Bender v. Kingman & Company, 9,810

• Court: Supreme Court of Nebraska
• Writing for the Court: KIRKPATRICK, C.
• Citation: 90 N.W. 886,64 Neb. 766
• Parties: PHILLIP H. BENDER v. KINGMAN & COMPANY ET AL
• Docket Number: 9,810
• Decision Date: 21 May 1902

90 N.W. 886

64 Neb. 766

PHILLIP H. BENDER
v.
KINGMAN & COMPANY ET AL

No. 9,810

Supreme Court of Nebraska

May 21, 1902

ERROR from the district court for Thurston county. Tried below before EVANS, J. Rehearing of case reported in 62 Neb. 469. Reaffirmed.

AFFIRMED.

George G. Bowman, Mell C. Jay and R. G. Strong, for plaintiff in error.

James H. McIntosh, contra.

KIRKPATRICK, C. HASTINGS and DAY, CC. concur.

OPINION [90 N.W. 887]

[64 Neb. 767] KIRKPATRICK, C.

This is a replevin action brought in the district court of Thurston county by Phillip H. Bender, plaintiff in error, against Kingman & Co. and John H. Mullen, defendants in error. Mullen was the sheriff of Thurston county, and had levied upon a stock of goods under writs of attachment issued in suits brought by Kingman & Co. against Weiser Bros. and in the action plaintiff in error obtained possession of the stock of goods claiming to be the vendee of Weiser Bros. An opinion was filed in this case July 10, 1901 (62 Neb. 469, 87 N.W. 142.) On application of plaintiff in error a rehearing was allowed, and the case is again presented for consideration.

The facts and circumstances with respect to the transfer to Bender by Weiser Bros. are set out somewhat at length in the opinion of this court in the case of Kingman & Co. v. Weiser Bros. reported in 48 Neb. 834, 67 N.W. 941, and no further statement of such facts need be made herein. The trial court directed a verdict for defendants in error, and such action and the rulings of the court upon the admissibility of certain evidence, are assigned as error in this proceeding.

The first contention of plaintiff in error is that the court erred in admitting in evidence conversations had between [64 Neb. 768] two witnesses who were called by defendants in error and Weiser Bros. It is disclosed by the evidence that these conversations were had in the hardware store during the progress of the inventory being taken of the goods which plaintiff in error had purchased from Weiser Bros. The evidence discloses that at that time plaintiff in error had parted with no consideration for the goods. Certain papers had been drawn up and deposited in the bank at Pender in escrow, to be held until the invoice was completed, so as to ascertain the value of the goods, to determine for what amount plaintiff in error should execute his notes to Weiser Bros. in addition to a contract for the purchase of certain lands which he had or was to assign. This testimony was undoubtedly admitted for the purpose of showing that plaintiff in error had full knowledge of the fraudulent intent of Weiser Bros. in making the sale before he had parted with any consideration. His duty upon having this knowledge brought directly home to him was immediately to stop further proceedings, and by proceeding with the transfer, and by surrendering his papers and giving his notes with full knowledge of the fraud of Weiser Bros. he became a party to such fraud. Hedrick v. Strauss, 42 Neb. 485, 60 N.W. 928; Karll v. Kuhn, 38 Neb. 539, 540, 57 N.W. 379; Temple v. Smith, 13 Neb. 513, 514, 14 N.W. 527. This evidence was clearly admissible for the purpose of showing the knowledge of plaintiff in error of the fraud which Weiser Bros. were about to perpetrate on their creditors, and its admission was not error.

The next contention of plaintiff in error is that the court erred in directing a verdict for defendants in error. This contention is based upon two grounds: (1) that the evidence was not sufficient to establish fraud; that, in any event, it was not a case in which the evidence was of such a conclusive character that reasonable minds could not differ, and therefore was a case which must have been given to the jury; and (2) that under the statutes of this state, the question of fraudulent intent must necessarily be submitted to the jury for determination.

[64 Neb. 769] Regarding the first point, it is sufficient to say that from an examination of the evidence we are led to the conclusion that it is of such a character that had the question been submitted to the jury, and a verdict returned for plaintiff in error, it would have been the duty of the court to set such verdict aside. This being true, it was not error for the trial court to direct a verdict for defendants in error, unless, under the statutes of this state, the question of fraudulent intent must necessarily be submitted to the jury for determination. The answer to this question depends upon a construction of section 20, chapter 32, Compiled Statutes, 1899, which is in the language following: "The question of fraudulent intent in all cases arising under the provisions of this chapter shall be deemed a question of fact, and not of law, and no conveyance or charge shall be adjudged fraudulent, as against creditors or purchasers, solely on the ground that it was not founded on a valuable consideration." Difficulties in arriving at the true import and meaning of language employed in a statute may sometimes best be removed by reference to the conditions prevailing at the time, and with reference to which the legislature enacted the statute regarding the purpose and meaning of which uncertainly may exist. The contention of plaintiff in error, in effect, is that by reason of the statute quoted the question of fraudulent intent, in every case tried to a jury, must be submitted to the jury for determination, and that this is so, even though the evidence establishing a fraudulent intent is so conclusive that reasonable men could draw but one conclusion therefrom, and that it is not within the power of the court to resolve the question into one of law and direct a verdict. The correctness of this contention is the question requiring determination. [90 N.W. 888]

Our section above quoted is identical in phraseology with the provision of the statute of frauds of the state of New York. Michigan and other states have provisions substantially the same. Before the enactment of the New York statute, the courts of that state, following the English [64 Neb. 770] cases, recognized a two-fold classification of fraud, namely, actual fraud and constructive fraud. Actual fraud is defined by an eminent writer as that where a party intentionally or by design misrepresents a material fact, or produces a false impression, in order to mislead another or to obtain an undue advantage. In every such case, there is a positive fraud in the truest sense of the term. There is an evil act with an evil intent. 1 Story, Equity Jurisprudence, sec. 192. But constructive fraud was recognized as having an actual, potential existence in the absence of all fraudulent intent. Contracts, although not originating in any actual evil design or contrivance to perpetrate a positive fraud or injury upon other persons, but having a tendency to deceive or mislead other persons, violate private or public confidence, or impair or injure public interests, were deemed equally reprehensible with positive fraud, and were therefore prohibited as within the same reason and mischief as acts and contracts done malo animo. 1 Story, Equity Jurisprudence, sec. 258.

In the case of Reade v. Livingston, 3 Johns. Ch. [N.Y.] 481, 500, decided in 1818, before the enactment of the New York statute (our section 20), Chancellor Kent said: "The conclusion to be drawn from the cases is, that if the party be indebted at the time of the voluntary settlement, it is presumed to be fraudulent in respect to such debts, and no circumstance will permit those debts to be affected by the settlement, or repel the legal presumption of fraud. The presumption of law, in this case, does not depend upon the amount of the debts, or the extent of the property in...