Chophard v. Bayard

• Decision Date: 01 January 1860
• Citation: 4 Minn. 418
• Parties: G. CHOPHARD & SON vs. T. W. BAYARD & CO.
• Court: Minnesota Supreme Court

4 Minn. 418

(4 Minn. R. p. 533.)

G. CHOPHARD & SONvs.

T. W. BAYARD & CO.

Supreme Court of Minnesota.

Error to district court, Ramsey County.

Sanborn & Lund, for plaintiffs in error.

J. & C. D. Gilfillan, for defendants in error.

ATWATER, J.

This action was brought by T. W. Bayard & Co. against the plaintiffs in error, to recover the value of certain goods, seized by the defendants below on an execution against one J. G. Perenoud, as the property of said Perenoud. The plaintiffs below claimed title to the property under a bill of sale from Perenoud to them. The answer justified the taking under execution, and set up that the bill of sale was made with intent to hinder, delay, and defraud, the creditors of said Perenoud, and therefore void as to the defendants, who were creditors of Perenoud at the time of the execution of the bill of sale, and also averred that the instrument conveyed all the property of every kind belonging to said Perenoud, which was subject to execution, which allegation was not denied by the reply. The cause was referred to E. A. Otis, Esq., who reported in favor of the plaintiffs, upon which judgment was entered for the sum of $744.40. The defendants bring the cause to this court by writ of error.

The only question necessary to be considered in this case, is as to the validity of the bill of sale from Perenoud to Bayard & Co. The facts in regard to that instrument are substantially as follows, viz.: The instrument bears date the second day of December, 1858, and for the consideration of $2,810, purports to convey absolutely to Bayard & Co. all the personal property, goods, wares, and merchandise, and groceries, then in the store of Perenoud, in St. Paul. The condition of the instrument then goes on to recite that Perenoud, at the date of the instrument, was indebted to Bayard & Co. upon sundry promissory notes, which were then past due, and that the indenture was given to secure the payment of said notes, and goes on to provide that the said Perenoud "may retain possession of said goods, chattels, and merchandise, and may sell and dispose of the same in the usual course of business, either at wholesale or retail, but is not to sell the same at prices less than a certain price contained in a certain bill or schedule furnished by said parties of the first part to said party of the second part, and the said party of the first part covenants and agrees to sell said goods, wares, and merchandise, and account to said parties of the second part at any and all times for the proceeds of such sale or sales, and said parties of the second part agree to apply such proceeds in payment of said above described notes." It is further provided, that Perenoud shall not sell or encumber the goods, except by a regular sale at wholesale or retail for cash, shall account for such sales whenever called upon to do so by Bayard & Co., shall deliver up, when called on to do so, all goods remaining unsold; and that Bayard & Co. shall have the right at any time to take absolute possession of all the goods, free and clear from any claim or equity of redemption on the part of Perenoud, unless he should sooner have paid the claim of Bayard & Co. in full. These are all the provisions which it is important to notice.

It will be observed that this instrument partakes of the nature both of a bill of sale and chattel mortgage. It purports to absolutely convey the property, and gives the right to the vendee to take possession at any time, and also speaks of the transfer as security for a pre-existing debt, leaving the vendor in the possession and management of the property. But by whatever name it be called, the intent and effect of the instrument, with reference to the interests of creditors, are the important points for consideration. It may be proper to state, that the referee found as matters of fact, that Perenoud, out of the proceeds of the sale of the merchandise, retained enough for the support of his family, using all the balance to purchase new supplies of goods, and replenish his stock; that he was insolvent at the time of the execution of the bill of sale; and that the sale was not made with intent to hinder, delay, or defraud, his creditors. These findings, however, are not important in the consideration of the transaction, as the validity of the sale must depend upon the provisions of the instrument, and the allegations of the pleadings.

Taking this whole instrument together, we can arrive at no other conclusion than that it bears upon its face the intent to hinder and delay the creditors of Perenoud. It is admitted that Perenoud, at the time of its execution, was insolvent. It is manifest from the provisions of the instrument that the vendor did not in fact, and did not intend to, part with his entire interest in the property. It may be even well doubted whether he intended to part with any interest, for he has reserved to himself just as complete control over the property as he had before the conveyance was made, stipulating to "account" for the proceeds. An agreement to account for the proceeds is not equivalent to an agreement to pay over the proceeds; for, without a violation of his agreement, he may apply them in such manner as he sees fit, and, as it appears in this case, did actually apply them to the support of his family and the purchase of other goods. Perenoud might have disposed of the entire stock of goods, and put the proceeds into his pocket, or invested them in other property, and not have rendered himself liable to Bayard & Co. for any misappropriation of the goods or proceeds. In other words, the property was not devoted to the payment of Perenoud's debt, and the entire stock of goods might have been disposed of, and the debt still have been left subsisting. It is true that Bayard & Co. stipulate, or rather are...