the evidence, and ascertain what particular rule is to be applied to the' parties here. The facts that we shall present are taken wholly from the testimony of N. M. Flanders and J. W. Flanders. Plaintiffs’ claim of over $1,200 was for goods sold. The purchase was made by N. M. Flanders; about $800 worth being for the Peoria concern, and the remainder for the Ottumwa store. The'goods were bought in September, 1896, and by agreement the bills were to be dated October 15, 1896, with a credit of 30 and 60 days. About the eleventh or twelfth of October, 1896, the stock in the Peoria store was attached by creditors. N. M. Flanders was there at the time. Just before the attachment was levied, she, with her sister, made a bill of sale of the stock to the woman who did the trimming for them, and whose pay was in arrears some four or five