Dyer v. Taylor

• Decision Date: 03 March 1888
• Citation: 7 S.W. 258,50 Ark. 314
• Parties: DYER v. TAYLOR
• Court: Arkansas Supreme Court

7 S.W. 258

50 Ark. 314

DYER v. TAYLOR

Supreme Court of Arkansas

March 3, 1888

APPEAL from Crawford Circuit Court, R. B. RUTHERFORD, Circuit Judge.

Judgment affirmed.

Duval & Cravens for appellant.

1. To render a sale of goods void as to creditors and vendees, it must appear that not only the intent to defraud his creditors existed in the mind of the vendor, but said intent was known to and participated in by the vendee thus aiding the vendor to defraud his creditors. 9 Ark. 482; 23 Id., 258; 30 Ark 417; 31 Id., 554; 32 Id., 255. The fraudulent intent must exist at the time of the sale. No subsequent illegal acts either in omission or commission can in any manner invalidate it. 39 N.Y. 200; 85 N.Y. 466. Evidence as to Patton's taking notes in his wife's name, false entries on his books, mutilating the books, etc., all occurring after the sale, were inadmissible against Dyer, he having no connection with them.

2. Fraud must be proved, and the onus was on defendant to show it by preponderating testimony. 40 Ark. 418; 1 Story Eq sec. 190. The money received by appellant was applied to the payment of his debts. The transfer of the notes to his brother was a mere preference of creditors, which a debtor may do.

3. The jury should have been required to answer the questions of plaintiff. An affirmative answer to them would have entitled plaintiff to a verdict, and discharging the jury without answering these questions was equivalent to a mistrial.

U. M. & G. B. Rose and Clendening & Read for appellee.

1. The evidence in this case shows an ordinary case of ordinary fraud, and very similar to 45 Ark. 520; 11 F. 559; 20 F. 287. In the two last mentioned cases the purchaser actually paid cash, while in this case, Dyer only gave a draft against the proceeds of Patron's own cotton. The leading case on this subject is 6 Wall, 299 where it was held that by giving intangible securities which could be easily placed beyond the reach of creditors, the purchaser had afforded facilities for the perpetration of a fraud, and the conveyance was set aside.

2. There was no error in accepting a general verdict without requiring the jury to answer the questions propounded, upon which the jury could not agree. Mansf. Dig., sec. 5142, is plainly permissive and not mandatory. 36 Ark. 371; 119 Mass 273. It rests with the jury whether they will render a special verdict or not, and if they refuse to do so, the court must still receive the general verdict. 3 Salk., 373; 3 Black. Com. Ch., 23; Cooley Const. Lim., 321; Bouvier Law Dict., Title "Verdict."

3. Evidence of frauds committed by Patton, with which Dyer is not shown to have been immediately connected, were admissible to prove, 1st, that Patton did commit a fraud and 2nd, that Dyer participated in it. Everything throwing light on Patton's motives and intent was admissible. Bigelow on Fraud, p. 476; Ib., p. 478; 24 Ark. 222; 31 Id., 666.

4. If Patton intended to defraud his creditors, and Dyer had notice of it, or knew such facts as should put him upon inquiry, the sale was void. 101 U.S. 141; Bump. Fr. Conr, (3rd Ed.) p. 201; Wade on Notice, sec. 11; 1 Story Eq. Jur., sec. 400; Bigelow on Fraud, p. 291; 35 Ark. 100.

OPINION

BATTLE, J.

Taylor being sheriff of Crawford county, seized a stock of goods under and by authority of several orders of attachment sued out by the creditors of J. N. Patton. Dyer, claiming to have purchased the goods of Patton, brought this action against Taylor to recover possession of them. The sale to Dyer was made about ten days before the seizure by the sheriff. Taylor contends that the sale was fraudulent and void as to Patton's creditors.

The evidence introduced in the trial tended to prove the following facts: Patton was the owner of a stock of goods; was a merchant, and did business in Alma, in this state; Dyer was his brother-in-law; had been his clerk; was intimate with him and familiar with his business. In the fall of 1885, Dyer was doing "a two hundred dollar business" near Alma, and had no property subject to execution and was in debt. Patton owed about $ 9,000, and his creditors were urgent and pressing in their demands. The books of Patton showed that, after giving Dyer credit for his services as clerk, Dyer was indebted to him in the sum of four dollars and thirty cents. Notwithstanding this fact Patton turned over to him ten bales of cotton, under the pretense of paying him for his services as clerk, and received from him $ 100 or $ 150 in money. Dyer did not weigh the cotton, and did not know, he says, what Patton owed him, and was dependent on Patton's books for information as to the accounts between him and Patton. About this time, Patton sold to him his stock of goods for $ 3,500. They say that Dyer paid $ 300 in money and gate draft on the proceeds of the cotton for $ 500, which was paid, and executed his three notes for $ 900 each, payable in thirty, sixty and ninety days, for the balance of the purchase money. Dyer said he had no means of paying the notes, but expected to sell the goods, and pay them with the proceeds of the sale. A day or two before this, Patton proposed to a man named Baker to sell him the same goods, but before Baker had time to decide what he would do, being pressed by his creditors, sold to Dyer, and a day or two afterwards, told Baker he could get the goods. Soon after, or about the time of this sale, he took notes to his wife in settlement of accounts due him on his books, saying he was indebted to her; sold cotton and took a draft for the purchase money in the name of Dyer, and afterwards endorsed it with Dyer's name, and collected it himself.

The sale of the goods to Dyer was on the 4th of November, 1885, and the goods were seized by the sheriff on the 13th of the same month. When the goods were attached, no books were found in the store containing the goods, but Patton, in response to a rule upon him to produce his books, said he had left them there. Finally, in response to a second rule he produced his ledger. It was much mutilated, a part of the leaves were torn out, and the tops of the others were so cut or gnawed that it was impossible to tell against whom the accounts on them stood. He said he had found it under the store-house, and he supposed rats had eaten it. But between the time of the attachment and the time when he said he found it, entries in his hand-writing were made in it, for which he could not account. Dates had been altered and entries changed. The books produced showed accounts amounting to $ 6,845, and that he had collected on them after the 1st of September, 1885, $ 5,111. After the attachment he transferred Dyer's notes to his brother. In an attempt to explain his conduct, he says he had given to Hill, Fontaine & Co., his note for $ 2,100 or $ 2,200, and his brother was his surety on the note; that he owed them on account $ 800; that his brother assumed the note; and that he transferred Dyer's notes to secure the note and account he owed to Hill, Fontaine & Co., so far as they would extend; and that including the transfer of the Dyer notes, he had paid on his debts between the 1st of October, 1885, and the sale to Dyer $ 8,140. And still he owes his attaching creditors $ 4,400.

The defendant recovered judgment against plaintiff; and plaintiff appealed.

In the course of the trial Dyer objected to the introduction of evidence to show the taking of the notes by Patton in the settlement of accounts, in the name of his wife, the mutilation of books, altering of dates, and changing of balances on books, because he had no connection with such acts. Was it competent?

In order for Taylor to maintain the issue on his part, it was necessary for him to show that Patton intended to cheat and defraud his creditors in the sale to Dyer; and that Dyer participated in the fraud. Any evidence throwing light...