23 P. 447 (Colo. 1889), Sickman v. Abernathy

Citation:23 P. 447, 14 Colo. 174
Opinion Judge:REED, C., ( after stating the facts as above.) PER CURIAM.
Party Name:SICKMAN et al. v. ABERNATHY et al. SAME v. HAX.
Attorney:[14 Colo. 176] Ballard, Robinson & Love, for appellants. Haynes, Dunning & Annis, for appellees.
Case Date:December 24, 1889
Court:Supreme Court of Colorado
 
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Page 447

23 P. 447 (Colo. 1889)

14 Colo. 174

SICKMAN et al.

v.

ABERNATHY et al.

SAME

v.

HAX.

Supreme Court of Colorado

December 24, 1889

Commissioners' decision. Appeal from district court, Larimer county.

In October, 1881, Alonzo P. Sickman and S. B. Livingston formed a partnership for transacting a mercantile business; were equal partners; only continued in business until about the 4th day of February following, when the firm of Livingston & Sickman sold to Jonathan Sickman, father of A. P. Sickman, and T. H. Davy, and by bill of sale assigned and transferred to them, the entire stock of goods then on hand, book-accounts, credits, and good-will, for the sum of $15,000, and received in payment three notes, of $5,000 each, made by Sickman & Davy, due, respectively, 60, 90, and 120 days after date. Livingston & Sickman at the time of the sale were badly in debt, if not insolvent. Immediately upon commencing business, or very shortly afterwards, Sickman & Davy commenced to pay the $15,000 for which the notes were given, without regard to the time of their maturity. Such payments were made upon the orders of Livingston & Sickman, and paid either in cash, or by substituting the paper of Sickman & Davy for that of Livingston & Sickman. At the time of the purchase by Sickman & Davy, A. P. Sickman was indebted to the Poudre Valley Bank for $2,000 for money borrowed, for which the bank held his note, which, with interest, amounted to $2,083, on April 19, 1882, at which time it was paid by Sickman & Davy at the request of Livingston & Sickman, and a credit given for the amount upon one of the $5,000 notes of Sickman & Davy. Among the accounts standing upon the books of the old firm at the time of the sale which were assigned to Sickman & Davy was a personal account of A. P. Sickman, due the firm of Livingston & Sickman, of $827.16; one of S. V. Livingston, $665.43; and another of Livingston, called the 'house account,' of $1,066.99,--Livingston's two amounting to $1,732.42; also, an account against one L. Welch of $409.22, against which Welch had a set-off for the full amount, which did not appear upon the books. These several accounts, amounting to $2,958.80, together with a bill of goods, amounting to $254.78, bought by Livingston from Sickman & Davy after the transfer, making in the aggregate over $3,000, were, by the mutual agreement of Livingston and A. P. Sickman with Sickman & Davy, indorsed as credits upon the notes of the latter. These being the payments over which the controversy arose, others need not be noticed. About the 1st of March, 1883, appellees Abernathy and Hax, respectively, commenced proceedings by attachment against Livingston and A. P. Sickman for sums due them for goods sold, and Jonathan Sickman and Davy were served as garnishees. They having answered that they were not indebted, the answers were traversed. After trials had been had in the county court, appeals were taken to the district court, a trial had by jury, resulting in favor of the garnishees, which verdict was set aside by the court. In March, 1885, another trial was had, resulting in finding the garnishees indebted to Livingston & Sickman in the sum of $3,123.44. From which judgments, appeals were taken to this court. Errors are assigned upon the giving by the court of the 3d, 4th, 7th, 8th, 9th, 10th, 11th, 12th, and 13th instructions on the part of plaintiffs, and upon the refusal of the court to give two instructions asked by garnishees.

Page 448

[14 Colo. 176] Ballard, Robinson & Love, for appellants.

Haynes, Dunning & Annis, for appellees.

REED, C., ( after stating the facts as above.)

At the time the suits by attachment against Livingston & Sickman, and the proceeding by garnishment of Sickman & Davy, were commenced, the three notes of the latter, which were negotiable, had been paid to the satisfaction of the payees, delivered up to the makers,[14 Colo. 177] and the whole transaction closed. Section 12, c. 46, Gen. St. 520, is as follows: 'No person shall be liable as a garnishee by reason of having drawn, accepted, made, or indorsed any negotiable instrument, when the same is not due in the hands of the defendant at the time of service of the garnishee summons, or the rendition of the judgment.' This might, perhaps, be considered as concluding this case, when applied to the facts, if our construction of it is correct; but the learned and experienced judge before whom the case was tried does not seem to have so considered it. Neither did the counsel. The importance of the case seems to render a full discussion of the questions presented necessary.

At the time of the sale and transfer of the assets of the defendants to the garnishees, the attendant circumstances and relation of some of the parties were such, perhaps, as to raise a doubt in regard to the honesty of the transaction sufficient to have caused an investigation by the creditors, which might have been had under proper proceedings; and, if found fraudulent, the sale could have been set aside, and the entire property in the hands of Sickman & Davy subjected to the payment of the debts, or, if found best, the sale could have been affirmed, and provision made for the application of the entire proceeds to the payment of the debts. But no such course was taken. The creditors, instead of questioning the honesty of the sale,

Page 449

acquiesced, treated it as legitimate, and elected to proceed against the purchasers for money supposed to be due. By the course pursued the sale and transfer of the assets of the firm to the garnishees was ratified. There are numerous authorities in support of this proposition. In Bishop v. Trustees of Hart, 28 Vt. 75, it is said: 'By instituting this suit to recover the avails...

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