Hedrick v. Strauss, Uhlman & Guthman

• Decision Date: 08 November 1894
• Docket Number: 5243
• Citation: 60 N.W. 928,42 Neb. 485
• Parties: W. A. HEDRICK v. STRAUSS, UHLMAN & GUTHMAN
• Court: Nebraska Supreme Court

60 N.W. 928

42 Neb. 485

W. A. HEDRICK v. STRAUSS, UHLMAN & GUTHMAN

No. 5243

Supreme Court of Nebraska

November 8, 1894

ERROR from the district court of Hitchcock county. Tried below before COCHRAN, J.

AFFIRMED.

B. G Burbank and House & Blackledge, for plaintiff in error.

C. C Flansburg, for defendants in error:

A buyer who pays the consideration after notice of fraud is not entitled to protection as an innocent purchaser for value. (Wait, Fraudulent Conveyances, sec. 369; Dougherty v Cooper, 77 Mo. 532; Arnholt v. Hartwig, 73 Mo. 485; Bishop v. Schneider, 46 Mo. 472; Dixon v. Hill, 5 Mich. 408; Matson v. Melchor, 42 Mich. 477; Starin v. Kelly, 88 N.Y. 421; Bush v. Collins, 35 Kan. 535; Riddell v. Munro, 52 N.W. [Minn.], 141; Becker v. Dunham, 27 Minn. 32.)

OPINION

The facts are stated in the opinion.

NORVAL, C. J.

This was an action in replevin brought by plaintiff in error against Thomas H. Britten, sheriff of Hitchcock county, to recover possession of a stock of general merchandise formerly owned by one E. O. Johnson. At the time the order of replevin was issued and served, the stock of goods in dispute was held by the sheriff by virtue of a writ of attachment sued out by the district court of said county by Strauss, Uhlman & Guthman against the said E. O. Johnson. On motion of said Strauss, Uhlman & Guthman, they were substituted, by order of the court, as defendants in the replevin suit, in lieu of the sheriff. Upon the trial of the latter case the jury returned a verdict finding that the defendants were entitled to the possession of the goods at the commencement of the action and that the value of such possession is the sum of $ 878.09. Nominal damages were assessed for the detention of the property. A motion for a new trial was filed by the plaintiff, which was overruled, and judgment was entered by the court upon the verdict for the defendants.

It is undisputed that the property in controversy herein was, on and prior to the 28th day of April, 1890, owned by E. O. Johnson, who was engaged in the general retail merchandise business at Stratton, in Hitchcock county, and on which date his indebtedness to wholesale houses and others aggregated between $ 4,000 and $ 5,000. The amount which he owned the defendants was $ 850 and interest. On the date aforesaid Johnson transferred his entire stock of goods to the plaintiff, and a few days later the said attachment was levied thereon. The theory of the defendants is that said transfer to plaintiff was colorable merely, made for the purpose, and with the intent of hindering, delaying, and defrauding the defendants and other creditors of Johnson, and that plaintiff was a party to the fraud. On the other hand, the plaintiff insists that he purchased the stock in good faith, for a valuable consideration, without notice.

Complaint is made by counsel in the brief of plaintiff of the giving of instructions 1, 2, 3, 4, and 5, asked by the defendants, which are as follows:

"1. The court instructs the jury that a conveyance or sale of property made with intent, on the part of the vendor, to delay, hinder, or defraud a particular creditor in the collection of his debt is void as against all creditors of the vendor, if the intent be known to, or participated in by, the vendee, although made for a good and valuable consideration.

"2. The jury are further instructed that if they find from the evidence that the plaintiff herein, W. A. Hedrick, knew at the time he purchased the stock of goods from E. O. Johnson that said Johnson had a fraudulent purpose for making the sale, and bought with that knowledge, then said Hedrick is not a purchaser in good faith; and if you find said sale was made by said Johnson for the purpose of hindering and delaying or defrauding his creditors, and that said Hedrick had knowledge of the facts and circumstances from which such fraudulent intent and purpose might reasonably and naturally be inferred by an ordinarily cautious person, then such transfer is fraudulent and void as against the rights of the creditors, and you will find for the defendants.

"3. The court instructs the jury that the intent to defraud is something distinct from mere intent to delay; and if the jury find from the evidence that said Johnson had no intent to defraud, but that he made the transfer as a shift merely to gain time in which to pay his debts, yet if the effect of said transfer would necessarily be to delay and hinder creditors in collecting their debts, and plaintiff knew or was in possession of facts which, upon inquiry, would have given him full knowledge of the effect of said transfer on the rights of creditors, then said sale to plaintiff was void as to creditors, and you will find for the defendants.

"4. The court instructs the jury that although they may find from the evidence that plaintiff gave to said Johnson the full value of the stock in trade and land, yet if they find from the evidence that a portion of said payment made by said Hedrick was two notes of said Hedrick for the sum of $ 1,500 each, and at the time of making the trade, and as a part of the consideration thereof, it was secretly agreed that the notes should not be transferred by said Johnson, but that he should hold them and receive his pay thereon out of the store, or in trade, as Hedrick becomes ready to pay, this, the court instructs you, being an advantage to the debtor, is denominated by the law a secret trust, and would render the sale void as to the creditors of said Johnson, and you will, if you so find, render your verdict for the defendants.

"5. The court instructs the jury that a purchaser of an entire stock of goods cannot close his eyes to the circumstances under which he purchases the stock, and the probable effect the means of payment will have upon the creditors of the seller, in hindering, delaying, or defrauding them of their claims; and if the effect of such sale will be to hinder and delay, if not to defraud, such creditors, he buys at his peril; and if you find that the plaintiff herein knew, or had reason to believe, that the effect of his alleged purchase would be to hinder and delay, if not to defraud, the creditors of E. O. Johnson, the seller, he is not a bona fide purchaser, and you will find for the defendants."

Objections to instructions cannot be raised for the first time in the supreme court, but, in order to have instructions reviewed, the attention of the trial court must have been challenged thereto in the motion for a new trial. The first and second instructions, therefore, will not be considered, since no complaint was made of either of them in the motion for a new trial, nor in the petition in error.

No claim is made in the brief filed that the third instruction given at the request of the defendants is incorrect as an abstract legal proposition, but the contention here is that it is not based upon any evidence in the case and assumes that the plaintiff knew, or was in possession of facts which, if pursued, would have given him knowledge of Johnson's indebtedness. The criticism that this instruction assumes that the plaintiff was aware of the existence of any fact or state of facts which tended to impeach the bona fides of the sale is not merited. The language is certainly not susceptible of the construction placed upon it by counsel. It submitted to the jury for their determination, from the evidence, what the facts were upon the question of fraudulent intent, and then informed them, if a certain state of facts were found to exist, that the transfer was void as to the creditors of Johnson. It is urged that this instruction is not based upon the evidence, because there is no testimony in the record tending to establish that plaintiff knew of Johnson's indebtedness, or that the transfer was made with the intent to defraud, or that the plaintiff knew of such purpose. It is not seriously contended that the motive which induced Johnson to dispose of his stock was not to defraud his creditors. We think the jury were justified in inferring fraudulent intent from the fact that Johnson's indebtedness was so great that the transfer had the effect to hinder and delay his creditors in the collection of their claims against him, when taken in connection with the facts and circumstances surrounding the transaction disclosed by this record. An important inquiry is, did the plaintiff participate in the fraud, or did he purchase the property in good faith, for a valuable consideration, and without notice of the motive and purpose of Johnson in making the sale? The alleged consideration for the property was $ 6,600, which Mr. Hedrick testified...