60 Mo. App. 530 | Mo. Ct. App. | 1895
Lead Opinion
This is an action of replevin wherein defendant had judgment in the trial court.
The defendant is the sheriff of Jackson county and as such seized the goods on writs of attachment, as being the property of the Kansas City Lounge Company, said writs having been sued out by creditors of said Lounge Company. The goods were taken from the possession of plaintiff, who claims to be the owner by purchase from the Lounge Company. The sale to plaintiff is attacked for alleged fraud. There was evidence tending to prove that the Lounge Company made the conveyance • to plaintiff for the purpose of cheating their creditors, and that plaintiff participated in that purpose. On the part of plaintiff, there was evidence tending to prove that he was not guilty of fraud, and that he made the purchase without knowl
Several instructions were asked by the parties. All of those asked by the plaintiff were refused, except one as to the form of the verdict, some of them refused absolutely and the others partially being given after making material alterations therein. Those asked by defendant were, all given. Declarations of plaintiff’s agent and of parties composing the Lounge Company were admitted over the objection of plaintiff.
There is a distinction to be made between a creditor purchaser from a fraudulent debtor and a volunteer purchaser from such debtor. The creditor may purchase property of such debtor and give his claim against the debtor in payment therefor, even though he knows the debtor’s purpose in making the sale and giving him such preference is to cheat his other creditors. But, if the volunteer purchaser knows that the object of the sale is to cheat or defraud creditors, his purchase will be considered a fraudulent purchase, even though he pays full value. As we shall see further on, this case involves both classes of purchasers.
Considering plaintiff first as a volunteer purchaser, and conceding the fraudulent purpose of the Lounge Company in making the sale, it is necessary, in order to invalidate the sale, that plaintiff should have had knowledge of the company’s purpose. Itis not sufficient that he may have had knowledge of such facts as would
There is a class of eases where knowledge of facts sufficient to put a prudent man on inquiry is considered and acted upon as tantamount to knowledge of the fraud itself. This arises from the fact that from the nature of such cases it became the duty of the person possessed of such initiatory knowledge, to pursue the inquiry and ascertain the ultimate fact. If he did pursue the inquiry, he learned the fact; if he did not, he was guilty of laches and will be forced to suffer the consequences of his neglect. But this rule will not apply to the sale of personal property — it could not well apply without hampering the barter and sale of such property to an embarrassing extent. It is not usual for the purchaser to seek out the motive of the seller. A purchaser, though he is possessed of information which' would put a prudent man on inquiry, can neglect to make the inquiry and yet be safe in his purchase. But the fact that he had such knowledge as would have excited the inquiry of a prudent man, may be considered by the jury, when they come to determine the question whether he did have actual knowledge of the fraud. The instructions given for defendant, with an exception to be noted further on, were, therefore, properly given.
But instructions .numbers 7 and 8, offered by plaintiff, in support of his theory on this branch of the case, were refused, and, we think, properly. Number 7
2. We will now discuss the question whether plaintiff should be considered as though a creditor purchaser — not that he was himself a creditor of the Lounge Company, but whether he virtually occupied that relation to the transaction. As before stated, there was evidence tending to show that the Lounge Company owed J. T. Miller a sum of money greater than the sum plaintiff was to pay for the property in controversy, and that the Lounge Company directed plaintiff to execute the notes, which were agreed to be executed for the purchase price, to Miller, he agreeing to take the notes as a payment of that amount of his debt. As applicable to this branch of the evidence, plaintiff offered his instruction numbered 1, which the
Though the debtor’s intent and purpose in preferring a creditor is often spoken of, and referred to, as a fraudulent intent as to other creditors, yet, in
The case of Gregory v. Harrington, 33 Vt. 246, is a stronger case than that presented in plaintiff’s refused instruction. In that case the debtor sold his store to a purchaser for the amount of a debt he owed the purchaser and the purchaser’s four several promissory notes. These notes were transferred by the debtor to some creditors whom he desired to prefer. The debtor’s design was to put his property beyond the reach of other creditors. The court held the sale valid, and in the course of the opinion said:
“In this case, if the principal debtor had transferred the property itself to the same persons to whom he transferred the notes he took for it, and .for the same purpose, no person would claim that he had not a perfect legal right to do so; or, if he had sold the property and taken the money for it, and had applied the money in the same manner, it would not have been fraudulent. The purpose was not to keep his property away from his creditors, but to pay it to his creditors, he exercising his legal right to prefer such as he chose. Fraud does not consist in transferring property with a view to prefer one creditor to another, but in transferring property with the intent to prefer one’s self to all his creditors.”
. In Tennent Shoe Go. v. Budy, 53 Mo. App. 196, it was held that where a person purchased goods of his debtor, by surrendering his own claim as part of the purchase price and obligating himself to pay other creditors up to the amount of the balance of the purchase price, it was a valid transaction and was governed by the law relating to preference of creditors.
3. Evidence was admitted, so far as appears, for the general purposes of defendant’s case, showing the declarations made by the members of the Lounge Company several months after the sale, not in the presence of plaintiff, which tended to show the sale to be fraudulent. This, without being confined to the purpose of showing fraud on the part of the Lounge Company, was error against this plaintiff. Declarations of the vendor as to title, or as to manner of sale,, made after having parted with the possession in pursuance of the sale, are not admissible against the vendee.. These declarations were proper as tending to show fraud' on the part of the Lounge Company, and in being called out by counsel, they should have stated the purpose. The court properly confined the object of the evidence by an instruction.
4. A part of the negotiation leading up to the sale was made by plaintiff’s agent, Fenner. He was not, so far as appears, plaintiff’s general agent for all purposes. He was plaintiff’s foreman in his factory. It does not appear that he was plaintiff’s general purchasing agent. He merely assisted plaintiff in this purchase — a purchase, too, which defendant contends was an unusual one. This agent’s declarations, made several days after the sale was completed and the transaction ended, were admitted. This was error. These declarations were no part of the res gestee. The transaction in which the agent had a part was not then depending. The sale being completed, the fact
Instruction number 9 for defendant, should be given as asked, with the proviso that the jury are at liberty to consider the action of such purchasers, in determining the question whether they did in fact know of the fraud.
Under the circumstances of this ease, as they appear in evidence, it would have been proper to have given plaintiff’s refused instruction number 10, declaring that the words “value received,” regarding the purchases of the notes, as used in other instructions, did not necessarily mean the full face value. Such is the law and the instruction should have been given.
Instruction number 6 should have been given, as asked by plaintiff. The modifying words added therein, are too apt to leave the jury to understand that fraud need only be proved against the Lounge
Instructions 12 and 13, offered by plaintiff, were properly refused, since the ruling in this state, under similar circumstances, is that the question is for the jury.
It seems that, under the rulings had in this state, the modification in plaintiff’s instructions numbers 2 and 3 were properly made. Defendant’s instruction number 5, on the same subject, should be so framed as not to exclude the hypothesis of Miller being a preferred creditor, in keeping with what has been said herein on that subject.
The judgment will be reversed and the cause remanded.
Rehearing
ON MOTION NOE EEHEAEING.
We have already held that a volunteer purchaser from a fraudulent vendor may obtain a valid title, even though he has actual knowledge of the fraudulent design of the vendor, if he pays the purchase price by direction of the vendor to a bona fide creditor of the vendor; since such a transaction merely amounts to preferring a creditor. But although the party to whom he paid the purchase price was a bona fide creditor, yet, if he was participating in the vendor’s effort to cheat other creditors, and the purchaser knew he was so participating, it would disentitle the purchaser to the protection of the rule as to preference of creditors, and his title would be invalid. If, therefore, on retrial, there is any evidence tending to show that Miller went beyond the purpose of getting a payment on his debt and participated in the fraud of the Lounge Company, and that plaintiff knew it, then plaintiff’s instructions which are applicable should be
Motion overruled.