Clements v. Moore Moore v. Clements

• Decision Date: 01 December 1867
• Citation: 73 U.S. 299,18 L.Ed. 786,6 Wall. 299
• Parties: CLEMENTS v. MOORE. MOORE v. CLEMENTS
• Court: U.S. Supreme Court

73 U.S. 299

18 L.Ed. 786

6 Wall. 299

CLEMENTS v. MOORE.

MOORE

v. CLEMENTS.

December Term, 1867

THESE were cross-appeals in equity from the District Court for the Western District of Texas.

Clements and Sheldon, judgment creditors of James Nicholson, filed in that court their original and amended bill (the last apparently without leave of court, as required by Rule 45¹) against Nicholson, his wife, and a certain Moore, to set aside on the ground of fraud——

1. A sale by Nicholson of his entire stock of merchandise (dry goods); and

2. A conveyance by him to Moore, and by Moore to Mrs. Nicholson, of certain lots in Bastrop, Texas.

The bill charged that in November, 1852, the defendants obtained judgment against Nicholson for a debt contracted in March, 1851; that on the 5th July, 1851, Nicholson, having then on hand a large stock of goods, worth $12,000, but being in failing circumstances, sold them to Moore for $7000, this sum being paid only in notes of Moore, due at different times; that Moore knew Nicholson's condition; that the sale was collusive, and e ant to defraud Nicholson's creditors—a secret arrangement having existed between the parties to share any profits that Moore might make on a sale of the goods.

As to the real estate, the charge was, that at the same time with this pretended sale Nicholson had transferred to Moore five lots in Bastrop; to wit, three lots known in the plan of the town as Nos. 62, 65, and 70; and also two others, to wit, No. 95 and fractional lot No. 4, both east of Main Street; that this transfer was without consideration or with a nominal one only; and that the lots were now claimed by Mrs.

Nicholson,—a redemption or repurchase by her being fraudulently set up with a view of furthering the plan of Moore and Nicholson to defraud the creditors of the latter.

Each defendant filed an answer.

NICHOLSON, admitting the debt charged, denied every allegation of collusion or fraud.

As to the goods, he averred that the allegation of an understanding that he and Moore were to share profits on a sale of the goods transferred, was 'absolutely untrue and false:' and in answer to special interrogatories, stated that the goods cost in New York $8556; that they were sold to Moore at 20 per cent. discount on that cost,—the sale amounting thus to $6310, which he declared was their full worth.

As to the lots, that the sale of these had nothing whatever to do with the sale of the merchandise; that Moore purchased them in good faith, paying therefor the sum of eight hundred and sixty dollars; that subsequently to this sale it was agreed that they might be repurchased at the same price at which they were sold, with interest; that they were accordingly repurchased by his wife, Rebecca Nicholson; that the intervention of his wife was not for the purpose of defrauding the complainants or the other creditors. On the contrary, that it was for the purpose of securing the separate property of his wife, so purchased in good faith by her from Moore with her own means. The answer alleged that when he married the said Rebecca, 'she was a widow, having a considerable amount of separate means and money, belonging to herself and to her child by a former husband; that from time to time she lent him these means to aid in carrying on his business, until the amount exceeded $500; that after the sale of said goods this defendant, in payment of said borrowed money, transferred one of Moore's notes for $500 to her; and that with it and other of her separate means, she purchased the lots from Moore;' that in fact, the lots had been purchased for the father of the defendant; and that the only reason why the defendant did not take the deed in his father's name was because he was an alien; that his father had ever since that time occupied them as a homestead, under an

arrangement with the defendant's wife that she should repurchase the property from Moore, and permit her father-in-law, now old, to occupy it during his lifetime; that the arrangement between Moore and the defendant's wife was not a mortgage, but a purchase in good faith; that his wife, having paid Moore, had, in the spring of 1853, filed a bill in the District Court of Bastrop County, to force him to reconvey the lots to her; and that the court had decreed a reconveyance, except as to No. 4, and also one lot, No. 95, 'which was redeemed and sold to pay a debt due from defendant;' that Moore was ready to convey; and that in this arrangement some creditors who had levied upon the property concurred.

MOORE, admitting that it might be true that Nicholson was in failing circumstances (though of their extent he, Moore, knew nothing), denied all knowledge of the debt to the complainants.

As to the goods, he admitted the purchase at the price stated by Nicholson, for which price he alleged that he had given notes, which he had since paid; that the purchase was made by him in good faith, reluctantly on his part, and only after Nicholson had offered his goods to others, without their purchasing; that the goods at New York invoice prices amounted to $78 7.75; that they were originally invoiced at high rates, and, being a broken and culled stock, were not worth New York cost in Bastrop. He denied all collusion with Nicholson, and all partnership in profits; and alleged that the profits which he made, if any, on the goods were so inconsiderable as not to be worth naming.

As to the lots, that on the 12th June, 1851, anterior, therefore, to the purchase of the goods, he, Moore, purchased them for eight hundred and sixty dollars, which he paid in good faith; that it was agreed with Nicholson 'that the lots might be repurchased for the same sum, with interest at ten per cent.'

The answer of Moore made the same statement as to the decree in the District Court of Bastrop as was contained in the answer of Nicholson; adding, that in the matter of the decree 'this defendant had not intended collusion with any

one;' that the lots were 'not redeemed but repurchased by Mrs. Nicholson;' though whether out of her own funds the respondent did not know, except as he was assured by Nicholson that they were so purchased.

MRS. NICHOLSON'S answer (which the complainants offered to receive without oath, but to which nevertheless she swore), was confined to the lots; the matter which was the subject of the bill so far as respected her. Denying all fraud, her answer stated that when she married Nicholson, she had in ready money the sum of about $1000, her own separate property; that her husband informed her that he was much pressed for some ready money, and agreed with her to give her in pledge two promissory notes of Moore, not then due, for about $500 each, for the use of this money; that she did give to her said husband the use of her said money, and took in lieu thereof the notes. She did not remember distinctly when she made the arrangement, but thought that it was some time during the year 1849 or 1850, and 'that it was some time afterwards that she surrendered to the said Moore the said notes in discharge of a mortgage, which said Nicholson had before that time executed to him on the lots.'

A part of the testimony having been taken, the complainants filed a paper thus:

'The plaintiffs in this cause hereby join issue with the defendants [naming them all], and will here the cause, on bill, answer, and proofs, against the defendants.'

The sixty-sixth rule of practice prescribed by this court for courts of equity of the United States, orders that——

'Whenever the answer of the defendant shall not be excepted to, &c., the plaintiff shall file the general replication thereto on or before, &c. [The rule makes the cause then at issue.] If the plaintiff shall omit or refuse to file such replication within the prescribed period, the defendant shall be entitled to an order, as of course, for the dismissal of the suit.'

THE FACTS, so far as proved by testimony, seemed to be thus: Nicholson was a trader at Bastrop, and in the spring and summer of 1851 was, in fact, embarrassed, and generally ally reputed so to be in his affairs.

As to the goods. After the sale of the merchandise, it appeared—on the one hand—that a short time previously to the sale of them—one House then pressing him through Mr. Larkins, an attorney in Bastrop, for payment of a debt due him, and the attorney and Nicholson entering, somewhat confidentially, into consideration of the latter's affairs—Nicholson stated that he could pay House's claim, but that doing so would leave him so much embarrassed that he was afraid that a certain New York firm, which was named (and which was, in fact, the complainants in this suit), would 'come down on him and appropriate hie effects to the exclusion of a large amount of home and other debts, which he thought ought to be preferred under the circumstances.' The debt of House having, through the efforts of Mr. Larkins, been satisfied, that person suggested to him the propriety of making to some one an assignment, by which provision could be made for any creditors whom he might wish to favor; and suggested the name of o ore as 'a suitable man to close up the business.' While Nicholson and Larkins were thus conversing, Moore happened to pass along in the street, and they, seeing him through the window, called him in. Nicholson then proposed to him to accept an assignment such as above mentioned. Moore said that he would take the matter under advisement; and the next day Larkins was desired to draw up such an assignment as had been contemplated. Becoming indisposed, however, the drawing of the deed was deferred. On getting to his office again, several days after the original conversation, Moore called to tell him, that he had decided not to take an assignment, but had purchased the goods absolutely.

As to what passed between Nicholson and Moore at the immediate time of the sale itself, little was shown by proofs, except that it was made on the 7th July, 1851;...