Finch v. Kent
| Decision Date | 02 July 1900 |
| Citation | 61 P. 653,24 Mont. 268 |
| Parties | FINCH et al. v. KENT et ux. |
| Court | Montana Supreme Court |
Appeal from district court, Yellowstone county; C. H. Loud, Judge.
Action by George R. Finch and others against Thomas Kent and wife. From a judgment in favor of plaintiffs, and from an order denying a new trial, defendants appeal. Reversed.
Gib A Lane, for appellants.
Campbell & Stark, for respondents.
This action, in the nature of a creditors' bill, was brought to set aside, as fraudulent and void, a sale of 3,400 sheep made by the defendant Thomas Kent to the defendant Mary Kent on the 3d day of January, 1893. The complaint states that on the 3d day of January, 1893, the defendant Thomas Kent, being then the owner of the sheep, sold them to his wife, the defendant Mary Kent; that the sale was fraudulent, without any consideration, and void as against the plaintiffs and the other creditors of Thomas, and was made for the purpose of hindering, delaying, and defrauding his creditors; that the defendant Mary Kent, for the sole and only purpose of assisting Thomas in his intent to hinder, delay, and defraud took the sheep at that time, and has ever since pretended to be the owner thereof, but that she holds title to the sheep in trust for Thomas, the real owner; that the defendant Thomas has no property other than these sheep which is subject to the levy of an execution; that on the 17th day of February, 1894, the plaintiffs recovered a judgment against the defendant Thomas for $1,000, with interest and costs upon which they subsequently caused a writ of execution to be issued to the sheriff of the county of Yellowstone, where the defendants reside and the sheep were situate, which execution was duly returned, with the sheriff's certificate thereon to the effect that he had been unable to find any property of the defendant therein subject to the writ; that thereafter proceedings supplemental to execution were had, under which the defendant Thomas was examined, and the judge of the court, by order, authorized the plaintiffs to bring an action to subject to the satisfaction of their judgment the interest of the defendant Thomas in the sheep transferred by him to his wife. The answer contains denials of the allegations of fraud, and sets up affirmatively that the 3,400 head of sheep were on the 12th day of January, 1893, by the sheriff of Yellowstone county, levied upon under an execution issued on a judgment in favor of a certain bank against one John Tinkler, and that thereafter one Sweetman, as bailee, replevied them from the sheriff, one Ramsey; that the action of Sweetman against Ramsey was determined in favor of the defendant therein; and that the cause is now pending on appeal in the supreme court of Montana. Defendants pleaded, also, that the remedy of the plaintiffs was barred by subdivision 4 of section 42 of the first division of the Compiled Statutes of 1887. By reply, the affirmative matters of the answer were denied. Upon the trial the plaintiffs moved the court to direct a verdict for the plaintiffs, and to enter its decree setting aside the transfer of the 3,400 sheep, and requiring Mary Kent to account to the sheriff for the proceeds, of the sale, or to deliver the sheep over to the sheriff, to be sold on execution to satisfy the judgment against Thomas Kent, for the reason that it conclusively appeared that there was no actual or continued change of possession of the property after the making of the bill of sale, and that Thomas Kent continued in the possession and control thereof. The court granted the motion, and the jury, under the direction of the court, returned their verdict that the sale was made for the purpose of defrauding the plaintiffs and other creditors of Thomas Kent, and was void. The court thereupon found, as a conclusion of law, (1) that the sale of the 3,400 sheep by Thomas Kent to Mary Kent was fraudulent and void, and made for the purpose of defrauding the plaintiffs and other creditors of Thomas Kent; and, as a conclusion of fact, (2) that there was never any change of possession of the sheep, and that Kent had continued in the possession of them ever since the time of the sale. A judgment was thereupon entered to the effect that Mary Kent deliver to the sheriff of Yellowstone county the 3,400 head of sheep alleged to have been sold to her, or that she account to him for the proceeds of the sheep, or of so much thereof as may be necessary to satisfy the demands of the plaintiffs. From the judgment, and from an order denying a new trial, the defendants have appealed. In the absence of an attack thereon by demurrer, by objection to the introduction of evidence, or otherwise, we shall, for the purposes of the appeal, treat the complaint as stating facts sufficient to constitute a cause of action.
1. The complaint charges that the sale or transfer by Thomas Kent to Mary Kent was made with the actual intent to defraud the creditors of the seller, and that the purchaser entertained the like intent. The court found fraud in fact, and also fraud in law, or constructive fraud; basing its judgment upon both these findings. We think that the defendants have inferentially presented the contention that the finding in respect of constructive fraud, arising out of want of an actual and continued change of possession, is without the issues joined. True, the continued possession of the seller is some evidence tending to prove actual fraud in the sale, but, unless it be alleged, a judgment overturning the sale on the ground of such constructive fraud only is erroneous. Where the purchaser sues to recover chattels sold to him by a debtor, and seized as the property of the debtor while in the latter's possession, an answer denying the title of the purchaser and justifying under the writ is sufficient to raise the question of whether there was actual fraud, as well as the question of whether there was constructive fraud, in the sale; for in such a case the burden is upon the plaintiff to establish his title to the property, and, in order to prove his ownership and the consequent right to recover, he must show a sale valid as against the creditor. Under these circumstances the burden is upon the plaintiff purchaser to prove that the sale was accomplished by an immediate delivery, and followed by an actual and continued change of possession, such as will satisfy the requirements of the statute. A. sues B. to recover chattels or their value, alleging title in himself. B.'s answer denies A.'s title, and justifies under a writ of execution issued on a judgment for money rendered against C., whose property he asserts the chattels to be. As soon as it appears upon trial that B. took the property from the possession of C., the presumption arises that C. was then the owner; and A., to prevail, must overcome the presumption. If he bought the chattels from C., who at the time of the sale was in possession or control, he must establish the immediate, actual, and continued change of possession contemplated by the statute; else, the sale is void as to B., who seized the chattels under the writ and a valid judgment. If, however, the chattels were levied upon in A.'s possession, he may in the first instance safely rely upon the prima facie presumption of ownership arising from possession, and the necessity of introducing evidence tending to show a purchase by him from C. in actual or constructive fraud of B. is upon the latter. The necessity of adducing evidence respecting ownership may, during the progress of the trial, shift from one party to the other. The onus of establishing the evidentiary or intermediate facts often shifts to B.,--as, for example, when he would prove actual fraud vitiating as to him the sale by C. to A., or when the property is, on execution, taken from A., who purchased from C. But the burden of proving the ultimate fact, namely, a title in A. which is valid as to B., remains upon A. throughout. He has asserted title. The wrong alleged is invasion by B. of the rights flowing from, and dependent upon, ownership. Title is denied by B. Unless title be shown to be in A., he fails to prove a cause of action. A sale or transfer in fraud of B. is void as to him. So far as he is concerned, the situation is the same as if the sale or transfer had not been made. Proof of either actual or constructive fraud on creditors is, as to the demand of B., fatal to the title of A., or, rather, establishes conclusively that A. did not acquire a title which can be maintained against B. The burden is upon the plaintiff, A.; and, if no evidence were received, B., the creditor, having denied A.'s allegation of ownership, would prevail. But a different rule, founded upon other principles, applies to a case like the one at bar, in which, if no evidence were received, the defendants would be entitled to judgment.
Here the plaintiffs aver that a sale was made by Thomas Kent to Mary Kent, and seek to have it set aside and declared void. It becomes necessary, therefore, for the plaintiffs to allege and to prove the facts which invalidated the transaction. It is incumbent upon them to point out the particulars which render the sale void as to them, and the evidence is to be restricted to proof of these allegations. If the vice which renders the sale null as to them was the existence of actual fraud, the complaint must, as the complaint in this case does, charge its presence. If the vice was constructive fraud, then it is incumbent upon the plaintiff's to state the matters which constitute that cause of action. Of course both actual and constructive fraud may be pleaded in the same complaint; but if actual fraud only be set up, then, although proof of constructive fraud may be evidence having a tendency to support the allegation...
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