Smith v. Collins & Griffith

94 Ala. 394 | Ala. | 1891

COLEMAN, J.

— Creditors of J. D. Collins & Go. sued out certain attachments against the firm, which were levied by the sheriff upon a stock of goods as the property of the defendants in attacmnent. The plaintiffs in this suit, Collins & Griffith, brought the present action against the sheriff and his sureties, in trespass, claiming the goods -as their property under a purchase from J. D. Collins & Co., made prior to the suing out of the attachments.' The bona fieles and validity of the sale to the plaintiffs by J. D. Collins & Co. was the issue in the trial court. Robert A. Collins, of the firm of Collins & Griffith, is a brother of J. D. Collins, and son of J. A. Collins, composing the firm of J. -.D. Collins & Co.

There seems to be no contest as to the validity of the debts of the plaintiffs in attachment, and of their existence at the time and prior to the sale of the goods. The evidence tends to show that the> consideration paid by plaintiffs principally consisted in cash and a debt due Robert A. Collins from J. D. Collins and J. A. Collins, jointly but not as partners. There was one item of four hogs, valued' at sixty dollars in the inventory. These hogs were' returned to the-vendors, and the agreed price for the whole purchase was credited with the amount of the sixty dollars. There are some general principles of law applying in such cases, which have been repeatedly declared by this court, but, as they seem not to be fully apprehended, we venture to repeat some of them again.

When a creditor, attacks a sale of property made by his debtor as fraudulent, and proves the existence of his debt prior to the sale, the burden devolves upon the purchaser to show that he paid a fair and adequate consideration. After the purchaser makes this proof, then the burden shifts back upon the creditor to show that tile sale was made with a fraudulent intent, and that the purchaser knew of and participated in this intent. The law declares that an insolvent vendor, or one in embarrassed circumstances financially, who disposes of his property which is liable for his debts, and places it beyond the reach of legal process, and withholds the purchase-money from his creditor, is guilty of fraud; anda purchaser for a cash or present consideration of substantially all his property, who knows that his vendor is insolvent, or financially embarrassed, or who has knowledge of such tacts as would put a reasonable man upon inquiry, and which, if followed up, would lead to a discovery of his insolvency or embarrassment, is a guilty participator in the fraud, and acquires nothing by his purchase, available against the creditors of his vendor.

The general charge of the court is not consistent with itself, and not in accord with these principles in several particulars. We specify only one. The court, after correctly instructing the jury as to the effect a knowledge of the insolvency of the vendor on the part of the vendee would have upon the purchase, in another part of the charge instructed the jury that, after plaintiffs showed a prima facie title to the property, “it devolves upon the defendants to show that plaintiffs’ vendors were in failing circumstances or insolvent, and to show notice of that fact to the plaintiffs when they became the purchasers; when they have done that, it devolves upon the plaintiffs to show that they bought those goods for a valuable consideration — to show to the reasonable satisfaction of the jury what they have paid for them.” This is error in two respects. First, in requiring the defendants to show that plaintiffs had knowledge of the insolvency of their vendors, before the plaintiffs were required to prove the payment of a valid consideration. The rule is, that when the proof shows that the attaching creditor’s debts existed prior to the sale, the burden of proving the payment of the consideration devolves upon the purchaser, and after this' proof is made, then the burden is shifted back upon the attaching creditors to prove that the purchaser had knowledge of the fraudulent intent, or insolvency of the vendor, or of his failing condition. The charge is also wrong in principle, in this, that impliedly it asserts that the purchase would be valid, if an adequate consideration was paid, although the purchasers had notice of the insolvent condition or fraudulent intent of their vendors.

The court holds that there is no reversible. error in the charge to the jury in reference to the fact of relationship of the parties, and in giving charge No. 1 at the, request óf plaintiffs, in which it was declared that the jury are sole judges of the weight to be given to the fact of relationship. The .charge asserts no incorrect proposition of law, and if deemed misleading, as falling short of the entire rule, the court holds that it was the duty of the complaining party to have asked for an explanatory charge. In the case of Reeves v. Skipper, at present term, this question was considered at length, and the rule which governs in such cases settled.

That J. D. Collins & Co. were largely indebted at the time of the sale to plaintiffs, and that the sale tended to hinder and delay their creditors in the collection of their debts, is not seriously controverted. A debtor possessed of ample means to satisfy all demands against him, as well as an insolvent debtor, may be guilty of a fraudulent intent in the sale of his property. He may convert his property into money for the express purpose of putting it beyond the reach of his creditors, and a vendee who purchases with a knowledge or such fraudulent purpose, for a cash consideration, in law is a participator in the fraud. Charge 2 given for plaintiffs ignores this contention, and is further objectionable, in that it does not hypothesize a want of knowledge or notice of facts, if such were proven on the trial to the satisfaction of the jury, calculated to put a reasonable man on inquiry, and which, if followed up, would have led to a discovery of either a fraudulent intent or the insolvency or failing condition of their vendors. Charge No. 7 is subject to the first objection pointed out to charge No. 2. Furthermore, it fixes the burden of proving knowledge or notice of insolvency upon defendants absolutely, without reference to the fact that the jury must be satisfied that plaintiffs paid a fair and adequate consideration, before this burden is shifted on defendants. We find no error in charges 3, 4, 5, and 6. Charge 6 is substantially the same as that approved in Kellar v. Taylor, 90 Ala. 290. Charge 4 may have called for an explanatory charge, but there is no error in the proposition asserted.

Charge No. 1 requested by defendants went too far, and was also argumentative, and was properly refused. Charge No. 2 was argumentative, and there is no reversible error in its refusal. If the jury believed the facts predicated in this charge, they were suggestive of fraud, and should have led to inquiry on the part of the purchasers; and if the charge had stopped here, it ought to have been given. Near the conclusion of the charge it becomes argumentative. Charges Nos. 3 and 7 were properly refused. A debtor who has a sufficiency of property amenable to legal, process to satisfy all legal demands, can not be said to be insolvent, although he may not have money-in-hand to meet his liabilities as they fall due in the course of trade. Charge 4 was misleading, and properly refused.' The validity of the transaction in this case is not affected by the use made of a part of the purchase-money by the vendor after Ihe consummation of the sale, disconnected from any other facts implicating "the purchasers in a fraudulent intent.

The following statement in charge 5, “which preference was to be exercised at their election after proceeds of sale came into their hands,” renders the charge confused and uncertain. We fail to perceive its connection and bearing to the remainder of the charge-. Charge 6 was properly refused. It is entirely legitimate for counsel to group facts and press them with reasonable inference in argument upon the jury, but altogether improper for the court to weigh the facts and draw the inference for the jury. The charge is argumentative, and objectionable in other respects. Charges Nos. 8, 9,11, 14j 16, 17 involved disputed questions of fact, to be determined by the jury and not the court. Charge 10 was properly refused. It was predicated on nothing to render it legal.

Charges 12 and 18 were properly refused. The latter declares the sale to have been fraudulent and void, without reference to the financial condition or fraudulent intent of the vendors, or any knowledge or notice of their intent or condition on the part of plaintiffs. The charge, to be correct, necessarily involves the assumption that the purchasers were chargeable with notice of these facts.

We do not see the importance which has been attached to the matter of the hogs, except as argument for the jury. If the purchasers knew of a fraudulent intent on the part of their vendors, or were chargeable with knowledge or notice that they were insolvent, or in failing circumstances, or if culpably negligent in not making inquiry and following it up, the greater part of the consideration paid being a present consideration, and not the satisfaction of an antecedent debt of J. D. Collins & Co., the sale would be invalid as to the injured creditors, independent of and without reference to the sale of the hogs. On the other hand, if the purchasers were not thus chargeable, the question growing out of the sale of the hogs, as a matter of law, did not render the sale void. It was for the jury to say whether the explanation given was consistent with fair dealing, when considered in connection with the other evidence.

Charge IS assérts the proposition, that the writs of attachment may be considered by the jury as evidence tending to show the financial condition of the defendant debtor; in other words, that the writ of attachment was evidence of their indebtedness. The rule which prevails in this respect on atrial of the right of property rests upon different principles and practice than when the suit is in trespass by a vendee of the defendants in attachment. The issue is not the same. — Pulliam, Rankin & Co. v. Newberry, 41 Ala. 174.

Charge No. 15 is incomplete, and we are left to conjecture as to the intention 'of the pleader. Many of the charges give evidence of hasty preparation.

There is no power in the Circuit Court to compel the production of a deposition which is in the hands of a commissioner, taken by him under a commission from the Chancery Court, without an order authorizing it from the court which issued the commission. We do not decide that a court of law; has any authority to compel a party at any time to produce his books in court, that they may be used in evidence against him. The rule is different in a court of equity. A failure, after legal notice, to produce books or other written clocuments in a court of law, wdiich may furnish legal evidence in proper cases, authorizes the.introduction of proof of their contents.

In testing the bona fidos of a sale made by a partnership, it is competent lor an attaching creditor to show the insolvency or embarrassed condition financially of the partnership debtor. For this purpose the books of the partnership may contain competent evidence, and, if furnished to him, may be introduced in evidence; or, upon a proper showing, the creditor may introduce evidence of the contents of the books. Whenever the financial condition of the debtor is material, •whatever throws light on (his question is admissible. To make such testimony available as- against the purchaser, there must be additional proofj such as knowledge or notice of the condition of the vendor-debtor, or of facts suggesting further inquiry, and which, if honestly followed up, would lead to a knowledge of his condition. The court should not exclude testimony which is competent against one party, because not competent against another party to the suit. The testimony should be received, and its bearing limited and explained to the jury.

The plaintiffs had the right to. be present during the trial notwithstanding their examination as witnesses.

Continuances are in the discretion of the trial court.

-It was.competent, as bearing on the question of a contemplated fraud, to show that J. D. Collins & Co., just before the sale to plaintiffs, ceased to make deposits of proceeds of sales of merchandise, and that J. I). Collins withdrew all cash on deposit. It was also competent, in a legitimate way, as explanatory thereof, to show the circumstances which induced the cessation and withdrawal of the deposits.

The record is unduly incumbered with merely cumulative exceptions, and many which were merely elementary questions. There are fifty-four assignments of error. Less than Jialf the number may be selected which raise every material question reserved by them all.

Reversed and remanded.