60 Kan. 598 | Kan. | 1899
The opinion of the court was delivered by
The creditors of W. L. Vickers & Co. brought this action to set aside a conveyance of lands made by O. C. Vickers and wife to P. B. Maxson, upon the alleged ground that the conveyance was made to defraud the creditors of W. L. Vickers & Go. This firm was engaged in the hardware and implement business at Wichita Falls, Tex., and was composed of O. O. Vickers and his nephew W. L. Vickers. O. C. Vickers resided in Kansas, where he owned a large farm, and also an interest in a bank at Dunlap, of which he was president. He furnished the greater part, if not all, the capital that was invested at Wichita Falls, while W. L. Vickers was the active manager of the business, and contributed but little.except experience toward the capital of the firm. The business was started in 1891, and many sales were made upon credit, so that when C. C. Vickers went to Wichita Falls in 1894 the assets of the firm consisted of a stock of merchandise worth about $7000, and notes, mortgages and accounts amounting to $17,700. C. C. Vickers determined to close out the business, and a sale of the goods on hand was made to two of the creditors for $7000. There remained debts of the
About the time that O. C. Vickers closed out his business in Texas, a sale of the land in controversy was made to P. B. Maxson, his father-in-law. The price of the land was fixed at $8500. It was subject to a mortgage for $3000, and Maxson agreed to assume the payment of the mortgage and to pay $5500 more. One thousand dollars was to be payable in ten days, and he executed two notes for $2250 each, due in six and twelve months. The bargain was made by Mrs. Vickers, and it was subject to the ratification of her husband, who was then in Texas. He ratified the sale and joined in the execution of the conveyance.
The creditors contend that the transfer was not an honest one, but was made to defeat and defraud them ; that while the amount of the notes and accounts of the firm exceeded its indebtedness, it was well known that a part of them was not good and that they were not worth to exceed fifty per cent, of their face value; that C. C. Vickers was in Texas about three months, and must have known the financial responsibility of the men who owed the firm. And it is also claimed that Maxson knew, or should have known, of Vickers’s circumstances and fraudulent purpose ; and, further, that while the negotiations were pending for the sale of the land he went to Texas,
On the other side, it is contended that Vickers thought his Texas assets were sufficient to pay the Texas liabilities, and that quite a sum would remain ; that the sale was only made to meet an obligation to the Dunlap bank, which was pressing, because it was an overdraft on a bank of which he was president; that the violation of law was liable to be exposed by a bank-examiner, and lest financial disgrace should result he decided to sell his land; that Maxson knew of this stress, and agreed to buy the land to relieve it and the anxiety of Mrs. Vickers, his daughter, because of it; that he had no knowledge of any fraudulent purpose of Vickers, nor of any facts that would upon diligent inquiry have disclosed it; that the information he gained in Texas was that the Texas assets were more than sufficient to pay the liabilities of the firm ; that Vickers so represented, and that he in good faith believed him. There was some testimony tending to sustain the various contentions of the parties, and the principal questions raised in this review arise upon the instructions given to a jury which was impaneled to try the facts.
Complaint is made of the seventh and eighth instructions, to the effect that actual knowledge by the vendee'of the fraudulent intent of the vendor need not be shown in order to avoid the sale, but that a knowledge of facts sufficient to excite the suspicions of a prudent man and put him upon inquiry will be sufficient. The principle embodied in these instructions is fairly within the authorities, and has passed beyond the stage of controversy into settled judgment. (Phillips v. Reitz, 16 Kan. 401; Kurtz v. Miller, 26 id. 314;
. A more serious objection is made to the ninth instruction, which reads as follows :
• "If the jury find from the evidence that the said C. C. Vickers and wife made a conveyance of the property described in the plaintiff’s petition to the said P. B Maxson for the purpose of hindering, delaying or defrauding the creditors of the said C. O. Vickers, or the creditors of the said W. L. Vickers*603 and O. C. Vickers, partners as W. L. Vickers & Co., then you are instructed that if the said P. B. Maxson, before he made the purchase of said property, or before he paid the consideration therefor, had knowledge that the said firm of W. L. Vickers & Co. was insolvent — that is, in failing circumstances and unable to meet their obligations as they matured — and that the creditors of the said C. C. Vickers were pressing their claims against him, then the said P. B. Maxson would be chargeable with notice of fraudulent intent of the said C. C. Vickers and Avife, and he Avould not be a bona fide purchaser of said property, and your findings must be for the plaintiffs, unless you shall further find that the consideration which the said P. B. Maxson paid for said lands Avas a good and valuable consideration, and that the money paid by him Avas applied to the satisfaction of the debts of the said creditors of W. L. Vickers & Co. or the debts of the said C. C. Vickers.”
In effect this instruction holds that mere knowledge of the vendor’s insolvency is, as a matter of law, sufficient to charge a purchaser with notice of a fraudulent purpose on the part of the vendor. It asserts the proposition that if Maxson kneAV that W. L. Vickers & Co. Avere in failing circumstances and unable to meet their obligations as they matured, and that creditors Avere pressing their claims against the firm when he purchased the land, he was chargeable with notice of the fraud of Vickers. The fact that persons are unable to meet their obligations as they mature does not necessarily indicate dishonesty, or that a sale made by them at that time is necessarily fraudulent; and yet the court ruled that a knoAAdedge of this fact alone by Maxson made him a participant in the fraud of the vendor, although he may have had no knoivledge of any facts or circumstances indicating Vickers’s intent to commit a fraud. Insolvency and honesty are not necessarily antagonistic. Many persons not subject
The exception at the end of the instruction as to the payment of consideration does not neutralize the error that preceded it, as coupled with it is a requirement that the purchaser shall see to and be responsible for the application of the purchase-money to the payment
It is suggested that as a jury trial could not be had as a matter of right, and as the findings of the jury are not binding upon the court, the instruction, although erroneous, is unimportant. The facts were submitted to the jury for their determination, and their findings were accepted and adopted by the court as its own, and the case was treated in all respects as though a jury trial was a matter of right. In such case “the same rules obtain as those which govern cases triable to juries as a matter of right, unless the court thereafter dispenses -with the jury for the purpose of trying the case itself.” (Loob v. Fenaughty, ante, p.
For the error mentioned the judgment will be reversed and the cause remanded for a new trial.