Henderson & Co. v. Allen

• Decision Date: 07 July 1888
• Citation: 18 P. 926,39 Kan. 679
• Court: Kansas Supreme Court
• Parties: C. M. HENDERSON & CO. v. GIBBS & ALLEN.--SAME v. CREAMER BROTHERS

18 P. 926

39 Kan. 679

C. M. HENDERSON & CO. v. GIBBS & ALLEN.--SAME v. CREAMER BROTHERS

Supreme Court of Kansas

July 7, 1888

Error from Lyon District Court.

REPLEVIN. The facts are briefly and substantially stated in the opinion.

Judgments affirmed.

Buck & Feighan, for plaintiffs in error.

Kellogg & Sedgwick, for defendants in error.

VALENTINE J. All the Justices concurring.

OPINION

VALENTINE, J.:

On September 4, 1884, two actions of replevin were commenced in the district court of Lyon county against C. M. Henderson & Co. for the recovery of certain goods, wares and merchandise, consisting principally of boots and shoes. One of such actions was commenced by Gibbs & Allen, and the other by Creamer Bros. The two actions involved substantially the same questions, and, with the consent of all the parties and the court, were tried together before the court without a jury; and the court in each case found generally in favor of the plaintiffs and against the defendants, and rendered judgment for a return of the property to the plaintiffs respectively; or, in case a return could not be had, then in favor of the plaintiffs, Gibbs & Allen, and against C. M. Henderson & Co., for the sum of $ 457.98, and costs; and in favor of the plaintiffs, Creamer Bros., and against C. M. Henderson & Co., for the sum of $ 192.90, and costs. These judgments were rendered on January 17, 1887; and to reverse the same, C. M. Henderson & Co., as plaintiffs in error, have brought both cases to this court, and both have been submitted to us at the same time, and upon the same briefs and arguments.

The plaintiffs in error, defendants below, claim that the court below erred in the admission of evidence, and also in its general finding on the evidence. The facts of the case, stated briefly, are substantially as follows: Prior to April, 1882, Frank J. Doan was in the employment of C. M. Henderson & Co., plaintiffs in error, defendants below, who were then and still are wholesale dealers in boots and shoes in Chicago, Ill. In April, 1882, Doan and one Quetch commenced business on their own account as retail dealers in boots and shoes in Emporia, Kansas, under the firm-name of Quetch & Doan, C. M. Henderson & Co. furnishing all the capital. Quetch & Doan continued in business until September, 1883, when Quetch retired, leaving Doan alone to continue the business. On April 27, 1884, Doan purchased a lot of boots and shoes from Gibbs & Allen, defendants in error, plaintiffs below, who were then and still are manufacturers of boots and shoes at Grafton, Mass. These are a part of the goods now in controversy. On May 13, 1884, Doan purchased a lot of boots and shoes from Creamer Brothers, defendants in error, plaintiffs below, who were then and still are wholesale dealers in boots and shoes at Boston, Mass. These are the remainder of the goods in controversy. The principal questions litigated in the court below were whether these purchases by Doan from Gibbs & Allen and from Creamer Brothers were fraudulent or not on the part of Doan. The court below found in the affirmative. At the time of these purchases Doan was owing to C. M. Henderson & Co. about $ 9,000, and also owed several other persons, while his entire stock of goods, furniture and fixtures and all that he owned were not worth that amount. Yet upon inquiry concerning his financial condition by the agents respectively of Gibbs & Allen and Creamer Brothers, he not only failed to disclose his unsound financial condition to them, but in effect stated to them that his financial condition was good. He stated to the agent of Creamer Brothers, among other things as follows: "I am all right financially; there is no incumbrance on my stock here; am in good shape, and buy goods of C. M. Henderson & Co., Hathaway, Soule & Harrington, Gibbs & Allen, and several others, and I shall discount the bill, that's all." Also the following, among other conversations, occurred between Creamer Brothers' agent and Doan, to wit: "I [the agent of Creamer Brothers,] told him [Doan,] that I heard the rumor that C. M. Henderson & Co., of Chicago, were backing him up; his answer was that all C. M. Henderson & Co. had to do with him was that he formerly traveled for them and he bought a good many goods from them; but farther than that, they had no more to do with him than I did. I then asked him if C. M. Henderson & Co. or anybody else had any chattel mortgages or liens of any kind on him; his answer was emphatically 'No;' I mean he spoke emphatically. I asked him if C. M. Henderson & Co. paid any of his bills or discounted any of his eastern purchases; his answer was 'No.' I told him, on his statement of what he told me, that we would make the goods and ship them to him on the 15th of July." These statements were, in all their substantial implications, false and misleading. Doan was not all right financially. He was not in good shape. He was in debt more than he was worth, he was hopelessly insolvent. He did not generally discount his bills. C. M. Henderson & Co. did have something to do with him. They had backed him up, and carried him in business ever since he started in business. He was then owing them more than he was worth. They had paid some of his bills and had discounted some of his eastern purchases; and he never could have done business without their aid. And further, although Doan purchased the goods from Gibbs & Allen on April 27, 1884, and although the goods were to be delivered to him by July 15, 1884, yet he requested that the bill for them should be dated September 1, 1884, and Gibbs & Allen's agent assented to this. This of course was for the purpose of postponing the day when the price for the goods would become due. We might further say that prior to these transactions between Doan and Gibbs & Allen and Creamer Brothers, there had never been any dealings between them. On July 30, 1884, Doan gave a note and chattel mortgage to C. M. Henderson & Co. on his entire stock of goods for the sum of $ 9,000. On August 21, 1884, he sold his entire stock of goods, including his furniture and fixtures, to C. M. Henderson & Co. for the amount of his indebtedness to them. At that time he owed to them $ 9,066.63. Yet his entire stock of goods including his furniture and fixtures invoiced only $ 8,538.19. His goods alone invoiced only $ 7,659.21, and C. M. Henderson & Co. realized out of them $ 6,665.86. He also at the same time owed several other debts, amounting in the aggregate to about $ 2,283.45. On September 4, 1884, the plaintiffs, Gibbs & Allen and Creamer Brothers, brought this action.

We cannot say that the court below committed any material error either in the admission of evidence or in its general finding upon the evidence; and taking the case as it was tried in the court below, and as it has been presented here, it would be useless to discuss these matters any further than we have already discussed them. It is true that the evidence tending to show that the purchases made by Doan from the plaintiffs below were fraudulent, is not very strong, yet we cannot say that the court below erred in finding that they were fraudulent, and certainly no evidence was erroneously introduced that might reasonably have misled the trial court into making such finding. The finding was general. No special findings of any kind were made, nor were any special findings asked for. Doan was hopelessly insolvent, and he misled and deceived the agents of the plaintiffs below into selling to him the goods in controversy.

There is still another question in this case, however, of much more importance than any of the foregoing questions, and that question is this: Where personal property is fraudulently procured by purchase from an innocent owner, and the fraudulent vendee afterward sells the property to an innocent and bona fide purchaser, except that the only consideration moving from the second purchaser to the fraudulent vendee is the payment or partial payment of a preexisting debt due from the fraudulent vendee to the second purchaser, may the original owner treat the original contract made by him with his fraudulent vendee as void, or rescind the same, and recover the property from the second purchaser? Upon this question there seems to be some conflict of authority; and yet the great weight of authority seems to be in favor of an affirmative answer to the question. Upon the affirmative of this question, see the following among other authorities; Sargent v. Sturm, 23 Cal. 359; same case, 83 Am. Dec. 118, and note; Root v. French, 13 Wend. 570; same case, 28 Am. Dec. 482, and note; Barnard v. Campbell, 58 N.Y. 73; same case, 17 Am. Rep. 208; Stevens v. Brennan, 79...