Nudd Et Al v. Burrows, Assignee

• Decision Date: 01 October 1875
• Citation: 23 L.Ed. 286,91 U.S. 426
• Parties: NUDD ET AL. v. BURROWS, ASSIGNEE
• Court: U.S. Supreme Court

91 U.S. 426

23 L.Ed. 286

NUDD ET AL. v. BURROWS, ASSIGNEE.

October Term, 1875

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

This was an action brought by the defendant in error, as the assignee of one Norton Emmons, a bankrupt, against the plaintiffs in error, to recover the net proceeds of about eleven carloads of live-stock and dressed hogs shipped by the bankrupt to the plaintiffs in error, and one thousand dollars in money paid by him to them, which proceeds and money they had applied to the payment of his indebtedness to them, in fraud, as contended by the assignee, of the provisions of the act to establish a uniform system of bankruptcy throughout the United States, approved March 2, 1867. Judgment was rendered in favor of the assignee.

A bill of exceptions was allowed in the court below, which is in substance as follows:——

The plaintiff introduced evidence tending to show that Emmons had for a number of years been engaged in the stock business in Wisconsin, purchasing cattle, sheep, and hogs, and shipping them chiefly, but not always, to the defendants at Chicago, for sale upon commission; that about the first day of July, 1870, Emmons associated with him Richard B. Chandler

and James W. Chandler, and that said parties thenceforth, under the firm name of Emmons & Chandler, continued the business, also shipping chiefly to the defendants the stock which they bought; that about the thirteenth day of December, 1870, said firm was indebted to the defendants between $4,000 and $5,000; that Emmons was then insolvent; that it was then arranged between the defendants, said Emmons and said Richard, B. and James W. Chandler, that said firm of Emmons & Chandler should dissolve; that James W. Chandler had previously gone out; that Emmons should continue the business until the first of the following January, and should at the close of the year buy a large amount of stock upon credit, which should be shipped to and sold by the defendants, and the proceeds applied to pay his indebtedness to them; that the firm of Emmons & Chandler did dissolve about the thirteenth day of December; that Emmons did in the first four days of the following January, in his own name and on his own account, ship to the defendants nine car-loads of cattle, sheep, and hogs, which were sold by them, and the proceeds held to pay the said indebtedness; that upon the sixth day of January, 1871, Emmons paid to the defendants $1,000 in money; that the net proceeds of said last shipment, so held by them, was $7,553.27; that a large part of the stock which went into the last shipment was paid for by drafts drawn by Emmons on the defendants, which were not accepted or paid by them; that the amount of drafts so drawn and unpaid was about $4,000; that a petition in bankruptcy was filed against Emmons in the District Court of the United States for the Eastern District of Wisconsin, on the eighteenth day of February, A.D. 1871, on which petition he was duly adjudicated a bankrupt; that the defendants, at the time of making the aforesaid arrangement,—to wit, on or about the thirteenth day of December, 1870,—had reasonable cause to believe said Emmons was insolvent.

As tending to show some of said matters, the plaintiff introduced in evidence a document as follows:——

'CHICAGO, Dec. 13, 1870.

'To whom it may concern:——

'This certifies that whereas Mr. R. B. Chandler has been a joint partner with Norton Emmons from the first day of July, 1870, to date, we release him from all further obligations that may be transacted

between us and Norton Emmons, and look to Norton Emmons only for balance of present account and all business that may hereafter be transacted with him.

'The above release of R. B. Chandler is made by the consent of all parties.

'I. P. NUDD & Co.'

Also the ledger of the defendants, showing the account of Emmons and of the firm of Emmons & Chandler with the defendants.

The last item upon the account of Emmons & Chandler is as follows:——

'1870, Dec. 13. By balance due Nudd, $1,617.43.'

Under which is written the following:——

'The above balance we transfer to the individual account of Norton Emmons, by request of both parties.'

Immediately after and upon the same ledger page is the following, showing all the entries made subsequent to said Dec. 13, 1870:——

DR. NORTON EMMONS. CR.

1870. 1870.

Dec. 13 To balance due Nudd,

and transferred from

the ac. of Emmons &

Chandler $1,617 43 Dec. 24 By net proceeds $1,140 07

" 13 To paid draft 1,500 00 " 24 " " " 4,767 51

" 14 " " " 1,500 00 " 3 " " dressed hogs 107 04

" 15 " " " 1,500 00 " 28 " " proceeds 651 88

" 16 " " E. Peterson 750 00 " 28 " " " 766 31

" 21 " " draft 187 00 " 28 " " " 1,929 48

" 22 " " " 1,500 00 " 29 " " " 765 84

" 23 " " " 3,500 00 " 20 E. & C., dressed hogs 1,396 64

" 23 " " " 200 00 " 29 E. & C., dressed hogs 863 58

1871.

" 23 " " " 500 00 Jan. 7 " " " " 1,444 15

" 24 " " S. W. Montague 55 72 " 6 " " cash rec'd 1,000 00

" 24 " " draft 1,000 00 " 10 " net proceeds 4,002 03

" 24 " " " 400 00 " 10 " " dr. h. 1,174 37

" 16 " " Chandler 40 00 " 10 " " dr. h. 1,268 16

--------50-

" 16 " " Peterson 35 00

" 16 " " Johnson 5 00

" 3 " " protest fees 10 20

" 27 " " draft 300 00

" 28 " " " 600 00

" 31 " " " 4,000 00

" 31 " " " 1,000 00

" 31 " " " 750 00

Jan. 11 " acceptance 334 84

To certain questions put to the witnesses, calling for the declarations and statements of Emmons at and before the consignment was made, the defendants objected, because said declarations, not being made in the presence of either of the defendants, nor brought to the knowledge of either, could not be used to prejudice them; which objections being overruled by the court, and the answers admitted, the defendants then and there excepted.

The defendants introduced evidence tending to show that they acted as the factors of said Emmons prior to the time of his partnership with Richard B. and James W. Chandler, and for said firm of Emmons & Chandler after that time and until the closing of the account, Jan. 10, 1871; that during all this time it had been the usual course of business and the regular practice of the defendants to advance money to these parties to buy stock, relying upon the consignments to be made to them to cover such advances; that the defendants continued to make such advances after the thirteenth day of December, 1870, in the same manner as before, receiving consignments, and selling the same to cover their previous advances; that the indebtedness to the defendants at the time of the last shipments of stock was for such advances; that these advances were made by payment of drafts upon the defendants; that such drafts were drawn in the name of Emmons, as well after as before the formation of the copartnership of Emmons & Chandler; that the bank business of the firm of Emmons & Chandler was done at the First National Bank of Madison, Wis., in the name of Emmons alone, as well after as before the formation of said copartnership, and that the drafts upon the defendants usually came through said bank; that their ledger, introduced in evidence, correctly shows the sums advanced by them upon drafts since the 13th December, 1870; that such advances were made in good faith, and in the usual and ordinary course of business, and relying upon consignments to be made to the defendants to cover such advances; that there was no such arrangement for the payment of the indebtedness to the defendants made about the 13th of December, 1870, or at any other time, between the defendants, or either of them, and said Emmons, Richard B. Chandler, and James W. Chandler, or either of them, as claimed by the plaintiff; that said firm of Emmons & Chandler did not dissolve upon or about the 13th December, 1870; that said James W. Chandler did not go out before that time, but that certainly James W. Chandler, and probably Richard B. Chandler, continued to be interested in business with said Emmons subsequently to that time, and continued so interested till the time of the closing of the account with defendants, Jan. 10, 1871; that the transfer of the account on the book of the defendants from the name of Emmons & Chandler to that of Norton Emmons was made at the request of said Emmons and the Chandlers; that the reason given to defendants for such request was, that all drafts were drawn in the name of Emmons alone; their bank business of Madison, Wis., was done in his name, and they desired their account on the defendants' books to correspond; that defendants had no idea that the firm of Emmons & Chandler was dissolved, or that their dealings with said firm were thereby brought to a close, or that, by making such a change, they released either of the Chandlers, but regarded the transfer simply as a change in the manner of keeping their books; that the receipt or release to Richard B. Chandler was not given to him until about the middle of January, 1871, after the account with the defendants was closed; that it was antedated at the request of said Richard B. Chandler; that it was given by the defendants unhesitatingly, and with but little inquiry into the reasons of Chandler for wishing the same antedated, because, at the time it was actually given, their account was paid in full; that business was conducted in the same manner subsequently to the 13th December, 1870, as before that time, and the defendants supposed they were doing business with the firm of Emmons & Chandler up to the time the account was closed, and, until such time, knew of nothing from which they could infer the dissolution of said firm; that there was nothing unusual about the size or quality of the last shipments, and the same were not, nor was any part of them, sold by the defendants under any arrangement with said Emmons and the Chandlers, or either of them, that the proceeds should be used to close up the account with the defendants; that...