Converse v. McKee

• Decision Date: 01 January 1855
• Parties: CONVERSE & CO. v. J. MCKEE.
• Court: Texas Supreme Court

14 Tex. 20

CONVERSE & CO.

v.J. MCKEE.

Supreme Court of Texas.

1855.

On the trial of the right of property taken in execution, the defendant in execution is a competent witness in behalf of the claimant.

Where the defendant offered to prove by a witness that a writing shown to him and purporting to be a balance-sheet or transcript of balances of accounts on the books of the firm of B. & McK. at the time of levy was a true and correct transcript of such balances taken from the said books by him, and of which he had been the keeper, and that the several items of the same were correct, both of his knowledge and from the books, to which proof by the witness and to any reference to said balance-sheet plaintiffs objected, because the books themselves were the best evidence of the facts sought to be proved, which objection was overruled by the court, and the witness was permitted to read the several items therein contained, and to prove their truth from his recollection, and that they were taken directly from the books, it was held there was no error.

Remaining in possession of personal property by the vendor, though a badge or presumption of fraud, is not conclusive of fraud, and the vendee may prove that the purchase was made in good faith. (Note 6.)

See this case as to a levy on partnership property for a debt of one of the firm. (Note 7.)

It may be proper here to notice that the charge of the court now complained of was contained in the general charge to the jury, and no exception or objection taken to it at the time; and if there had been anything in the objection, it might well be answered that it was not made in the court below, and ought not to be heard here. (Note 8.)

The doctrine is too well settled to be now questioned that partnership debts claim a priority of payment out of the partnership effects before the individual debt of one of the members of the firm. (Note 9.)

Appeal from Harris. The bill of exceptions read as follows: “Also, the claimant offered to prove by said Bailey that a writing shown to him,” &c., (same as in the second paragraph of the syllabus of this report.) The balancesheet showed a balance in favor of the partnership of $3,253, not including claims to the amount of $831.26 marked doubtful, nor an item entered “By railroad orders not above $140.10.” Among the claims considered good was one against Bailey for $2,229.16, which, according to the testimony, was made up by assumptions on the part of Bailey & McKee of individual debts of Bailey. Bailey, however, testified “that the assets of the firm were insufficient to pay the liabilities if the firm business had been closed at the time of the levy.”

The sheriff who made the levy testified that on the evening of the 7th of September he went to the store of Bailey & McKee, and declared a levy of the execution upon the interest of James Bailey in the goods of the store; that the goods were pointed out by the attorney of the plaintiff; that McKee agreed to make out an inventory of the goods for him, and that he left the goods without interruption on account of the instructions of the plaintiffs' attorney, who told him in the presence of McKee that he expected the execution would be arranged, and that he might wait further instructions; that McKee and the plaintiffs' attorney then agreed that McKee should furnish an inventory of the goods, and they left; that on the 11th, in obedience to the further instructions of plaintiffs' attorney, he proceeded to take an inventory of the goods, and that the same were still in the store; that McKee had told him from time to time that he intended to replevy them, and that they were left until the 16th, when he closed the doors and took possession, giving McKee notice that he held joint possession with him of the interest of Bailey.

Cross-examined: J. W. Henderson, as attorney for McKee, gave him notice on the 11th that the goods belonged to McKee, and that if he levied he did so at his peril.

The attorney of the plaintiffs corroborated the above statement, and, in addition thereto, stated that he spoke with McKee, who was present; that McKee asked the amount of the two executions, and that he told him they were over $600, and that McKee said that rather than have any trouble about them they would settle them; that McKee promised, as he understood him, to make out an inventory for the sheriff; and he instructed the sheriff, on account of what passed between McKee and himself and Bailey and witness's partner, that he expected the executions would be settled, and that McKee would make out an inventory, and that he could leave the goods as they were; that the sheriff left the goods in that position, notifying McKee that he had levied upon the interest of Bailey in the same.

The sheriff's return corresponded with the above statements. It commenced as follows: “* * * and levied by virtue of this execution, on Thursday, the 7th of September, upon all the right, title, and interest of James Bailey in the goods, wares, and merchandise in the store occupied by the firm of McKee & Bailey, on Main street, Houston, which goods were left in the possession of Jethro McKee and James Bailey until Monday, the 11th,” &c.

James Bailey, a witness for claimant, testified that he and McKee were partners in trade in Houston for some time before and until the 9th of September, on which day he, Bailey, sold out his interest absolutely and entirely to Jethro McKee, in consideration and for the purpose that McKee would and should pay the liabilities of the firm, and that from that date he had no further interest in the firm property, except that they were applied to the payment of the debts; that the goods levied on, and claimed by McKee, were the same which belonged to them as partners, and were in their joint possession on the 9th of September; that he was and is wholly insolvent, depending on his services as clerk for McKee for his support.

Cross-examined: That McKee paid him nothing; that the sale was made for the purpose of paying the debts of the firm; that nothing was said about whether if anything was left after the payment of the debts he was to be entitled to a share of the surplus, because they estimated that there would be none; and he supposed at the time if anything remained it would go to the payment of the two executions; that those executions would take the balance, if any; that at the time of the sale no balance-sheet was made by him and McKee, &c.; that he remained in same store with McKee as his clerk, &c; that when he made the sale to McKee the agreement was that he was to be his clerk and have a commission of five per cent. on all sales.

McKee in his affidavit of claim claimed the property as owner and also as a member of the firm of Bailey & McKee to apply the same to payment of the partnership debts.

The court instructed the jury as follows: The jury are instructed that a creditor has no legal lien on the personal property of his debtor, so as to prevent his making a fair sale in the usual course of trade until the execution has been levied; but after levy a sale by the debtor is invalid.

To constitute a valid levy the sheriff must have taken possession of the goods in some way. A mere declaration by the sheriff that he makes a levy is not sufficient, and he ought to take control of the entire goods of the firm when he levies.

If from the evidence the jury believe that there had been no levy made on the goods at the time of the sale by Bailey to McKee, but that the sale was made for the purpose or intent of hindering, delaying, or defrauding the creditors of Bailey in collecting their debts, such a sale would be fraudulent and void; and its being made to his partner and his remaining in possession are badges of fraud, which may be rebutted by evidence showing the fairness of the transaction.

But if the jury believe from the evidence that the sale was made, not for the purpose of defrauding Bailey's creditors, but in truth and fairness for the purpose and consideration that McKee should settle the debts of the firm, and that those debts were equal or nearly so to the assets of the firm, and in order to protect the firm creditors from loss by a levy of the executions for Bailey's separate debt, and that the firm debts should be secured and paid in preference to his separate debts, such a sale would be valid and sufficient against the claim of plaintiff or any other creditor of Bailey who had not levied.

Whether the sale were fraudulent or not, if the jury believe from the evidence that the debts of the firm of Bailey & McKee at the time of the levy were equal to or greater than the value of the assets of the firm, and that Bailey was insolvent, then McKee, being responsible for the partnership debts, had a right to control the assets of the firm for the purpose of paying the debts, and it was his duty to do so; and in such case the firm property was not liable to the execution of any separate creditor of Bailey.

Signed by the judge; but no objection appeared of record further than that that the plaintiffs asked certain instructions, all of which were given except the one noticed and copied in the opinion.

Palmer & Jordan, for appellant.

I. The first error assigned by appellants is the ruling of the court on the objection to the evidence of the witness Bailey introduced by defendant. The objection was founded on the fact that Bailey was one of the defendants in execution and the vendor of the claimant, and was interested in the result of the trial. (Goodacre v. Bream, Peake's N. P. C., 174; 1 Greenl. Ev., sec. 347, and cases cited; Id., 391, 395; 16 Johns. R., 70, Brown v. Nichols; and see 6 Mart. Lou. R., N. S., 458-460, Thompson v. Chavenau, as to incompetency of claimant's vendor; 9 Cowen, 631.)

II. The second error assigned by plaintiffs is the overruling of the objection to the use of the paper purporting to be a transcript or balance-sheet from the books of McKee & Bailey, and...