Lane v. Starky

• Decision Date: 18 December 1883
• Citation: 18 N.W. 47,15 Neb. 285
• Parties: JOHN T. LANE, PLAINTIFF IN ERROR, v. JACOB STARKEY, DEFENDANT IN ERROR
• Court: Nebraska Supreme Court

18 N.W. 47

15 Neb. 285

JOHN T. LANE, PLAINTIFF IN ERROR, v. JACOB STARKEY, DEFENDANT IN ERROR

Supreme Court of Nebraska

December 18, 1883

ERROR to the district court for Saline county. Tried below before MORRIS, J.

REVERSED AND REMANDED.

Brown & Ryan Brothers, for plaintiff in error, reviewed the testimony at length, and cited, inter alia: Temple v. Smith, 13 Ind. 514, and cases cited. Burrill Assignments, § 341. Bump., 89. Glenn v. Glenn, 17 Iowa 501.

Hastings & McGintie, for defendant in error, cited: Thornton v Hook, 36 Cal. 223. Nichols v. Patten, 18 Me 231. Fifield v. Gaston, 12 Iowa 218. Clark v Tennant, 5 Neb. 557. Howe v. Howe, 99 Mass. 89. King v. Moon, 42 Mo. 551. Linn v. Wright, 18 Tex. 317. Waterbury v. Sturtevant, 18 Wend. 353. Kittle v. St. John, 10 Neb. 605. Hedman v. Anderson, 6 Neb. 400. Bump on Fraudulent Conveyances, 563. Atwood v. Impson, 5 C. E. Green, 150. Seymour v. Wilson, 19 N.Y. 417. Shontz v. Brown, 27 Pa. S., 123. Pattison v. Stewart, 6 W. and S., 74.

MAXWELL, J. COBB, J. concurs. LAKE, CH. J., dissenting.

OPINION

MAXWELL, J.

In July, 1882, one F. M. Woodruff had a store containing general merchandise at Friendville, in this state, and was embarrassed by his liabilities. The total amount of his debts at this time seems to have been about $ 4,000, and the value of the stock the testimony shows to have been from $ 2,700 to $ 4,000, while the book accounts were from $ 300 to $ 1,200. Woodruff was indebted to one Stone, who kept a bank at that place, a little over $ 200 for money loaned. Woodruff's creditors were pressing him very hard at this time, when he sold his entire stock, including the book accounts, to Stone for $ 2,000, which was paid by deducting the amount Woodruff was owing Stone, and by Stone giving his promissory notes for the balance--one of said notes for $ 500, with interest, due in six months; one note for $ 500, without interest, due in twelve months; one for $ 500, without interest, due in eighteen months, and a note for the remainder, without interest, due in two years. Stone, at the time of the alleged purchase, had full notice of the debts owing by Woodruff, and the testimony clearly shows that one of the objects he had in view in purchasing said goods was to hinder and delay if not defraud the creditors of Woodruff. This transaction took place on the 6th of July, 1882. There is considerable testimony tending to show that Stone did not purchase the goods absolutely, but merely to secure his own claim, and to enable Woodruff to settle with his creditors. This is denied by Stone, but is sustained by the clear weight of testimony, and it certainly seems very strange that a merchant should sell his entire stock for not to exceed one-half of its face value, and receive as payment therefor only long time notes without interest. Certain creditors of Woodruff threatened to attach these goods to secure their claims, and Stone, evidently alarmed, made several efforts to sell the same before the attachments were levied. On the 26th of July, 1882, he was informed that an attachment was about to be levied on the goods in question, and he at once went to a man named Hugh Seed, and offered to sell him the goods for $ 2,500, taking his notes therefor, payable in one, two, three, and four years. Mr. Seed agreed to take the goods on these terms, and the parties went to the store where the goods were kept, and the notes were drawn up ready to be signed, when Seed, evidently anticipating trouble if he purchased the goods, refused to take them and sign the notes. This was between two and three o'clock in the afternoon of the 26th. Stone thereupon sold the goods to one Starkey for $ 2,500, taking his notes therefor, payable to himself. Immediately after this alleged sale, Starkey and the former clerk employed by Woodruff and Stone commenced to invoice the goods, the invoice being completed on the following Sunday. In the forenoon of the 27th of July, an attachment was levied upon a portion of the goods in question as the property of Woodruff, the amount levied upon being $ 714.95. This action was brought by Starkey against the officer levying the attachment to recover the value of the property seized under the order. A verdict was rendered in favor of Starkey in the court below, and a motion for a new trial having been overruled, judgment was entered on the verdict. The question for determination in this court is, was Starkey a bona fide purchaser of the goods in question?

It appears from the testimony that he was an employe of Stone at $ 16 per month and board, at the time of this purchase; that he had been in the employ of Stone at Friendville for about two years; that prior to that time he had resided with his father in Hamilton county, and he states in his testimony "a part of the time I milled it,"--tended mill for his brother. It nowhere appears that he possessed any property whatever. Nor does the testimony show that at the time of the levy on the goods in question, he had paid one cent thereon. But it is said he gave his negotiable promissory notes for the goods, and that this is sufficient to prove a valuable consideration. Whether negotiable promissory notes given under the circumstances of this case would be sufficient or not, we will not determine, as the record nowhere shows such notes to have been given. It is in evidence that notes were given to J. D. Stone, but no copy is set out nor does their character appear. It does appear, however, that Stone, knowing that an attachment was about to be levied, hurriedly sells these goods to Starkey, who knew but little or nothing about the business--the alleged purchase being made in the afternoon or night of July 26th, and the notes given at that time, while the invoice was made afterwards. No reason is given why the invoice was not made before the sale, but it is apparent that the reason was the fear of Woodruff's creditors, and the testimony tends to show that there was sufficient under the circumstances to put Starkey upon inquiry. The question of a bona fide purchase has been before this court a number of times.

In Gregory v. Whedon, 8 Neb. 373, 1 N.W. 309, it is said: "In order to constitute a person a bona fide purchaser he must have parted with something that is valuable upon the faith of his purchase before he had notice of any prior right or equity;" and in Savage v. Hazard, 11 Neb. 323, it is said, "to constitute a bona fide purchase for a valuable consideration, it must be without notice, and with the money actually paid." In both of these cases the purchasers had given their promissory notes, but the sales were held to be invalid. The rule is well settled that the burden of proving a valuable consideration is upon the purchaser when proof of that fact becomes necessary to his protection against either creditors or subsequent purchasers. 1 Am. Leading Cases (4th Ed.), 53. Battle v. Jones, 2 Ala. 314. Abbott's Trial Ev., 448-9 and cases cited in notes. This Starkey has failed to do. It is stated in the defendant's brief that it devolves upon the plaintiff to show that the transactions between Woodruff and Stone, and Stone and Starkey, were fraudulent. It is a fundamental principle that fraud is never presumed--that is, when a sale is alleged to be fraudulent as to creditors it devolves on the party alleging the fraud to prove it. But the proof of fraudulent intent need not extend beyond the vendor and vendee. The question as to a purchase from a fraudulent vendee is whether or not he acted in good faith. If he did, he is protected. If he did not so purchase, the goods in his hands are still liable for the debts of the real owner. That is, the goods in the hands of the fraudulent vendee were liable for the vendor's debts. Therefore, if one purchase with notice of the vendee's title, or have facts sufficient to put him upon inquiry, he takes merely the title possessed by the vendee. There may, however, be an intent also on the part of such purchaser to defraud or aid in defrauding the creditors of the vendor which may be proved to show his want of good faith. The testimony in this case fails to show that Starkey was a bona fide purchaser, and therefore entitled to protection, and for that reason the judgment must be reversed. As there must be a new trial in this case, we desire to say that the cross-examination of both Stone and Starkey was too much restricted. In cases of this kind the facts can only be ascertained by a full examination of the witnesses. Then, too, the very large number of objections interposed by the attorneys, almost in the same form to all questions, seem to have been unnecessary. It is the duty of an attorney to protect the rights of his client by proper objections and exceptions; but this does not authorize nor require continued and persistent objections to proper and competent testimony. The judgment of the district court is reversed and the cause remanded for a new trial.

REVERSED AND REMANDED.

COBB, J. concurs.

DISSENT BY: LAKE

LAKE CH. J., dissenting.

This cause comes here from Saline county. The action in the court below was brought by the defendant in error to recover damages for an alleged wrongful seizure by the plaintiff in error of a portion of his stock of goods under an order of attachment.

The order of attachment was issued to the plaintiff in error, as sheriff, at the suit of Samuel P. Farmington et al. v Francis M. Woodruff, who a short time before had been engaged in the mercantile business in Friendville, in said county, and from whom the defendant in error had, mediately, obtained...