112 Mo. 374 | Mo. | 1892
This is an action upon the bond of defendant Mason as sheriff of the city of St. Louis, to recover damages for taking, under writs of attachment issued in April, 1888, against one Isaac Trepp, and selling certain goods claimed by plaintiff.
■ The answer admits the seizure and conversion of the goods, but charges that they were in fact the property of the debtor, _Isaac Trepp, and were transferred to plaintiff fraudulently, and with intent to hinder, delay and. defraud his creditors.
Isaac Trepp, a merchant doing business in Centra
The evidence shows that plaintiff Salomon and Trepp were brothers-in-law, having married sisters, who were the, daughters of on$ Martin Frank, of New York; that plaintiff was the executor of said Frank, and as such, at the date of the sale of the goods, held three notes against Trepp for $3,500, $3,000 and $2,000 respectively. Plaintiff claims that the goods in controversy were bought and paid for in settlement of these notes. The good faith of this sale constitutes the matter of controversy in this suit.
I. The court was asked by plaintiff to instruct the jury, as a matter of law, that Trepp was indebted to plaintiff, at the date of the sale and transfer of the goods, in the full amount of the said three notes, unless the $3,500 note had been paid, and that the burden of proving payment was on defendant.
There was üo direct evidence tending to impeach the validity of the three notes; but the evidence did tend fo prove payment of the one for $3,500. The instruction was asked on the theory that the notes were prima facie valid, and proof of their invalidity should be made by defendant.
. The issue in the case was whether the sale was fraudulent, and not whether the notes were valid. The question of the validity of the notes, therefore, was only incidentally involved in the issue. They only represented the consideration for the transfer of the goods, and, as between the maker and the payee, were prima facie valid.
The consideration of the sale was one of the necessary elements of its validity. The only consideration
II. At the trial, for the purpose of proving that the $3,500 note had been paid prior to the sale, the defendant introduced in evidence the settlement of plaintiff as executor of Frank, one item thereof with which he had charged himself being “cash from Isaac Trepp, $3,500.” Defendant also read a deposition of plaintiff taken in another suit involving the validity of the same sale. In this deposition the plaintiff was given an opportunity to explain the charge of $3,500 contained in the settlement.
In rebuttal plaintiff offered to read a deposition of one McIntyre, the lawyer who prepared the settlement for him. By this witness plaintiff offered to prove that, when the settlement was made, he had told witness that $3,000 of the $3,500 charge in the settlement was the $3,000 note which the wife of plaintiff, as heir of Martin Frank, deceased, received as a distributive share in the estate, and $500 he himself had
The fact which the insertion of the item in the settlement tended to prove was in the nature of a declaration, on the part of plaintiff, that the $3,500 note had been paid. We think what plaintiff said at the time, in explanation of the act, was admissible as a part of the transaction. The act of inserting the item in the settlement should be viewed, and its effect judged, in the light of the verbal acts of plaintiff while doing or directing it. They were admissible as indicating the intention at the time, “and are, therefore, •admitted in proof like any other material facts.” 1 Greenleaf on Evidence [15 Ed.] sec. 108; State v. Gabriel, 88 Mo. 638, and authorities cited.
III. The court instructed the jury, on request of defendant, in effect: That if the sale was made by 'Trepp with intent to hinder, delay or defraud his creditors, and plaintiff “knew or had good reason to Jcnow of ¡such intent” at the time, and that the value of the goods transferred was “largely in excess” of . the amount then actually due on said three notes, the sale was fraudulent and void.
A sale, though made by the vendor with a fraudulent intent, will not be declared void unless the vendee had actual notice and knowledge of such intent. The knowledge of facts, which, if investigated and followed ■out, would lead to knowledge of the fraud, is not deemed sufficient under the decisions of this court. It is “not the duty of every purchaser of goods to inquire into the motives of the vendor in making the sale; for •such a rule would hamper the transfer of personal property to an extent which would be detrimental to •commerce and subversive of the policy which eneour•ages .free and unlimited traffic in such property.”
The court goes further yet, in the proof required to establish fraud in a preference given by an insolvent-debtor to one or more creditors, when goods are taken in satisfaction of bona fide debts. In such case the creditor has the. right to look after his own interest, and is not required to consult the interest of the other-creditors ; an actual participation in the fraud is necessary to make his acceptance of the goods fraudulent. Simple knowledge is not enough. Sexton v. Anderson, 95 Mo. 379, and cases cited; Holmes v. Braidwood, 82 Mo. 610.
It is evident that the instruction is improper in predicating fraud in the sale upon the fraudulent, intent on the part of the vendor, and only “good reason to know of such intent” by the vendee.
IV. Omitting from the instructions that part relating to the knowledge of plaintiff of the fraudulent intent of Trepp, does enough remain to make it a proper declaration of law? If the vendor intended fraud', and the value of the goods was largely in excess of the' debts surrendered, would the sale be fraudulént, as to' the other creditors, as a matter of law?
There is no doubt that inadequacy of price in the sale of property by an insolvent debtor is a badge of fraud; but it is not regarded sufficient alone to raise a legal inference of fraud, unless so grossly so as to “strike the understanding at once with the conviction that such a sale never could have been made in good faith.” Bump on Fraudulent Conveyances, pp. 44, 45; Ames v. Gilmore, 59 Mo. 549; 8 American & English Encyclopedia of Law, 760.
The fact that the goods transferred may have been largely in excess of the amount due on the three notes-
The value of the goods sold and the amount due on the notes were both disputed facts, which must have been known before the value and price could have been compared, and the adequacy or inadequacy determined. The words “largely in excess” used in the instructions are too indefinite to convince the understanding, as an inference of law, that the transfer was made in bad faith. We think the court erred in giving this instruction.
V. Plaintiff insists that, unless one or more of the notes had been paid, there was no evidence of fraud in the case, and the court should have so instructed the jury. Without undertaking to review the evidence, but after a careful consideration of it, we conclude that it was sufficient to authorize the submission of the issues to the jury. Fraudulent transactions are not committed openly, and in the light of day, but generally with secrecy, and with a view of concealing the evidence of it. Fraud must, therefore, generally be inferred from all the facts and circumstances which characterize the transaction. Where an inference of fraud may be drawn from all the circumstances the question should be submitted to the jury.
Other errors are assigned, but we find no other ruling which constitutes reversible error, or yrhich demands special consideration.
For the errors indicated, the judgment will be reversed and the cause remanded.