Dougherty v. Cooper

• Decision Date: 30 April 1883
• Parties: DOUGHERTY v. COOPER et al., Appellants.
• Court: Missouri Supreme Court

77 Mo. 528

DOUGHERTY

v.COOPER et al., Appellants.

Supreme Court of Missouri.

April Term, 1883.

Appeal from Nodaway Circuit Court.--HON. H. S. KELLEY, Judge.

REVERSED.

Strong & Mosman and Johnston & Alderman for appellants.

L. Dawson and C. A. Anthony for respondents.

PHILIPS, C.

This is an action of replevin. One Sandifer was a merchant in the town of Graham, Nodaway county. The plaintiffs claim to have bought out his stock of goods about the 1st day of February, 1877, at the agreed price of $2,250; the goods invoicing about $2,400. Sandifer, at this time, was largely in debt, more than the amount of his assets, and was then being pressed by his creditors. Wells & Co. having obtained a judgment against Sandifer, the sheriff, Jos. M. Cooper, under an execution issued on said judgment, went to make a levy on said goods, or so much thereof as might be necessary to satisfy the debt, amounting to $650, and costs $4.95. Levy was made the 23rd day of March, 1877. When the sheriff went to make the levy, he informed plaintiff Dougherty that he was ordered to seize enough goods of Sandifer's old stock to satisfy the execution. And as it was mutually deemed least injurious to lock up the stock rather than remove part of the goods, plaintiffs locked the store and handed the key to the sheriff, who made return of levy on said date. On April 5th following, plaintiffs brought this action of replevin against the sheriff and judgment creditors and re-took the goods into their possession. The answer alleged that the sale of the goods by Sandifer was fraudulent as to his creditors and that plaintiffs were privy thereto, and had not paid anything for the goods.

The evidence tended to show that the circumstances under which the purchase was made were calculated to throw suspicion upon its integrity, and that the plaintiffs were apprised of Sandifer's financial embarrassment and the solicitude of some of his creditors, particularly of Wells & Co. The manner of the payment, as agreed upon, was substantially as follows: M. N. Dougherty agreed to turn over to Sandifer three notes on George and M. Mowry, amounting to about $1,308. The balance was to be paid by conveying to Sandifer an interest in a house and lot in Graham and one-half the contents, consisting of a saloon, and the balance in money--realty estimated at $540, and stock in saloon at $372. The evidence left the fact in doubt as to whether any part of this purchase money was actually paid at the time of the levy in question. Touching the time of the transfer and the delivery of the Mowry notes, M. N. Dougherty, himself, says: “I think, but am not certain, that it was before the sheriff seized the store.” As to the balance of the purchase consideration, there is no pretense that it was paid prior to the levy. In fact plaintiffs' evidence shows affirmatively that it was long after.

As is usual in such cases, a great number of instructions were unnecessarily asked, which will be noticed here after, so far as pertinent to the questions to be reviewed. The jury found the issues for the plaintiff, and the defendants bring the case here on appeal.

1. FRAUDULENT CONVEYANCES.

Two principal questions involved in the issue in the trial court were: Was the sale of the goods by Sandifer to hinder or delay or defraud his creditors? If so, were the plaintiffs participants in the fraud; in other words, were they purchasers in good faith? The fact that Sandifer was in debt or insolvent at the time of the alleged sale, did not destroy his jus disponendi over his property. He had the right to sell or dispose of it, provided he did so for an honest purpose and not to withdraw it from process for his just debts. An embarrassed debtor may make sale of his property which he deems advantageous to enable him to raise the necessary means for paying off his creditors and to prevent its sacrifice at forced sale under execution, and for this purpose the law recognizes his right to sell for cash or on time. Hickey v. Ryan, 15 Mo 62; Buckner v. Stine, 48 Mo. 407; Green v. Tanner, 8 Met. 411; State ex rel. Peirce v. Merritt, 70 Mo. 275; Murray v. Cason, 15 Mo. 379; Waddams v. Humphrey, 22 Ill. 661, 663; Nelson v. Smith, 28 Ill. 495. The fact that the sale may or does have the effect to hinder or delay the creditors, is not sufficient to avoid it. Gates v. Labeaume, 19 Mo. 17; as, to have that effect the debtor vendor must have entertained a design to hinder or delay his creditors, and that must be effectuated by making the sale. Gates v. Labeaume, supra; Murray v. Cason, 15 Mo. 379. Defendants' counsel seem to have framed their instructions in the main upon the idea, if Sandifer was largely indebted and in failing circumstances, and sold his property without having sufficient to meet his debts, the court should declare this to be a fraud. It might be evidence of fraud, a fact to be submitted to the consideration of the jury for their determination. And the question of fact-- the intent--the court submitted favorably enough to the jury in the instructions given of its own motion. The court in previous instructions had properly advised the jury as to the necessity of finding the existence of a fraudulent intent on the debtor's part.

2. ______: bona fide purchasers.

Finding such intent to exist on Sandifer's part is not sufficient, however, to invalidate the sale as against the plaintiffs, provided they were purchasers for a valuable consideration without knowledge of such fraudulent intent. In other words, if Sandifer's object in making the sale was to defeat his creditors, or Wells & Co., in their efforts to collect their debts, three conditions must concur to protect the title of the purchaser: 1st, He must buy without notice of the bad intent on the part of the vendor; 2nd, He must be a purchaser for a valuable consideration, and 3rd, He must have paid the purchase money before he had notice of the fraud. Arnholt v. Hartwig, 73 Mo. 485; Bishop v. Schneider, 46 Miss. 472; Dixon v. Hill, 5 Mich. 408; Wormley v. Wormley, 8 Wheat. 449. Had the defendants' counsel tried their case below on the theory invoked in argument here, a different result might have been reached by the jury, and certainly the questions to be decided here would have been simplified. Why the issue was indirectly presented by counsel and court to the jury, as to whether the plaintiffs had in fact paid the purchase money, or any part thereof, at the time of the levy of the execution is remarkable in view of the fact that it is conceded that over $800 were not then paid, and it was debatable whether any of it had then been paid. If the purchase price was not paid at the time of the sale the plaintiffs could not protect themselves against Sandifer's fraud, if proved, by taking shelter under the cover of innocent purchasers. In the seventh instruction asked by defendants, a feint was made at raising this issue:

7. If the jury believe from the evidence that plaintiffs, after they received the goods in dispute, and before payment for the same by them to Sandifer in the manner stated in the evidence, knew of Sandifer's indebtedness, and that such transfer and disposition of Sandifer's effects would operate to delay or hinder Sandifer's creditors in the collection of their demands against him, then such alleged sale and transfer was void as to defendants and others, creditors of Sandifer, and their payment of any part of the purchase money, subsequently to the levy, for the goods, gave them no better right than they would have had without such payment.

The intended virtue of this instruction was, however, lost by carrying into it the vice common to defendants' instructions by asserting that if the sale had the effect to delay or hinder the creditors and the plaintiffs had knowledge thereof, “then such sale was void.”

3. ______: ______.

The nearest approach to the submission of this issue is found in the following instruction given on behalf of plaintiffs:

1. If the jury believe from the evidence that Dougherty and Hutchinson, or either of them, purchased the goods in controversy, or any part thereof, from Sandifer, in good faith and for a valuable consideration, and said Dougherty and Hutchinson, or either of them, took possession of said goods prior to the levy thereon by defendant Cooper, and that said goods were in possession of said Dougherty and Hutchinson at the time of said levy, said Dougherty and Hutchinson acquired a valid title to said goods, and the validity of such sale will not be impaired or affected, notwithstanding said Sandifer, in making such sale, intended to hinder, delay or defraud his creditors, unless the jury shall further believe from the...