Brittain v. Crowther

• Decision Date: 06 February 1893
• Docket Number: 173.
• Citation: 54 F. 295
• Parties: BRITTAIN et al. v. CROWTHER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

54 F. 295

BRITTAIN et al. v. CROWTHER et al.

No. 173.

United States Court of Appeals, Eighth Circuit.

February 6, 1893

Statement by CALDWELL, Circuit Judge.

On the 24th day of April, 1891, the plaintiffs in error, Brittain Smith & Co., brought suit by attachment in the circuit court of the United States for the district of Nebraska, against Daniel S. Lohr, to recover the sum of $2,334.75, for goods wares and merchandise sold and delivered by the plaintiffs in error to the defendant between the 31st day of July and the 10th day of September, 1890. On April 25, 1891, the order of attachment was levied upon a stock of general merchandise at Broken Bow, Neb., as the property of the defendant Lohr. On May 4, 1891, Harriet E. Lohr, the wife of Daniel S. Lohr, the defendant in the principal action, and Frank Crowther, her brother, filed a petition of intervention alleging that they were associated together as partners under the firm name of Crowther & Co., and that the goods levied upon were their partnership property, and of the value of $6,000, and prayed that the same might be delivered to them upon the execution of a bond agreeably to the law and practice in that state in such cases, which was done. On May 26, 1892, the plaintiffs obtained judgment against Daniel S. Lohr in the attachment suit for $2,387 and costs. The plaintiffs filed an answer to Crowther & Co.'s intervening petition, denying that the interveners owned the goods attached, and alleging that they were the property of Lohr, who had transferred the same together with a large amount of other property and money, to Crowther & Co., for the purpose of defrauding his creditors that Crowther & Co. never paid for the goods, and had knowledge of Lohr's fraudulent purpose at the time they acquired the same. A reply was filed to this answer, and the issues thus made up were tried before a jury, and there was a verdict and judgment in favor of the interveners, and the plaintiffs sued out this writ of error.

Edson Rich, for plaintiffs in error.

Before CALDWELL and SANBORN, Circuit Judges, and SHIRAS, District Judge.

CALDWELL Circuit Judge, (after stating the facts.)

The issue to be tried was whether the transfer of the stock of goods by Lohr to his wife and brother-in-law was made in good faith to pay bona fide debts which he owed them, or whether it was a fraudulent device to hinder, delay, and defraud his creditors. Upon the trial of such an issue, it was competent to prove every fact and circumstance tending to show that Lohr made the transfer of the goods for the purpose of defrauding, hindering, or delaying his creditors, or that he transferred them to his wife without any sufficient consideration. The plaintiffs had a right to show Lohr's acts, statements, and correspondence, in so far as they had any tendency to prove that he was acting fraudulently, or had transferred the goods without consideration. They had a right to show the kind, quality, and value of the goods which he purchased in the spring and fall preceding the transfer of the stock of goods to Crowther & Co.; to show the statements he made to his creditors at the time he purchased the goods, or at any time thereafter, as to his financial condition and business prospects; to show the amount and kind of property he owned before his failure, and what disposition he made of the same; to show the amount of debts he owed after his failure, and when and for what they were contracted, and the explanations, if any, he gave for his failure, and whether or not he paid any of his debts after disposing of his property.

At one time Lohr owned and operated two stores at Broken Bow, and later, and about July, 1890, he had three stocks of goods in as many separate storehouses. He purchased the goods in these three stores mainly on a credit. These three stocks of goods, together with an old stock valued at $1,800, which Lohr had traded for at Ceresco, were disposed of in the following manner: One stock, and the principal one, was turned over to his wife and his brother-in-law, the interveners in this case. It is claimed that Lohr owed his wife $2,200 for services, and his brother-in-law, Crowther, $400 for clerk hire, and in August, 1890, this stock of goods-- which invoiced $3,400, according to the testimony of the interveners, but which plaintiffs claim was worth much more-- was turned over to Mrs. Lohr and Crowther in payment of Lohr's indebtedness to them, they executing a note to Lohr for the difference between the indebtedness to them and the invoiced value of the goods, viz. $1,296. There was also turned over to Mrs. Lohr and Crowther, at the same time, the old stock of goods, which Lohr had traded for at Ceresco, valued at $1,800; and the plaintiffs claim, and the evidence tends to show, that a considerable amount of goods was taken from Lohr's other stores, and placed in the store conducted in the name of Crowther & Co., of which no invoice was taken. Another one of these three stocks of goods Lohr removed to Lead City, S.D., the last of October, 1890, and about the 1st of December following, he sold this stock, which invoiced $5,000 or more to Emil Faust, for $3,220; and on the 8th day of the same month B. S. Lilly placed on record a bill of sale from Lohr for the remaining stock of goods in Broken Bow, and took possession of the same. Having divested himself, in the manner stated, of all his visible and tangible property, Lohr, on the 9th day of December, 1890, one day after the bill of sale for the last stock of goods was placed on record, wrote the following letter to one of his creditors:

'Broken Bow, Neb., Dec. 9, 1890.

'L. Simon & Co., Chicago, Ills.: I suppose, ere this, you have been informed of my condition. Till just a few days ago, I thought I could pull through, but it is impossible. I am short $8,000.00 and cannot account for it in but one way,-- a direct steal.

'Resp.,

D. S. Lohr.'

He owed a large amount of debts at the time of his failure, none of which he paid. His shortage largely exceeded $8,000 and was undoubtedly, as he states in his letter, the result of 'a direct steal;' but there is not a scintilla of evidence in the record indicating that any goods or money had been stolen from him. When he sold the stock of goods which he had taken to Lead City, he telegraphed to his wife: 'Pay nothing. Will start home to-morrow. ' Very much of the evidence tending to prove the foregoing facts was excluded by the court. The statements of Lohr to his creditors and others, tending to prove his fraudulent practices and purposes, were excluded 'for the reason,' as stated in the bill of exceptions, 'that said conversations were not held in the presence of any member of the firm of Crowther & Co.;' and the letter of Lohr to Simon & Co. which we have quoted, and other letters of like character, as well as Lohr's telegram to his wife, were excluded upon the ground that they were irrelevant. But all this testimony was competent and relevant. The plaintiffs were not required to prove their whole case at once, or by one witness. To support the issue on their part, it was necessary to prove that Lohr turned the goods over to Crowther & Co. for the purpose of defrauding his creditors, and that Crowther & Co. did not pay value for the goods, or that, if they did pay for the goods, they did so with knowledge of the fraudulent purpose of Lohr in making the sale, or, which is the same thing, with such knowledge as would put a prudent man upon inquiry. It is very rare that a fraudulent purpose can be proved by direct and positive evidence. Hence, proof of every fact and...